U.S. Is taking Debt Higher and Higher!

April 16, 2018    

* Gold experiences Mr. Toad’s Wild Ride!    

* Russian sanctions begin to spread elsewhere… 

 Good Day… And a Marvelous Monday to you! I have no idea where the last 3 days went… The new chemo drug has done the heavy lifting on my tumors, but has put me in a tailspin energy wise, and the new drug is causing skin rashes that are driving me crazy!  But not doing anything to speak of the past 3 days was OK, because it was too cold and rainy to go outside! UGH!Tom Petty and the Heartbreakers greet me this morning with their song: I Won’t Back Down…  I guess that could be my theme song, as I won’t back down from pointing out the debt accumulation in the U.S.   

Speaking of the debt accumulation in the U.S. The Federal Gov’t recorded a budget deficit of $208.7 Billion in March, and increase of more than $32 Billion from a year ago, as revenues slipped and expenditures climbed… The Treasury Dept. said last Wednesday that the February Deficit was 18.4% higher than a year ago… You see where this is going don’t you? OK, for the first 5 months of this budget/ fiscal year the deficit has totaled $599.7 Billion, and increase of 13.8% from the same period of a year ago…

And… using my new math skills, if we totaled nearly $600 Billion in 5 months, guess what our deficit would be in 12 months, if nothing changes, that is… give up? I’ll do the math for you… Can you believe it would be $1.44 TRILLION? YIKES! Where are the people that projected our deficit this year to be $540 Billion? We’ve already passed that figure in 5 months! I’ll just point out that I told you that whatever the Gov’t was telling us the deficit would be, it would be too conservative, and I said it would be much higher… And looky there! That’s exactly what’s going on!  

This is the fifth year in a row in which household debt growth has been seen in all four major consumer debt categories: mortgage, student loan, auto loan and credit card.”
The eye-opening stats:

• Total mortgage debt has reached $8.8 trillion
• Student loan debt, seemingly ever-increasing, has hit $1.4 trillion
• Auto loans are at a record-setting $1.2 trillion at a time when subprime auto debt is booming
• Americans hold $834 billion of credit card debt.
“More sobering is that the household debt increase in the last quarter of 2017 was at its fastest pace since 2007.”  I thank longtime reader Bob, for sending me this info… Crazy, eh?  Debt everywhere…  

I put to bed my weekly DTL (Dow Theory Letters) last night so be sure to look for it this Thursday, when I’ll be back in S. Florida and away from all this chilly St. Louis weather, and I’m not coming back until May!  Oh, sorry for that, but what I wanted to say before I was so rudely interrupted, was that I really do a deep dive into the Retail Apocalypse which is only going to make Corporate Debt even larger…  This debt accumulation just keeps growing like a weed that is getting ignored by the owner of the ground, but not by the neighbors (like me) that see it growing and point it out to anyone that walks by!   

OK, enough of that before my Blood Pressure rises, which is not something that I need to have going on, as I have a Doc appt. early this morning…  So, let’s switch gears here and talk about the currencies and metals…  The currencies had a day where they attempted to recover their two-day loses to the dollar, on Friday.  If you just follow the Dollar Index then that’s fine, and the Index was trading around 90.20 in the middle of last week, and this morning it has rallied to 89.57… 

So, the euro is doing some of the heavy lifting, but currencies like the Aussie dollar (A$), kiwi, pound sterling, Norwegian krone, and the Chinese renminbi are looking healthier with each passing day.  I was doing some reading this morning (I bet your wondering what time of the day do I wake up to do reading before writing this letter?, it’s a good thing I’m a quick reader!)  and I came across an article on Bloomberg that highlights a fund manager at BNY Mellon , who  beat global peers over the past year is shorting the dollar   Here’s a piece of the article that can be found here, should you want to read more…https://www.bloomberg.com/news/articles/2018-04-15/fund-that-beats-98-of-peers-shorts-dollar-buys-japan-linkers     “The U.S. dollar still looks expensive to us — we’re in the early stages of a U.S. dollar-depreciating trend”   And the fund manager goes on to say that he likes Japanese yen and Norwegian krone… 

Ok I was with him until he said he liked Japanese yen… Although, if the dollar is in the beginning stages of a weak dollar trend, that I called for more than 6 months ago… Most currencies will gain VS the dollar, including yen… I just don’t like it, fundamentally…    

I also read this morning that the Sanctions on Russia are beginning to show up with slower growth in the Eurozone and Switzerland. The Swiss franc has surprised me with its weakness lately, while most of the other currencies have rallied VS the dollar.  And the sanctions on Russia makes sense to me…  

The price of Gold went for spin on Mr. Toad’s Wild Ride last week… Up $13 Wednesday, down $18 Thursday, and up $11 on Friday…  If I hadn’t been such a wimp and was still writing on Fridays, I would have been in a  tizzy about the $18 selloff of Gold on Thursday…  But by the end of the week, the shiny metal had still gained some ground after the ride was over.  

The U.S  talked the U.K. and France into joining them in bombing of Syria on Friday morning, and that news sent Gold on its recovery path that only saw 240,000 contracts traded. When the contracts traded are in the lower range like on Friday, it indicates to me that the price manipulators were absent that day…  So, Gold closed at $1345.40 on Friday, and is basically flat in the early morning trading today.  The shiny metal is closing in on the line drawn in the sand at $1,350 by the price manipulators… Or as I affectionately (NOT!) call them, The Boys in the Band…   

The price of Oil has held steady Eddie from last Thursday, at $66.70 give or take some pennies…  The bombing in Syria pushed the price of Oil so that it could avoid a selloff..  And here’s Bloomberg with their thought on the price rise in Oil… “Rising geopolitical tensions in the Middle East have already boosted oil prices and there is plenty of scope for them to move higher still. That an oil price spike would follow Western missiles launched at Syria seems a foregone conclusion. But for prices to really keep moving higher, the U.S. would have to take serious action against Syria’s key sponsors: Russia and Iran.”    

The U.S. Data Cupboard was taking a breather last week, and the dollar lost ground. This week, we’ll get three real economic data prints, starting today with Retail Sales…  The good Old Butler Household Index or BHI for you new readers, indicates to me that with Easter falling on April 1st, that the buying for the holiday came in March, which means we could see an uptick in Retail Sales… But if we do, remember that it was a one and done… We’ll also see Industrial Production and Capacity Utilization tomorrow, so get prepared for that weaker print.   

To recap… Chuck goes all MMA on debt and what the U.S. is doing about it today, and he also points out that the economy is going to suffer from all this debt accumulation. The currencies are attempting to recover the ground they lost last week, and so far are doing a good job of recovering! The Russian sanctions are beginning to show up elsewhere, and Gold took a spin on Mr. Toad’s Wild Ride last week, but ended the week higher… 

For What It’s Worth… I used up some good stories in the body of today’s letter that could have been FWIW articles but those don’t compare to this one, which is about the crazy pension news and can be found here: https://dollarcollapse.com/pension-funds/more-absolutely-crazy-pension-news-2/   

Or, here’s your snippet: “A public university president in Oregon gives new meaning to the idea of a pensioner.

Joseph Robertson, an eye surgeon who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension.

It is $76,111.

Per month.

That is considerably more than the average Oregon family earns in a year.
Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster. More government workers are retiring, including more than 2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year.

The state is not the most profligate pension payer in America, but its spiraling costs are notable in part because Oregon enjoys a reputation for fiscal discipline. Its experience shows how faulty financial decisions by states can eventually swamp local communities. 

What happens next is also predictable: A growing number of pension plans will blow up as states and cities run out of cash, and the resulting chaos will lead the federal government to bail them out with another five-or-so trillion dollars of taxpayer money. Only this time around – with debt at every level of society twice or more as high as when the banks got their bailout — the result, especially in the currency markets, might be a lot less reassuring. ” 

Chuck Again…  That’s a very interesting article and in the end their thought that the result, especially in the currency markets might be a lot less reassuring, is parlance for. The dollar is going to get creamed!

Currencies today 4/16/18… American Style: A$ .7770, kiwi .7340, C$ .7933, euro 1.2365, sterling 1.43, Swiss $1.0411, … European Style: rand 12.0695, krone 7.76, SEK 8.4143, forint 250.83, zloty 3.3636, koruna 20.43o5, RUB 62.07, yen 107.28, sing 1.3113, HKD 7.8598, INR 65.40, China 6.2744, peso 18.05, BRL 3.4233, Dollar Index 89.57, Oil $66.67, 10-year 2.86z%, Silver $16.59, Platinum $927.12, Palladium $992, and Gold… $1,345.70  

That’s it for today…  Well, it was a good weekend for my beloved Cardinals, and proves that they can beat the lowly teams… Hey! You’ve got to start somewhere! It’s really cold outside here, and now the Cardinals go to Chicago where it will be even colder!  Well tomorrow is Tax Day… I wrote my checks last night to mail today. UGH!  When I was a young man and didn’t make enough money to amount to a hill of beans, I used to say… “Give me the income and I’ll gladly pay the taxes” And then when I began to earn some money, well, I wish I hadn’t said that when I was younger!  And with that… Grand Funk Railroad takes us to the finish line today with their classic rock song: I’m Your Captain…  I hope you have a Marvelous Monday, and remember to Be Good To Yourself!  

Chuck Butler

Is All This Stuff Just A Diversion?

