Author: admin

Rocktober 10, 2018

* Currencies rally then fall back in the overnight markets

* Russia wants to bypass the dollar in Trade with Europe… 

Good Day… And a Wonderful Wednesday to you… Unfortunately, Mother Nature is seeing to it that the Gulf Coast Region, Florida panhandle, is going to have a rough time of Wednesday, as yet another hurricane will make landfall in the U.S. this year. I hope everyone has listened to the authorities and evacuated by now… When I went to bed last night, the Yankees were losing to the Red Sox, which would mean that the Red Sox eliminated the Yankees from the playoffs… A quick check this morning confirms that to be the case. The band, Yes, greets me this morning with their song: Owner of a Lonely Heart…

Yesterday, I told you about how this week was a dead air week for the U.S. Data Cupboard, and with that in mind, the dollar was sent out to sea without any support, and it didn’t fare well… No data had the dollar bugs climbing back into the wallboards, and the currencies kicking a little sand in the face of the dollar bugs. The euro climbed back to above 1.15 and the Aussie dollar (A$) gained almost 1 full cent on the day, after posting a 7-year low on Monday… That to me looks akin to having go too far one way, only to have it regain too much the other way…

And lo and behold, the overnight markets saw to it that nothing got ahead of itself, as the dollar was bought in the overnight markets, thus causing the currencies to give back about 1/2 of their gains on Tuesday. I’m really surprised, no wait, nothing surprises me any longer, so let’s say this is very interesting in that the overnight markets are comprised of the Asian markets, where China is the big dog and has made claim after claim about how the dollar standard should be replaced, and then Asian markets hand the baton to Europe, where they have been busy building a payments system to bypass using the dollar, and yet, in those two markets the dollar rallies…  Interesting, eh? 

The Reserve Bank of Australia (RBA) has kept rates on hold for a long time now, and quite frankly, I thought by the middle of this year, (which was 4 months ago) that we would have seen a rate hike from the RBA… But NOOOOOOOO! Come on RBA, you’ve got a housing bubble in Sydney… Do you need to see what happened in the U.S. 10 years ago when the Central Bank didn’t believe in housing bubbles and didn’t hike rates to stop the bubble from expanding more? I would think that every Central Bank Gov. in all the Central Banks around the world, get to view a documentary on how a Central Bank does NOT deal with a housing bubble, and it features the U.S. and the Fed…

Last week I talked about how the U.S current debt was nearing $22 Trillion… But the figure that scares the bejeebers out of me more is the Unfunded Liabilities figure right now of more than $115 Trillion (don’t forget that professor Lawrence Kotlikoff says the U.S. owes more than $200 Trillion!) and my, yours, and your cousin Eddie’s portion of that debt is a whopping $943,500… So, when you have a minute, please fire off a check to the U.S. Gov’t for $945,000 (to take into account the change in the number between now and when the check is received!) and then put a sign in your yard, telling your neighbors (really guilting them into doing the same) that you paid your portion of our Gov’t’s unfunded Liabilities…

Wait, What? You don’t have that kind of spare change in your change jar? Well, that’s Ok, because neither does most people have that kind of money… The Bill Gates, George Soros, Jeff Bezos, of the world could do it… And here’s where I always shut those load mouth folks that think that all you have to do is tax the rich more to pay off the debt… There aren’t enough of them to make up that kind of money folks… It’s that simple… When will people ever learn that you don’t reduce debt by adding to it?

The Brazilian real continues to push the currency appreciation envelope, and it’s about time! The real has been bruised and battered and even got to a spot where I referred to it as “a basket case”…  And I don’t say that willy nilly all the time… There are things that fall under the heading “basket case”, which means they are pretty bad, and have no signs of reversal… The U.S. Debt situation is a pretty bad “basket case”, so you see what sets the bar…  But every day now for the last couple of weeks, the real has been on a mission to remove that title of being a “basket case”.  

With the Hurricane in the Gulf, I would think that it would disrupt the Oil production in the region, and that could have an affect on the price of Oil as we go through the next few days. The price of Oil has a $74 handle hung on it this morning, and if things go the way I suspect them to go, we could be looking at a $76 or $77 handle by the end of the week… 

That would give the Petrol Currencies that include, the ruble, krone, loonie and real, a boost they so desperately need as none of these currencies have every really recovered from the fall of the price of Oil from $100 to the lows of a couple of years ago of $27…  I told you yesterday that I keep reading stuff that talks about the price of Oil returning to $80…  Well, it’s not that far of leap from where it is today, so maybe… you just never know, eh?

Gold fought through 230,000 contracts to gain a whopping $1.60 yesterday…  The devastation to the price of Gold had been done, and hopefully completed, but the sellers had to take a break, they’re going to get carpel tunnel syndrome writing all those contracts!  

With the U.S. Data Cupboard on a break this week, you get a break as the letter will be shorter! HA!  

To Recap… The currencies rebounded on Tuesday, only to see 1/2 of their gains given back in the overnight markets, which Chuck thinks is very interesting that they would want to own dollars, given what’s been said and done so far…  The Brazilian real continues to rally…  And the Price of Gold rallied by a whopping $1.60 on Tuesday… UGH!

For What It’s Worth…  Well, I have another article from the RT this morning, hmm… there’s more to that than you think! Anyway, this one is about how Russia is planning to use its currency to trade with Europe and can be found here: https://www.rt.com/business/440675-russia-ditching-dollar-euro/

Or, here’s your snippet: “The Russian Ministry of Finance said on Monday it may shift to the use of local currencies with European trade partners. The move will be part of the so-called de-dollarization of the Russian economy.

“As we can see the main opportunity which can be realized in the short and medium term is the transition to settlements in national currencies with our European counterparts, including settlements involving the euro, and including for the delivery of our energy commodities,” Deputy Finance Minister Vladimir Kolychev told reporters.

According to him, such a decision would benefit Russia’s European partners in several ways.

“This would, on one hand, strengthen the euro’s position as a reserve currency, and on the other hand provide a sort of security for such [energy] deliveries if the U.S. were to make some decisions affecting U.S. dollar settlements for our banks and our large energy companies,” Kolychev said.

He suggested that transition to euro payments would be simpler because the euro is already a reserve currency, and it would be logical to expect interest in the idea from European companies.”

Chuck Again…  Remember it’s my belief that we did this to ourselves… and that’s all I’m going to say about that now, because I don’t need my blood pressure rising so early in the morning! 

Currencies today 10/10/18.. American Style: A$ .7092, kiwi .6460, C$ .7715, euro 1.1499, sterling 1.3152, Swiss $1.0072, European Style: rand 14.6245, krone 8.2133, SEK 9.1148, forint 282.76, zloty 3.7480,  koruna 22.4550, RUB 66.55, yen 113.20, sing 1.3832, HKD 7.8367, INR 74.29, China 6.9198, peso 19.07, BRL 3.7541, Dollar Index 95.69, Oil $74.77, 10-year 3.23%, Silver $14.33, Platinum $821.40, Palladium $1,074.80, and Gold… $1,186.02

That’s it for today… So, it’s Dodgers and Brewers in the NL, and Red Sox and Astros in the AL..   I was talking to a friend last week that’s younger than me, and he didn’t know that before 1969, there was just one Pennant winner in each league that then went to play in the World Series, and it would be over by now… Now 10 teams qualify for the playoffs that take the whole month of Rocktober to finish, and the World Series is played in 40 degree weather…  Except if the Brewers play the Astros, they both had domed stadiums!  Sorry of the baseball talk, but that’s me…  The Gin Blossoms take us to the finish line today with their song: Allison Road…  My good friends, Rick and Laura have a daughter Allison, that I still to this day call her Allison Road… She always giggles at that..  Alrighty then, I hope you have a Wonderful Wednesday, and please remember to Be Good To Yourself!

Chuck Butler

Rocktober 9, 2018

* Currencies rally then stumble overnight… 

* More on Russia than you paid for! 

Good Day… And a Tom Terrific Tuesday to you! BYE-BYE to the Braves and Indians as their baseball seasons ended yesterday. I spent the day yesterday, tidying up as Kathy is expected home today. So, with the kitchen being spotless, I told Alex that we needed to go out for dinner, and we did… I don’t get the opportunity for just one on one with him most of the time, so I love it when I get that chance! And welcome back to all the folks that had the day off yesterday… I hope you enjoyed your 3-day weekend! I on the other hand, was here, writing, no holiday for me! I mean, doesn’t anybody want to work any longer? HAHAHAHA! Neil Young and Crazy Horse greet me this morning with their 16 minute live version from The Filmore East of: Cowgirl In The Sand…

The day yesterday for the U.S. trading hours was a non-event, and the currencies traded in a tight range, which meant the Big Dog euro, remained below 1.15. The rest of the currencies fall in line behind the euro, except, the Brazilian real… I talked last week about how the real had been on the rally tracks, and it appeared to be all political, which scares me a bit… Well, over the weekend in Brazil, the guy the masses wants to see run the country won a regional vote and goes on, and that gave more love to the real… Like I said last week, ride this horse until it bucks…

I had a longtime reader, send me a note yesterday, disagreeing with my thoughts on the Russian ruble… And while he did a great job of showing me that the ruble hasn’t kept up with inflation… I thought, Ok, I’m a dolt…  But… Well… here are a couple of things he didn’t take into account… The ruble was smashed when it entered the conflict with Ukraine… The sell off had nothing to do with fundamentals of the country, simply that the world was aghast that the Russians were at war again… Hmmm… let’s see, the U.S. has been in a war in the gulf region since the early 90’s, where’s the aghast there? I’m just saying…

Yes, the drop in the price of Oil did the ruble no good either… And I’ve long said, (you can check the archives if you want!) that the ruble is an “oil play”… So, if you believe the price of oil is going higher, then the ruble should be your choice currency… Of course I know there are some out there that can’t get their arms around anything Russian, expect salad dressing! So, if that’s your bag, baby… Then the same holds true for the Norwegian krone… The Norwegians haven’t done anything to tick off investors except cut interest rates…

But keep the cards and letters coming, for they point out when I’m being a major dolt! And I realize that I fall under that umbrella many times… more than I care to admit!

