Author: admin

July 23, 2018 

* Currencies and metals rally on Friday!

* Trump doesn’t appreciate the rate hikes!

Good Day… And a Marvelous Monday to you! A very nice weather-wise weekend here in the St. Louis area, led to a lot of outside time for me! Warm but not excessive heat, I loved it! My beloved Cardinals didn’t have the weekend series with the rival Cubs turn our the way they wanted… But boy did Matt Carpenter have “a day” on Friday… I texted my baseball buddies yesterday to say, that I have officially given up on Marcel Ozuna, not that most of you care, but that’s pretty bad when I give up on a player… I sure hope he proves me wrong! Yes, greets me this morning with their classic rock song: Roudabout…

Well, Friday’s price action in the currencies saw the dollar’s worst day in over two weeks… Seems the dollar bugs got spooked when President Trump not only blasted the Fed and their rate hikes one day, but came back for more for day two! Seems that Trump doesn’t appreciate the Fed hiking rates after all he’s done to improve the economy (tax cuts)… I don’t see this having any affect on Jerome Powell, and his band of Fed Heads from proceeding with their rate hikes, but I guess one always has to have in the back of their mind, that the President isn’t happy with them!

So, the euro, which on Thursday morning was hovering around the 1.16 handle, going back an forth around the handle. But by Friday’s end of the day/ week, the euro was 1.1745… I’ve told you all this before, but for any new readers here goes… The euro is the offset currency to the dollar, so when the dollar gets sold, the euro rallies, and vice versa… The recent trading has seen the dollar on the rally tracks just about every day, so the rain on the euro’s parade was quite heavy at times.

And Gold was allowed to rally closing on Friday up $9.20 on the day VS Thursday’s close. Boy was I ever mesmerized by Grant Williams’ Things That Make You Go Hmmmm…. Last night… He printed his speech from the recent Vancouver Conference, and in it he points out something I used to tell people all the time… In fact, a few years ago in hills outside of Atlanta, Georgia, where the EverBank managers were having a retreat, I told the people there that if Richard Nixon hadn’t removed the dollar from the Gold standard, that they wouldn’t be making so much money these days… I also told them that we wouldn’t be looking at a $15 Trillion debt, and unfunded liabilities of nearly $100 Trillion (remember this was a few years ago)… We, as a country had been growing by leaps and bounds, until the debt reached a limit where it took too much effort and attention to service the debt, and that’s when the economy began its Japan-like decade of relatively no growth…

Grant Williams pointed out that we are a need of a new Gold Standard… Again, about 6 years ago, a reader sent me a note and asked me why the U.S Gov’t didn’t just sell its Gold to pay off the debt? I then put pencil to paper, and did some math… and responded that selling the Gold at the price at that time wouldn’t put a dent in the National Debt… However, if the Gov’t wanted to reset the price of Gold, to say $10,000 per ounce, then they would have something! A reset of the Gold price wouldn’t be the first time this was done… Remember FDR confiscated everyone’s Gold and then reset the price of Gold up 75%!!!!! And then made it illegal to own Gold or trade it… We all know that’s been changed over time, but the reset is the most important thing…

Things That Go Hmmm… is a paid for subscriber newsletter, and it’s well worth the cost of admission, so just Google it or Grant Williams and you’ll find it… I rely on his newsletter to set me straight from time to time!

OK… Well, did you see/ hear about the tweet that President Trump sent out last night directed to the Iranian President? WOW! Very Strong words, but now that he’s gone to DEFCON 4 with this message, what happens if Iran ignores it and continues to threaten America?  There’s no backing down now… In case you missed it here’s the tweet: “To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!”  

Now, I’m not about talking about the President’s Tweets, but I thought for sure that this tweet would be a market mover for Gold… But a quick look at the shiny metal this morning, shows that’s just not the case, as Gold is flat as a pancake (Head East)…  

I told you last week, that what I needed was some time with my long time friend, and former boss, Frank Trotter, to help me with understanding what the heck is going on in the markets… What should be down is up, and what should be up is down…  He read that in the Pfennig, and fired off a note to me telling me this: “Things here in the US are simply madness to me. Pick a topic and rational analysis and decorum seems to no longer apply. The residents are running the insane asylum and people seem okay with that.” 

I have a call scheduled with Frank today, so hopefully he’ll be able to perform those old Jedi mind tricks on me, and I’ll hang up feeling much better about the goings on in the currencies and metals! 

The overnight markets have once again been unkind to the euro, and other currencies… Gold was able to hold its Friday gains, but not so much the euro, which gave back 1/4-cent of its gains overnight  last night.  UGH! You don’t think it’s the European Central Bank (ECB) doing the euro selling overnight do you? I mean, they need a weaker currency to help introduce inflation in their country, (they think!)…  So, they have the motive, they have access to the currency markets, so they have the weapon… Uh-oh! 

But they wouldn’t do that would they? Sell their own currency? In this day and age, I have no doubt they would…  But let’s just say that it’s not the ECB, then who?  The Russians and Chinese would much rather see the euro gain VS the dollar, as they have no qualms about telling the world that it needs a dedollarization…  

I sent off my DTL piece for this Thursday yesterday… And I’ll give you a snippet of a topic I discussed in the letter. And that is about the Russian ruble…  Think about this for a moment… What country has a Trade Surplus? What country has seen their inflation drop from near 10% to less than 3%? What country has seen economic growth, despite economic sanctions placed on them? And what country other than China has gone bonkers with Gold accumulation?  And more importantly, what country hasn’t gotten caught up in the currency wars going on right here, right now?  There’s only one answer to these questions and that is Russia, and their currency the ruble is a currency that I tend to believe should be stronger and would be if the euro got on a roll VS the dollar… 

I’m not a cheerleader for Russia, folks.. I’m just pointing out the facts that lead to a potentially strong currency… I can’t find many currencies these days that warrant getting pointed out for having a potentially strong currency!  

The U.S. Data Cupboard doesn’t have much for us in the early part of this week, with only Existing Home Sales and New Home Sales dominating the first two days of data prints this week. It’ll be Thursday when we finally see a piece of real economic data, when Durable Goods and Capital Goods Orders print for June. By the time that data prints on Thursday, I’ll be 35,000 feet in the air, on my way to my summer vacation! 

To recap… The currencies turned around and rallied on Friday, but saw some of those gains of Friday, given back in the overnight markets last night… Chuck points out, using his CSI training, that the ECB looks to be the perp we’re looking for with regards to who is selling the euro in the overnight markets?  Gold did gain $9.20 on Friday, and is flat this morning, so maybe that’s the start of something, eh?   And Chuck points out that Gold should be rallying on the President’s latest tweet, but it’s not… UGH!  

For What It’s Worth…  I thought that since I went on and on about Russia and the ruble this morning, that this article about Russiaphobia fit nicely in the FWIW section today, and it can be found here: https://www.rt.com/usa/433798-russophobia-us-russia-war/

Or, here’s your snippet: “Russian demonization and Russophobia have gripped the U.S., where politicians would rather impeach Trump than avert a nuclear war with Russia, professor emeritus at both Princeton and New York Universities Stephen Cohen believes.

While U.S. media and establishment still cannot settle nerves after Trump-Putin summit in Helsinki, Cohen, who is also contributing editor at The Nation, and Chicago University professor John Mearsheimer, bashed the Russian bogeyman approach in an interview to Vice news.

Cohen has been labelled as Russian president’s apologist, with “tsunami” of attacks on him. However, the scientist says that those people are just uninformed, with Mearsheimer adding many refuse to engage in fair dialogue with both of them merely because they would “lose the debate.”

“We’ve demonized Putin and we’ve putinized Russia, so we’ve demonized Russia. Russophobia is running amok in this country.” Cohen said. “I’ve seen these things from the inside. I’ve re-thought and re-thought how we got to the edge of war with Russia, where we haven’t been since Cuba in 1962. And I have concluded it is 95 percent our own doing.”

Chuck again… It’s all strange to me what’s going on folks…  but I do believe it’s all the discord between the parties, and the parties’ followers… I’m just saying… 

Currencies today 7/23/18… American Style: A$ .7410, kiwi .6810, C$ .7610, euro 1.1712, sterling 1.3240, Swiss $1.0083, European Style: rand 13.49, krone 8.1526, SEK 8.8342, forint 278.32, zloty 3.69, koruna 22.0585, RUB 63.12, yen 111.10, sing 1.3633, HKD 7.8474, INR 68.68, China 6.7685, peso 19.07, BRL 3.77, Dollar Index 94.46, Oil $69.08, 10-year 2.88%, Silver $15.49, Platinum $832.15, Palladium $894.02, and Gold… $1,230.38, and the SGE Gold price $1,232.32

That’s it for today… Up all night again last night… I’ve been sleeping like a baby, up every 3 hours! But I don’t have a tumor in my mouth any longer! I’m happy to trade the tumor for sleepless nights! My St. Louis oncologist, told me that my recent scans said there were two very small nodules on my lung, but that they hadn’t grown, so they’re not sure what they are… I told her, that with my history, we all know what they are…  But they aren’t growing which means the medicine is keeping them in check… I never smoked one cigarette in my life… go figure!  OK, enough of that! I have two more Pfennigs to write (Tuesday and Wednesday) and then you’re on your own for the next two weeks…  My darling granddaughter, Delaney Grace, continues to perform on the Muny stage each night with the closing night coming this Wednesday. And with that, the band, Looking Glass takes us to the finish line today with their song: Brandy…  One hit wonders, eh? I hope you have a Marvelous Monday, and remember to Be Good To Yourself!

Chuck Butler

 

 

 

 

July 19, 2018  

* Euro loses a full cent!

* Gold sees an $11 gash this morning! 

Good Day… And a Tub Thumpin’ Thursday to you! I’m hoping to recharge my batteries early this morning, so I am able to participate! It was a very late night for yours truly, but one that was well worth it! Delaney Grace was on stage at the Muny! If you’ve ever been to St. Louis in the summer, you’ve probably heard or had the opportunity to see a production at the Muny… And there was my little bundle of joy, dancing and singing on the stage! She was GREAT! And she’ll be back on stage for nightly presentations of ANNIE for a week! The Kinks greet me this morning with their song: Sunny Afternoon… 

Well, I think I had better be getting my things in order to walk away from all this… Recall I told you a couple of weeks ago that if things didn’t work they way I described them that I would have to really “retire”, as my credibility would be shot!  And judging from what happened in the overnight markets last night, I’ve got one foot out the door… 

So, let’s get to it…  Yesterday late afternoon, I checked to see how the markets were behaving, and things looked a bit better, the euro had climed higher within the 1.16 handle, Gold was holding its own, and things seemed calmed down… But that was all put to bed last night, the currencies, led by the Big Dog, euro, got trashed once again, and Gold is down $11.30 in the early morning trading today… 

It doesn’t help the currencies when one of the major currencies, is dropping like a rock, as the rate hike thoughts have turned to mush for pound sterling… This morning they printed their latest Retail Sales report and it was negative! OUCH!  That’s going to leave a mark! Yes, a June print for Retail Sales in the U.K. was a negative -0.5%!  