April 12, 2018          

* Gold soars yesterday, but gets brought back today

* Russian ruble gets whacked! 

Good Day…  And A Tub Thumpin’ Thursday to you! The old saying goes… A bad day at the ballpark was better than a good day at work… Well, the outcome of the game yesterday was bad, but it was a great day at the ballpark, warmer weather, a good friend with me, and my old boss, and longtime friend, Frank Trotter, stopped by our seats to say hi, and catch up on a few things. I hadn’t seen Frank in almost a year, so that was fun! The Band Ace greets me this morning with their song: How Long… Paul Carrack was the singer for Ace. He also fronted The Squeeze, and Mike and the Mechanics…  

  I told you yesterday that Chinese President Xi, had extended an olive branch to the U.S., thus easing the fears of an all out Trade War… at least for one day! I saw where President Trump sent out a message that he liked Xi’s speech..  So, now after all the war drum beating, and bravado, we’re going to get along nicely in the sandbox?  Oh, well, that sounds like the foundation is pretty questionable, doesn’t it? Well, I think so, which means I wouldn’t be surprised to see the Trade war drums to begin beating again in a couple of days.   

So, with the Trade War fears subsiding right now the dollar fought back yesterday, and all the currencies found that they are not on terra firma… The Chinese renminbi was the exception, as it was allowed to appreciate last night… One currency that doesn’t get a lot of attention due to it being pegged to the U.S. dollar, is the Hong Kong Dollar or honkers as currency traders call them. I don’t know if you’ve been watching it in the currency roundup, but the honker is very weak.

You see, the honker has a trading band and it normally trades right smack in the middle of the band, but in recent days the honker has been trading at the bottom of the range, and Hong Kong citizens, who’ve never seen currency fluctuations, are getting antsy…  The Hong Kong Monetary Authority, the folks that maintain the currency band, issued a message yesterday, in their attempt to calm the people that just because the honker hasn’t been this weak since 2005, there’s no reason to worry.  Hong Kong has ample currency reserves, so they could correct this situation with intervention at any time…  But I did want to make note that I’m watching the honker…  

The Russian ruble got whacked again yesterday. UGH! I told you yesterday that ruble investors are fleeing the currency with fears that the ruble could experience a run on the currency like 2014, after the U.S. announced additional economic sanctions on Russia.   Weak minds…  these sellers must have weak minds, for what has the Central Bank of Russia (CBR) and their rock star Gov. Elvira Nabiullina proven in the past? The proved that they know how to weather a storm, and she maneuvered the Russian economy around the previous sanctions that both the U.S. and Europe had placed on Russia… The country came out of the recession, defeated inflation, and had seen its key interest rate fall in recent times… Oh well… I guess this will test one’s metal, eh?    

How about Gold yesterday? The shiny metal had a great day but… and there’s always a but, right?  Gold is giving back most of yesterday’s gain in the early trading this morning… Here’s the skinny… Gold rallied with conviction yesterday all the way to $1,369, but the price manipulators flooded the market with short Gold paper trades, pushing the number of contracts traded yesterday to 492,000! OMG!  Well, the $1,362 didn’t last long and Gold closed at $1,362 on the day, up $13.69…  

But like I said the early morning trading isn’t being kind to Gold, and it’s already down $11  The Syrian ordeal hasn’t reached panic stage like everyone thought when the President tweeted “the bombs are coming”, and so the impatient Gold holders are winning the day so far… 

It was brought to my attention yesterday, that yesterday’s letter was very long…  Well, I guess I had a lot to say, eh? I had to make up for the fact that there’s only 4 Pfennigs a week now! HA!  And in that vein…  Let’s think about something that’s been on my mind lately…  What if, all this Trade War mongering, and Syrian posturing is just a diversion to keep the sheeple like me from thinking about how the economy is crumbling around us?  I mean, stocks, were down yesterday, but they’ve been up and down in an environment where they should be heading downward daily, because the stock jockeys refuse to believe the gig is up…  I don’t want to go down the rabbit hole that is a discussion on stocks… But…

I do have something to say, and that’s simply, I was reading one of those emails that are trying to sell you something, and in this case it was stocks, and guy was saying that Corp earnings are great and only going to be getting better, and that bodes well for stocks…  If I could I would respond to him and ask him this… If there is a Trade War, wouldn’t that cut into the Corp earnings you’re touting as great, and cause problems for the Corporation’s stock?     Ok, gotta move on, I’m no stock jockey, even though that’s where I cut my teeth in the financial sector…   

The U.S. Data Cupboard had the stupid CPI report, and a drop in gas prices pulled down consumer prices in March which came in at Econoday’s low estimate for a 0.1 percent decline. But the core rate, which excludes energy, did hit expectations at a modest 0.2 percent monthly gain with the year-on-year rate rising 3 tenths to 2.1 percent which also hits expectations. I can’t believe I reserves this much space in the letter talking about the stupid CPI!  

BTW John Williams at Shadow Stats says that CPI is really 6%, when you calculate it like we used to before the “hedonic adjustments” were added to the calculation in the 90’s…    

To recap… the olive branch extended to the U.S. by China calmed the markets yesterday, and allowed the dollar to fight back, and fight back it did, gaining on all the currencies except the Chinese renminbi. Chuck points out the honker weakness, the Russian ruble weakness for us today. And asks a question, is this all a diversion?   

For What It’s Worth… Well, as Gomer Pyle used to say, “Surprise, surprise, surprise” That’s what I thought of when I saw this article sent to me by MarketWatch… It’s about what was in the Fed’s Meeting Minutes that printed last night… Quite interesting, and you can find it here: https://www.marketwatch.com/story/fed-discussed-need-to-slow-the-us-economy-down-minutes-show-2018-04-11  

Or, here’s your snippet: “The Federal Reserve, focused on stimulating the US economy since the financial crisis, has switched to discussing how to cool off the economy, according to minutes of the March meeting of the Federal Open Market Committee.”

Chuck Again… And these mental giants thought that by leaving interest rates near zero for nearly a decade wouldn’t eventually show up in the economy?    Oh well, we carry on despite our shortcomings, right?  

Currencies today 4/12/18… American Style: A$ .7754, kiwi .7380, C$ .7945, euro 1.2338, sterling 1.4194, Swiss $ 1.0384, … European Style: rand 11.9880, krone 7.7692, SEK 8.4118, forint 252.30, zloty 3.39, koruna 20.5771, RUB 63.33, yen 107.17, sing 1.3110, HKD 7.85, INR 65.17, China 6.2750, peso 18.17, BRL 3.3976, Dollar Index 89.74, Oil $66.64, 10yr 2.78%, Silver $16.64, Platinum $929.14, Palladium $953.17, and Gold… $1,349.10 

That’s it for today…  I’m headed to the heart doc this morning, they’ll run a magic wand over my pacemaker, and it’ll tell them all they need to know about what my heart has been doing… Cardinals have noodle bats I do believe… The start of spring training they couldn’t hit, and then things got better, but the start of the regular season has seen a return of the noodle bats… UGH!  OK, no Pfennig tomorrow… I’m officially down to a 4 day a week Pfennig schedule… Do you recall me telling you about the young man that played water polo for my son, Andrew, who became paralyzed last in a swimming mishap in Mexico, and how he had progressed to the surprise of everyone? Well, I saw him last week at a water polo game, and he’s walking better then me! And he negotiated the steps very well! I teared up watching him move about, so inspirational..   And with that it’s time to do, so the Beatles send us to the finish line today with their song: I Want To Hold Your Hand…  I hope you get to get out and make this a Tub Thumpin’ Thursday, and remember to be Good To Yourself!   Chuck Butler 

Russian Ruble Gets Smack, Crack, Bushwhacked…

April 11, 2018  

* Threat of “War” war spooks the markets  

* China extends olive branch? 

Good Day… Well, I finally got through all the emails in the Pfennig Replies. Shame on me, as I had forgotten how many readers respond to a Pfennig when I ask them a question… But get through them I did, and thank you to one and all who replied with “no worries” emails in response to my asking you what you thought about me going to a 4 day week. I even had someone ask me why I got up so early and wrote, when it would be better to write at 5 each day to give a recap of the day’s activities… There are a number of reasons I’ll continue to write in the morning, but the first response would be that this is a conversation that you and I are having at the kitchen table with a cup of coffee, and it will remain that way as long as I write the Pfennig! Like I said there are a number of reasons why I do this, but that’s number one in my book! Chicago greets me this morning with their song: Does Anybody Really Know What Time It Is… This is one of the songs the band I played in and traveled the country in our VW microbus, allowed me to be the lead singer… So, I have a special place in my heart for this song… Besides the Neil Young songs I did with my acoustic guitar, the only other song I had the lead part, was Colour My World…

Well, traders got back to trading currencies yesterday and giving them some direction, rather than just wallowing in the mud, like they’ve done for about a week… The euro gained, not by leaps and bounds, but it gained nonetheless. The Aussie and kiwi dollars both followed the euro’s lead, and gained but not by leaps and bounds. Gold had a good day, just like I thought and said it might do, as the coming Trade War, that has already seen the battle lines drawn, is drawing closer and closer…

I keep getting emails from readers that think I’m not getting the point, as to why the U.S. immediately without provocation, went to the protectionism method of negotiation… I do get the fact that the U.S. trade sector has been treated unfairly in the past, and an evening out of the playing field was in order… But to go to Tariffs before other means of negotiating what it was the U.S. wanted from China, was not, in my opinion the best option, for I believe that the tariffs when put into place will cause the economy to falter quickly, and more than that, the dollar will be subjected to weakness that it has seen in previous times of tariffs in the past. Ok, enough of that!  