Gold got whacked good (or bad depending on how your look at it) yesterday… More than $15 was shaved off the value of Gold yesterday, and in the more than 300,000 contracts traded in Gold, were some large sells that dictated the direction of the shiny metal on the day…  The climb of the bond yields has done a number on not only Gold & Sliver, but also stocks… I mentioned that last week that the rise in yields would reach a point where stock investors would just as well, take their money out of the risky stock market and put it back into the bank or bond market to guaranteed interest returns… I don’t think interest rates are quite there yet, but if late last week’s turmoil in stocks is any indication, I would run for the hills as fast as I can here folks, because this is no false down, like the moves to higher rates were previously, this time, it’s for real…

Some time ago, I asked you to ask me what the most difficult part of my job (TIMING!) is… HA! Well, I did it again, I jumped the gun… I bought some bonds a couple of weeks ago, before this recent move upward in yields… Of course I did! That’s how much of a dolt I am sometimes! Geez Louise, Chuck, if you had just waited 10 days, you could have booked higher yields!

There are bond traders out there folks, that are so young, they’ve never seen a bear market in bonds… I say bear market because with bonds, yield and price have an inverse relationship… If bond yields go up, the price of the bond goes down, and vice versa… So, if bond yields are rising, bond prices are going downward, and thus the bear market… And there are some stock traders that came on board after 2008, that can’t imagine a bear market in stocks… Blood Sweat & Tears said it best… What goes up, must come down… Spinning wheel’s got to go ‘round… And of course, there are currency traders that came on board after 2010, and can’t imagine anything but dollar strength…

I’m just pointing this out to say… That trees don’t grow to the moon, and bull markets don’t either! At some point, the bull market ends, and a bear market begins… Trends… I explained this all to you last week, so I won’t go there again, but hopefully you get the message I’m sending here…

I guess the IMF with all their highly paid and educated economists are seeing things my way these days… I point this out because that doesn’t happen very often! The IMF issued a report that lowered their outlook for Global Growth, and pointed to the Trade War going on as their reason for doing so… Again, as I’ve pointed out… Nobody wins in a Trade War, period!

It’s a dead air week, this week for the U.S. Data Cupboard… Yes, there will be some data prints here and there, but nothing to really get behind and say this or that…   We will see PPI (wholesale inflation), which has been falling in recent months, and the stupid CPI (consumer inflation) later in the week… But other than those two, I could wrap the rest in yesterday’s newspaper and pass it off for day old fish… I’m just saying… 

The price of Oil had really slipped in the past few trading sessions, falling from a $76 handle last Thursday, to a $73 handle yesterday… I think that was akin to  getting ahead of one’s self…  The price of Oil has rebounded a bit in the past 24 hours and is back to a $74 handle this morning.  I read a report the other day about the prospects for Oil, and there were a number of so-called experts saying that the price of Oil could see $80 soon…  I filled the gas tank in my car on Sunday, boy that was sicker shock!  I think I recall $4 gas back when the price of Oil was trading around $100…  Talk about something that could really hurt the economy… 

To recap…  It was a holiday in the U.S. yesterday, so after the European markets closed up shop and headed to the pub, the markets drifted… But overnight the dollar is back to enjoying the higher yields Treasuries are booking… The IMF is singing from the same song sheet as Chuck, as they point out the damage that the Trade War is doing to Global Growth.  Gold got whacked by $15 yesterday, inflation is coming folks… and all these whackings Gold has taken will be distant items in our rear view mirror… At least that’s how I see it!   

Of course I thought we be seeing this all taking place by now, so once again I jumped the gun… UGH!  

For What It’s Worth… Ok, this has been Russia Week so far this week, eh? Well, there’s no reason to stop there! I’ve been talking about how Russia, China and now Europe have been developing their own payment systems ala SWIFT that are outside of the dollar, and the U.S. has no control over, and how this would badly damage the dollar once put into use… Well, this article sent to me from Bob, talks about all of that and more, and can be found here: https://www.rt.com/business/440482-russia-dollar-economy-dependence/

Or, here’s your snippet: “The Russian Finance Ministry has announced a plan to wean the country of dollar dependence. It is expected to be a long and painful process. RT has asked analysts to explain how this could be done.

According to the plan published this week, Russia seeks to de-dollarize the economy by 2024. The program is long and complicated, but its key point is that Russian exporters who use rubles instead of dollars would get huge taxation benefits including quicker VAT returns and other stimulus to ditch the greenback.

But there are also other ways to strengthen the role of the ruble in Russia. “It is necessary to gradually switch to such a system of international payments, which implies payment in rubles for Russia’s best and most popular goods on the world market like oil, gas and arms exclusively,” Andrey Perekalsky, analyst at financial institute FinIst, told RT.

Russia should also unite with China and the European Union in creating a payment channel that can’t be controlled by the United States. The alternative to the SWIFT interbank settlement network that could bypass Iranian sanctions could be seen as a first step in that direction, the analyst notes.” 

Chuck again… I want to make this perfectly clear, I’m not cheering these moves… I’m strictly pointing them out so that investors can do something about them, that’s all…  Shoot Rudy, I don’t want these things to happen to the dollar’s value, I use dollars for gas, groceries and giggles! 

Currencies today 10/9/18… American Style: A$ .7058, kiwi .6430, C$ .7693, euro 1.1435, sterling 1.3042, Swiss $1.0050, European Style: rand 15.0300, krone 8.2986, SEK 9.1311, forint 284.33, zloty 3.7733, koruna 22.5852,   RUB 66.72, yen 113.20, sing 1.3868, HKD 7.8345, INR 74.45, China 6.9083, peso 19.01, BRL 3.7996, Dollar Index 96.12, Oil $74.77, 10-year 3.24%, Silver $14.31, Platinum $814.05, Palladium $1,074.76, and Gold… $1,186.93

That’s it for today… Alarm went off, and I kept sleeping this morning, that’s why this is later than usual… I don’t worry about that stuff any longer, It’ll get finished when I’m good and ready to finish it! I hear that fall/ autumn weather is going to arrive by this weekend… Get the woolies out! Gather up the wood for the bonfire, and buy something pumpkin spiced! I complained about that pumpkin spice thing last year, and this year I saw Frosted Flakes that were pumpkin spiced!  I’m surprised that there aren’t pumpkin spiced sandwiches! Ok… Journey takes us to the finish line today with their song: Who’s Crying Now?  I heard that Steve Perry the former lead singer for Journey has come out of retirement and has a new album… I’ll have to check it out!  I hope you have a Tom Terrific Tuesday and remember to Be Good To Yourself!

Chuck Butler

 

Rocktober 8, 2018 

* Currencies rally on Friday but get sold overnight

* Gold gets whacked again! 

Good day… And a Marvelous Monday to you! A nice weekend was had by yours truly, despite my Missouri Tigers losing in S. Carolina… UGH! And despite that yesterday afternoon here, looked like the monsoons had moved in! Last Thursday night, I got down to business, cooking wise, and made myself, because I was home alone, a big pot of spaghetti and meatballs, with cheese garlic bread, and a small salad… While I sat there eating, and enjoying what I had made, I said, “Those Italian Restaurants on the Hill in St. Louis, should be hiring me!” I’m just saying… It was THAT good! Cat Stevens greets me this morning with his song: Moodshadow… Yes, I’m being followed by a moonshadow…

Well, last Friday’s Jobs Jamboree was interesting in that the BLS said the jobs created in September were just 134,000… But the Unemployment Rate dropped to a cycle low… In fact, the last time it hit a low like this was 1969… Guess what started in 1970? Give up? It was a recession… So, we have that in our back pockets to think about now don’t we? And bust my buttons! It was one of those rare times, when the BLS actually has a come to Jesus moment, and takes away jobs from the surveys… For September they took away 67,000 jobs… So, if I always take out the jobs additions the BLS makes all the time, I have to add back in when they take them out! … So, 201,000 jobs were on the surveys… And that was more like what was expected… And would make more sense that the Unemployment Rate dropped if we had kept the numbers that the surveys gave…

The currencies led by the euro, found their way in the darkness that has been caused by the long shadow the dollar throws off. The euro climbed back above 1.15 on Friday, and I thought to myself… Funny, how the dollar can’t rally on the Employment data… Now, the euro wasn’t really on Terra Firma above 1.15, and that proved out in the overnight markets, where the euro has been pushed back below 1.15… I think, that the Eurozone heads would like for the euro trade between 1.15 and 1.20, for optimum trade… I had a longtime reader send me a note on Friday, and asked me to give my opinion on the Russian ruble…

Well, here goes folks! I’ve said this for a longtime now, that the Russian Central Bank is the best Central Bank on the planet… Their Gov. Elvira Nabiullina, is the best Central Banker going right now. She gets it… But besides the Central Bank, the Russian economy has done quite well, given they have had Economic Sanctions placed on them by the U.S. and Eurozone, for way, too long! And that to me is a sign that the economy would be soaring to the moon if they didn’t have the governor placed on the economy by the sanctions… Sooner or later, the heads of the U.S. and Eurozone will come to the realization that the sanctions haven’t had the effect on the Russian that they thought they would, and drop them… When they do, It is my opinion, which could be wrong, I might add, that the ruble will begin to make headway VS the dollar.

We already see the ruble gain whenever the price of Oil shoots higher, but the currency has this governor on it, and can’t shake it with just higher Oil prices… It needs the world to see how well the country is moving without the sanctions! The Russian Central Bank has inflation under control, which is quite impressive to me, and they have eked out some positive growth in recent quarters…

When the debt in the world comes crashing down… and currency investors / traders/ what have you, begin to look around at where to go besides the dollar, I believe they will turn their focus on the ruble…

So, buying it now, at still blue light special prices, seems like the thing to do… But again, that’s just my opinion, and I could be wrong!

Suddenly, and I mean suddenly yields on Treasuries are rising and acting like nothing is going to stop them from rising! The 10-year’s yield is 3.23%… It sure didn’t take long for that last 28 Basis Points to be gained, now did it? I told you long ago, that when yields start to rise, they will rise quickly, and before you can say “I didn’t know bond yields could rise” They’ll be higher than a kite, on a blustery day! I said last week, that the bond boys have come to the realization that the Fed is downright serious about continuing to hike rates, and that they see inflation coming… Uh-oh!