There’s been not a peep from the European Central Bank (ECB) and so the currencies aren’t even fighting back… They are acting like the 90lb weakling that gets sand kicked in its face by the big bully (dollar), and cowers in fear and doesn’t dare fight back. 

I hesitate to even mention this, as I’m sure I will be putting the old jinx on it, but with all the currencies getting whacked, there is one that needs to be singled out for not getting caught up in the dollar buying…  The Canadian dollar/ loonie has quietly moved higher by 2-cents in the past week…  

Gold yesterday traded down 10-cents… marking two days of trading and about 500,000 contracts for the two days, and not even a full $1 movement in the two days, that is until this morning.  I read a piece/ opinion on gold this morning on Bloomberg, and since it’s not what I would like to hear, I think you need to read at least a piece of it… 

“The gold chart is incredibly ugly these days. The precious metal is at its lowest level in more than a year, having fallen by over 10 percent since early January. But what’s even worse is that bullion has become boring. A few years ago, in the pre- and post-crisis era, it got tons of attention. Now nobody outside of some die-hard enthusiasts really care. Even critics don’t spend much time on gold, with many of them having moved onto bashing crypto. Still, one must marvel at the cognitive dissonance gold bugs need to have. They argue that the economy remains in a gigantic bubble that’s being held up by central bank stimulus all over the world. And yet gold is meant to be a check or a hedge against precisely that behavior. So either gold isn’t working as advertised, or the economy isn’t the gigantic scam it’s made out to be. It’s basically one or the other. All this being said, just because the bull story has collapsed, it doesn’t mean its argument is flawed.” – Bloomberg 7/19/18

Chuck Again… To that, I would say, yes, what you say is correct, but what you left out, is that physical Gold isn’t allowed to trade on supply/ demand mechanics, that there’s just too much interference from the paper trades, and as long as that scenario exists, people like me that believe in Gold as a store of wealth, will have to hear about how Gold is failing to live up to its historic performances… 

OK, since this is all going on this morning, I think it would be best for me to go through a short list of reasons why this dollar rally is on a wobbly three legged stool…  So, the Fed says they’re on pace to continue hiking rates (which has helped the dollar turn around), but what happens when the rug is pulled out from under the economy? And more so, out from under inflation?  Well, that would be the end of the rate hikes, that’s what! And here’s a hint of what I’m talking about… Real average hourly earnings haven’t managed to rise in any of the past three months. What does this tell me? Well it tells me that inflation is falling again, and I wonder why? Oh, that’s right, Chuck, you told us all two years ago what Fed Rate hikes were going to do for inflation! 

Now… for all of you who do not believe me that we are a country that has gone from making things to sell, to buying things, and receiving things for doing nothing, take a gander at this info I pulled from Paul Ryan’s twitter page yesterday… “The last time unemployment levels were this low, there were 17 million SNAP recipients. Now there are 42 million.”

42 Million SNAP recipients? Are you kidding me? That’s really strange for a country that is supposedly at full employment (even with 95 million people still looking for work), and an economy that’s robust, (but could only muster 0.5% growth in Retail Sales in a month full of graduation gifts!)  Smoke and mirrors, folks… That’s what the Fed and Treasury are using on you, to make this all look good…  But, if this (dollar strength) is what comes of all this, then I give up… Raise the white flag….  Because all that I’ve learned in economics and currency valuations is being thrown out the window, folks… 

But I’m still here, talking about it, so no worries about me… I’ll continue to talk about how this doesn’t make sense, point out the things that worry me, and should worry the markets, but don’t… 

The U.S. Data Cupboard doesn’t really have much for us today, and yesterday it had housing data that showed June data on Housing Starts that fell from 1.337 Million in May to 1.173 Million in June… And like I just said there’s not much today, so more dollar buying will take place given that if there’s no real data printing, there’s no bad data printing to soften the dollar! 

To recap… It was a very ugly night for the currencies and metals, with the euro down 1-cent, and Gold down $11.30 in the early morning trading. Forget the Trade War, forget the exploding debt here in the U.S., forget the fact that there are 42 Million SNAP recipients… 

For What It’s Worth…  this morning’s FWIW piece come to us courtesy of the WSJ and was sent to me by long time reader, Bob…  (thanks!) it’s about the rising debt here in the U.S. and you’ll have to have a WSJ subscription to read it all…  

Or, here’s your snippet: “WASHINGTON—The Trump administration expects annual budget deficits to rise nearly $100 billion more than previously forecast in each of the next three years, pushing the federal deficit above $1 trillion starting next year.

The revisions, which went largely unnoticed when the White House submitted its annual update to Congress last week, reflect the cost of federal spending increases agreed to earlier this year and higher interest payments.

The budget proposal released in February showed annual deficits totaling $7.1 trillion over 10 years. The latest revisions increase these cumulative deficits by $926 billion, to $8 trillion.”

Chuck again… And I’m so sure of this if I were a betting man, I would be the farm that even these upward revised numbers will be low, when the final tally comes in… I’m just saying… 

Currencies today 7/19/18… American Style: A$ .7342, kiwi .6730, C$ .7705, euro 1.16, sterling 1.2980, Swiss $.9975, … European Style: rand 13.4460, krone 8.25, SEK 8.9350, forint 280.86, zloty 3.7330, koruna 22.3438, RUB 62.90, yen 113, sing 1.3723, HKD 7.8494, INR 68.91, China 6.7144, peso 19.06, BRL 3.8393, Dollar Index 95.49, Oil $68.23, 10-year 2.88%, Silver $15.28, Platinum $799.66, Palladium $893.72, and Gold… $1,216.21

That’s it for today… and this week… I’m going to need to find my old boss and friend, Frank Trotter, for when we worked together and things didn’t make sense a visit with Frank would help me to sort things out… Frank? are you out there? Last night was just perfect for sitting outside at the Muny, as the heat backed off, there was a nice summer breeze,  and my little d, as I call her, Delaney Grace was on the stage! My beloved Cardinals get back on the ballfield tonight so good luck to them for the 2nd half of the season, may it be much better than the first half was! One 3 more Pfennigs next week, and then I’m on my annual summer vacation! And with that thought… The Commodores takes us to the finish line today with their song: Brick House…  That song will get you dancing in your seat! Ok, I hope you have an opportunity to make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself! 

Chuck Butler

 

 

July 18, 2018  

* Gold gets whacked badly!

* Currencies get sold again!

Good Day… and a Wonderful Wednesday to you! I had a great time with my grandson, Braden, yesterday, and at the end of the day he said I was his BFF! Well, I can tell you this right here, right now, that the title BFF wouldn’t last 2 minutes if I refused to let him swim in the pool! But for now, I’m beaming like a proud BFF… The All-Star Game last night, was pretty light on highlights, and after about 4 innings, it no longer held my attention! And no I’m not ADHD! Or whatever the letters that are used to describe someone with no ability to focus and sit tight! I did see this morning though that 10 home runs were hit in the game that ended up 8-6 AL… Bob Marley greets me this morning with his song: 3 Little Birds… Don’t worry, cause every little thing is gonna be alright…

My Monday Pfennig was titled: Could We All Just Get Along? And after the Helsinki summit where President Trump met Russian President Putin, I need to repeat that over and over again… How in the world can Trump’s detractors rail on him for meeting with Putin? I shake my head in disbelief! Oh, and before you think this letter has gone political, I’ll just point out that I’m no fan of the Trump tariffs, I’ve said it, defended it, and will do it again!

Well, Monday’s “nothing day” when the currencies and metals were stuck in the mud ended when the beginning of Tuesday morning’s trading began… Once again, the currency rally of Friday last week,, was wiped out with dollar buying on Tuesday. So it was a turnaround Tuesday for the dollar… I have no idea why, other than the stuff that came out of the U.S. Data Cupboard, which you could have had a positive knee-jerk reaction to, but real traders would have looked at last month’s negative -0.5% print, and then compared this month’s (June print) 0.6% gain, and call it basically a wash… But I’m sure some boy-genius, said that this is the start of a trend, and bought dollars…

The euro lost the 1.17 handle, and all the other currencies followed the Big Dog, and were sold too… And Gold? It got sold like funnel cakes at a State Fair, and most of it was paper trades.  But they get to drive the price of Gold down, and since there are more of them than the physical trades, guess who wins? The short Gold paper trades totaled 268,000 yesterday, quite a bit more than usual for a summer day…  As of last Saturday, Ed Steer (www.edsteergoldsilver.com) showed that it would take 60 days of Gold production to cover the amount of ounces sold short in the paper trades. And yesterday’s trading showed trades were entered for Gold, with the probability of a large number of those being short Gold paper trades, being very high! 

The selling in Gold s live leaving blood in the ocean for the sharks to come in a take a bite out of what’s left, and that’s what going on this morning, as Gold is down another $5 in the early morning trading today… 

Speaking of short paper trades… the number of days of production that’s needed to cover the total ounces sold short in Silver is… are you ready for this? … . 216 days, which is a bit over 7 months of world silver production…

The GATA folks sent me this email last night, check it out… “Craig Hemke of the TF Metals Report, writing at Sprott Money, reports tonight that in recent months India’s demand for silver has been running at record levels. But Hemke adds that paper silver traded on the New York Commodities Exchange trades every two days more silver than the world produces in a year.

“Led by India,” Hemke writes, “the world is on pace to consume all the silver produced in 2018, yet the dollar price of silver is now down over 10 percent year to date. That’s a dichotomy that must soon rectify itself. Either physical silver demand will crash before year-end or the paper price will be forced to respond as it did in 2016.”

I shake my head in disgust that this continues to be allowed to go on…  

The price of Oil also saw selling once again, and what for a fleeting moment about 10 days ago, looked like the Price of Oil was heading to $80 and higher?, has been wiped out… And the price of Oil is trading with a $67 handle this morning… I alluded to the ideal of some price shenanigans with Oil yesterday, and I truly believe it to be true, that there’s something else at work here… And it’s not just the increased production from the Saudis that have caused the price of Oil to drop like a rock in the past 10 days!