Forget the Trade War, what we have now is the threat of a “war” war… President Trump has sent a destroyer to the Middle East region, and Russia isn’t pleased as punch about that… Add to the destroyer that could fire off cruise missiles at any time now that has the Russians all up in arms, is the fact that the market have been spooked by the additional sanctions placed on Russia by the U.S. on Monday…  

The Russian ruble has gotten smack, crack, bushwhacked, tied another one its back, baby (R.E.M.) with investors running as fast as they can from the ruble, fearing another run on the currency like we saw back in 2014…  Well, that may come about, but instead I think the savvy investors will see this selloff as an opportunity to buy rubles and ruble investments cheaper, and the this selloff will not dive as deeply as the one in 2014.  Of course I might be wrong about that, but at least I have the chutzpah to make the call… right?    

The rest of the currencies all, and I mean all, spent the day gaining VS the dollar. And once again, the moves aren’t monumental but they are positive, and when you put all these small daily moves together, you end up at the end of the week, with a nice gain. I’m just saying…  

Gold also saw another small move on the day adding $3.40 to its price, but this morning’s price is up more than $8 in the early trading, just like I said it would probably do once we found out what Trump was going to do with Syria. And now we know, as the President has sent a warning that “the bombs are coming”…   Can’t back down now, you’ve already told the world what was coming…  

And the price of Oil is pushing the price appreciation envelope across the table this morning as it sports a $66 handle this morning. The threat of another war front in the Middle East and disruption of the Oil production, has the price of Oil looking spiffy this morning.  

So, all three anti-dollar assets are on the rally train this morning, once again…. We’ve seen this several times this year, only to see them fall off the train again, due to the PPT performing their circus tricks with saving the dollar from this embarrassment…  But soon, even the PPT will see that they are throwing good money at a bad trade, and step away from the markets, quietly… That’s when we will know that the weak dollar trend that has been nascent is ready to really take off for higher ground! 

And then was this:  Longtime reader, Bob, sent me a note yesterday, telling me that the Global debt has reached $237 Trillion… here’s the skinny… Yesterday we saw the latest update from the Institute of International Finance (IIF) showing that 2017 saw no less than $20 trillion in global debt added in just one year taking the total to $237 trillion. YIKES!  

And helping to build / accumulate this growing debt, is the fact that the U.S. Congressional Budget Office issued a report saying that the annual deficit here in the U.S. will grow to near $1 Trillion two years earlier than first thought, and will begin to rise steadily this year and next year, and then become a part of our annual budget, to be $1 Trillion each and every year… Oh Boy! Where can I get in on this? I sure would like to run my budget in the ground and begin to book annual deficits too! Tell, me, tell me, tell me true! I want to be just like our Government! NOT! 

But didn’t I tell you when the annual deficit was first being discussed about a month ago, that the government’s estimates are always too low, and it was my thought that the actual deficits would larger?  Well, yes I did… but don’t let that get in the way of you deciding that you had better up the ante of currencies and metals in your investment portfolio before things get hot and heavy with the selling of the dollar…  

Well, China extended an olive branch, in my opinion that is, yesterday, when President Xi made a speech where he talked about opening up the Chinese markets even more, and lowering the tariffs on U.S. cars… I commend the Chinese for doing what they can to avert a Trade War, and for their effort the Peoples Bank of China (PBOC) allowed a nice appreciation of the renminbi overnight.  

But think about that for a minute… this was all staged…  The Chinese announce that they are lowering the tariffs on U.S. cars, and at the same time, they make up for that loss in tariffs by upping the ante on the renminbi, so that Chinese exports are move expensive, but the amount will be small and unnoticeable to the U.S. consumer… But when you add up all the marbles, China takes away a big bag of them…  Pretty smart, if you ask me!  

But like I said above the focus changed from Trade War to “War” war… 

The U.S. Data Cupboard yesterday had the PPI (wholesale inflation) And the report showed that there is a little more inflation at the wholesale level in March,  including for primary metals, but the acceleration is modest. Producer prices rose 0.3 percent in March which is 2 tenths above Econoday’s consensus with ex-food & ex-energy also up 0.3 percent and ex-food, ex-energy & ex-trade services up 0.4 percent, both of which are 1 tenth above consensus. 

Today’s Data Cupboard has the stupid CPI (consumer inflation) for March, and the so-called experts believe that CPI will jump to 2.4% Year on year (YOY) and core inflation will rise to 2.1% YOY…  I’m from Missouri, so they’ll have to show me these increases… But when you consider all the hedonic adjustments that are taken in the calculation of CPI, one never really knows what they’re looking at, and that’s why I call it the “stupid” CPI…  

Do you have young kids or grandkids? Do the go into convulsions any time you say the word “stupid” in front of them? Mine do, and I tell them that I’m an adult and can say what i want!  But if you want to see them bonkers, play one of the Charlie Brown videos… The Charlie Brown characters use the word stupid like they use cuss words in jail!   HA!    

To recap… The Trade War fears have given way to “War” war fears and that has Gold pushing higher this morning. The currencies all booked modest gains VS the dollar yesterday, except the Russian Ruble which got whacked because of fears of another run on the ruble like what happened in 2014, after new sanctions were placed on Russia by the U.S. on Monday… And the Global Debt has reached $237 Trillion! My oh My…   

For What It’s Worth… Since I talked about the rising debt levels in the world this morning, and pointed out the increased annual deficit here in the U.S. this article about housing debt rising seemed to play nicely in the sandbox with my earlier thoughts on debt… You can find the entire article here:http://www.builderonline.com/money/affordability/rising-home-prices-push-borrowers-deeper-into-debt_c   

Or, here’s your snippet: “More Americans are stretching to buy homes, the latest sign that rising prices are making homeownership more difficult for a broad swath of potential buyers.

Roughly one in five conventional mortgage loans made this winter went to borrowers spending more than 45% of their monthly incomes on their mortgage payment and other debts, the highest proportion since the housing crisis, according to new data from mortgage-data tracker CoreLogic Inc. That was almost triple the proportion of such loans made in 2016 and the first half of 2017, CoreLogic said.

Economists said rising debt levels are a symptom of a market in which home prices are rising sharply in relation to incomes, driven in part by a historic lack of supply that is forcing prices higher.” 

Chuck again… I would be fearful right now of the pushing out of the crowd that doesn’t have a lot to spend for a house… I’m just saying…

Currencies today 4/11/18… American Style: A$ .7747, kiwi .7368, C$ .7926, euro 1.2384, sterling 1.4185, Swiss $1.0448, … European Style: rand 12.0968, krone 7.7678, SEK 8.3072, forint 251.56, zloty 3.3842, koruna 20.4425, RUB 62.16, yen 106.81, sing 1.3084, HKD 7.8496, INR 65.16, China 6.2882, peso 18.29, BRL 3.4161, Dollar Index 89.47, Oil $66.17, 10yr 2.77%, Silver $16.61, Platinum $935.47, Palladium $960.52, and Gold… $1,354.00 

That’s it for today…  After a 9 innings of feeble at bats my beloved Cardinals won in the 11th inning. Of course I had long gone to sleep thinking that their lack of hitting costs them another game… Was I ever pleasantly surprised to see the score this morning! I’m going to the day game today, the weather is supposed to be warmer, and I’m excited! I love day baseball, for to me, it’s when all the games should be played! I sure hope my hip settles down, and I can sit there and enjoy the game with good company! I see the heart doc tomorrow, I think he’ll be happy with my weight loss, but not with the higher BP that the new chemo drug is causing…  Oh well, it is what it is…   And with that thought, I had better get this out the door.. The Amazing Rhythm Aces take us to the finish line today with their song: 3rd Rate Romance…  Bet you don’t have that one on your playlist!  I hope you have a Wonderful Wednesday, and Be Good To Yourself!  

Chuck Butler

 

 

 

Let’s Go Out And Tick Everyone Off!

April 10, 2018        

* New economic sanctions for Russia… 

* Did China step away from the auction window?

 

Good Day… And A Tom Terrific Tuesday to you!  Right from the get-go this morning, I want to thank everyone who sent me notes yesterday, with all those wonderful words regarding my mentioning that the tumor in my mouth was gone… The notes are truly appreciated! The Pfennig Replies email box was flooded with emails, and that’s pretty cool! My beloved Cardinals find another way to lose a game last night. UGH! Jane’s Addiction greets me this morning with their song: Been Caught Stealing… 

Well, why don’t we, as a country, just go out and attempt to tick everyone off at the same time? Did you hear about the new economic sanctions place on Russia? What for this time?  No Crimea, no Ukraine, did we just say, what the hell, and place sanctions on Russia?  Well, this is crazy folks… The Russian ruble got whacked on the news, and brings about a point that I’ll attempt to make here… The ruble is very undervalued, wink, wink, and now it’s even more of a bargain price… wink, wink…    

There’s so much going on, it’s impossible for me to talk about all of it in one letter, but I jam as much of my thoughts on the goings on in today’s letter, for tomorrow isn’t guaranteed to us, only today is.  Look at Chuck being philosophical  ! Yeah, sort of akin to SNL’s Deep Thoughts by Jack Handy! HA!  