Don’t just take my word for it… the folks over at dollarcollapse.com had this to say about the sudden change in sentiment toward complacency, and the rise in bond yields… 

“What happened? Apparently the weight of accumulating problems finally became too great to ignore. Interest rates had been rising for a while as inflation bumped up against Fed targets, but traders only noticed when the 10-year Treasury yield pierced 3%. This cycle’s housing boom had been moderating since June, but lately the bottom seems to have dropped out, generating headlines like this:
Manhattan home sales tumble in market clogged with listings
Vancouver home sales mark steady decline
For Sale home supply surges in hot West Coast markets
Bond-market bloodbath likely to hit mortgage rates soon

And the emerging market crisis – easily managed if the dollar just went back down – suddenly feels permanent as rising interest rates pull the dollar along for the ride.” – dollarcollapse.com  

Last week I went on and on about how I believed we would revisit the 70’s… I had some readers agree with me, and some that didn’t agree with me… So for all of you who didn’t agree with me, or were on the fence, here’s something to think about… In 1970, all the Johnson era ‘great society” and “Vietnam war” expenditures were showing up at the white house’s door to be paid… And we thought that those were some doozy debt levels back then! The economy looked like it was going to grow forever, and the Unemployment rate had dropped to all-time low the year before… Bond yields were rising, and Gold was shaking off the dust, for it wouldn’t be too much longer when individuals could own it again…

And the recession broke out… And it was a real doozy, folks… And remember we didn’t have the debt levels we have today as we go full-steam ahead to $22 Trillion!   I’m just saying…

Well, Gold gained a few bucks on Friday and closed above $1,200… And that was all there was to that, for in the after markets and the early trading overnight, Gold has lost more then $9 and is back below $1,200… Ed Steer, told me in his Saturday letter, that Gold did trade above its 50-day moving average at one point on Friday, only to have it drug back below the figure when all the beans were counted, meaning all the contracts traded in Gold… So, what happened between trading above its 50-day moving avg. and then seeing it trade back below the average? The Jobs Jamboree, that’s what! But if you were a Fed Head, and you saw the low jobs number for Sept, and then went back and saw that 4 of the last 5 jobs reports have missed on the downside, would you be willing to put your reputation on the line with another rate hike?

I guess in the long run it doesn’t matter… For no one, except me of course, still hammers on Big Al Greenspan for leaving rates too low, too long when they should have been increased and allowing the housing bubble to begin… Or Big Ben Bernanke, for all his ridiculous quotes prior to the financial meltdown, about how it would never happen, and then his introduction of 3 rounds of Quantitative Easing, along with ZIRP (zero interest rate policy)… There was never a need to go to zero with rates, but he strong armed his fellow Fed Heads into believing there was, and well, the rest is history…  

In other news… China lowered their reserve ratio for banks again, in an effort to hold off a recession. This is like a rate cut folks… and puts more money in the economy. But it does weaken a bank’s position, should bad things happen…  And it seems that Italy is at the root of the euro’s weakness… One by one first it was Greece, then Portugal, then Spain, and Ireland, and now it’s Italy… The 3rd largest economy of the Eurozone…  And what’s their problem? They have too much debt!  And are wanting their budget calling for more debt, to get the seal of approval from the Eurozone heads… 

Today is Canada’s Thanksgiving Day… So, I hope all my friends in Canada have a nice day and celebration…  Today is also Columbus Day here in the U.S. when we celebrate the man that discovered the virgin Islands… OK, I’m just having some fun…  We learned in school that old Chris found the U.S. after convincing the Queen of Portugal that the earth wasn’t flat… And so that’s the story I’m sticking with… Tradition… it means something to me folks! 

So with the Columbus Day holiday, if I were still working, I wouldn’t be writing today, for it’s a bank holiday! So, no data from the Data Cupboard today… Let’s head to the Big Finish!

To recap… The Jobs Jamboree was disappointing on Friday, but only because the BLS played a game with the numbers… The Unemployment Rate fell to a cycle low, just like it did in 1969, only to have a recession appear the following year… The currencies tried to bounce back on Friday, but their attempt was turned away at the border in the overnight markets last night. And Gold is getting whacked this morning… heads up, the ball is coming down toward your head! And Chuck spills his guts on the Russian ruble… 

For What It’s Worth…  Well, there’s a ton of debt / and problem stories out there, but I thought this one was very interesting and goes to show ya, that you never know… This is about a guy who discovered his doorstop was a valuable meteorite and can be found here: https://gizmodo.com/michigan-man-discovers-his-doorstop-actually-a-meteorit-1829551900/amp

Or, here’s your snippet: “A Michigan man recently learned that this 22-pound rock he used for decades as a doorstop on his farm was in fact a meteorite worth over $100,000.

According to a Central Michigan University press release:
The man, who asked to remain anonymous, obtained the meteorite in 1988 when he bought a farm in Edmore, Michigan, about 30 miles southwest of Mount Pleasant.

As the farmer was showing him around the property, they went out to a shed. The man asked about the large, odd-looking rock that was holding the door open.

“A meteorite,” the farmer said matter-of-factly. He went on to say that in the 1930s he and his father saw it come down at night on their property “and it made a heck of a noise when it hit.” In the morning they found the crater and dug it out. It was still warm.

The farmer told the man that as it was part of the property, he could have it.”

Chuck again… Man I really enjoy reading stuff like that…  I wonder if that old fence post for the barbed wire fence that used to be at the back of my property is worth anything?  Hehehehehe… 

Currencies today 10/8/18… American Style: A$ 7066, kiwi .6455, C$ .7696, euro 1.1485, sterling 1.3043, Swiss $ 1.0072, European Style: rand 14.8397, krone 8.2756, SEK 9.0895, forint 282.88, zloty 3.7502, koruna 22.3121, RUB 66.56, yen 113.36, sing 1.3844, HKD 7.8299, INR 74.15, China 6.8673, peso 18.82, BRL 3.8399, Dollar Index 95.91, Oil $73.31, 10-year 3.23%, Silver $14.49, Platinum $821.00, Palladium $1,068.13, and Gold… $1,194.49

That’s it for today…  Boy I was full of you know what and vinegar today, eh? Are the Brewers a hot baseball team or what? Who knew?  The Braves and Dodgers better beware of the hot team… I actually watched some NFL football yesterday, as the monsoon rain came down, and I couldn’t be outside…  Ok… Sniff ‘n’ the Tears takes us to the finish line today with their song: Driver’s Seat…  So… let’s go out and make this a Marvelous Monday/ Columbus Day/ Canadian Thanksgiving Day! And remember to Be Good To Yourself!

Chuck Butler

 

Rocktober 4, 2018… 

*ADP report sends the currencies down… 

* Gold can’t follow up Monday’s gains… 

 

Good day… And a Tub Tumpin’ Thursday to you… I’m not going to be able to participate with you on any Tub Thumpin’, as I’ve hit a brick wall this morning, with regards to answering the bell… Every once and a while, the chemo gets to me, folks… that’s all I can say. Otherwise, I’ve been able to tolerate it to the degree that I can write each day, and no one knows how badly I feel… And today, well, I feel badly, but not bad enough to keep me from writing, just bad enough that I won’t be doing any Tub Thumpin’! Today is 10/4… Remember those old days of CB radios?  10/4 good buddy! Charlie Daniels greets me today with his song: Long Haired Country Boy… A rich man goes to college, and a poor man goes to work, a poor girl wants to marry and a rich girl wants to flirt… I came from a relatively poor family of 7 kids, and I had to go to work… I didn’t begin any college education until I was married, had two kids, and went to school at night… So, I guess old Charlie Daniels wasn’t wrong!

Well, the ADP Employment report that I told you would print yesterday, threw a cat among the pigeons, by printing a blowout number of jobs created in September… According to ADP 230,000 jobs were created in Sept. That got the dollar bugs all excited and they came out of the wallboards by the truck load buying dollars left and right, and by the end of the day the euro had fallen below 1.15… I guess we’ll have to wait-n-see if this holds true when the BLS prints their version of the jobs report tomorrow morning… Until then, we’re stuck with the dollar bugs singing and dancing in the streets…

On a sidebar, a few years ago, I had a dear reader send me question and ask me why I call the dollar buyers, dollar bugs… And I replied, “ well, they call us Gold lovers “gold bugs”, so I’m just returning the favor”…

Less than a week ago, the Aussie dollar was trading above 72-cents, and this morning it’s trading below 71-cents, and the euro was above 1.17 and this morning its below 1.15… And once again, Gold couldn’t hole its price above $1,200… The price of Oil surged higher to trade above $76 a barrel, and the only Petrol Currency to get any love from the move was the Brazilian real, which has been the basket case currency for the last year, as first it was lower Oil prices, and then Political circuses that caused investors to drop reals like a bad habit…

The Brazilian real, at one time in the past was the best performing currency of the year… And the fall from grace was not pretty… But here we are, with the real trading below the 4 handle for the first time in a month of Sundays. Or probably longer, as this circus with Brazil has been going on a long time! But like I said something is going on here and unfortunately, it’s political… We’ve ridden this horse before, and this isn’t my first rodeo folks… Political gains in a currency can be erased in a heartbeat, so be careful here… But ride the horse as long as it doesn’t buck, right?

And all the hoopla and hype about the Hong Kong dollar/ honker last week, has fallen by the wayside, and the honker is nearly back to where it was before there was a euphoria about a rate hike in the country took the currency for a rally ride that shocked the world of currency traders and investors… But like I said, a week later, and all the euphoria is gone… The hype is gone, the hoopla is gone, and so are the gains the currency booked last week…

So, like I said above, Gold wasn’t allowed to hold its gains above $1,200 yesterday, and closed below the figure on the day. So, who’s next in line to be caught rigging the price of Gold & Silver? First it was Deutsche Bank, and then yesterday I told you about Bank of Nova Scotia… Wouldn’t it be great for Eliot Ness to round up all the perpetrators of price rigging and bring them all in to be booked and locked away? OK, I probably dated myself there with the reference to Eliot Ness… But if you’re too young to know who I’m talking about, I apologize,  but Eliot Ness was responsible for heading up the Untouchables, and they took down Al Capone!  I hope you see what I’m talking about now? 