In The U.K. this morning, they posted their latest CPI (consumer inflation) and it fell… Core CPI dropped to 1.9%, a 15 month low, and out the window went any remaining hopes of a rate hike soon here… And Bank of England (BOE) Gov. Mark Carney? He was nowhere to be found, because he’s hoping that if he stays out of sight, it will be a out of sight out of mind experience for him, and he has egg all over his face right now…  I shake my head in disbelief that the markets were fooled once again by this man’s bag full of promises to hike rates… Tsk, Tsk Tsk.. 

I’m doing a lot of shaking of my head this morning, so I had better wrap this up soon, or I’ll be getting dizzy!  I already talked about the outcomes in the U.S. Data Cupboard yesterday, but we did also have the first of two testimonies by Fed Chairman Jerome Powell to lawmakers. And like I said yesterday, he didn’t tell us anything new, it was the same old yadda, yadda, yadda…   But I did pull this from his speech, and while reading it I bet you’ll be able to tell me why I highlighted this section…  Ok… here we go… 

“Powell said the unemployment rate is expected to fall further and the Fed’s challenge will be to keep inflation close to 2%. Key unknowns are the outcome of the ongoing trade disputes and the impact of the Trump tax cuts and boost in federal spending, he said. “Overall, we see the risk of the economy unexpectedly weakening as roughly balanced with the possibility of the economy growing faster than we currently anticipate.” 

Yes, just like a two handed economist right? on one hand we could see this, and on the other hand we could see this…  And why did he come out with that two handed statement about risk to the economy weakening as balanced with the possibility the economy could grow faster?  Because he’s greasing the tracks for whatever outcome comes about, and he be able to say, “see I told you”…  

There’s not much in the U.S. Data Cupboard today except some Housing Data, that I just don’t see as market moving at this point.  Powell will makes the second of his two testimonies today, and I expect today to be a mirror image of yesterday’s speech.  

To recap… Gold got whacked badly yesterday, and the sharks are circling the blood stained waters this morning and Gold is already down $5 in the early morning trading today. The currencies also got whacked yesterday, the euro lost 1-cent, Oil lost another buck in its price, and the dollar is for some unknown reason pounding its chest… Chuck goes through some numbers on data, and short paper trades in Gold & Silver.. 

For What It’s Worth… Well, I told you last month that Russia had sold 1/2 of their Treasuries they held in reserves. According to the folks at zerohedge.com Russia has sold their remaining Treasuries now… this is all detailed with graphs and is a good write up that can be found here: https://www.zerohedge.com/news/2018-07-17/russia-liquidates-its-us-treasury-holdings

Or, here’s your snippet: “Readers may recall that last month we first reported that for all the confusion about sharply higher yields in April, the explanation was simple: it was Vladimir Putin who liquidated a whopping half of Russia’s Treasury holdings, which declined by $47.4BN to just $48.7BN – the lowest since 2008 – from $96BN in March.

But wait, it gets better, because as Trump continued to jawbone about more sanctions targeting Russia, Putin did not stop and in May he continued what was an outright liquidation of Russia’s TSY holdings, which plunged by another $40BN, or 82%, from $48.7BN to just $9BN in May. Keep in mind this was over $100BN at the start of the year.

It appears that When Putin warned he would diversify Russia’s state reserves out of Treasuries – he was serious.”

Chuck again…  Recall that I said that I thought that Russia’s first sale of Treasuries was a test for China to see the reaction of the markets and the U.S.? The next big seller will be China… well, that’s how I see this all unfolding, folks… I sure hope I’m wrong on this!

Currencies today 7/18/18… American Style: A$ .7355, kiwi .6765, C$ .7673, euro 1.1620, sterling 1.3035, Swiss $1.00, European Style: rand 13.3208, krone 8.1728, SEK 8.8645, forint 278.60, zloty 3.7090, koruna 22.2380, RUB 62.44, yen 113, sing 1.3682, HKD 7.8493, INR 68.44, China 6.6900, peso 18.96, BRL 3.8549, Dollar Index 18.96, Oil $67.62, 10-year 2.85%, Silver $15.44, Platinum $806.34, Palladium $907.79, and Gold… $1,222.75

That’s it for today…  I need to get my eyesight checked today, they make sure that my remaining eye remains in good health… And then I’ll be off to the Muny, St. Louis’ outdoor theater, that’s been around for 100 years! My darling granddaughter, Delaney Grace is an orphan kid in the presentation of Annie tonight!  I’ll be smiling from ear to ear when I see her up on that huge stage! Kathy got home yesterday, just in time for Delaney’s Muny debut! So, someone’s moving around upstairs, and it startled me at first because I’m use to being alone here!   The Steve Miller Bank takes us to the finish line today with his song: Serenade…  Stevie Guitar Miller on the iPod this morning! I hope you have a Wonderful Wednesday and remember to Be Good To Yourself!

Chuck Butler

 

July 17, 2018

* A nothing day for currencies & metals on Monday

* Cut the pork, will you Lawmakers?

Good Day… And a Tom Terrific Tuesday to you! Well, my busy day yesterday, got to me about mid afternoon, and I was wiped out, took a long nap, and was then ready to watch the Home Run Derby… I’m reminded of a HRD of years ago, when I was recovering from my two major cancer surgeries, and my colleagues, Chris, Mike, and Christine, came to visit with me… Good memories…  One of my doctors told me yesterday, that I’m his best patient, and that he loved it when I came in! WOW! My grandson, Braden is coming to spend the day with me… Just me and Braden, I wonder how this turns out! HA!  Seals & Crofts greet me this morning with their song: Summer Breeze…  

Well, yesterday’s trading was a lot of nothing.. No major movements anywhere, the Dollar Index at the end of the day stood at 94.55, and it began the day at 94.53…  Gold lost 80-cents on the day!  Have the Dog Days of Summer come upon us already? 

The U.S. Data Cupboard had the June Retail Sales print for us yesterday… Recall that I call this print a piece of real economic data, so paying attention to it is called for. And like I told you yesterday, the BHI indicated that June’s report would good, not great, but good, and that it was, gaining 0.5% for the month.  When I looked at that yesterday I got this feeling of being let down…  I asked myself, “is this all we get for all we did as a country to spur consumption?” 

Do I think consumers have finally figured it out that sooner or later the bill comes in the mail for their purchases, and if they don’t have the money they won’t buy? I doubt it one second! We’re a country of consumers, we buy, buy, buy…  But as a country of consumers we do catch our collective breaths every now and then, and when we do, the numbers begin to look ugly…  But the point I’m getting to eventually, is this… The U.S. Gov’t and Fed went a long way toward ruining our financial system to get us to this point, and it’s just not what we paid for! 

This past weekend, President Trump said some things about NATO that had a lot of people up in arms… But if you go back to the Chuck’s Debt Solutions from many years ago, I was the first to call for the closing of military bases around the world, especially in countries where the citizens don’t’ want us there to begin with! Now, if that was my call then, I was sure happy to hear the President call NATO to the red carpet… and then tell them they’re obsolete, and that the European countries need to buck up and pay more of their share of the costs of NATO… You tell ‘em!

I spoke about the Federal Budget Deficit yesterday, and good friend, Dennis Miller, sent me a note that he too had written about it in his letter published last Thursday (the day that I was whacked out!). So, I thought I would share with you one of his thoughts on the Federal Debt… Here’s Dennis Miller (www.milleronthemoney.com)

“Today you spoke about government debt. This was last weeks article and I realize you were fogged over. What I found amazing was the budget deficit and the government grants were almost identical.

Congress gives us the BS that there is nowhere to cut the budget. What crap! If they all stopped their pork giveaways, we would have a balanced budget.

This explains to me why Reagan said no matter how much you take in… congress will spend more. They look at revenue as their personal piggy bank.” – Dennis Miller

Chuck again… Thanks Dennis… Yes, I was “fogged over” last Thursday… But I’m back now, and I bet you all are happy as larks that I’m back! HA!

I mentioned above that Gold lost 80-cents yesterday… And that move contributed to my thought that it was a nothing day in the currencies and metals… Have you noticed how the price of Oil has been taken back down so swiftly? I’m going to have to call foul on this move…  The fingers are all pointing at Saudi Arabia’s call to increase production… And while that could have caused some slippage, I’m not buying what they’re selling here, as the reason for this huge drop in the price of Oil… There’s something else in the works here folks… That’s all I’m saying… 

I did let the cat out of the bag last week, when I said that all markets are manipulated… OOOPS, did I say that out loud? I guess I did! No one wants to hear those words, but they’ve got to be said, and if their said enough and loud enough then maybe some regulator will do something about it, but I’m dreaming folks… And before I go deeper into that rabbit hole, I’m going to climb out, and live another day! 

Fed Chairman, Jerome Powell, will be speaking today and tomorrow, so this must be the semi-annual trip to give the Fed Chairman’s testimony on the economy to both houses of the Gov’t. It used to be called the Humphrey-Hawkins Bill, but that bill expired long ago, and Fed chairmen and woman have continued to make the trip up to the “hill”…  I could say that the markets are awaiting Powell’s speech to give them some direction, but deep down I don’t believe that to be the case…  Why?

Because they’ve and we’ve heard it all before… The economy is robust, unemployment is down, yadda, yadda, yadda…  Pink Floyd said it best when they wrote in their song: It’s a battle of words, and most of them are lies… 

The U.S. Data Cupboard has two pieces of real economic data for us today… Industrial Production and Capacity Utilization will print the June’s results today. As I said yesterday, I suspect that the Industrial Production data will reverse May’s negative print, but in all for the year, this data is still underwhelming…   I read a report the other day, about how Capital expenditures are falling, and plans to spend are also showing signs of backing off…  Capital expenditures, or CAPEX, are what makes the economy go around folks… This is an easy thing to check out folks… Check around your place of business, are they planning on making equipment purchases, expand space, etc.? 

It’s all about the U.S. Data and Powell speech today folks, there’s just not much going on overseas today… China did print their latest GDP figure and called it weak at 6.7%…  Sure, it’s not the go-go years of 10% clips and above for Chinese GDP, but weak?  If we saw GDP of 6.7% here in the U.S. we would be dancing in the streets!  We did see that Russian Industrial Production for June printed this morning, and it was not a strong number, only gaining 2.2% VS 3.7% in the previous print… 

The Russian ruble has had to deal with sudden drop in the price of Oil, and now this weaker IP data… Hang on ruble, times will be better…  reminds me of a great 60’s song: Hang on Sloopy, Sloopy hang on… 

I’ve been pleasantly surprised by the resiliency of the Canadian dollar / loonie…  The loonie saw weakness late last month after they picked a fight with the bully, and lost, but has regained its mojo, and has withstood the test of a price drop in Oil. 