The currencies, led by the Big Dog euro, had a good day yesterday and in the overnight sessions, for the first time in quite a few days. Or it sure seems that way, that just about every morning, I’m saying “the currencies didn’t move much” or something like that! But not today! The euro has recovered back above 1.23, and I was reading an article this morning that talked about the improved sentiment toward the Eurozone, with Germany, the Eurozone’s largest economy, getting very close to a coalition Gov’t, and more and more talk about the European Central Bank (ECB) getting closer to an unwind of their stimulus… 

With the Big Dog on the move, the other currencies are following the lead dog. The Aussie dollar (A$) finally moved past 77-cents, and kiwi has really been burning the midnight oil to get past 73-cents. The price of Oil has fought back to the $64 handle, on supplies news, and the added sanctions… 

Well, Gold was able to gain $2.30 yesterday, but the big move upward for the shiny metal is likely to be associated with whatever it is that President Trump does to Syria… Geopolitical problems usually send Gold soaring, with the price manipulators sitting on the sidelines.  

Well, how many of you are aware of the historical fact that whenever the U.S. Treasury yield curve inverts, it’s an indication of an economic recession on the way? Well, that’s that, and what’s the reason I’m bringing this up today… I’ll let the boys and girls from Bloomberg tell you in their own words…

“The forward curve of a closely watched proxy for the Federal Reserve’s policy rate has slightly inverted, signaling investors are either pricing in a mistake from central bankers or end-of-cycle dynamics, according to JPMorgan Chase & Co.

The inversion of the one-month U.S. overnight indexed swap rate implies some expectation of a lower Fed policy rate after the first quarter of 2020, the bank’s strategists including Nikolaos Panigirtzoglou, wrote in a note Friday.

“An inversion at the front end of the U.S. curve is a significant market development, not least because it occurs rather rarely,” they said. “It is also generally perceived as a bad omen for risky markets.” – Bloomberg…

Of course they’re just talking about the front end of the curve being inverted, but the curve as a whole, is flattening and in danger of inverting, so I’ll keep an eye on that, don’t worry about that!   

The Trade War talk is heating up again. Did you know that, the Chinese tariffs are a huge blow to American growers, especially those in Midwestern states that the President needs to win re-election in 2020. China is the biggest buyer of U.S. soybeans, picking up about a third of the entire U.S. crop. The trade is worth about $14 billion. 

The U.S. tariffs target the high-end technology products made in China. That could mean that companies like Apple Inc. and Lenovo Group Ltd. that operate significant Chinese production bases face higher costs or supply-chain disruption. The biggest blow by far is to almost $4 billion worth flat-panel TV screens.    And I’ve got a real doozy for you in the FWIW section today, it’s so BIG that I wouldn’t blame you if you skipped ahead to read it right now!  

The U.S. Data Cupboard doesn’t really have any real economic data this week, so the news that will drive the markets will come from the U.S. Gov’t…  And I don’t think any of that will help the dollar, but instead it just might help Gold!  

To recap…  The currencies finally moved off the point they were stuck at for over a week, and the Big Dog euro led the currencies higher VS the dollar! Geopolitical pressures are what will move the markets for currencies and precious metals this week, with questions like: What will Trump do in Syria?  The President did add new economic sanctions on Russia yesterday, and Chuck doesn’t understand what the heck is going on here….  

On a sidebar, I’ve talked about this before but it’s even more important now because of the new sanctions on Russia…  The world has 3 super powers, the U.S., China and Russia…  It would behoove the U.S. to buddy up with one of the other two so they could gang up on the third country and get their way with them…  But guess what we haven’t done?  That’s right, we haven’t buddied up with anyone, in fact we’ve ticked off China, and now add Russia, so guess who’s buddying up? That’s right China and Russia, and soon they’ll be getting their way with us…  I’m just saying…  

For What It’s Worth… I think you had better pay attention to this article that appeared on the ZeroHedge.com site. It’s about China stepping away from the Treasury auction window, just like I said we needed to be afraid they might do, and it can be found here: https://www.zerohedge.com/news/2018-04-09/we-understand-chinese-government-has-halted-purchases-us-treasuries-sgh

I don’t have much of a snippet today, because 1. I want you to click on the link and read the report, and 2. I can’t get the copy and paste to work for this article…

Chuck again… Brother have we stepped into a pile of doggie doo… It’s been a longtime arrangement between China and the U.S…. The U.S. buys China’s exports, and China buys U.S. Treasuries… But when you play with fire, you get burned… And if the report is true, that China has ceased buying Treasuries weeks ago, who’s going to take up the slack? The Fed is not buying Treasuries, and the U.S. increased their deficit spending, which needs the sale of Treasuries to finance the deficit spending! Uh-oh!

I’ve explained this in the past, but what the heck… When Treasuries aren’t being bought, the U.S. Gov’t has two choices… They can aggressively hike rates to get the yields on the bonds higher and more attractive, but risk causing the economy to go into a recession. Or… They could depreciate the value of the dollar, so that the purchase price on the conversion to dollars in the terms of the transaction, would be cheaper… Given the two choices, which do you believe the U.S. Government will choose? What’s behind door #1 or door #2? #2? Johnny, tell them what they’ve won! You’ve won a weak dollar that will reduce your purchasing power, like a tax, but that’s not all! You have also won higher interest rates because the Fed will hike rates at first to see if they can attract buyers, and then seeing they can’t, they’ll ask for a depreciation of the dollar…

Got Currencies and Gold (or silver)?  

Currencies today 4/10/18… American Style: A$ .7737, kiwi .7350, C$ .7889, euro 1.2330, sterling 1.0462, Swiss $1.0462, … European Style: rand 12.05, krone 7.8211, SEK 8.3493, forint 252.61, zloty 3.4001, koruna 20.5470, RUB 59.43, yen 107.02, sing 1.3102, HKD 7.8494, INR 64.84, China 6.3051, peso 18.28, BRL 3.3846, Dollar Index 89.81, Oil $64.21, 10-year 2.79% Silver $16.48, Platinum $936.72, Palladium $936.85, and Gold… $1,339.60  

That’s it for today… Lots on our plates, eh? My stomach is performing circus tricks this morning, so I’ll end this here and try to get that settled down… The sun came out yesterday, and it kind of got a bit warmer, and I’m told that it will continue to get warmer today and tomorrow, so that’s a good thing, because I can’t stand cold weather! Junior Walker and the All Stars take us the finish line today with their song: What Does It Take? Great sax work in that good old song… And with that… it’s time to go… So, I hope you have a Tom Terrific Tuesday, and don’t forget to Be Good To Yourself!   

Chuck Butler

Who Will Blink First?

April 9, 2018      

* Jobs report is very disappointing but the dollar doesn’t get sold!

* Who will depreciate first?

 Good Day… And a Marvelous Monday to you! It was a very cold weekend here in the St. Louis area this past weekend, making me remain indoors, for the most part of the weekend, daring only to go outside when I was going to my car! It’s so cold here that I’ve decided to go back to S. Florida next week. I would have gone this week, but the flights were still very expensive from the Easter Weekend. Our Blues got bounced out of the playoffs this year, so boys, gather up your golf clubs and head to the links… UGH! Oh well, at least no “playoff heart break” for us this year! My beloved Cardinals hit the ball one day, and not the next day, and then rinse and repeat… I think I’m going to the day game this Wednesday with good buddy Duane, so I’ve got that going for me! Big Head Todd & The Monsters greet me this morning with their song: Tomorrow Never Comes…

Well, Friday’s Jobs Jamboree sure was a shocker, eh? The so-called experts had forecast that the jobs created number for March would be 170,000 (that was down from a forecast earlier in the week that called for 240,000) and the BLS said that only 103,000 jobs were created in March, and that was with the help of 65,000 jobs added to the surveys! In my eye, that means only 38,000 jobs were created in March… But did the dollar get sold?

Unfortunately, the answer is no… Unlike the previous months that showed good jobs reports, and the dollar rallied, the green/peachback didn’t get sold on bad jobs numbers… I told you last week about the quote I had from Charles Hugh Smith, who talked about how he thought the PPT was ordering food into the office for they were having to work through the night… Makes sense that they were in to prevent dollar weakness just like they came in a week or so ago, to prevent the dollar from falling off a cliff!

Of course you can’t really hand your hat on bets about what the BLS is going to do next month, but if we should see another weak jobs report, then someone at the BLS is going to be getting a call asking them to pump up the numbers!  Or at least to turn in their government issued jacket, and to clean out their locker! 

So…Getting back to the markets… Stocks got whacked on Friday, but the futures are positive this morning, so I guess someone is interested in catching this falling knife!  Think about the trading on Friday.. The Jobs report was very disappointing and stocks got sold, but bonds didn’t rally, which they normally do when disappointing economic data prints, and the dollar didn’t get sold.. Hmmm..   Very interesting don’t you think? 

Gold was able to gain $7.20 on the day, Friday, but is down a buck or two in the early morning trading today. So, no follow up out of the starters blocks this morning with Gold.. I just finished my DTL (Dow Theory Letters) letter for this week last night, and in it I really dig deep into the jobs report, so you’ll not want to miss it! Oh, Chuck! don’t tease them like that, the DTL is a paid subscriber letter, and readers can’t just go to www.dowtheoryletters.com and read it!  I’m sorry, I just assumed that you all had signed up to read more of my stuff! HA!     