Don’t look now, but the U.S. Debt Clock says the U.S. current Debt is $21.6 Trillion… That’s a gain of more than $1.27 Trillion in the fiscal year of 2018, which just ended at the end of September, by the way… And remember the tax cuts didn’t go through until mid-year… I was talking to someone the other day, and said that during the Bush administration years, his worst deficit year was $740 Billion, which seems like chump change now, right? During most of the previous administration’s years the deficit each year was more than $1 Trillion… They tailed off in the last couple of years, but now their back to being above $1 Trillion, and like was telling this person, I won’t be long before our year deficits are $2 Trillion… And all that’s going to just work out just peachy dandy, don’t you worry your little mind about that the Gov’t has it all under control… Yeah, you can put that up there with believing in all the things they told you as a kid were real only to find out later they weren’t…

The Japanese yen is sliding… A week or so ago, I wrote about how the safe havens were being unwound, and it continues… I guess no one out there in investment land feels that all this sunshine and lollipops is going to end at any time…  This leads me to believe the complacency in the markets is at a place that the great economist, and a mentor of mine, Hy Minksy, would call a Minsky Moment…  

Remember when the tech stocks AKA dot.com stocks were soaring and there weren’t too many people out there saying that it was going to collapse and losses would mount up…  Or, how about the financial meltdown… Me and few others, were warning anyone that would listen to us that there was a housing bubble, and that houses were being used as ATM’s, but again, there weren’t many people that were worried, including Fed Chairman, Ben Bernanke, who thought housing prices would never collapse, like the did…  So, I’m just saying folks… When the markets participants become really complacent, the hammer is about to be dropped on them…  So be careful out there will you please?

Oh, and one more point on the markets getting complacent… The yield on the 10-year Treasury has jumped higher to 3.22% this morning… There are two things at work here… First, the bond guys finally believe the Fed is going to keep raising rates, and second, they’ve lost the belief that the economy is going to suffer at some point…  

And it’s not just the 10-year moving higher with its yield, the 5-year is 3.06%, and a 12-month T-bill is 2.61%… I tell you this to show you that you don’t have to go out 10 years to get any yield…  In a rising rate environment it’s always better to stay short in tenure on your bond holdings so that when they come due you can roll them into a higher yielding bond…  Booking the interest, and rolling the principal, now that’s a store of wealth idea, now isn’t it? 

The U.S. Data Cupboard has August Factory Orders for us today… You might recall that July’s print was negative? Well, it was, and that leaves us question marks about August’s print. I do expect it to be positive, but just not as strong as it should be at this point of the expansionary cycle… 

To recap… The ADP Employment threw a cat among the pigeons yesterday, and got the dollar bugs to come out of the wallboards and do some dancing in the streets. All this left the euro trading below 1.15, and the A$ below 71-cents…  Gold couldn’t follow up Monday’s $14 gain and lost $5.70 on Tuesday. Oil continue to rack up the gains and now trades with a $76 handle. But the only Petrol Currency to get some love was the beaten and bruised Brazilian real… go figure! 

For What It’s Worth…  Well, I had a couple ideas stacked up today, and went with this one, from Nomi Prins, who I really enjoy reading her stuff, and this time she’s talking about zombie companies… Pretty interesting stuff, and can be found here: https://dailyreckoning.com/worlds-most-important-bank-issues-urgent-zombie-alert/ 

Or, here’s your snippet: “So today we stand near – how near we don’t yet know – the edge of a dangerous financial precipice. The risks posed by the largest institutions still exist, only now they’re even bigger than they were in 2007-08 and operating in an arena of even more debt.

Now the Bank for International Settlements (BIS), or the “central bank of central banks,” is sounding a new alarm on this policy.

In its recent quarterly report, the BIS warned that low rates have catalyzed an increase in the number of “zombie” firms. The number of such firms has now risen to an all-time high.

Zombie firms are companies “that are at least 10 years old, yet are unable to cover their debt service costs from profits.” Their prospects for future growth aren’t so hot either.

The problem is that once a company becomes a “zombie” it tends to stay a zombie. That phenomenon is only getting worse. The BIS disclosed that “whereas in the late 1980s zombie firms had a 60% chance of staying in that condition the following year, the probability reached 85% in 2016.”

Zombies created from an influx of central bank money aren’t good long-term investments. It’s one thing for a company to take on debt to grow, but it is another to take on debt simply to re-pay other debt.”

Chuck Again… yes, not all debt is bad, as long as it’s repaid… and that’s all I’m going to say about that!

Currencies today 10/4/18… American Style: A$ .7085, kiwi .6492, C$ .7770, euro 1.1499, sterling 1.2978, Swiss $1.0084, European style: rand 14.6582, krone 8.2235, SEK 9.0414, forint 281.94, zloty 3.7440, koruna 22.4255, RUB 65.60, yen 114.29, sing 1.3797, HKD 7.8345, INR 73.74, China 6.8679, peso 19.01, BRL 3.9105, Dollar Index 95.88, Oil $76.38, 10-year 3.22%, Silver $14.65, Platinum $823.75, Palladium $1,058.94, and Gold… $1,199.01

That’s it for today and this week… Tomorrow’s a Jobs Jamboree Friday, so you’ll have that going for you! My beloved Missouri Tigers play on Saturday so that’ll be my day! Baseball is cruel… One day the Cubs are in first place, where they’ve been most of the season, and the next day, they’re out of the playoffs… That’s cruel man…  I went to get a massage yesterday, my back has really been giving me fits, so it’s feeling much better this morning… I know how to get my back good again… lose weight!  Last winter when I was so sick every day, and eating was the last thing on my mind, I lost a ton of weight, and my back felt great!  But a change in medicine, changed all that, and eating was fun again! Too much fun! UGH! On well, people around here don’t remember what I looked like before, so fat, bald, and short, is what I am now! And with that the great Al Stewart takes us to the finish line today with his song: The Year Of The Cat…  I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow! And please… Remember to Be Good To Yourself!

Chuck Butler

 

 

Rocktober 3, 2018 

* Chuck talks currency trends…  

* Gold jumps higher! 

Good Day… And a Wonderful Wednesday to you! Well, my first couple of days of 2018, in withdrawal, went OK… I’m withdrawing from my dependence on my beloved Cardinals, for they missed the playoffs again this year, and now I have to sit and watch other teams play. UGH! I did receive my order form for my Spring Training Tickets though, so that warmed my heart a bit thinking about watching my Cardinals play again… The Beatles greet me this morning with their song, from the Sgt. Pepper’s Album: She’s Leaving Home…

Yesterday, was kind of the day to take a big breath, and get ready for what’s coming next, whatever it may be… The currencies didn’t really move much, although they did wrap a tourniquet around the wound the dollar caused the previous day. I saw a headline article yesterday from a trader who said that investors should get ready for a HUGE breakout price movement from the dollar. And I immediately thought to myself, he must be a youngster, having never experienced anything than the current situation, and never studying history, for if he had he would know that currencies move in trends, and the strong dollar trend is nearing an end, for it has been in place since 2011, when the hidden debts of Greece were exposed…

He might also find out that during one of the most interesting periods of time in American history, were the 70’s… (if someone hadn’t come up with the idea for disco music, the 70’s would have much higher marks!) Let me explain… In the 70’s inflation followed a period of stagflation, and once inflation got moving higher, it took off to the moon, and it wasn’t tamed until interest rates in this country rose to 20%… And during that time? The dollar was sold like funnel cakes at a State Fair, and Gold soared…

I point that out because I’m so convinced that were going to revisit the 70’s with the economy… So, dig through your closet and find those bell bottom jeans, and leisure suits, and platform shoes… And while you’re looking make sure you pull out that WIN button.. (whip inflation now)!  

In fact, the 70’s had the first weak dollar trend, that lasted from August 1971, when the dollar was allowed to float, as Richard Nixon removed the Gold backing of the dollar, and lasted 7 years, until 1978, when with interest rates at their highest level investors all over the world flocked to U.S. Bank deposit accounts, CD’s and what have you… The trends have gone roughly like this… 1971-1978 weak dollar trend, 1979-1985 strong dollar trend, 1986 -1995 weak dollar trend, 1996-2001 strong dollar trend, 2002-2010 weak dollar trend, and 2011 to now, strong dollar trend.

So, I just think that we’re going to revisit the 1970’s again with inflation soaring to the moon, the Fed chasing it higher and higher, and the dollar getting sold like funnel cakes at a state fair, and this time it could get really ugly, because in the 70’s when Paul Volcker hiked rates so often, even resorting to hiking them on a Saturday night, the U.S. had little debt, certainly not the size of debt it has now that it has to finance… Think about that for moment, let it sink in, and then I’ll remind you… Got Gold?

Earlier this week I told you that the Ford Motor Co.’s CEO had told reporters that the Trade War’s tariffs were going to cost his company $1 Billion… Well, yesterday, car sales data printed… Something strange, in my opinion, is that GM has decided to not report monthly numbers any longer, instead choosing to go to quarterly numbers… Well, Their quarterly numbers can be broken down right?

So, here’s the report card as reported by Wolfstreet.com… “Automotive News estimated that GM’s September deliveries plunged 15.8% to 235,228 vehicles, with GM Silverado pickup sales down 19% (44,960) and Sierra pickup sales down 35% (11,724). These are hot vehicles – or should have been.

Ford reported that sales in September dropped 11.2% to 197,404 – with deliveries at the Ford brand down 11.3% (189,236) and at the Lincoln brands down 7.2% (8,168).”

Chuck again… like I keep telling people… the Trade War with China is going to hurt both countries’ respective economies… This is just the beginning folks…

I read an article last night that said that soon the U.S. will be spending more on bond servicing (interest payments) than they spend on the Military, Medicaid, or children programs… And that’s with interest rates at 2.25% for short term and 3.07% for 10-years… Imagine, if you will, if interest rates were actually normalized… say, 5-6%?   OMG!  

OK, I’ve got to talk about something else here, or I’ll begin to swear, and throw shade at everything and everybody involved with this mess… But not to worry, Fed Chairman, Powell, says everything is seashells and balloons…  My A%# it is… but… that’s what the sheeple want to hear, not the stuff I write… Only people that want to know the truth, read my letter…  

Well, Gold finally had a good day, actually climbing more than $14 on the day, and at one point it was up about $23, before some of the 344,000 contracts traded in Gold brought the shiny metal back down to earth. 

And the price of Oil slipped a bit, but is still trading with a $75 handle this morning… With the slippage here, the Petrol Currencies weren’t able to add to their recent gains.  The Dollar Index moved from 95.63 yesterday morning to 95.54 this morning, so although, as I’ve explained a number of times through the years, the Dollar Index isn’t the best indicator of currency movement, it’s not completely worthless!  And a lot of fund managers still use it, so there you go! HA!   

All the U.S. Data Cupboard had for us yesterday was the aforementioned auto sales data… Today is Fed speaker day, with no less than 5 different Fed Heads out on the speaking circuit… Oh, and the ADP Employment Data for Sept. will print… This data is supposed to give us an indication of what the BLS will print on Friday… The problem with that thought is that one never knows what the hell the BLS is going to pull out of their sleeve! 