To recap… It was a nothing day in the currencies and metals, as there was little movement if any in both asset classes. The Dollar Index dropped 3 ticks from yesterday morning’s figure, and Gold lost 80-cents on the day…  nothing…  Fed Chairman Powell heads to Capitol Hill today for the first of his two speeches to lawmakers, and Chuck believes it will be more of the same yadda, yadda, yadda…  

For What It’s Worth…  OK… I’ve said this quite a few times previously, but when I saw this article, it reminded me that Debt Is Everywhere!  And this article breaks that down and can be found here:https://www.blacklistednews.com/article/67143/there-is-now-officially-3-times-more-debt-in-the-world-than.html  

Or, here’s your snippet: ” You may well have seen in the news the last couple of days that global debt has reached another all time high. After climbing to astonishing $247 trillion when combining public debt of around $60 trillion and non-financial sector debt of about $186 trillion.

This eye-watering figure also means that for the first time ever there is now officially 3 times more debt in the world than money.
It has been reported that this astounding level of debt is causing major cause by investors on top of ongoing concerns about the Federal Reserve’s monetary policy.”

Chuck again… 3 times more debt in the world than actual money… Now how’s that going to work out? Badly, if you ask me, but then I’ve said that all along, but who listens to me? 

Currencies today 7/17/18… American Style: A$ .7407, kiwi .6815, C$ .7572, euro 1.1715, sterling 1.3208, Swiss $1.0052, …European style: rand 13.2720, krone 8.0960, SEK 8.7880, forint 275.80, zloty 3.6720, koruna 22.0735, RUB 62.31, yen 112.55, sing 1.3612, HKD 7.8486, INR 68.28, China 6.6847, peso 18.93, BRL 3.8546, Dollar Index 94.50, Oil $68.13, 10-year 2.85%, Silver $15.76, Platinum $822.71, Palladium $916.56, and Gold… $1,241.31

That’s it for today… Well, I had better get ready for the arrival of Braden today… I had a pretty good day with my stomach yesterday, so hopefully that can continue today… I cringe when I load up the meds in the morning and at night, and realize they are the reason I have stomach problems… of course if I just didn’t eat I wouldn’t have any problems either!  HA!  I used to tell people that I was trying to grow to 6’4″ because I had reached the perfect weight for someone that tall, and I had more of a chance of growing taller at my age, then I did losing the weight! HA! So, here’s to growing to 6’4″!  A Big Thanks to my good friend, Terri, who helped me get something done yesterday, and she went out of her way to get it done for me! Thank YOU!  Ok, Uriah Heep takes us to the finish line today with their song: Sweet Lorraine…  I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!

Chuck Butler

 

July 16, 2018

* Consumer Debt Soars In June!

* Currencies attempt to come back!

Good Day… And a Marvelous Monday to you! Thanks so much for understanding my plight last Thursday I must have scared a few people, as even my good friend, Duane, sent me a text, asking me if I was OK?  It all passed by Thursday afternoon, and Friday was a new day, full of sunshine and lollipops! I have no idea why the medicine whacks me out like that sometimes… But, I guess I have to say thanks to the Lord, that it doesn’t whack me out like that all the time! The Pousette Dart Band greets me this morning with their song: Amnesia…   I hope that it’s only amnesia, believe me I’m sick but not insane! 

The currencies fought back on Friday to gain a bit VS the dollar, on the day. The week of relatively little economic data came to and end last Friday with a weaker Consumer Confidence Index for July, printing at 97.1 down from June’s 98.2…  On Thursday last week, the U.S. printed its Federal Budget number, and in June, let me remind you that in June quarterly taxes are due, the U.S. posted its second largest June deficit of $75 Billion! 

Here’s the breakdown in case you were keeping score at home: Where the money was spent on social security ($88BN), defense ($65BN), Medicare ($79BN), Interest on Debt ($32BN), and Other ($126BN).  The $75 Billion net deficit, saw receipts of $316 Billion…  There are some other items in the numbers but these are the biggest expenditures…  

Did you notice the $32 Billion spent on bond servicing? And that was just in the month of June… That means if we multiply it by 12 we would get the annual amount spent on paying the interest on debt, and it would be $322 Billion… And that’s at much lower interest rates than will be available going forward!   I’m so disgusted with the lawmakers in this country that I wouldn’t mind if they all lost their reelections. That they have sold the country down the road for a bagful of promises to social security, Medicare, Medicaid, and whatever other Gov’t handout that’s available to them.   They don’t care how much debt they incur, because by the time it all comes crashing down they won’t be in office any longer and it will be someone else’s problem…  Shame, Shame, Shame…  I don’t know how they live with themselves knowing well what they are doing… 

And the Fed is no better, as they’ve allowed the lawmakers the ability to run up debt with zero interest rates for 10 years, now, and even after 3 years of rate hikes, our Fed Funds rate is still only 2%!!!!  I’m get riled up here, don’t know if you can tell, but my blood is boiling thinking about this mess our country is in, and all these people with their grand schemes have failed miserably…  But we as a country (as a whole, not Pfennig Readers!) would rather be intrigued by whether or not Putin rigged the election, than we care about what the lawmakers and Fed Heads are doing to our country! 

OK… I’ll step down from my soapbox now, maybe I can calm down a bit, here… I have to because I’m all alone here, if I passed out or had a heart attack no one would know… So, settle down Chuck, take a sip of coffee, savor it, and then sit back for a minute before continuing on…  Ok, I’ll be back in a minute… 

So, I told you above that the currencies attempted to fight back VS the dollar on Friday, and that was all good, but the real move came last night in the overnight markets, and for once in a blue moon, the overnight markets saw the currencies continue to their moves higher VS the dollar. I told you last week that I thought the dollar rally was over, and then just to prove me wrong, the green/peachback rallied for a couple of days… 

So, once again we sit at the crossroads that has one route heading to more dollar strength, and the other heading to dollar weakness… I’m going to pick the one that has dollar weakness, but I’m hesitant, because the manipulators have proved that they can move the dollar where they want to, as long as it makes them feel alright! If traders show a lot of commitment toward dollar weakness, then the manipulators will step back and play in the shadows…

In the overseas data cupboards this morning, we saw Chinese Industrial Production for May, slip a bit from 6.8% in April to 6% in May, but to offset that slippage, Chinese Retail Sales also printed for June, and saw an increase from the May print of 8.5%, to 9% in June. A mixed bag-0-nuts there, folks, and nothing to really hang your hat on… Let’s move on…

In the Eurozone this morning, they printed their May Trade Balance and saw a nice narrowing of the deficit that printed in April at euro 18.8 Billion to the Mary print of euro 16.9 Billion.   

And finally, today continues the meeting of President Trump and Russian President Putin… I see what Trump wanted to do, as he thought he was on a roll after the meeting with the N. Korean leader, but as time has gone on, that meeting with N. Korea’s leader has turned sour, and hopefully Trump can salvage something from this meeting with Putin… In my view, which is in the cheap seats, so I don’t have an up front and close view, I see the world wanting the U.S. and Russia to get along… 

Since we went down the data cupboard road for overseas, we might as well see what’s going on in the U.S. Data Cupboard… Well, the U.S. Data Cupboard gets restocked this week with a truck load of data, and some real economic data reports, starting today with June’s print of Retail Sales…  The Butler Household Index (BHI) tells me that in June Retail Sales should be good, not great, but good…  (lots of money spent in the U.S. on graduation gifts)…  

According to the latest Monthly Treasury Statement, in June, the US collected $316BN in receipts – consisting of $162BN in individual income tax, $94BN in social security and payroll tax, $3BN in corporate tax and $22BN in other taxes and duties- a drop of 6.6% from the $338.7BN collected last June and a reversal from the recent increasing trend…even as Federal spending also dipped, down 8.8% from $428.9BN last June to $391.1BN last month.

Where the money was spent on social security ($88BN), defense ($65BN), Medicare ($79BN), Interest on Debt ($32BN), and Other ($126BN).

This resulted in a June budget deficit of $75 billion, better than the consensus estimate of $98BN, and an improvement from the $147 billion deficit in May and as well as slightly less than the deficit of $90.2 billion recorded in June of 2017. This was the second biggest June budget deficit since the financial crisis.

Tomorrow’s Data Cupboard will have the latest prints of Industrial Production and Capacity Utilization, and I would look for some recovery in the June print from the negative prints in May… But that’s tomorrow, and you know my saying for that… let tomorrow be… 

I watched a quick video this morning from CNBC that had Ron Paul talking about a great collapse that he sees coming, that has its roots in all the debt… And he something that plays well in the sandbox with my call that that the Fed’s “Great Unwind” of their balance sheet won’t get too much further, before they have to call it off…  Mainstream America just didn’t get Ron Paul, just like they didn’t get Ross Perot, but people like us, Pfennig Readers, we get them, they are true Austrian economics folks… 

This weekend I took a walk through all my books here that I’ve read through the years, and came across the book that I wrote the Foreword for in 2008…  Addison Wiggin’s: The Demise of the Dollar, with Foreword by Chuck Butler.. It was the first time I had any words printed in a book. I then remembered that I wrote a whole chapter for the Little Book of Dollar of a Shrinking Dollar…  I know the guys like John Mauldin, James Rickards, and Addison Wiggin, and Bill Bonner have all written multitude of books through the years, but I’m very proud of my short pieces for these books mentioned above… Something my grandkids can look up one day, and say, “Grandma, the general (that’s what they call me), sure was a smart man, wasn’t he?” 

The folks at Wiley publishing used to contact me all the time about writing a book, and at the time I was busy trading and managing risk at EverBank World Markets, traveling to speak, and writing the Pfennig every day… I had no time to allocate to book writing, and now that I’m no longer doing all those things I no longer hear from them…  Boy, I have no idea how I slipped down this rabbit hole, but I’ve got to get out of it before I begin to point fingers… 

To recap…  The currencies rallied on Friday, and then bucking the recent trend to sell the currencies in the overnight markets, they continued their Friday rally last night… Is the dollar rally finally over?   Did you see the HUGE, Monstrous, Godzilla-like Consumer Credit (read debt) report from last week? Chuck breaks it down for you… Chuck also gets on his soapbox this morning, so you won’t want to have missed that! 

For What It’s Worth… The folks at MarketWatch sent me this late last week, and I saved it for my FWIW section today. It’s about when the tariffs will begin to be felt by consumers and can be found here: https://www.marketwatch.com/story/heres-when-americans-will-start-feeling-the-pain-from-escalating-trump-imposed-tariffs-2018-07-11?mod=MW_section_top_stories   

Or, here’s your snippet: “Very few Americans have paid a price from escalating U.S. tariffs, but if trade fights get worse, the first big bill will come due shortly after the school year starts.