Well, the news on the Trade War front has China vowing to remain in this fight until the bitter end…  And the BIG NEWS is that China is reviewing the idea of allowing a big depreciation of the renminbi as a tool to combat the U.S’s tariffs…  I was wondering when this was going to show up…  Think about that if the U.S. raises tariffs 25% on Chinese goods, and the Peoples Bank of China (PBOC) depreciates the renminbi by a large margin, they offset some of the damage of tariffs and keeps the goods priced where U.S. consumers will still buy them. 

The one thing holding the PBOC from announcing a large depreciation is the timing… You see, the report on “currency manipulators” is due later this month, and China does NOT was to be named a “currency manipulator”, which they would most certainly be in line for admission to the club if they depreciated the renminbi by a large margin right now. 

This would be reverse engineering the thought I talked about last week when I told you the rumors going around that there could be another Plaza Accord in store for the dollar…  Who will blink first? Quick draw McGraw is needed by either China or the U.S.  What a mess! These two Giants trying to out due the other by depreciating their currency VS the other…  I shake my head in disgust that this wasn’t thought of before going to war with Trade tariffs…   

The price of Oil, only got to trade above $63 for one day, before falling back below that handle.  The Petrol Currencies that didn’t participate in Oil’s one-day rebound last week, got hit the hardest… The Russian ruble and Brazilian real saw lots of selling, while the Canadian dollar / loonie and Norwegian krone held their ground.  One other currency that used to be thought of as a Petrol Currency is the Mexican peso, and even with the reduced amount of petrol that Mexico produces these day, it gets hit with the drop in the price of Oil just like everyone else…  

The U.S. Data Cupboard had the Jobs report last Friday, which also showed that the Avg. Hourly Earnings were stronger. Longtime readers know that I put more emphasis on the Avg. Hourly Earning and the Avg. Work Week Hours  each month instead of the number of jobs created.  I think this month’s rise in the Avg. Hourly Earnings is something that we need to be on top of going forward, for wage inflation is something that we don’t want to see, and if it begins to get out of hand, those of you who own Gold will be happy you do!    

To recap…  The Jobs Jamboree was very disappointing on Friday, with only 103,000 jobs created in March, but in Chuck’s eye, only 38,000 real jobs were created… The dollar didn’t get sold on the disappointing jobs report, which is puzzling to Chuck. And Bond yields didn’t drop like they usually do on disappointing economic data… Did someone order in food for the PPT?  Gold did gain $7.20 on Friday, and China is thinking about a large depreciation of the renminbi to offset the effects of the tariffs..  

For What It’s Worth…  Since there’s all this talk of tariffs, depreciations and so forth, I thought this article explained why these things have come to the forefront of our daily lives, and it can be found here: https://www.zerohedge.com/contributing-editors   

Or, here’s your snippet:”With so much attention focused on trade data in recent weeks, Trump will hardly be happy to learn that not only did the U.S. trade deficit grow by 1.6% in February from $56.7BN to $57.6BN, missing expectations of a $56.8BN print, but was the highest monthly trade deficit going back ten years, just as the financial crisis was warming up back in 2008.

According to the Census Bureau, the deficit increased to $57.6 billion, as imports increased more than exports. Broken down by components, the goods deficit increased $0.3 billion in February to $77.0 billion. The services surplus decreased $0.6 billion in February to $19.4 billion.

The good news is that exports of goods and services increased $3.5 billion, or 1.7% , in February to $204.4 billion. Exports of goods increased $3.0 billion and exports of services increased $0.5 billion.

Meanwhile, the countries that should be worried they are about to fall in Trump’s trade war sights and resulted in a US trade deficit, included China ($34.7), European Union ($15.3), Germany ($6.7), Mexico ($6.6), Japan ($6.0), Italy ($2.8), OPEC ($2.3), India ($1.9), Taiwan ($1.5), France ($1.4), South Korea ($1.1), Saudi Arabia ($0.4), and Canada ($0.4).

More importantly, it’s not just China: the deficit with Mexico increased $1.0 billion to $6.6 billion in February, while the deficit with Germany increased $0.4 billion to $6.7 billion in February. Meanwhile, the deficit with Canada decreased $1.2 billion to $0.4 billion in February.”  

Chuck again…  So, here you are a country that makes things that U.S. consumers want…  and the country you export to, is running a deficit with you. You don’t seem to have a problem with this deficit, as long as the U.S. keeps buying your stuff, right?  But then someone upsets the applecart, and now everything is up in the air…   Who wins? Who loses? Either way I think I’ll be glad that my investment portfolio is diversified!  

Currencies today 4/9/18… American Style: A$ .7657, kiwi .7283, C$ .7815, euro 1.2269, sterling 1.41, Swiss $1.0410, … European Style: rand 12.1344, krone 7.8086, SEK 8.3846, forint 254.32, zloty 3.4191, koruna 20.6672, RUB 58.07, yen 107.10, sing 1.3129, HKD 7.8489, INR 64.88, China 6.3048, peso 18.36, BRL 3.3679, Dollar Index 90.19, Oil $62.28, 10-year 2.80%, Silver $16.31, Platinum $916.92, Palladium $921.22, and Gold… $1,331.80  

That’s it for today…  Saturday was the coldest day ever for game at Busch Stadium III… But at least the sun was shining! After winning Friday night VS our hated rival Blackhawks, I thought our Blues would win on Saturday night and sneak into the playoffs, but I was wrong, the our Blues laid a big egg on Saturday night. Hey! I’ve got some great news! Are you ready for this? The tumor in my mouth is gone… my face is back to normal size, my tongue doesn’t have to share space with a tumor any longer!  The new chemo drug worked fast. Unfortunately, the new drug is doing some strange things that I’m not pleased about.  But the tumor is gone!  Now if it will stay away and not return again!   The Gin Blossoms send us to the finish line today with their song: Allison Road.   I hope you have a Marvelous Monday and remember to Be Good To Yourself! 

Chuck Butler

It’s Opening Day In St. Louis!

April 5, 2018    

* Trade War talk softens on Wednesday…

* The PPT spreads its wings…

Good Day…  And a Tub Thumpin’ Thursday to you! I’m not in the mood for Tub Thumpin’ this morning, so hopefully that changes by this afternoon! I reacquaint myself to my St. Louis Oncologist today. She’ll be amazed at the shrinkage of the tumor in my jaw. At least I think she’ll be amazed! Nice win for my beloved Cardinals who if they hadn’t blown the game the night before would be on a 4 game winning streak! UGH!  Our Blues lost their game on a goal scored on the home team’s ice with 8-seconds left in the game… I watched it, and still don’t believe it… 10CC great me this morning with their song: Dreadlock Holiday… I don’t like cricket, I love it!  

It’s Opening Day here in St. Louis today.  The Baseball season should always open in St. Louis, as we do Opening Day better than any other organization. It’s quite the spectacle and you should put it on your bucket list to be here for Opening Day!  

Well the PPT (plunge protection team) were busy again yesterday saving the world…  I was doing some reading yesterday and came across some research that talked about how the PPT has brothers across the oceans of the world. The ECB and BOJ both stepped up their bond buying programs late last week when it looked like U.S. stocks would lead stocks around the world for a ride on the slippery slope…  

I can hear the phone call now..  Hello ECB, this is the U.S….  Since we’ve ended our bond buying programs, we need for you, who still has one, to step up the bond buying to save the word.  And then the same phone call goes to the BOJ…  Of course I’m making that stuff up, but can you see how that all played out?  

For heaven’s sake! These two Central Banks were getting prepared to do some unwinding of their respective bond portfolios, and out of the blue, they both decide to step up their bond buying?  This scenario has the PPT’s fingerprints all over it…  And Charles Hugh Smith had this to say about how hard the PPT’s all over the world have been working… .”Global Plunge Protection Teams must be ordering take-out food; every night is a long one now.”   

The effects of the bond buying only helped for one day, but Shoot Rudy, they could do this for a long time to let the stocks of the world down easy, instead of these one-day crashes!   And here’s another telling sign that something fishy is going on.. Peter Navarro of the President’s administration sent out a message the other day to U.S. investors to not fear the markets and to buy the dip…   

The price manipulators were driving the bus again yesterday… Gold traders were pushing the appreciation envelope quite nicely , and Gold reached $1,352.50, and then the price manipulators woke up and saw it above their line in the sand of $1,350, and they proceeded to flood the markets with short Gold paper trades and by the end of the day Gold was $20 lower from their high of the day, and 326,000 contracts traded, of which I’m quite sure there were quite a few short Gold paper trades..  UGH!

Gold did actually end up gaining 60-cents on the day, Big Whoop, eh?  The same fate was Silver’s trading yesterday, and the two industrial metals of Platinum and Palladium saw their values chopped off at the knees, even with the surprising auto sales data, that was propped up by pick ’em up Trucks and SUV’s…   Like I said yesterday, everything I’ve read leading up to the auto sales data print, wasn’t pointing at a better than expected auto sales print… So, I still think the auto sales print was done with smoke and mirrors..  I’m just saying…   

The currencies continue to allow the dollar bugs to beat them up, but not too badly, to keep the currencies coming back for more… UGH!  The euro continues to trade sub-1.23, and the Aussie dollar (A$) can’t seem to gather enough strength to get past 77-cents. The price of Oil gained nearly a dollar back after giving up $3 since last week, but the Petrol Currencies saw their reactions mixed… The Russian ruble and Brazilian real lost ground, while the Canadian dollar / loonie and Norwegian krone gained ground on the day.  I wonder what gives with that?  Well, now I have the job of researching that!  Hey! it gives me something to do while I wait to see the oncologist! HA!   