To recap… It was a nothing day for the currencies yesterday, as they wrapped a tourniquet around the wound the dollar inflicted on them on Monday and rode out the rest of the day with tiny gains… Gold however gained more than $14 on the day!  The price of Oil slipped a bit, but no great shakes, and Chuck goes through currency trends, and points to the 70’s as our poster decade as one he believes we are about to relive… 

For What it’s Worth… I’ve fought a long and difficult battle against the naysayers of Gold & Silver Price manipulation… I’ve presented proof after proof, and they shrug it off and say it doesn’t prove anything… I wonder what they’ll come up with after seeing the article that the GATA folks sent me yesterday that highlights Bank of Nova Scotia admitting their traders “rigged the Gold & Silver markets”… The article can be found here: https://thedailycoin.org/2018/10/02/another-bank-fined-for-rigging-the-gold-and-silver-markets/

Or, here’s your snippet: “The evidence continues to mount proving the work that GATA has performed for the past two decades is, not only 100% accurate, but shows how much a part of our world gold actually plays. Don’t think for a minute that gold is not part of our monetary system. If it weren’t these price rigging schemes would not happen – especially on a global basis.

We reported on Deutsche Bank two years ago – click here – click here – click here – when their precious metals market rigging schemes were exposed and the bank was “fined” for rigging the gold market. During the investigation it was also discovered Deutsche Bank was rigging the silver market. A series of internal instant messages confirmed the rigging mechanism and the fact the price rigging was actually happening.

Now we learn the Canadian based Bank of Nova Scotia has now been caught with their hand in the cookie jar and charged with “spoofing” the gold and silver markets.”

Chuck Again… When will this stuff be stopped? BNS was only fined $800,000 for these illegal trading programs… Now $800,000 is a lot of money, but no where near where the fines and to go further the jail sentences should be for these types of crimes against people and their investments!

Currencies  today 10/3/18… American Style: A$ .7150, kiwi .6556, C$ .7795, euro 1.1548, sterling 1.2974, Swiss $1.0126, European Style: rand 14.3895, krone 8.1834, SEK 8.9913, forint 279.70, zloty 3.7206, koruna 22.3279, RUB 65.26, yen 113.83, sing 1.3762, HKD 7.8378, INR 73.31, China 6.8679, peso 18.79, BRL 3.9778, Dollar Index 95.54, Oil $75.18, 10-year 3.07%, Silver $14.78, Platinum $833.55, Palladium $1,054.60, and Gold… $1,203.38

That’s it for today… It took 13 innings for the Rockies to defeat the Cubs in the Wild Card game last night… the tension was so thick you could cut it with a knife! I’m hot happy about this being the last season for the TV Show The Big Bang Theory…  That sure was a long run for that show! Well, the NHL hockey season is about to start… Let’s Go Blues!  Ever since our football team was stolen from the city, and if the Cardinals don’t make the playoffs, the focus shifts to the start of the NHL season! Live takes us to the finish line today, with their song: Selling The Drama… Live had a great first album, a not as good 2nd album and then fell of the face of the earth… At least as far as I’m concerned…  So, there you go with that bit of info! HA! I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself! 

Chuck Butler

 

Rocktober 2, 2018 

*Most currencies lose ground on the day

* U.S. manufacturing shows signs of weakening… 

Good Day… And a Tom Terrific Tuesday to you! 2 tiebreaker games in the National League yesterday was something new for baseball and its fans. The Cubs and Rockies lost so they become the wild card teams and thus will play a 1 -game play-in game tonight… I had a very nice lunch yesterday with my longtime friend, and former boss, Frank Trotter… It seems that both of us have been doing a lot of travel this year, and not much time at home… For all of you who have wondered what Frank is up to… he’s enjoying retirement, and looked very comfortable and relaxed… Neil Young greets me this morning with his song: The Needle & The Damage Done… (I used to play that song on the guitar!)

Well, one day above the 1.15 handle was all the euro got to enjoy, as it was back to below 1.16 once again yesterday… The Data in the U.S. didn’t warrant a dollar rally, but it did anyway… this downward move was really sparked by an Italian official spouting off about how Italy would be better off outside the euro… A senior official from Italy’s ruling party said most of the country’s problems would be resolved if it scrapped the euro for a national currency, triggering a broad market sell-off. 

Most of the euro’s losses came after Claudio Borghi, the economic head of the ruling League party, said Italy would enjoy more favorable economic conditions outside the euro zone, and said Italy’s government had no intention of leaving the euro.  But the markets didn’t wait around for his softener statement… And the euro’s still getting sold this morning, which means the other currencies aren’t being able to wander too far from the porch…  Kind of reminds me of the old saying: Loose lips, sink ships…  

The price of Oil jumped higher once again yesterday and this morning is trading with a $75 handle… So, the Petrol currencies are the only currencies that have been able to at least hold onto previous gains… The Russian ruble continues to lead the Petrol Currencies, with other Petrol Currencies following that include: The Norwegian krone, Canadian dollar/ loonie, and Brazilian real… 

 Speaking of the data, I know I told you that there wasn’t much real economic data until later this week, but the U.S. ISM Index (manufacturing) for September printed and showed that the Trade War is beginning to show up here (recall yesterday I told you it would begin to show up soon?) as the index fell from 61.3 in August to 59.8 in September. This is the first piece of data to show the Trade War’s effects, and it certainly wasn’t good! But, as I said, the dollar rallied… go figure…

I have many a thought about things going on throughout the day, every day, no matter what I’m doing, there’s always time to think about what to do if all the debt comes crashing down on economies all over the world, but more importantly for you and me, (except overseas readers) here in the U.S…. I used to have a saying that I would pull out in times like this, in my DTL pieces… I would say… Got Gold?

BTW, the Pfennig Replies site has been fixed and is no longer on the fritz… So, yesterday, I had a few questions that the readers wanted me to talk about in the Pfennig… So, here goes…

First… the reader said they heard that the Fed was now under the Treasury… Well, that’s not true… The most important thing to understand is that the relationship between the two organizations is circular. In its simplest form that means the Treasury pays interest to the Federal Reserve on the sovereign debt securities the Fed holds and, in return, the Fed rebates that interest back to the Treasury.

Next up… the reader wanted to know my thoughts on the Trade War… I realize that not everybody reads the Pfennig every day it’s received in their email box. So, I won’t be a smart Alec here, and just repeat what I’ve said previously, that the Trade War is not good for either country’s respective economy… The idea is to outlast the other country… But in the meantime, the two economies are being reduced to shreds… The latest example of this is the tariffs that President Bush placed on Japanese Steel back in 2001… And the furthest example is the Great Depression… The Smoot-Hawley Tariffs maybe didn’t cause the depression, but they were at the scene of the crime…

And then finally, the reader wanted to know what I was talking about when I said that China was in control of Gold and doing it with the blessing of the U.S. even though it’s illegal… Well, I went through this some time ago, showing how the Chinese are using their ability to direct the price of Gold lower, just like they do their currency, the renminbi during the Trade War to offset the tariffs being charged on their exports to the U.S. Well, the Hunt Brothers were caught trying to corner the price of Silver back in the late 70’s… And to me, what China is doing is trying to corner the price of Gold…

I want to welcome a new batch of readers to the Pfennig this morning… They received their first taste of what will be in their email box 4 days a week yesterday…

OK… lots’ of discussion this morning with Gold in mind…  The shiny metal lost about $3.60 yesterday but is attempting to recover that loss this morning, in the early trading Gold is up $2.50… The Gata folks sent me a note yesterday telling me that Central Banks around the world increased their Gold holdings by 264 Tonnes this year… The Usual suspects are the top of the list for Gold purchases, Russia and China, but there are more like: Turkey, and Kazakhstan… The reason the GATA folks sent me the note was to highlight that Poland also bought gold for the first time since 1998! 

To Recap… The currencies couldn’t hold onto gains after an Italian official spouted off about how Italy would be better off outside the euro, and that chopped the euro’s value off at the knees… U.S. Data (manufacturing index) was weaker once again, this one showed the beginnings of the Trade War’s effects. Gold lost a few shekels on the day, but the price of Oil continues to rise and allow the Petrol Currencies to at least hold onto their gains… 

For What It’s Worth… Debt is a real problem for a lot of Governments, states, corporations, and people. The one that could be gotten ride of first is the debt that people have… Longtime reader, and someone that supplies me with ample fodder to read each day, Bob, sent me this one and it can be found here: https://www.inc.com/ryan-jenkins/this-is-millennials-number-1-life-goal.html?cid=sf01001?utm_campaign=swirled&utm_medium=email&utm_source=newsletter

Or, here’s your snippet: “$42K, the average debt of millennials. Debt is not only impacting millennials’ ability to amp up their wealth and savings — 23 percent claim that money issues make them physically ill on a weekly or monthly basis. And 94 percent report that their number one financial goal is to pay off all of their debt.

About 67 percent of Millennials (versus 32 percent of Baby Boomers) say financial stress overtakes their ability to focus and be productive at work.

Sixty-eight percent of Millennials say debt has had a “negative impact” on their relationships with their spouse/partner, friends, and colleagues.”

Chuck Again… the thing I found promising in all these debt numbers is that 94% report that they number one financial goal is to pay off all of their debt… Do you see the problem with having all that debt is having on their ability to begin to build wealth, store wealth? It ain’t gonna happen as long as their focus is on paying off debt…

Currencies today 10/2/18… American Style: A$ .7178, kiwi .6583, C$ .7795, euro 1.1527, sterling 1.2958, Swiss $1.0162, European Style: rand 14.3983, krone 8.1855, SEK 9.0027, forint 280.88, zloty 3.7232, koruna 22.3728, RUB 65.39, yen 113.77, sing 1.3748, HKD 7.8350, INR 73.38, China 6.8679, peso 18.81, BRL 4.0341, Dollar Index 95.63, Oil $75.36, 10-year 3.06%, Silver $14.55, Platinum $821.00, Palladium $1,055.84, and Gold… $1,191.54

That’s it for today… Once again Welcome to new readers I sure hope you stick around as long as most of my current readers… It sure was good to catch up with my old Big Boss, Frank Trotter, yesterday. I hadn’t seen him in a month of Sundays… He still plays hockey! Simply amazing! Not much on the telly last night, but the Wild Card baseball game takes place tonight, which has so much tension in it as it’s a one loss and you’re done game… We’ll see who blinks first… ELO (Electric Light Orchestra) takes us to the finish line today with the live version of their song: Can’t Get It Out Of My Head…  I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!