An initial blast of tariffs, mostly targeting $50 billion in Chinese goods, was tailored by the Trump administration to minimize the damage to the U.S. economy. Consumers or businesses could more easily find substitutes for goods whose prices would rise due to higher U.S. tariffs.

For now most consumers don’t have to worry much. The economy accelerated rapidly in the spring and is expected to remain strong through the summer months.

Come fall, though, and the price of many imported consumer goods in the crosshairs of the White House could begin to rise.

China exported about $500 billion in products to the U.S. in 2017. They encompass a vast range of goods such as fabrics, clothing, vacuum cleaners, refrigerators, computers, lighting and so forth — the kind of goods that are no longer made in America or are only made in small quantities.

Absent another source of supply, prices on these goods are sure to rise.”

Chuck Again…  Good analysis here… that I agree with. 

Currencies today 7/16/18…   merican Style: A$ .7425, kiwi .6782, C$ .7545, euro 1.1710, sterling 1.3253, Swiss $1.0014, … European Style: rand 13.2140, krone 8.008, SEK 8.8208, forint 275.50, zloty 3.6760, koruna 22.1040, RUB 62.52, yen 112.42, sing 1.3620, HKD 7.8485, INR 68.53, China 6.6897, peso 18.80, BRL 3.8510, Dollar Index 94.53, Oil $69.35, 10-year 2.85%, Silver $15.78, Platinum $824.63, Palladium $932.21, and Gold… $1,241.09

That’s it for today… I’ve got a busy day ahead, and need to clean up the house from all the parties I’ve had while Kathy was gone… (NOT!) the house looks hardly lived in! But a busy day for me… Well, I’ll my pointing out that the Cardinals poor play was the manager’s fault, came to a head Saturday night, when the Manager was fired… You can’t fire all the players, so you fire the leader…  The All-Star Game is tomorrow night… I have two pictures on my wall here of me and my two boys, at the All-Star Game back in 2009, and one of just the two boys. Good memories…  And with that it’s time to go, and America takes us to the finish line with their song: Lonely People..  I hope you have a Marvelous Monday, and Be Good To Yourself!

Chuck Butler

 

 

 

 

 

July 13, 2018

 

Good Day… And a Tub Thumpin’ Thursday to you! I’m not going to be able to participate in the Tub Thumpin’ today, folks… In fact this is going to a record for the shortest Pfennig ever! The meds have whacked me out, I was awake almost half the night, and finally got to sleep when the alarm went off… I’ve tolerated this new chemo to a degree, and that has been run over with a Mack Truck this morning… So, I’ll give you the currency roundup, and head back to bed, hopefully by noon or so, this death warmed over feeling will have stopped! 

There’s been more dollar buying overnight, and the currencies all are getting knocked around, along with the price of Oil and the Gold, I guess it’s a good thing I’m not commenting on all this today, I would probably say something that got me in deep dookie… 

Currencies today 7/13/18…. American Style: A$ .7383, kiwi .6758, C$ .7576, euro 1.1652, sterling 1.3190, Swiss $1.0014, European Style: rand 13.4350, krone 8.1152, SEK 8.8675, forint 279.12, zloty 3.7131, koruna 22.2624, RUB 62.07, yen 112.55, sing 1.3636, HKD 7.8479, INR 68.42, China 6.6674, peso 18.95, BRL 3.8366, Dollar Index 94.90, Oil $70.85, 10-year 2.86%, Silver $15.86, Platinum $831.56, Palladium $939.65, and Gold… $1,244.58 (not change in the SGE for days now)

That’s it for today, sorry for the short Pfennig, I really can’t believe I was able to get through this much of it!  Have a great day, and Be Good To Yourself!

Chuck Butler

July 11, 2018   

* The boys in the band show up Tuesday

* Currencies once again get sold overnight… 

 

Good day… And a Wonderful Wednesday to you! I went out and made sure that I had a Tom Terrific Tuesday yesterday… Did you?  I sure hope so, but if not, you can make it up today with a Wonderful Wednesday! I see my beloved Cardinals won last night, when I went to bed the score was 4-2 in favor of the Cardinals. And they wound up with a football score winning 14-2… The Marshall Tucker Band greets me this morning with their song: Heard It In A Love Song…   

Well, the currencies didn’t move much yesterday, if anything they firmed up a bit, as the bounce from the dollar in the overnight markets Monday night was brought to an end. Last night in the overnight markets saw the same kind of trading we saw the previous night, with the dollar being bought, for some unknown reason…  Oh, there’s the usual suspect of excuses for this dollar buying… The Fed’s on a faster pace to hike rates, a flight to safety, and it’s the king currency, are at the top of the lists of excuses, but to me that’s all they are… excuses, and excuses never won a ballgame for anybody! 

All those excuses are nothing but window dressing… curb appeal… lipstick for a pig, and all those other things… Because the traders out there know as well as I do, that a recession for the U.S. is coming, and therefore that wipes out the rate hikes..  In fact, I was explaining to my good friend Duane, yesterday that what we’re probably going to see during the next recession is negative interest rates here in the U.S.  So, that would take care of the flight to safety excuse, and then there’s this King Dollar that the dollar bugs love to talk about… Well, if that’s all it has going for it is talk, then as my dad taught me years ago… Money talks, BS walks…  

But for now, we have to put up with this stuff, but let it go, because its just a phase… You know like when your child comes home with a mohawk spike in his hair that’s colored orange… No reason to fly off the handle, it’s just a phase and it will pass… This too shall pass… Just be patient, keep your currencies and Gold, and I feel it will all be right on the night!  Of course that’s just my opinion and I could be wrong, but I wouldn’t say these things if I truly didn’t believe in them! You can take that to the bank!

So, Chuck, do you really think that negative interest rates are in our future here in the U.S.?  Yes, I do… Think about this, the average interest rate that was in place prior to previous beginnings of recessions was 6%, and the average total amount of rate cuts during a recession was 4.03%…  And our current Fed Funds rate is 2%?    Well, if we just have a normal recession, which I doubt we will because of all the excesses that have built up in the past 9 years, easy credit, zero interest rates and lackadaisical attitude toward debt build up, but if we just have a normal recession, 4% in rate cuts puts us negative -2%…   See what I just did with the math there? Man, I am a math whiz, eh? HA!  

But seriously, do you see where I’m coming from there? Not many people in the world know these averages, but now you do, dear Pfennig Reader! And I’ll tell you who else knows them all to well… The Fed Heads…  Recall a couple of years ago, when then Fed Chair, Janet Yellon, asked for a answer to her question, “Can the U.S. have negative deposit rates”  and her answer was yes…  I made a big deal out of that then, calling it “greasing the tracks”,  and in the next recession, the Fed Heads will be able to pull that off the shelf, dust it off, and implement negative deposit rates!   

This is all in the plans for getting you, me and the guy down the street that cuts his grass with his shirt off, to spend our money that we’ve saved and hold in the bank…  But here’s where it gets really dark and grim, folks, and if that’s not your bag baby, then skip ahead because I’m going in… Who’s with me? Come on, I don’t want to be like Will Ferrell in the movie where he’s streaking and thought the rest of the crowd was behind him, only to be the only naked guy running down the street!   

OK, those that have chosen to come with me to this dark and grim place, had better put your sharp objects away first… Ok? Alrighty then here we go…  This is all a plan to eventually go to digital money… a cashless society…  here’s the idea hatched in my head several months ago…  The recession causes the Fed to go negative with interest rates, and depositors decide instead of spending their cash, they’ll just go to the bank and withdraw it, take it home, and put in under the mattress because at least there it’s not costing you money to have it…  The Gov’t sees this as a real problem and decide to make withdrawing your cash a crime, and overnight your dollars become digital units in the bank…  Talk about an end to your privacy, civil liberties, and all the other things that make this a great country! 

I’m back now…  that was quite the ugly trip to the dark and grim location in Chuck’s brain, wasn’t it?   But I have one question to ask… Got Gold?

Speaking of Gold… The shiny metal was gaining some ground yesterday morning, and then the boys in the band showed up with their arms full of short Gold paper trades… If you see a graph of the day’s trading in Gold you can point to the exact time of day the boys in the band showed up…  So, the early gains were wiped out, and Gold ended up down $2.20 after about 267,000 contracts were traded… 

And if I can just circle the wagons and go back to the dark and grim place for a moment… The way I see things, Gold will play a BIG role in the formation of a new currency regime…  I’m just saying… 

Today’s U.S. Data Cupboard just has the PPI (wholesale inflation index) for June to view today… PPI has really been on a tear, higher that is, so far this year, and I doubt that it took a breather in June, but we’ll see…  There’s not a whole lot in the Data Cupboard this week folks.. Tomorrow we’ll see the stupid CPI (consumer inflation) and that’s it…  So, the currencies will be left to trade on their own accord the remainder of this week… That’s usually not a good thing for the dollar, but we’ll have to wait-n-see how this all falls out. 

I’m still amazed that the major media outlets aren’t making a big deal out of the Consumer Credit (read debt) print from Monday, when it jumped to $25 Billion from $10 Billion the previous month… To me, if I were a paid journalist, I would be looking into this data print, and telling everyone that this is not good… 

To recap…  The currencies gained a bit yesterday, but gave it all back and more in the overnight trading… Consumer Credit (debt) was shockingly strong at $25 Billion, with credit card debt really soaring…  Gold couldn’t hold its early morning gains and ended up down on the day $2 and change…  Chuck takes some brave readers to a dark place this morning… 

For What It’s Worth…  I don’t know how I was able to pull this article, recall me telling you my problems with Bloomberg, but I was, so this is about a firm telling us their “recession flag” is flashing red, and it can be found here: https://www.bloomberg.com/news/articles/2018-07-10/a-u-s-recession-indicator-flashes-red-for-leuthold-s-paulsen

Or, here’s your snippet: “One gauge of recession risk with a “pretty good” track record over the last half century has just raised a cautionary signal, according to the Leuthold Group.

For the first time since just prior to the 2007-2009 recession, premiums on the lowest-rated tranche of investment-grade U.S. corporate bonds have risen to 2 percent after being below that level, according to data compiled by the Minneapolis-based research group. The analysis looks at the gap in yields between corporate debt rated Baa by Moody’s Investors Service and those on 10-year Treasuries.”