The Trade War talks saw a softening of the stances yesterday, and we had The White House’s National Economic Council Director Larry Kudlow reminding everyone that would listen to him that none of the tariffs discussed have gone into place yet…  We also heard that both the U.S. and China have mentioned that there’s still time for negotiation…  Recall that previously, it was only China talking about talking… What brought the U.S. into the discussion, when they seem to hell bent and whisky bound to hurt China? Well, China went for the motherlode of tariffs when they included soybeans and other agriculture from the Midwestern states that Trump needs…  Now that’ll get the U.S to the negotiation table in a NY minute!  

Oh, the tangled webs we weave, eh? There’s a lot on the plate of the U.S. right now… A teetering stock market, a Trade War, directing the PPT, and bringing the ECB and BOJ into the fray, and on cherry on top continues to be the debt, at $21 Trillion and now scheduled to have more than $1 Trillion added to it every year.. YIKES…   

I was talking with my son Andrew on Sunday, and asked him if he still showed the I.O.U.S.A documentary to his class, and he said yes, but it had gotten old. The Debt at the time of filming was $8.5 Trillion… So, he’s gotten some updates, and tries to educate his students about the rising debt and what it would mean to them as they grow older… 

He told me that he had some students that just didn’t get it, and said that their parents told  them that the U.S. just needs to print enough money to pay off the debts…  He asked me to come in to talk to them and explain how that would not be a very good solution…  So, I guess at sometime in the next two months I’ll be heading to Lindbergh H.S. for something other than a swim meet or water polo game!   The Butler Patio goes to school! HA!  

The US. Data Cupboard yesterday saw the ADP Employment report show that jobs created in March were 241,000, but we’ll have to wait-n-see what gruel the BLS has put into the jobs surveys, maybe some crow’s feet, or eye of newt…  Whatever it is, it won’t be the same as the ADP report..  We also saw that Factory Orders tried to recover the negative -1.7% January print yesterday with a 1.2% positive print for Feb…  The 1.2% figure was good, but didn’t match the expectations for 1.7% gain…  Hmm…  Oh well, they’re only expectations!  

Today’s Data Cupboard doesn’t really have another market moving so we’ll just move along here for these aren’t the droids we’re looking for!  

To recap…  The PPT has morphed into PPT for Europe and one for Japan, as they were recruited to help out late last week…  Gold had a nice day going yesterday, until the price manipulators showed up, and Gold’s nice day turned into just a 60-cents gain… UGH!  And the Trade Wars talk softened yesterday, after China had gone for the gut with tariffs on agriculture including soybeans… Whatever gets the talks going is good with me!  The currencies continue to allow the dollar bugs to have the hammer, and the price of Oil recovered nearly $1 of its $3 dollars loss this week.   

For What It’s Worth…  Since I spent some time talking about the U.S. debt this morning, I thought when I saw this article that it played well, as U.S. consumer debt is soaring just like the U.S. National Debt… This article can be found hhttps://www.cnbc.com/2018/04/04/growing-debt-among-older-americans-threatens-retirement.htmlere:    

Or, here’s your snippet: “Debt among older Americans is rising fast. In 2016, the average debt in families in which the head of the household is age 75 or older was $36,757. That is up from $30,288 in 2010, according to a recent report by the non-profit Employee Benefit Research Institute in Washington.  

 The average monthly Social Security check is $1,404, and more than 40 percent of single adults receive more than 90 percent of their income from that check, according to the government.

“There’s just fewer options that you have at that stage of the game,” said Justin Halverson, a financial advisor and co-founder of Great Waters Financial in Minneapolis. ”   

Chuck Again… This is a very disheartening article, but it’s better if you know about the problems so you can adjust, improvise, and deal with it…

Currencies today 4/5/18… American Style: A$ .7689, kiwi .7289, C$ .7833, euro 1.2266, sterling 1.4055, Swiss $1.04… European Style: rand 11,92, krone 7.8086, SEK 8.3976, forint 253.39, zloty 3.4294, koruna 20.6420, RUB 57.62, yen 107.02, sing 1.3141, HKD 7.8491, INR 65.02, China 6.2982, peso 18.09, BRL 3.3401, Dollar Index 90.18, Oil $63.13, 10-year 2.82%, Silver $16.27, Platinum $913.72, Palladium $924.41, and Gold… $1,333.10

That’s it for today…  I’m really tired today, and don’t know why, but I’m sure it has to do with the new chemo I’m taking by pill every day… The new chemo has also ramped up my blood pressure, so my BP medicines change, UGH!  But as the oncologist in Florida told me, we can take care of the BP as long as the chemo is shrinking the tumor! I’m not worries about my BP, they’ll get it in order, I’m sure! This is what I’m thinking folks… I’m thinking about taking Friday’s off, which would mean only 4 days of Pfennigs a week… What do you think?    Bad night for the Blues, good night for the Cardinals last night… The Turtles takes us to the finish line today with their song: It Ain’t Me Babe…   I hope you can get out and make this a Tub Thumpin’ Thursday, and please Be Good To Yourself! 

Chuck Butler

I’ll See Your Raise of Tarrifs And Increase The Bet!

April 4, 2018      

* Eurozone prints some good data today   

* Was smoke & mirrors used to count Car Sales?

 

Good Day… And a Wonderful Wednesday to you! Rain, rain go away, Chuck wants to go out to play! Rain came down in buckets at times yesterday, and the temp dropped throughout the day all the way down to the lovely 29 degrees it sits at this morning… UGH! Some spring, eh? Old Man Winter still has a grip on us, and Mother Nature can’t wrestle him for control. It’s the same with the dollar bugs, they just won’t let go, and still think the dollar is the place to be, even though the dollar has lost 13% value in the past year and couple of months… Neil Young greets me this morning with his song: The Needle And The Damage Done…  I played that song on my guitar and sang for a group of EverBankers on Amelia Island about 8 years ago, maybe more now that I think about it!    Time flies when you’re having fun!  

Well, I turned on the currencies screen this morning thinking that the recent slippage in the euro and other currencies would be reversed, but that was not to be, and instead of a reversal, what I saw was more slippage… UGH!  So, why did I think I would see a reversal of recent weakness in the currencies?  

Ahhh grasshopper, I’m glad you asked!  Well there are two reasons… First and foremost, the U.S. announced more tariffs, to the tune of 25%, on Chinese goods yesterday. The list of goods was so long, that you need a spreadsheet to keep track of them. But that’s not it… China retaliated this morning with an announcement of $50 Billion in new tariffs, mostly on agriculture, including soybeans.. 

The Trade War is really heating up, but through the fog we hear a faint voice calling out to us from China, saying that there’s still time for negotiations… But, in a move that I’m not happy about, the President has gone full-ahead with his tariffs, as if he wants a Trade War with China… 

The other reason I was looking for a reversal is the Eurozone printed some good data today…  First, Eurozone inflation grew 1.4% in March and is going to put pressure on the European Central Bank (ECB) to begin to unwind their stimulus measures, including bond buying and negative deposit rates… In addition, Eurozone Unemployment dropped to a 9-year low in March, to an 8.3% level…  But the dollar bugs have a grip on the currencies right now, just like old man winter has a grip on the weather! 

The Peoples Bank of China (PBOC) didn’t allow an appreciation in the renminbi last night, choosing instead to mark it down. The PBOC probably put the brakes on the recent string of appreciations because they were getting out of whack with their trading partners…  You see, if the Russian ruble and euro were also gaining then the appreciations would continue, but with them seeing slippage, the renminbi has to follow, or else get out of whack with their trading partners’ currencies.  

Gold lost $8.60 yesterday, continuing the recent trading pattern of seeing Gold rise one day, only to see it get whacked the next day. And that’s played out today with Gold up $10 in the early morning trading today.  I saw a note from friend, Rick Rule, the commodities guru, with Rick saying that Gold will easily move higher to $1,400 if an all-out Trade War breaks out… 

I also saw some data from the Perth Mint that showed sales of Gold products rose about 13 percent in March from a month earlier, while month-on-month silver sales fell for second month in a row.  And Gold sales climbed about 34 percent in March compared with the same month last year!  So demand for physical Gold is good and strong right now, but these things like the amount of demand get thrown to the curb by the price manipulators when they decide it’s time for a whacking…  One of these days, Alice!   