Chuck Butler

 

Rocktober 1, 2018

* Currencies attempt to rebound after sell off 

* Gold continues to get whacked… 

Good day… And a Marvelous Monday to you!  Welcome to Rocktober! A longtime Pfennig Tradition of calling this month Rocktober continues… And if I’m about anything in life, it’s “tradition”… A great weekend on my part this past weekend, except my beloved Cardinals blew it and didn’t make the playoffs for the 3rd consecutive year… UGH! But other than that, my Missouri Tigers had a bye, I watched my darling granddaughter, Delaney Grace play soccer, and spent the better part of yesterday with my good friend Rick… I’m no longer employed by anyone, so that makes me officially retired, except I get up early in the morning to write this letter… for free! My dad used to have a saying, he’s say, “I had better get my head examined” , which is what comes to my mind when I wake up before the farmers and begin to write… But it is what it is… The Killers greet me this morning with their song: Somebody Told Me…

OK… well, Thursday morning the euro was trading at 1.1710, and that didn’t last too long, as the trap door under the euro was sprung, and by the end of the day it was trading with a 1.15 handle… All because the Fed hiked rates, and removed the “accommodative” wording from their statement… Need I remind everyone out there buying dollars because of the Fed’s stance, that 1. Interest rates are still only 2-2.25%, and 2. If the Fed is looking at 2nd QTR GDP as their key to hiking rates and being so hawkish, that they might want to step back and take a look at recent history…

Remember back in 2009, when economists and the government, saw “green shoots”? What happened to those green shoots? They saw their vines get brown and die… that’s what… And then we’ve had on couple of occasions in the past 9 years, where we saw a quarter of good growth, only to be disappointed the following quarter…

The Daily Reckoning (www.dailyreconking .com) highlighted these for me last week… check this out… In the first quarter of 2015, growth was 3.2%, but by the fourth quarter that year growth had fallen to a near-recession level of 0.5%.
In the third quarter of 2016 growth was 2.8%, but it fell quickly to 1.2% by the first quarter of 2017. In the third quarter of 2017 growth was 3.2% but then returned to 2.0% by the first quarter of 2018, about the average for the past nine years.

I shake my head in disgust at these numbers… and think, Hey! Oh, and don’t forget that year or so ago, I started writing about the tent revival in Global Growth, right? Well, guess what has gone to the wayside? That’s right Global growth… One day it’s here, the next day it’s gone…

So, this all plays well in the sandbox with my call before the 2nd QTR GDP printed that it was going to be like a star that’s about to burn out, that it shines the brightest right before the burn out…

The Fed Heads are out of touch with reality folks… They sit up in the Eccles Building and chart their dots for rate movements, without stopping to take a look around at the economy… The Trade War… and themselves!
So, as I’ve said before over and over again, let the Fed Heads keep hiking rates, they’ll have to reverse them sooner or later…

The euro got oversold on Thursday and recovered a bit on Friday and in the overnight markets last night, and trades with a 1.16 handle this morning. 

The BIG NEWS overnight has been centered on a New and Improved NAFTA… Where’s Ross Perot, when you need him to explain to the public what this is going to do? HA! Well, the New and Improved NAFTA won’t get the seal of approval from Congress until next year, and who knows, by then it could be completely different! But I have to say Kudos to the negotiators who got this done right under the deadline wire… 

The Canadian dollar / loonie, and Mexican peso are both beneficiaries of this new Trade deal, with the loonie out pacing the peso’s gains…  The loonie gets the extra push from the rise in the price of Oil late last week… Yes, don’t look now, because I’ll tell you…  The price of Oil is trading with a $73 handle, and continues to rise despite President Trumps desire to have a cheaper Oil price. 

The Russian ruble is also seeing a lot of love from currency traders and investors, as it is the leading Petrol Currency these days. I have to say that, once again, I’m quite impressed with Russia’s ability to work through the economic sanctions placed on it by the U.S. and European Union. 

A quick perusal through the economic calendars here and abroad, reveals that there’s just not much on the agenda of anyone’s Data Cupboard, until we get Retail Sales from the Eurozone on Wednesday, August Factory Orders here in the U.S. on Thursday, and of course with it being the first Friday of the month this week, we’ll see the Jobs Jamboree take place on the back-end of this week. 

There are a lot of “little data prints” along the way, but I’ve highlighted the real economic data prints for you. 

I haven’t seen the Trade figures from China, but all the reports coming from there have Trade figures falling by a significant amount, due to the tariffs and Trade War with the U.S. I’ve said it before, and I’ll say it again, nobody wins in a Trade War, and sooner or later, we’ll begin to see the Trade figures here in the U.S. also start to fall… I told you last week that the CEO of Ford Motor Co. blasted the steel tariffs and said that his company would lose $1 Billion because of the tariffs… That’s just the tip of the iceberg folks… There will be more losses, and strains on the already shaky economy… 

I say shaky economy, Jerome Powell says robust economy… I guess we’ll see who’s right, eh? I read this morning that 2/3rds of economists believe the U.S. will be in recession by 2020… I believe it will be before that, but then that’s just me being me… 

Longtime readers will recall me warning the Reserve Bank of Australia (RBA) for not hiking interest rates while there was a housing bubble going on in the country… Well, I read an article this past weekend that talked about the housing bubble… Look, folks, when the media finally gets around to writing about something it’s probably really to be over… But Australia isn’t the only country that’s experiencing a housing bubble… I’ve chronicled the housing bubbles in Toronto and Vancouver, and all they’ve seen to stop them is one 25 Basis Points rate hike from the Royal Bank of Canada (RBC)… When will these Central Bankers ever learn, when, will, they, ever, learn?

What on earth is going on with Gold these days? I was stopped by a longtime Pfennig Reader in a restaurant yesterday, and he asked me when Gold was going to begin to rise again?  I told him that the Chinese were controlling the price of Gold at the moment, with the blessings of the U.S. (because otherwise it would be illegal to do what’s being done!) And if the Trade War and tariffs ended, the governor would be removed from the price of Gold…  

I don’t know if you’ve been watching, but Silver has quietly moved higher while the price of Gold has been beaten around the head and shoulders. Silver’s moves are in cents, not dollars like Gold, but the moves are there, you just have to look for them! 

And what’s all this talk going on these days about lifetime earnings, and other socialism thinking? Last night I had a brief conversation with Alex’s girlfriend, Grace, who was telling me about a class she’s in that the professor is touting Marx and socialism… I said, OMG Grace, you’ve got to tell her that in the history of mankind Socialism has NEVER worked! And after she had gone, I sat here thinking that we as a country are in deep dookie, because that’s the $&# that young minds are being taught… God help us, that’s all I can say about that! 

Before we head to the Big Finish today, I wanted to mention the passing of Marty Balin, the lead singer of the Jefferson Starship, who’s record: Miracles, is one of my all-time fave recordings… RIP Maty Balin…

To recap…  The new and improved NAFTA deal has been reached by  U.S., Mexican and Canadian negotiators, and that has seen the loonie and peso receive some love from Traders. The price of Oil continues to ratchet higher, and gives the Petrol Currencies led by the Russian Ruble… Then Chuck goes all crazy on pointing out the blips of growth we’ve seen in the past years, only to be disappointed a month or so later.  

For What It’s Worth… Well, it’s happening again… Argentina has economic problems… The IMF is about to announce a funding for Argentina, but I don’t think that’s going to make a difference… I found this on Ed Steer’s Saturday letter (www.edsteergoldandsilver.com) and it’s about the Argentine rate hike and can be found here:https://www.zerohedge.com/news/2018-09-28/aregntina-hikes-rates-65-peso-plunges-new-record-low

Or, here’s you snippet: ” It appears the market is willing to test BCRA’s mettle as it pukes pesos down to a new record low against the greenback and pushes towards the bottom of its new “no intervention” band.
The new record low is now 41.54/USD…

While not ‘allowed’ to intervene directly until 44/USD, Bloomberg reports that Argentina just hiked its Leliq rate to 65%.

The sharp drop follows Thursday’s 2.8% decline and comes despite the IMF agreeing on Wednesday to increase its bailout package to the Latin American country by an extra $7.1bn.

Paging Christine Lagarde…”

Chuck again… Crazy stuff going on down in south America, eh? But what else is new there? 

Currencies today 10/1/18… American Style: A$ .7218, kiwi .6607, C$ .7816, euro 1.1610, sterling 1.3040, Swiss $1.0176, … European Style: rand 14.1109, krone 8.1432, SEK 8.9082, forint 278.55, zloty 3.6818,  koruna 22.1931, RUB 65.56, yen 113.98, sing 1.3699, HKD 7.8274, INR 72.81, China 6.8665, peso 18.53, BRL 4.0507, Dollar Index 95.11, Oil $73.42, 10-year 3.09%, Silver $14.56, Platinum $812.03, Palladium $1,056.93, and Gold… $1,184.64, 

That’s it for today…  Can you believe that the regular season for baseball is over? Man did that go fast or what? Or, it’s probably just me getting older, and thinking things go by fast! UGH! No Cardinals in the playoffs once again, this is not a trend, it’s become a bad habit! But I still love them anyway… Was that not the worst play call in the history of college football on Saturday night, when Penn St. tried to run the ball on 4th and 5, when they hadn’t been able to run the ball all night? Strange call indeed! And with that, Junior Walker and the All Stars take us to the finish line today with their song: What Does It Take?  I hope you have a Marvelous Monday, welcome to Rocktober, and remember to Be Good To Yourself!

Chuck Butler

 

September 27, 2018 

* Currencies back off on Fed rate hike

* RBNZ leaves OCR unchanged… 

Good Day… And a Tub Thumpin’ Thursday to you! Well, my memo to my beloved Cardinals… Pack up the bats boys, it’s all over but the crying… I did something different for me last night… I came home to hear Alex playing his guitar, and for some reason, I decided to join him. Picked up my guitar for the first time in a couple of years, and played a little bit… This will be short-n-sweet today folks, I promise! The Rolling Stones greet me this morning with their song: Dead Flowers… 

Well there were no surprises at the Fed’s FOMC Meeting yesterday, the Fed heads raised the Fed Funds Rate 25 Basis Points (1/4%) bringing the rate to 2.25%. Fed Chairman, Jerome Powell, didn’t make any dovish comments, and instead talked about the Fed remaining on the dot path, or so they think!, which would mean another rate hike in December, and then more next year.  It was as rehearsed a press conference as there could be, and it all looked very sterile and robotic…  I just don’t see how they are going to be able to connect all the dots next year… 

The currencies, led by the Big Dog, euro, lost a little ground, but nothing to get to panicked about, the euro, for instance, is still trading above 1.17, with most of the euro’s downward move from 1.1765 yesterday is the reporting of a major problem with Italy’s budget… There go those crazy third cousins causing problems again! 