Chuck Again…  More and more the big guys are coming around to my way of seeing this economy…  

Currencies today 7/11/18… American Style: A$ .7393, kiwi .6793, C$ .7550, euro 1.1710, sterling 1.3245, Swiss $1.0051, European Style: rand 13.4880, krone 8.0645, SEK 8.7790, forint 277.03, zloty 3.6945, koruna 22.1350, RUB 62.20, yen 111.26, sing 1.3605, HKD 7.8488, INR 68.72, China 6.6223, peso 19.02, BRL 3.8473, Dollar Index 94.35, Oil $73.71, 10-year 2.84%, Silver $15.97, Platinum $841.14, Palladium $937.07, and Gold… $1,250.06

That’s it for today… Seeing Dexter Fowler hit a grand slam last night, makes you wonder how good the Cardinals would be if he had hit like that all year?   I’m just saying… Duane and Chuck tried a new place for lunch yesterday, that was very interesting and good! Cardinals play one more game on this extended road trip, and then come home! George Harrison takes us to the finish line today with his song: What Is Life?  And with that, I’ll let you go today… HA!  I hope you have a Wonderful Wednesday, and Be Good To Yourself!

Chuck Butler

July 10, 2018

* Currencies get whacked in the overnight markets… 

* What’s up with Chuck today?

Good day… And a Tom Terrific Tuesday to you! I hope your Monday was Marvelous, as mine was… It’s very quiet here, when I’m all alone, and that’s a good thing!  I think  I gave a dear reader a heart attack the other day, I guess my fat fingers reported the ruble price as 22.94… When it was really 62.94… Darn fat fingers… No baseball last night to complain about. HA! I broiled me a nice big fat steak last night, sautéed some mushrooms to go with it, had a salad, and a bottle of wine… It was a great meal for me, especially since I’m here by myself!   The Great Jimmy Buffett, greets me this morning with his song: Fins…   You’ve got fins to the left, fins to the right and your the only girl in town!

Well, we didn’t see any further gains in the currencies yesterday, and in fact there could have been some slippage, but it was difficult to tell, given the tight ranges the currencies trade in.  Gold wasn’t able to hold on to the near $10 gain it had in the early morning trading, only being able to hold on to $ 4 of it.. UGH!  But that was yesterday, and in the overnight markets, the currencies have given back a chunk of their gains from late last week, and the euro is in danger of giving back/ falling below the 1.17 handle again..  

I have to say that this small bounce by the dollar surprised me, but then, I’m not sure why I would be surprised…  It’s all manipulated markets and the direction is determined by the elites…  Which, therein lies my surprise…  I’m convinced that the elites want to collapse the dollar, so a new currency regime can be put in place… Of course this isn’t going to happen today, next week or even next year, but my point is simply if that’s the direction they want the dollar to eventually go, why would they allow support for it now?  

I thank you for staying with me here today after that last paragraph, as I can see some of you dear readers thinking that I’ve lost my mind, well, no worries, I found it, so let’s continue on with the letter today, eh?

I waited and waited for the Consumer Credit data to print, and having not seen it yesterday, I was thinking they were hiding something… But it must have been my source, not picking it up, because Consumer Credit (read debt) did print! 

And brother, what a print it was! Consumer Debt rose $24.5 Billion in May, up from just $10 Billion in April… All the components increased but the one that caught my eye was Credit Card debt, which rose  $9.8 billion, the biggest monthly increase since November, and one of the highest monthly increases on record!  Now I see why the propeller heads are saying the second QTR GDP is going to be a whopper!  

But don’t you also see how I have come to the thought that it will be a one and done for the whopper GDP quarter? Run those credit cards sky high, until they are maxed out, then what do you do? You wait for another one to come in the mail! But my point here is that we don’t normally see credit card debt increase like this over and over again… 

I told you yesterday that the stock market seems to be taking a “wait-n-see” attitude with the Trade War, but that won’t last long folks… My suggestion would be to make sure you have your stop losses in place. I mean you should have them in place all the time, but especially now, because Recessions are not kind to equities… I’m just saying…

The flight to safety kind of took a breather yesterday, as I just told you Gold wasn’t able to hold its early gains, the price of Oil gained pennies on the day, and the 10-year Treasury ‘s yield remained steady Eddie on the day. The trading yesterday was very much like what we normally see in the dog days of summer, but with all the goings on around the world, it sure seems like the dogs will be more active than usual this summer! 

So, I read where the N. Koreans are putting a different spin on the summit that took place last month between the leaders of the U.S. and N. Korea. And this is where I’m going to point out once again that I was one of the few people in this country to point out that the agreement for N. Korean to denuclearize DIDN’T HAVE A DEADLINE!   And now the N. Koreans are taking advantage of that…  You know, my mother used to say if you go to bed with dogs, you end up with fleas…  I wonder if President Trump is having an itching feeling these days? 

The GATA folks sent me a note yesterday with a link to a site where they calculate sound money states… Now, that’s an interesting concept, don’t you think… I think of Arizona who I told you last year was dropping the sale tax on precious metals and so forth… And looky there, Arizona is the 4th best state…  Here’s the top 6 states for sound money.. 

Best 6 states for sound money:
-Utah – 63.16%
-Texas – 58.82%
-Wyoming – 57.89%
-Arizona – 47.37%
-South Dakota – 47.06%
-Oklahoma – 42.11%

If your state is not listed there, you might want to fire off a letter to your congressman and ask him why your state is not in the top 6 of sound money states! 

In the U.K. a BMOC with BREXIT, Boris Johnson, resigned and that makes two supporters of PM May, as she attempts to get her BREXIT plan passed. The pound sterling took the news as bad news, and got sold.  In China overnight, the renminbi was actually allowed to gain on the night. This has to be the first appreciation in the renminbi in over a month!  Hmmm, I do believe I told you last week that the weakening of the renminbi was about to end… More proof that even a blind squirrel can find an acorn! HA! 

The price of Oil moved upward into the $74 handle in the past 24 hours. And the Petrol Currencies of Rubles, and loonies gained on the move in the price of Oil, but the krone was held back because of the weakness in the euro, and the Brazilian real is a basket case, so there’s no amount of increase in the price of Oil that’s going to help the real! 

The U.S. Data Cupboard is pretty bare today with only some 3rd Tier data prints to offer us.  But I’m still all worked up over the rise in Credit Card Debt in May… I find that to be unsustainable, but we’ll have to wait-n-see, eh?

To recap… The currencies held fast throughout yesterday’s trading, but last night’s overnight markets whipped them pretty good, with the dollar coming back, and that surprised Chuck, who then goes into a third mind kind of spiel, who knows what spurred that? Gold couldn’t hold its early gains yesterday, and is down nearly $7 in the early morning trading today…  The U.K.’s PM May, is watching her supporters resign, and now there’s a question of whether she’s going to be able to hold on to the PM job, all this has the pound under pressure… 

For What It’s Worth… Ok, hit article is about how the Big 3 of the European Union (Germany, France and the U.K.) are going to band together to defy the U.S.’s call to not trade with Iran… Pretty interesting I thought, and it can be found here: https://www.rt.com/business/432363-eu-dollar-trade-iran/amp/

Or, here’s your snippet: “Major European countries party to nuclear negotiations with Iran – France, Germany and the U.K. – have agreed to maintain trade with Tehran independent from the U.S. dollar, said Russia’s Foreign Minister Sergey Lavrov.

European companies are under increasing pressure from Washington to cut business ties with Tehran. Since the majority of transactions are currently conducted using the U.S. dollar, firms working in Iran face potential U.S. penalties.

According to Lavrov, the decision particularly concerns small and medium-sized companies. He explained that the participants in the Iranian deal have agreed to work out measures to protect the countries’ businesses from US sanctions.

“Everyone agrees that this [U.S. sanctions – Ed.] is an absolutely illegal and unacceptable policy, but, of course, this can hardly be changed and there will be enough struggle in trade, economic and political spheres,” the minister said.”

Chuck again… Well, my feeling here is that we’re going to see a lot of this going around the U.S. in trade folks… I guess we’ll see what the fallout becomes, but I’ve already told you my thoughts on it… 

Currencies today 7/10/18… American Style: A$ .7445, kiwi .6818, C$ .7542, euro 1.1712, sterling 1.3259, Swiss $1.0052, European Style: rand 13.4490, krone 8.0370, SEK 8.7465, forint 277.46, zloty 3.6887, koruna 22.1190, RUB 62.71, yen 111.23, sing 1.3568, HKD 7.8479, INR 68.68, China 6.6170, peso 19.10, BRL 3.8637, Dollar Index 94.32, Oil $74.11, 10-year 2.87%, Silver $16.02, Platinum $841.86, Palladium $950.96, and Gold $1.250.99

That’s it for today… I saw this really funny (to me) cartoon yesterday, it’s people all crammed into an elevator that has crashed and is in between floors, and the caption says, “Remain calm. It’s not a crash – it’s just a correction”  I’ll have that cartoon in my next DTL piece for sure! I’m also going to dive deep into the Pension funding or lack of funding problem here in the U.S. So, what are you waiting for? sign up for the Dow Theory Letters at www.dowtheoryletter.com   I have some errands to run today, so I’ll get out of the house, which is something I didn’t do yesterday except to get the mail! I noticed the other day that I’ve put just 50,000 miles on my car since I bought it over 7 years ago! Doctor’s offices, hospitals, and down the street to my favorite watering hole is about the only places I go these days… Oh woe is me, right? HA!  Seriously, I’m good as gold right now, so no worries!   And with that, Led Zeppelin is taking us to the finish line with their great song: Kashmir…   I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!  bye~

Chuck Butler

 

 

July 9, 2018

* Jobs Jamboree is interesting… 

* Currencies are back on the rally tracks! 