The prices of Platinum and Palladium are really on the skids these days and it’s all about the car sales around the world, but especially here in the U.S.  Vehicle Sales in March surprised the markets and me with a rise from the February figure… I don’t know how the folks that compiled this data did it, if they used smoke and mirrors, or an abacus, but from everything I read about car sales, I don’t see how they could post a rise in the number of cars sold…  Just the other day, Bloomberg ran an article talking about how subprime buyers were going missing from the car dealerships’ showrooms… So, anyway you slice the salami, falling car sales figures are really putting pressure on Platinum and Palladium… 

Have you noticed the drop in yield of the U.S. Treasury 10-year in the currency roundup? What looked like a rout on the yield and its next stop would be 3%, has turned around, and the U.S. Treasury 10-year’s yield has dropped to 2.75%… I think this is important folks… So pay attention if you can.. The bond boys are not fond of what the U.S. is doing with tariffs, and they believe like me that the U.S. economy will get whacked, and so they buy bonds, thus pushing the yield down… Remember, bond pricing is derived by an inverse relationship between price and yield.  If the price of the bond goes higher, the yield goes down, and vice versa…  

And the price of Oil is seeing the Trade War as a reason to ignore the latest report on supplies showing a HUGE DROP, and so the price of Oil has dropped $3 in the past few days… And this drop in the price of Oil has really played hell with the Petrol Currencies from Russia, Norway, Canada and Brazil. 

Today’s Data Cupboard has some interesting data to print today including; the ADP Employment Report for March, Factory Orders for Feb, and the Fed’s meeting minutes from their last meeting…  Of these three data prints, I would think the ADP Employment report is the most important, followed by Factory Orders, and then the meeting minutes, which quite frankly I don’t give two hoots about!  

To Recap…  The dollar bugs have a firm grip on the currencies right now, just like Old Man Winter has on the weather… The euro couldn’t find any love from two good prints for them starting with inflation rising, and Unemployment dropping. The Trade War is to blame, right now, with the U.S. placing 25% tariffs on a long list of Chinese goods, and China retaliating with $50 Billion of tariffs mostly on agriculture… UGH!  Gold got sold yesterday, but is up in the early morning trading today.  

For What It’s Worth…  This is BIG NEWS folks… I told you in the last year that Russia was working on an alternative to SWIFT (worldwide payments system that the U.S. threatened to lock Russia out of after the conflict in Ukraine) and they are ready to go live! You can read about it here: https://www.rt.com/business/418665-russia-banks-ready-shut-swift/    

Or, here’s your snippet: “Russian financial institutions and firms are ready to work without SWIFT’s interbank cash transfer services, according to Deputy Prime Minister Arkady Dvorkovich.

The potential disconnection of Russia from SWIFT has been under discussion since 2014, when the EU and the US introduced the first round of international penalties against Moscow over alleged involvement in the Ukraine crisis and the reunification with Crimea.
At the time, the European Parliament called for strong actions against Russia, including expelling the country from money transfer services. However, the Society for Worldwide Interbank Financial Telecommunication regarded the recommendations as violating rights and damaging for businesses.

In 2017, Russia’s Central Bank Governor Elvira Nabiullina told President Vladimir Putin that the banking sector had been provided with all the necessary conditions for operating lenders and payment systems in case of disconnection from SWIFT. According to the regulator, 90 percent of ATMs in Russia were ready to accept the Mir payment system, a domestic version of Visa and MasterCard.

The Mir payment system was introduced in 2015 after clients of several Russian banks (SMP Bank, InvestCapitalBank, Russia Bank and Sobinbank) were unable to use Visa and MasterCard due to the sanctions.”

Chuck Again… Just another step in the direction that Russia and China are working toward that will bring about a change in the current currency regime…    

Currencies today 4/4/18… American Style: A$ .7675, kiwi .7280, C$ .7795, euro 1.2278, sterling 1.4035, Swiss $1.0428, European Style: rand 11.9070, krone 7.8532, SEK 8.4034, forint 253.92, zloty 3.4265, koruna 20.5478, RUB 57.53, yen 106.13, sing 1.3147, HKD 7.8487, INR 64.81, China 6.2857, peso 18.32, BRL 3.3180, Dollar Index 90.10, Oil $62.36, 10-year 2.75%, Silver $16.44, Platinum $921.24, Palladium $923.82, and Gold… $1,347.30

That’s it for today… What an awful end to the baseball game last night with my beloved Cardinals blowing the game. I sent off my taxes for 2016 to the tax guru yesterday… I know it’s late, but when you have to pay like I always have to do, better late than early! At least that’s my story and I’m sticking to it! HA! The Home opener is tomorrow here in St. Louis. We do Home Openers like no other team and I used to love being there for the festivities prior to the game, but my “source” for opening day tickets has me on the personal non gratis list these days, and so I watch the festivities from home… Buddy Miles takes us to the finish line with his song: Down By the River…  Which always reminds me of the line from the late great Chris Farley… I live in a van down by the river!   And with that, it’s time to go… I hope you have a Wonderful Wednesday, and Be Good To Yourself! 

Chuck Butler

 

 

RBA Leaves Rates Unchanged…

April 3, 2018      

* More Trade War Talk… UGH!  

* Economists point out U.S debt levels as a problem!  

 

Good Day… And a Tom Terrific Tuesday to you! And Congratulations to the Villanova Wildcats on their NCAA Basketball Championship last night. For the second time in 2 months, the city of Philadelphia was rocking last night. It’s the first time that the Super Bowl Champions and the NCAA Basketball Champion are from the same city… It’s ugly cold here, and I’m about ready to turn around and head back down south! Triumph greets me this morning with their song: Lay It On the Line…  

Which is what the Chinese keep asking the U.S. to do, but the U.S. apparently has better things to do than to meet with the Chinese and discuss tariffs.    

Yesterday, I gave you my thoughts on the Trade War and tariffs… And yesterday Bloomberg ran an article titled: Trump’s Tariffs Hurting American Factories as Prices Skyrocket. Hey! I don’t make this stuff up folks… I told you the tariffs would hurt the economy, and already they are beginning to show… For instance, yesterday, the ISM manufacturing index printed for March, and it showed some slippage, albeit the index is still showing a healthy manufacturing sector. But think about this, we saw slippage, and the tariffs didn’t go into effect until the last week of March! Soon, oh soon the light… (Yes) I was reminded of those lyrics while writing about how the tariffs are already showing up hurting the manufacturing sector…Yes, soon, we’ll all see the light…   

And the Trade War is having an effect on other countries, like Australia, where the Reserve Bank of Australia (RBA) left rates unchanged last night and pointed to the higher funding costs and the increased concern around U.S. Trade Policy…  Hmmm…  I found it interesting that RBA Gov. Lowe, didn’t mention the one bugaboo in the recovering Aussie economy, which is the price of iron ore, Australia’s biggest overseas earner, slipped into bear market territory recently, but chose instead to point the finger at the problems in the U.S. as his main reason for leaving rates unchanged.  

The Aussie dollar (A$) shrugged off the unchanged rates news, and continues to recover the losses it took after reaching 81-cents in January, both the A$ and kiwi got whacked and both have been in recovery mode since. Of course a rate hike in Australia would have been like Manna From Heaven for the A$, but that was not to be, and the A$ will have to continue to take small gains daily.   

Speaking of U.S. Trade Policy… I would think that you all have heard that President Trump is threatening to pull the U.S. out of NAFTA…  I tell you this now, so you can hear me now and listen to me later, but should the President prevail the congressional block of pulling out of NAFTA, and lawsuits filed by U.S manufacturers who would be damaged by such a move, Mexico’s economy would be in deep dookie…    But it would also hurt the U.S. economy…

For instance, without NAFTA, Mexico could impose a tariff on U.S. Corn imports, and those tariffs could be as high as 37%!   These trade wars are really stupid ideas, folks, for no one wins, and everyone’s economy is sucked down a black tube… Remember Ross Perot? Remember his great sucking sound, when talking about the negative effects of NAFTA?  I don’t know what’s worse now 23 years later…   

The rest of the currencies have seen some slippage in the past 24 hours, with the euro slipping below the 1.23 handle… I always here the stock jockeys ranting about how investors needed to “buy the dips”… Well, I won’t rant… but I will say it does make sense to me to “buy the dips in the currencies and metals” But maybe, that’s just me, being me, eh?  

Gold had a good day yesterday gaining more than $15 for the day.  I was talking yesterday morning and saying that with everything that’s going on in the world these days, Gold should be well bid… And then it went out and gained more than $15 on the day!  Unfortunately, there is no follow up in the early morning trading today, and Gold is getting sold by $6 early this morning.  

The price of Oil saw a $2 slide downward in the past 24 hours, as supplies are up again… It’s the darn cycle that I’ve explained before with Oil… The price falls, developers ramp up exploration, and the price rises, but then all the exploration fills the coffers with Oil and the price drops again, and then later, rinse, repeat…   Something needs to happen to break this cycle that the price of Oil has been stuck in for what seems like a month of Sundays!   