The Reserve Bank of New Zealand  (RBNZ) left their Official Cash Rate (OCR) unchanged at their meeting last night… The OCR remains at 1.75%, and inflation at 1.50%… So, at least they don’t have real negative rates, like we have here in the U.S. but… 1.75% for the tiny island nation, isn’t going to get anyone too excited to buy the currency… UGH!   

The RBNZ said in their communique that as long as inflation remained below 2%, the OCR would remain unchanged through next year… Wait! They said what? Yeah, they said that…  I shake my head in disgust with myself for thinking that the RBNZ was ready to hike rates… The June GDP was better than expected, and the trend there is good… But apparently not good enough for the RBNZ… 🙁

Gold lost $6.70 in trading yesterday, and the price of Oil bumped higher by 10-cents… President Trump was at the UN yesterday, and by all accounts he ticked off quite a few people, refused a meeting with Canadian PM Trudeau, and then had to hear from the Ford CEO who claims that the steel tariffs have caused Ford to lose $1 Billion so far… 

We finally get some real economic data from the U.S. Data Cupboard today in the form of Durable and Capital Goods Orders… These two data pieces can be very volatile, but give a good picture of what went on in the month they are reporting from… The recent prints have been negative… But there’s a good chance that the August print will be a positive one… 

To recap… The Fed did hike rates yesterday, and stated that they remain on their dot path, which would mean another rate hike in December  and then more next year… The currencies backed off a bit, but most of the euro’s downward move came from a problem being reported with the budget in Italy.  And the RBNZ left rates unchanged and said that they would remain unchanged through 2019… Chuck is beside himself on this one folks… 

For What It’s Worth… I struggled with this one this morning folks… but finally decided that it was FWIW worthy… It’s about how the IRS continues to target conservatives, and can be found here: https://www.zerohedge.com/news/2018-09-25/i-dont-give-shit-if-its-crime-fourth-veritas-video-reveals-irs-still-targeting

Or, here’s the snippet: “James O’Keefe just dropped the fourth installment in his series exposing the corruption and bias in the ‘deep state’. This report features two Internal Revenue Service (IRS) officials who candidly discuss the IRS’s unfair treatment of conservative non-profit groups.

In a separate meeting, attorney Semasek discloses to Project Veritas multiple times that “mistakes were made,” during the 2013 scandal when conservative non-profits were targeted when applying for tax-exempt status.
SEMASEK: “… you know what, for what it’s worth, on the record, I know people in Tax Exempt Government Entities. All that stuff we saw in the news, yeah mistakes were made”
Attorney Semasek, who worked for the IRS during the 2013 scandal, continued:
SEMASEK: “… The law requires that an organization can’t be political, it can’t be partisan to be tax exempt… Those employees in Cincinnati Ohio started to separate them and put them in a pile. And it turns out that they were like the Tea Party group of people. And I think they did, like Lois Lerner and maybe some of her employees were more liberal leaning or Democrats so I don’t know if they disallowed them, but they required them to produce more documentation to try to prove that they weren’t partisan.”

He repeated that mistakes were made:
SEMASEK: “… and that was bad. I think, from what people tell me, that really know about, there were mistakes made, but the problem with what happened… And again, there were mistakes made, and I think probably some people that were advised against conservative groups did make some mistakes.”

Chuck Again…  I guess I had better be careful calling out the IRS, eh? 

Currencies today 9/27/18… American Style: A$ .7228, kiwi .6642, C$ .7657, euro 1.1710, sterling 1.3128, Swiss $1.0296, European Style: rand 14.1025, krone 8.1222, SEK 8.8243, forint 276.40, zloty 3.6515, koruna 21.9616, RUB 65.83, yen 112.82, sing 1.3648, HKD 7.8155, INR 72.46, China 6.8731, peso 18.91, BRL 4.0580, Dollar Index 94.50, Oil $72.22, 10-year 23.05%, Silver $14.41, Platinum $826.21, Palladium $1,082.00, and Gold… $1,193.91

That’s it for today… Strange day yesterday, the Fed hikes rates, and the 10-year Treasury’s yield drops 3 Basis Points… I know, short term rates VS 10-year rates, but still I would have thought it would move differently… I’m just saying… Tried out a new place in town last night, but I doubt seriously it would replace my usual Friday night place! Emerson Lake and Palmer (ELP) take us to the finish line today with their song: Still You Turn Me On… And with that, it’s time to go… I sure hope you can make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

September 26, 2018

* Currencies remain in dullsville…

* Europe finalizes their new payments system… 

Good day… And a Wonderful Wednesday to you! All the hope for a good series VS the team in front of the Cardinals has come crashing down all around us! UGH! It appears that the hard charge the Cardinals put on in August, and early September, is going to turn out to be for naught… But being the eternal optimist with this stuff, there are still games to be played, by all parties involved, so we’ll see…  Alvin Lee and Ten Years After greet me this morning with their song: Choo Choo Mama… 

Another day yesterday, and another day of tight trading ranges… The euro has been trading around 1.1765 for 3 straight days, and all the other currencies fall in behind with little to no movement coming in ahead of the Fed’s FOMC meeting today. 

Early this afternoon we’ll see the color of the Fed heads rate hike, and their outlook going forward… I really thought, earlier this year, that by now the Fed would be rethinking this rate hike cycle they’ve been in since 2015.  And I expect the dollar to reverse some of the losses it has taken on in the past week… There’s always that chance that the rate hike doesn’t lead to dollar strength, if the rate hike was already priced in by the markets. 

Gold can’t seem to shake the $1,200 level, which is fine with me, given the rate hikes and all that… Besides it sure does give investors looking to diversify with metals a cheaper price to buy, eh?  

The price of Oil has really moved higher ever since President Trump called for cheaper Oil prices…  And with the price of Oil trading in the $72 handle, the Petrol Currencies, led by the Russian ruble are at least getting a little love from traders. The ruble though, has pushed downward to below the 66 handle, and that looks pretty good to me.  The direction, that is…  Remember the ruble is a European Priced currency, so as the trading level of the ruble goes down, it’s really rallying, because it would take less of the currency to make a dollar. 

Since the currencies are in dullsville, I’ve been wanting to get this off my chest, so here goes… 

Yesterday, I told you that the negotiations on the Trade Talks between the U.S. and China had been ditched… And then I received word that China says that they can withstand the tariffs that have been placed on their exports by increasing domestic consumption, investment and business sentiment in order to protect the economy from the impact of U.S. tariffs.

Now, longtime readers may recall me telling them years ago that China was going to insulate themselves from another financial crisis in the U.S. by increasing domestic demand… They talked about increasing domestic demand, but then the world began to rebound and Chinese exports were once again leading the Chinese economy… Now fast forward to now, and look what China’s talking about again? Increasing domestic demand… Well, maybe this time they’ll take this challenge seriously, because they sure didn’t previously!

The thing that I think about all the time, is something my dad used to tell me when I was a young man… he would tell me that China is a sleeping bear, and we as a country had better not ever wake the sleeping bear up… All these tariffs might be the thing that wakes up the sleeping bear… Think about that for a minute, what country has the second largest economy, with a very large population? That’s right, it’s China… And IF China wants to seriously increase domestic demand, then watch out, because they certainly have the population to achieve that feat!

An economy the size of China’s with their export prowess, and a strong domestic demand economy, could rule the world! I mean that, I truly do, folks… And it looks like we could be waking up the sleeping bear…

OK… got that off my chest and I feel much better! The New Zealand dollar / kiwi, moved positively yesterday (small moves) on the news that New Zealand Business Sentiment had improved last month. The Business Sentiment is still negative, but the improvement of the index was very noticeable and so kiwi was allowed to move a bit stronger. 

While we’re talking about New Zealand and the kiwi, it would be a good thing to tell you that the Reserve Bank of New Zealand (RBNZ) will be meeting tonight, (tomorrow for them).  Late last year, the RBNZ was hinting about a rate hike coming by this summer… I jumped on that “hint” and told you dear readers that it was good thing to buy ahead of a rate hike… 

Well, things didn’t quite work out like I thought the RBNZ was hinting at, but the RBNZ could save face with me, if they hiked rates tonight…  Unfortunately, that’s not going to happen, and once again we’ll be looking for any new hints in the statement following the no rate move announcement. UGH!

It appears that Europe has finalized their development of a payment system that would be outside of the dollar and the U.S.’s control.  So, as I’ve previously talked about, now Europe has a payment system, and Russia / China have their payment system.. Mark you journals for this will be the cause of the dollar losing its reserve currency status…  It’s not going to happen overnight! But as these payment systems begin to be used, and used more, the reliance of countries on dollars will be removed… I’m just saying… 

The U.S. Data Cupboard yesterday had the Case/ Shiller Home Price Index for July, and it showed that home prices had slipped for a second consecutive month…  I’m not sure what to think about that, other than if this is a trend, it’s not going to be a good thing…  But two months of data isn’t exactly an etched in stone trend… So, we’ll have to keep an eye on this data next month… 

The Fed’s FOMC Meeting takes place today, and that is the only thing listed on the Data Cupboard’s roster on this Wonderful Wednesday! 

To recap… The currencies are in dullsville, Gold can’t get past $1,200, and the price of Oil is still rising. Chuck gives us his thoughts on waking the sleeping bear, and Europe has finalized the development of an alternative payments system to SWIFT… 

For What It’s Worth… OK, since the markets focus today will be on the Fed’s FOMC Meeting, I thought this piece that the MarketWatch people sent me is FWIW worthy, especially on rate hike day here in the U.S. and the article can be found here: https://www.marketwatch.com/story/a-first-ever-fed-september-interest-rate-hike-could-set-stocks-reeling-wednesday-2018-09-25?mod=MW_section_top_stories

Or, here’s your snippet: “With the Federal Reserve all but certain to raise interest rates on Wednesday, investors may need to brace for sudden, unexpected market volatility as stocks have been underperforming on Fed Days in recent months.