Good Day… And a Marvelous Monday to you…  I trust you had a grand Independence Day Holiday week. I know I did… Saturday was probably one of the most beautiful days in July I’ve ever experienced in my life!  But the heat will return later this week, so we have that to look forward to! NOT!  I’m all alone again for the next 10 days, so as usual, “Hello, Pizzaman Pizza? I need a large, no, make that an extra large, with extra cheese, walk it through the garden and then through the barn!” HA!  My beloved Cardinals are heating up the twitter verse these days, I wish they would concentrate on gong on a win streak of more than 4 games! Deep Purple greet me this morning with their song: Hush… 

I last left you last week on Tuesday, the day before our Independence Day Celebration, and at that time, the euro was climbing through the 1.16 handle, and on the days following the euro climbed through that handle, and is trading this morning with a 1.17 handle!  I read and researched quite a bit this past weekend, and I have to tell you that most of the chartists believe that the dollar’s run is over, which I would think would lead to lots of back up the truck noises… Beep, Beep, Beep… 

On Friday of last week, the BLS printed their latest version of a very hedonically adjusted jobs report for June… The BLS claims that 213,000 jobs were created in the month of June, which was better than the 200,000 jobs that were expected to have been created in June.  Of those 213,000 so-called jobs that were added in June, 104,000 of them came courtesy of the BLS themselves, adding them to the surveys with their Birth/ Death Model… The Unemployment rate though rose in the June to 4%, from 3.8% in May… And there was something else that caught my eye… Of the 104,000 jobs the BLS added out of thin air, they claim that 89,000 of them were in the Leisure and Hospitality sector…  In fact, they’ve added 373,000 jobs for this sector, this year!  Isn’t that nice that the economy is running on bartenders and wait staff? Not that there’s anything wrong with those jobs, but they aren’t going to bring this economy out of the 2.16% GDP it has averaged for the last 10 years! I’m just saying…

Well, we’ve begun a new quarter, the 3rd quarter of the year is here! And while I’m thinking of what’s going on this quarter, don’t forget that I warned you that the GDP reading for the 2nd QTR  could be a moonshot above 4%, but it will be akin to a star burning brightest right before it flames out.  In keeping with the 4th of July celebrations, in last week’s DTL piece I called the 2nd Quarter’s GDP potential print the Grand Finale… Congers up an image in your mind of fireworks going off everywhere, right?  But then the show is over… And there’s nothing left but smoke and crying! 

The Tariffs began to be added to Chinese exports to the U.S. on Friday, and the stock market shrugged it off… I don’t think this is a case of the tariffs being priced in already, but more a case of traders and investors not knowing full what the hit will be to the economy, so until we know for sure what it is, it’s a case of Party on Wayne, Party on Garth! 

There’s an article on the Bloomberg this morning that has Morgan Stanley picking the currencies they feel will perform better than others during a Recession here in the U.S.  I’ll come back to this in a moment, but first, I do believe that the major investment houses, are coming to the realization that a recession is on the way, as I see more and more of them talking making investment plans for the recession…  Will this be a case of thinking something to reality?  You know, the recession might not actually be here yet, but if everyone thinks it is, well, it is… 

Yen, francs, and Singapore dollars are the three currencies that Morgan Stanley believes will be the best performers in a recession…  I guess Morgan Stanley believes in the so-called safe havens and then throws in Singapore dollars… I’m not so sure this should be an end-all list folks, so take this with however many grains of salt you wish! 

Gold didn’t have a good day on Friday, closing down $2.80 on the day, but the early morning trading this morning has Gold climbing nearly $10, so it could be a very good day for the shiny metal…  I read this weekend that Chinese first half Gold demand exceeded 1,000 Tonnes… WOW!  Russia, will see your 1,000 Tonnes and raise you 1,000 Tonnes! HA!   That’s what it seems like is happening with physical Gold demand in China and Russia…  One country announces their Gold figures and the other had to beat them! 

Did you ever have a friend or know somebody that was always having to something better than you? If you bought a house, they bought a bigger one, if you bought a car, they bought a more expensive one, and so on… That’s Russia and China these days, and it’s all good for Gold!  Oh, and guess what? I’ve got the link to Shanghai Gold Exchange’s price for Gold each day, and I’ll add it to the currency roundup from here on out… 

So, the currencies are on the rally tracks, and it looks like the dollar’s run has come to an end… I might be a little early with that statement, but it’s a call, right?  If I end up being early and the dollar bounces again, I’ll just pick up the pieces of my broken confidence, and move along…  The signs are all there for me to be correct though… The Emerging Markets currencies have found a bid, a weak one, but a bid nonetheless. The Petrol Currencies are rebounding, and the offset currency to the dollar, the euro is leading the charge.    

They had some new wrinkles added to the BREXIT negotiations, but even those setbacks aren’t raining on sterling’s parade this morning… 

One currency that just seems to be on the chopping block every single day, is the Brazilian real… And Brazil has an election coming up , which normally lends a hand to the real, but not this time… And on top of that the Brazilian National Team lost their knockout round game in the World Cup, and the whole country is reeling from that loss… 

The price of Oil continues to be well bid… It sold off a bit on Friday, but has rebounded in the past 24 hours. And the other commodities like copper, sugar, etc. are looking like that have some pep again… As well, they should given the inflation report in the U.S. last week, that we talked about… 

The Commodity currencies though are really in the dumps… Kiwi, can’t seem to find a bid, the same goes for the S. African rand and the Canadian loonie… The only Commodity Currency to find some love is the Aussie dollar (A$) …  I feel as though I’ve been led down a road that’s going in the wrong direction with kiwi… A year ago, the Reserve Bank of New Zealand (RBNZ) started talking about a rate hike cycle, and I was led to believe that this rate hike cycle would begin in the 2nd QTR of 2018… You may recall me talking about kiwi and saying that investors were getting a chance to buy ahead of the Big Boys…. But the 2nd QTR of 2018 just ended, and the RBNZ isn’t any closer to beginning a rate hike cycle than I am to the man in the moon!  So, we’ll have to batten down the hatches here, and wait out the RBNZ!

The 10-year Treasury’s yield sits at 2.85%, and there seems to be a strong flight to safety going on right now, which supports the bond market here…  I’ve told you this before, but the 10-year Treasury is used to price mortgages… and I found these rates online…the 30-year fixed-rate mortgage averaged 4.52% during the July 5 week, down from 4.55%, mortgage provider Freddie Mac said Thursday. The 15-year fixed-rate mortgage averaged 3.99%, down five basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.74%, down from 3.87%.

And remembering my old training from the bank I must included this: Those rates don’t include fees associated with obtaining mortgage loans. 

So, mortgage rates are falling again, which means more air will be blown into the housing bubble…   It’s a shame that this is happening, yet again… 

Speaking of the housing bubble… We’re quickly approaching the 10 year observance of the 2008 Financial Meltdown… And later this fall it will be the 20 year observance of the LTCM meltdown, where they had to form a “committee to save the world”…  The timing for a the next meltdown could be bang on the 10-year, 20-year times…  I’m just saying… 

The U.S Data Cupboard is scratching the walls looking for some real economic data to print this week, and early in the week, there just isn’t much to talk about… So, we’ll move along now, for these are not the droids we’re looking for!

To recap… The Trade War between the world’s two largest economies began in earnest on Friday, and the markets are kind of reacting to it, with stock reaction muted, and the flight to safety in Treasuries and Gold taking flight, but not soaring yet. The rot on the economy’s vine isn’t being exposed just yet, but it will…  The Jobs Jamboree netted 213,000 jobs in June, of which 104,000 were added out of thin air by the BLS, and the Unemployment Rate rose to 4% from 3.8% the previous month.   The currencies are rebounding and Chuck has made the call that the dollar’s rally is over…  Will he be right?  Only the Shadow Knows! 

For What it’s Worth… I came across this story and went into a deep dive on it for next week’s DTL, but will still give it to you here… this is about a warning from Moodys about corporate debt defaults, and it can be found here: https://www.cnbc.com/2018/05/25/moodys-warns-of-particularly-large-wave-of-junk-bond-defaults.html 

Or, here’s your snippet: “With corporate debt hitting its highest levels since before the financial crisis, Moody’s is warning that substantial trouble is ahead for junk bonds when the next downturn hits.

The ratings agency said low interest rates and investor appetite for yield has pushed companies into issuing mounds of debt that offer comparatively low levels of protection for investors. While the near-term outlook for credit is “benign,” that won’t be the case when economic conditions worsen.

The “prolonged environment of low growth and low interest rates has been a catalyst for striking changes in nonfinancial corporate credit quality,” Mariarosa Verde, Moody’s senior credit officer, said in a report. “The record number of highly leveraged companies has set the stage for a particularly large wave of defaults when the next period of broad economic stress eventually arrives.”

Chuck again… Yes, this could very well be the snowflake that causes the avalanche for the U.S. economy folks… better keep an eye on this one!

Currencies today 7/9/18… American Style: A$ .7476, kiwi .6850, C$ .7495, euro 1.1779, sterling 1.3345, Swiss $1.0124, European Style: rand 13.3566, krone 7.9940, SEK 8.7015, forint 274.04, zloty 3.6730, koruna 21.9521, RUB 62.94, yen 110.40, sing 1.3536, HKD 7.8482, INR 68.69, China 6.6427, peso 19.03, BRL 3.8644, Dollar Index 93.77, Oil $73.83, 10-year 2.85%, Silver $16.24, Platinum $858.69, Palladium $965.63, and Gold $1,265.31, and SGE Gold $1,269.64

That’s it for today… Nice to be back. We had an absolutely gorgeous weekend, weather-wise… A Chamber of commerce weekend. But the excessive heat is supposed to return this week, so I have that to look forward to! I’m all alone again for the next 10 days… good friend, Mike, came to the house yesterday to keep me company and watch the Cardinals blow another game. We grilled some good stuff to eat, and had a good day! Chicago takes us to the finish line today with their song: Hard Habit To Break, one of my fave Chicago songs! And with that I’ll get out of your hair today. Thanks for reading the Pfennig, and I hope you have a Marvelous Monday, but please remember to Be Good To Yourself!

Chuck Butler

 

July 3, 2018   

* Currencies hit a roadblock yesterday… 

* It’s Our Independence Day Tomorrow! 

Good Day… And a Tom Terrific Tuesday to you! Are you staying cool? Because it’s going to be a hot one here for the 4th of July Independence day Holiday. I’m going to put something in the Big Green Egg, and 6 hours later I’ll check it. No standing over a hot grill for me! But Barbeque will be in order for sure! I’d like to do some ribs, but, I don’t think everyone that will be here are fans of ribs, so I’ll have to think of something else…  Kansas greets me this morning with their song: The Wall…  In the 70’s you didn’t get much hotter for a band than Kansas was… I’m just saying… 

Well, I was looking over some charts yesterday, of the stock market performances of the S&P 500, Dow and Russell 2000… And if you believe in charts, then go out and load up on more stocks… But if you only use charts as a “helper”, then be careful… Because in other charts I looked at, the effects of the Trump tariffs are already kicking in, as they might not be actually kicking in, but psychologically they’re kicking in, as companies worry about what it’s going to do their costs… 

That was very evident in the ISM (manufacturing index) that printed yesterday for June. The ISM index rose to 60! WOW, now that’s impressive, especially given that Durables and Factory Orders were all negative in growth… But I digress…  The thing that caught my eye in the ISM though were the “internals” of the report.  You see, apparently the supply chain is under stress and factories are taking longer to deliver goods.

My friend, David Gonigam at the Five Minute Forecast  had this yesterday… “The “supplier delivery” number is up to 68.2, and this is an instance where higher numbers aren’t necessarily better. Instead, we’re looking at the worst disruptions to the supply chain since the “oil shock” of the mid-1970s.

The cause? Steel and aluminum tariffs, say the report’s authors. “Respondents are overwhelmingly concerned about how tariff-related activity is [affecting] and will continue to affect their business,” says ISM’s Timothy Fiore.” – David Gonigam www.agorafinancial.com

I love it when I have a thought about something, and then out of the air, comes a link, a newsletter, etc. with confirmation of what I’m thinking!  

There’s certainly a “split” if you will, of people in this country that think everything’s coming up roses, and then there’s people like me that think that the roses are 7-days picked!  But that’s what makes the world go around, right? As long as we can have a civil discussion about it, I hear you, you hear me, and we go get a beer, right? 

I keep talking about a credit crisis that’s going to hit the markets sooner or later… It could come from any number of credit sources… Auto loans, student loans, mortgage loans, corporate loans, etc. But I’m keeping my eye on the student loans… There’s more than $1.5 Trillion in Student Loans and the default rate has steadily climbed to 20%… And it’s still growing, folks…

A credit crisis begins in one sector and then spreads to the other sectors very quickly… So, we had better keep our eye on all of these credit sources… because they are all risky business, and I’m not talking about the Tom Cruise movie either!   One of these days, all this stuff will come crashing down around us, you don’t keep adding to debt until it can’t take any more! And you have to stop digging a hole when you find out the hole doesn’t have any Gold! 

Well, I should have figured that if I saw that China’s renminbi was being allowed to depreciate, to offset trade tariff effects, then the People’s Bank of China (PBOC) was ready to disavow any hint that this is what was going on… And the PBOC has begun to talk about how they will not allow the renminbi to be taken down excessively… Those sly Chinese bankers… They knew just how weak they could allow the renminbi to go before they would apply the brakes on any further thoughts of depreciation.

And that’s what they are doing right now… applying the brakes… The Chinese have come to the conclusion that the renminbi has fallen enough… Enough is enough, now we’ll have to see if the markets are going to play along…

When I first began trading currencies for the old Mark Twain Bank, I was taught that the markets had deeper pockets than any Central Bank… And that’s why I’ve always said that Central Bank intervention can move markets short term, but they won’t last, because the Central Bank can’t continue to spend money on a falling currency to defend it. 

But I think China’s PBOC presents a different animal to the equation of whether Central Bank intervention works or not. The Chinese proved back in 2015, when the Capital Flight out of China was HUGE, and there were all those calls for a collapse of the Chinese economy… But, China simply used some of their $3 Trillion plus reserves and bought renminbi, to defend it, and soon, the markets were playing along with the PBOC…

I was excited to see that my Pfennig last week titled: Emerging Markets, the Canary In The Coal Mine, got a lot of notice… The Twitter-verse seemed to like it, and I didn’t get one email that day telling me I was wrong, as opposed to a normal day where people tell me I’m wrong all the time! HA!    

I’ve gone this long into the letter without telling you what the currencies did yesterday… And that was on purpose, as the currencies and their attempt to recover got stopped at the border…  I had a funny line (to me that is) ready, but decided it wouldn’t be funny to everyone… See how I’ve matured? HA!  

During the day yesterday, the euro was giving back most of its gains from Friday, but by the time the day ended the single unit was back to the same level it was early yesterday morning 1.1642.  Overnight, there was more movement, and the single unit has inched higher, but not by much. The Dollar Index is trading at 94.68 this morning, and yesterday morning it traded at 94.79… 

The rot on the Emerging Markets currencies’ vines is beginning to really take hold, and getting exposed to the sunlight, which means it’s going to keep growing… The price of Oil has bumped to near $75 this morning, and the Russian ruble can’t find a bid, and the Brazilian real continue to fall like a rock from a ledge. 

Come to think of it, the price of Oil’s rise isn’t helping another of the Petrol Currencies this morning, as the Canadian dollar/ loonie has dropped in price. The Norwegian krone, which follows two leaders, the price of Oil and the euro, is on the rally tracks this morning, due to both of its leaders bumping higher. 

 told you yesterday that on Friday this week, it’ll be the Jobs Jamboree for June… Right now the so-called experts are expecting 205,000 jobs created in June… That sure doesn’t say much for all those college grads that were looking for jobs, eh? Yesterday afternoon, I got to thinking about me not being around after today for the rest of the week, and thought, well, I guess I should at least give everyone a heads up as to what else could move markets as the week goes on…

OK, so starting today… automakers will report their June sales totals. Forecasters predict full-year sales falling short of the three previous years when sales have topped 17 million cars and trucks.

Also today, we’ll see Factory Orders for May… April’s negative showing here, will probably spill over to May, so another piece of real economic news in the negative…

The stock market will close today at 1pm ET, and be closed tomorrow along with banks and a whole shootin’ match of other things. We pick things up again on Thursday with the Fed’s last meeting Minutes… These could be a powder keg for the markets, so look out for those Meeting Minutes!

Then on Friday, we have the aforementioned Jobs Jamboree, and, more importantly, in my opinion, since the Jobs report is so heavily hedonically adjusted each month. The first round of Trump tariffs goes into effect on Friday when the U.S. will begin imposing a 25% tax on $34 billion worth of Chinese products… And the rot on the economy’s vine will begin to creep up the vine…

So, there you have it… a week’s worth of stuff that will go on once I sign off today… You know, that reminds me to remind you, that the last week of July, first week of August, is my annual summer vacation… I’ve been taking those weeks off for so long now, that I almost forget they are coming up! It’ll be a two week sabbatical for you from me, so you have that to look forward to!

Yes, it’s just me these days… At my old place of business, I had “back ups”, when I was unable to write, like vacations, scans days, infusion confusion days, etc.  So, now there’s just a void… I’m sure my publishers, the wonderful Aden Sisters, will probably send you a letter or two during those two weeks…  I have to say that I’m loving my association with the Aden Research folks, Mary Anne and Pamela…  

Gold lost another $6 in yesterday’s trading… The shiny metal just can’t seem to catch a break or a bid these days. I’m still not going to back off my view that Gold is a store of wealth, is independent, has no obligations, or any dolt Central Bank doing dolt things like implementing negative deposit rates, etc.  And since Gold hasn’t performed very well lately, a lot of people/ investors panic… But… if you want to diversify from the legitimate fear for your assets into tangible assets –  Then an asset allocation to Gold I would think would be good especially in view of the unresolved debt crisis and the policy of the central banks – then Gold is an obvious choice of asset class…  And that’s all I’m going to say about that! (today at least! HA!)’

And looky there! Gold is up $5 in the early morning trading on this Tom Terrific Tuesday! They used to have a saying on the trading desk at a brokerage firm I worked at in the late 70’s…  just to get this out of the way, no bodies were harmed….   But the traders would say, “even a dead body bounces”…  And when I saw Gold bounce this morning, my mind drifted back to the late 70’s…  Sorry if I offended anyone with that old trader saying about assets that bounce…  Man, that’s so long ago, my oldest child, Dawn, wasn’t even born yet!  Wait, What? I had a life before children? I don’t believe that for one minute! HAHAHAHAHA!

To Recap…  The currencies hit a roadblock yesterday, and their advances were stopped at the border, but have recovered in the overnight markets to sit about where they were yesterday morning. Gold lost $6 in trading yesterday, but is up $5 in the early morning trading today. Chuck brings you up to date with all the goings on for the rest of the week, and the Trump tariffs are already showing up in the economic data! 

For What It’s Worth…  I’ve been talking about the rot on the Emerging Markets for a few weeks now, and when I saw this synopsis of the goings on in these markets I had to get it in this letter so you could see it too… 

• The DXY index, which tracks the US dollar against other major currencies, rose 5%.
• The Argentine peso and Brazilian real fell 30% and 14%, respectively.
• The Turkish lira and South African rand each fell nearly 14% versus the dollar.
• A bunch of Asian emerging market currencies fell 3% – 6%.
• Europe’s emerging markets weren’t spared. The Hungarian forint (-10.0%), Polish zloty (- 9%), and Czech koruna (-8%) led a long list of EU peripheral currency losers.
• China’s stock indexes fell by double-digit percentages in the quarter, though that might have more to do the incipient trade war than relative inflation and interest rates.
• Asian junk bond spreads (their yields versus those of high-grade bonds) widened dramatically.
• Emerging market bank stocks got crushed, including Banco do Brasil (-30%), Banco Bradesco (- 30%), and Brazil’s Ibovespa stock index, down 27% in U.S. dollars.
• Last but definitely not least scary, US and European bank stocks fell hard last week, which isn’t surprising since they’re on the hook for untold amounts of the aforementioned emerging market securities and currencies.

Chuck Again…  I have to say that this all could certainly blow over, and everything will be right on the night… There! I said it, now this FWIW piece is fair and balanced!  But do I believe that? Not for one Iota! Like I said earlier in the week… The Emerging Markets is the Canary in the Coal Mine… 

Currencies today 7/3/18: American Style: A$ .7395, kiwi .6735, C$ .7583, euro 1.1650, sterling 1. 3188, Swiss $1.0062, European Style: rand 13.7228, krone 8.1275, SEK 8.8521, forint 281.60, zloty 3.7743, koruna 22.4025,  RUB 63.21, yen 110.85, sing 1.3660, HKD 7.8445, INR 68.56, China 6.6542, peso 19.68, BRL 3.89, Dollar Index 94.68, Oil $74.82, 10-year 2.87%, Silver $15.94, Platinum $824,48, Palladium $947.47, and Gold… $1,247.26

That’s it for today… And for this week… I sure hope you can have a grand Independence Day tomorrow… I would suspect the markets, for the most part will be shut down for the rest of the week, as those that are able to make this a long holiday week, will do just that!  My beloved Cardinals are making a trip out west, which means I won’t get to see much of the games because they are on so late! Last night, for instance I went to bed in the 5th inning! Maybe a trip out west is what they need to straighten themselves and their season out… time will tell… At least they got off on the right foot last night with a win in Arizona. I hear that there will be a large crowd of people here tomorrow, and I was asked what would I like to cook for them… Hmmm… I’ll have to think about that, since it’s going to be near 100 tomorrow! The late Great Leon Russell takes us to the finish line today with his song: Queen of the Roller Derby…  So, get out there and shoot some fireworks, wear some red, white and blue, and fly a flag… And be careful! I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!

Chuck Butler