Data published by Bespoke Investment Group Tuesday indicate that stocks, on average, fell 0.13% on the last 10 times the central bank held its policy meetings.

Adding to potential trouble, George Goncalves, head of U.S. rates strategy at Nomura, notes that a Wednesday rate hike would mark the first time that the Fed has tightened in September, a month in which the stock market historically has not performed well.”

Chuck again… At some point interest paid on money market account and band deposit accounts will be competition for the stock market. It’s difficult to call at what rate that would come into play, but it’s getting close, I can feel it… 

Currencies today 9/26/18: American Style: A$ .7258, kiwi .6656, C$ .7720, euro 1.1762, sterling 1.3153, Swiss $1.0340,     European Style: rand 14.2843, krone 8.1155, SEK 8.8222, forint 275.20, zloty 3.6427, koruna 21.7574,  RUB 65.78, yen 112.90, sing 1.3652, HKD 7.8121, INR 72.51, China 6.8647, peso 18.97, BRL 4.0952, Dollar Index 94.21, Oil $72.12, 10-year 3.08%, Silver $14.47, Platinum $827.11, Palladium $1,064.50, and Gold… $1,198.74

That’s it for today… I had a great lunch yesterday with good friend Duane, as we visited a new lunch place for us… Then sat outside to watch the baseball game with good friend Mike, but we only lasted 5 innings… My oncologist wasn’t none too happy with me yesterday, when I told her about my recent nasty fall… She wanted to wrap me in bubble wrap!  I guess she likes me? And why wouldn’t she? Everybody likes Chuck! HAHAHAHAHAHA! Stevie Ray Vaughn takes us to the finish line today with his song: The Sky Is Crying…   I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

 

 

September 25, 2018

*Currencies back off their highs from last week… 

* Gold is kept on a short leash… 

Good day… And a Tom Terrific Tuesday to you! I have an early morning appt. with my St. Louis oncologist this morning, so this will be a shorter than usual Pfennig today. With that said, my beloved Cardinals started their last three games at home against the team that’s in front of them in the standings… I would like to say that I was able to stay up to watch the entire game, but that would be a lie… I went to bed with the game tied 4-4…  I dropped my wife off at the airport yesterday morning at 4:25 am, so I have an excuse! And I see that the Cardinals lost the game… Uh-Oh! Ok, The Guess Who greet me this morning with their song: No Time…

Well, the currency moves from last week didn’t exactly continue through yesterday, and if anything we saw a bit of selling… I told you that I didn’t think the currency rally would last through Wednesday’s FOMC rate hike but I didn’t think it would end on Monday! UGH! There’s really not much in the way of economic data this week here or abroad, so the FOMC Meeting has the spotlight… What will Fed Chairman Jerome Powell say afterward? Will he revert to his somewhat dovish words of about 3 weeks ago? Or will he say the Fed needs to go onward and upward? I’m thinking that he might be feeling the heat of the weaker economic data, and will want to give himself some wiggle room going forward with rates…

The Trade War digs in its heels as the U.S. and China agree to halt talks on Trade negotiation… I feel sad about this, as I really thought that talks would be the way to get this done without throwing the two largest economies under a bus! But when one of the negotiators doesn’t really have their heart into the negotiations, well… It’s needless to say that things just don’t get worked out when that happens, right?   And I hear you asking, so, was it the U.S. or China that didn’t have their heart into negotiations?  Come on, really? This is a layup… it’s the U.S. folks, sad to say… 

OK… So, European Central Bank (ECB) President, Mario Draghi, said in a speech yesterday that “he sees a “relatively vigorous” pickup in underlying inflation”… And that, my friends, is the first sign, albeit hidden from the masses, but not me, of the ECB’s intention to begin to raise rates before next summer…  But then this morning, Peter Praet, a member of the ECB’s board, played down Draghi’s remarks with a comment of his own… 

Longtime readers will recall me talking about how traders don’t like it when Central Bank members don’t sing from the same song sheet, right? Well, this is what the euro has had to face, along with the pressure the dollar and the Fed rate hikes has added to the euro. I was reading about how there are so many short positions with euros, that a short squeeze could happen at any time… And then I thought to myself, well, we saw a big jump in the euro late last week, and that didn’t trigger a short squeeze, so I doubt the euro can hang its hat on that thought, as a way to get back to at least 1.20… 

Gold traded in a wash, rinse, repeat cycle yesterday, as it would climb to $1,200 and then get beaten back below the figure, only to see it rise up again, only to be beaten back down… This morning, the shiny metal is back to $1,200… But for how long? Well, probably, just as long as it takes for the boys in the band to get their instruments tuned…  

There’s something else that’s going on that scares the bejeebers out of me…  I’ll call it the great unwinding of safe havens…  Gold, euros, yen, and Treasuries have all been on the selling blocks lately, and it all looks to me as if the markets and the participants have all gone all-in on removing safe havens…   And if that’s the case, then we’re in for something that could be very ugly… 

It’s not good when everyone moves to one side of the ship, right? it’s not good when everyone wants a pet rock, right? And so on… And it’s not a good thing when everyone is buying dollars, and selling the contra currencies and assets that act as a governor, if you will.  And that’s what’s happening… right here, right now…  I’m just saying… 

I just used a term that I’m sure most youngsters have no idea what I’m talking about… a governor…   Well, that’s too bad, but… you always have Google to explain it to you! And since Google, Facebook, and Amazon are out to rule the world, you’ll be in good hands…   Of course I’m smiling like the Cheshire Cat, and chuckling to myself, here, alone in the dark basement with only my desk light to illuminate the area, where I’m writing… 

I told you yesterday that the data in the U.S. and abroad would be skimpy this week, with the FOMC rate hike in the spotlight… But we will see the color of New Zealand’s Trade Balance for August today… Since New Zealand is an island nation, and they depend on imports for just about everything that isn’t sheep, lumber and dairy related, which means their Trade Balance is usually a deficit… The key with New Zealand is that their exports balance out the imports as best they can… We’ll get a snapshot today of whether the key was turned… 

So, did you celebrate the Queen’s birthday yesterday? HA!  Hey! Did you hear that N. Korea’s Kim, has requested a meeting with President Trump? I sure hope it’s to get to signing an agreement to denuclearize, and not just leave with a handshake… 

A handshake used to mean something in business… Bank loans were gotten with just a handshake, cars were purchased, and mergers were agreed upon with just a handshake… But those days have been long gone for some time now, and that’s what got my goat when the last meeting between these two ended with a handshake to denuclearize N. Korea… Get it in writing, or wear a wire for goodness sakes!

The U.S. Data Cupboard has the Case/Shiller Home Price Index for July to view today… Last month, we saw home prices slip in June… So, this report is important in that it would confirm or deny a trend…  

In the errors and corrections section… Well, I wrote a BIG mistake yesterday… I said Russia had imported tonnes of Gold last month, when I meant they had imported 1 million ounces… UGH! Oh well, can’t win ‘em all, right? I do my best, to be accurate, folks… 

To recap… The currencies rally last week ended on Monday, but the downward moves were muted. Everyone has their eyes on tomorrow’s FOMC announcement and press conference. Chuck is seeing an unwinding of safe havens, is this a good thing? Chuck thinks not! And Draghi sees an uptick in inflation, is that his way of greasing the tracks for an earlier than next summer rate hike? Chuck thinks so… 

For What It’s Worth…  This is an interesting piece as it compares network news to professional wrestling… Ah, the days of wrestling at the Chase is in my memory bank… But this writer, gets to the heart of what’s wrong with major media these days, and it can be found here: https://internationalman.com/articles/professional-wrestling-and-the-media/

Or, here’s your snippet: “As a boy, I was quite non-violent, but I confess to having been fascinated with professional wrestling. For one hour, every Saturday morning, I’d watch Yukon Eric, Haystack Calhoun and Killer Kowalski attack each other in the ring in what was called, “professional wrestling.”

Of course, even as a boy, it was evident that it was a sham. Some wrestlers played the role of angry bullies; others were practically cartoon characters. The threats each made to the other before the match, the silly outfits, the absurd holds and body slams – it was clearly phony.
But, as adults, we’ve matured and are no longer so easily taken in.

Today, as responsible adults, we turn off wrestling and watch network news.

Some reporters play the role of angry bullies (Bill O’Reilly, Sean Hannity, etc.); others are practically cartoon characters (Greg Gutfeld, Rachel Maddow, etc.). And, like wrestling, it’s so compelling – watching liberals and conservatives trying to out-shout each other on the stage. Clearly, this is not objective, sober news-reporting, but it’s most certainly producing the desired effect – to get those who are gullible enough to tune in every night to receive the latest updates on a ceaseless rehash of recent events.

In recent years, the average viewer has begun to admit that this is largely a stage show; that conservative networks present a dramatically-skewed conservative slant, whilst liberal networks present a dramatically-skewed liberal slant. This practice has become so extreme that, if the viewer can force himself to flip back and forth from one station to the other, the same news event actually appears to be two different occurrences, the reporting is so divergent.”

Chuck Again… I believe I saw a Rick Flair imitator on TV news the other night! HA!

Currencies today 9/25/18… American Style: A$ .7247, kiwi .6646, C$ .7720, euro 1.1765, sterling 1.3148, Swiss $1.03.53, European Style: rand 14.3672, krone 8.1315, SEK 8.7911, forint 275.13, zloty 3.6458, koruna 21.7715, RUB  66.06, yen 112.87, sing 1.3655, HKD 7.8094,  INR 72.62,  China 6.8549, peso 18.98, BRL 4.0627, Dollar Index 94.17, Oil $72.42, 10-year 3.11%, Silver $14.31, Platinum $832.30, Palladium $1,060.82, and Gold… $1,200.30

That’s it for today… Well, in the end, the Pfennig wasn’t shorter than usual after all! How about that? My fat fingers must have been flying all over the keyboard this morning trying to keep up with the thoughts coming out of my head! HA! My beloved Cardinals have their backs against the wall now, will they come out fighting? I sure hope so! Have you ever been in a brawl, with your back against the wall? I have, and the only way out is to come out fighting… Hello, McFly? Are you listening? Sugar Ray takes us to the finish line today with their song: Every Morning…  And with that, let’s get to making this a Tom Terrific Tuesday! And remember to Be Good To Yourself!

Chuck Butler