Now, don’t get me wrong here, I’m not rooting for higher priced Oil, as I don’t care to pay $75 to fill up the gas tank for my car! But when something should be seeing price gains and it isn’t, I point it out… Like I do with the price of Gold every day, and euros…  

Yesterday’s  Data Cupboard  saw some interesting data prints, with the aforementioned ISM (manufacturing index) slipping and Construction Spending only able to carve out a 0.1% gain for February…  Today’s Cupboard has just one print, but it will be an interesting one, as Vehicle Sales for March will show whether consumers begin to show signs of being tapped out… 

Bloomberg ran an article that talked about this, and here’s what it had to say, “The American consumers who were stretching themselves to buy or lease a new car are starting to go missing from showrooms. Rising interest rates and new-vehicle prices are squeezing shoppers with shaky credit and tight budgets out of the market. In the first two months of this year, sales were flat among the highest-rated borrowers, while deliveries to those with subprime scores slumped 9 percent, according to J.D. Power”  

To recap… The currencies saw some downward slippage in the past 24 hours, and Gold which had gained $15 yesterday, is getting sold by $6 in the early morning trading. The RBA left rates unchanged overnight, and pointed to the rising financing costs and Trade policy of the U.S. as their reason for leaving rates unchanged…. Hmmm…   The President is discussing pulling the U.S. out of NAFTA…  

For What It’s Worth… Well to hear me, or some other people talk about the rising debt is one thing, but to hear about if rom 5 of the most well-respected economists (notice Paul Krugman isn’t one of them!) is another, and something people should be sitting up and understanding immediately…. This article originated in the Washington Post and it can be found here: https://www.washingtonpost.com/opinions/the-debt-crisis-is-on-our-doorstep/2018/03/27/fd28318c-27d3-11e8-bc72-077aa4dab9ef_story.html?utm_term=.e2d5c85f2771

Or, here’s your snippet: “It’s difficult to get economists to agree on anything, but this article is a rare instance of five prominent economists in total agreement. Unfortunately the issue they agree on is that the U.S. is going broke. This article is an op-ed published in the Washington Post and written by Michael Boskin, John Cochrane, John Cogan, George Schultz and John Taylor. Schultz was Treasury Secretary for President Nixon. Boskin was Chairman of the Council of Economic Advisors for President Bush 41. John Taylor was on the short list to be Chairman of the Fed before President Trump settled on Jay Powell. Cochrane and Cogan have highly distinguished academic careers as do the others. In short, this is an “A-List” of top-tier economists. What they agree on is that the U.S. is heading quickly toward $1 trillion annual deficits, probably by next year, and that these deficits will continue at that level as far as the eye can see. They also warn that government debt will increase by $5 trillion in the next few years on top of the $20 trillion already outstanding. Higher interest on the debt will just add to the burden. These are not the warnings of a fringe doomsday blogger, but of the establishment itself.”

Chuck Again… My own estimate is that the actual debt and deficit numbers will be worse than these projections pushing the U.S. closer toward a true crisis of confidence in the dollar. Because… we, as a country, ALWAYS underestimate debt levels… And don’t forget that 10,000 baby boomers retire every day, and will continue to do so for at least another 9 years… Whose going to pay for all those Unfunded Liabilities?  

Currencies today  4/2/18… American Style: A$ .7681, kiwi .7245, C$ .7760, euro 1.2296, sterling 1.4040, Swiss $1.0440, … European Style: rand 11.8477, krone 7.8372, SEK 8.3750, forint 254.16, zloty 3.4245, koruna 20.6308, RUB 57.17, yen 106.20, sing 1.31, HKD 7.8485, INR 64.91, China 6.2795, peso 18.22, BRL 3.3088, Dollar Index 90.09, Oil $63.05, 10yr 2.57%, Silver $16.51, Platinum $930.40, Palladium $940.75, and Gold… $1,340.80  

That’s it for today… well, our Blues laid another egg last night and they most likely will miss the playoffs this year. UGH! Oh well, if you don’t make the playoffs you can’t experience a playoff heartbreak! My beloved Cardinals saw their bats come alive yesterday in Milwaukee… How about that 6th man for Villanova last night? He ended up being the star of the game!  This is late again today! UGH! It’s taking me longer and longer to gather up all my thoughts each day as to what to write about…  One of these days you’ll get a Pfennig and it will only be 500 words!  Hey! teacher leave those kids alone! Yes, Pink Floyd sends us to the finish line today with their song: Another Brick In The Wall…  some great guitar work by David Gilmour in that song!  And with that, I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!  

Chuck Butler

 

Dollar Reserves Begin To Show Weakness…

April 2, 2018    

* China moves forward with their own tariffs!

* A heavy data week here in the U.S.  

 

Good Day…. And a Marvelous Monday to you! And, welcome to April! One of my dear friends at my old office is named April, and for years I’ve called her April Showers… So, it’s her month! I’ve done this joke every April, so only new readers will not get it before the punch line. But if April showers bring may flowers, what do May flowers bring? The answer: Pilgrims… HA! Well, my beloved Cardinals could only win 1 of 3 in NYC, UGH!  The NCAA Tournament Championship game is tonight: Villanova VS Michigan. I was saddened when Loyola of Chicago lost on Saturday…  Eric Clapton greets me this morning as he and his bandmates Derek and the Dominoes sing their song: Layla… There’s a long juicy, gossipy story behind that song, but I won’t get into it here…   

Well… Here we are in April.. Yesterday was Easter, along with April Fool’s Day, and Mother Nature decided to play a joke on us with some nasty weather, sleet that turned to snow yesterday.  I’m dreaming of a White Easter…  I think I may have a hit song there, you think? HA!  We’ve had one day of sun since I returned to St. Louis, and the rest of the time, it’s raining and ugly outside… UGH!   

It’s been very much like that with the currencies and metals in the past two weeks too. The markets are confused with the signals from the U.S. and China regarding their pending Trade War, and so with no real signs that this is going to take place, traders and such are not going out on limbs..  A bunch of chickens if you ask me! Make a call, invest some capital and see where it goes!  Besides, today, China has gone ahead and place tariffs on 128 U.S. exports to China… Yes, they begin today, and this is no After April Fool’s Day joke, folks… 

I’ve received quite a few emails from readers in the past week, jumping all over me for my stance on the Trade War. I tried to be as diplomatic as I could and told them to go jump in a lake! No… I really tried to explain my position, that I understood that the U.S. had been treated unfairly by other countries for years, with regards to Trade. But quite frankly, the problem with the things we make here in the U.S. and attempt to sell overseas is that they are too darn expensive… And we can thank the fact that our wages are much higher here than in other countries. So, the answer to correct that is to add tariffs to imported goods? That’s just one of the tools in the negotiation tool box.. And one that should only be used when nothing else works. Instead we’ve gone to the “anchor tool” right from the start… The only place we can go now is to back off, and look weak…

Besides, I’ve shown how past attempts by presidents to implement protectionism measures led to economic messes, and that’s what I’m fearful of, folks… And that’s my stance and I’m not moving from it! (people that know me personally, know I’m difficult to move! HA!) 

The U.S. Data Cupboard, last Thursday, showed that Personal Spending only grew at 0.2%, that’s not the kind of consumer spending that the economy needs to grow, but don’t let that fact get in the way of more Fed rate hikes!   On Friday, it was a holiday for the stock jockeys, and that gave the bond and currency guys the idea to take off early, and head for the Hamptons.  So, we didn’t see much movement in the currencies and metals on Friday, for instance Gold added 60-cents… 

The euro has inched higher after the PPT took the single unit to the woodshed last week. Yes, with Gold trading over $1,350 and the euro heading to 1.25, and stocks licking their wounds after a horrible trading day, the Plunge Protection Team stepped in and bought stocks and dollars…  So, now a week later, stocks are still “iffy”, while Gold is up $8 in early morning trading and the euro is adding to its 1.23 handle.  

While the euro and other currencies suffered from the wrath of the PPT, the Chinese renminbi took a different course, and had a good week. The renminbi was allowed to appreciate again last night, and I think they are allowing these appreciations to get under the U.S. President’s skin… To show him that these tariffs and a Trade War isn’t going to hurt the Chinese…  That’s just my viewpoint on these nightly appreciations going on with the renminbi…  And don’t forget that China had a good week last week as they introduced their new Oil futures contract that’s denominated in renminbi, and it was a HUGE HIT for China on the first day and on…  

The Chinese will gain a much wider distribution of their currency with these Oil Futures denominated in their currency.. Getting Central Banks around the world to bulk up on renminbi in their reserves, and then completing the Opening of their capital markets are the last two steps the Chinese need to see happen before they allow a float of their currency, but considering where they came from 8 years ago, only having two more steps, means they’ve done a lot of work in these past 8 years, and should be commended… But then they ARE a Communist Country, but when they allow a float of their currency, we will be able to put the fact that they are a Communist Country on the back burner… 

I like it when the renminbi is allowed to appreciate, because it allows the Singapore dollar (S$) to follow the renminbi’s lead. I’ve always like the S$ for the way they run their country, and the Monetary Authority of Singapore (MAS). The MAS does something that all Central Banks should use, and that is the used the value of their currency to fight inflation, instead of just willy nilly rate hikes… 

Another country that’s ahead of China in the distribution and float of their currency is Russia… I was explaining Russia’s reserves to anyone that would listen to me yesterday. You see, as I’ve explained in the past, Russia decided to slow down the accumulation of other country’s currencies as reserves and instead bought physical Gold, and then in the past few years, while the dollar was still swinging a mighty stick, Russia’s reserves grew in value because they held Gold, and not euros, francs, etc.   

Well, like I said above, Gold is up $8 in the early morning trading today, which is a good start to the day!  And it should be gaining with all that’s going on in the world on April 2nd, 2018… But then that’s just me thinking out loud about Gold…   One thing I’m going to highlight in the FWIW section today is the fact that the use of dollars in Central Bank reserves had fallen, with euros and renminbi picking up the slack. I’m sure Gold, if properly measured would be the biggest winner of this category… 

For instance, the country of Pakistan is depleting their dollar reserves at the fastest pace in Asia, according to Bloomberg… Now, all of Pakistan’s dollar reserves aren’t being sold because of trade problems… keep that in mind… it’s just an example of how, what I talked about a couple of weeks ago is still going on, and that’s Central Banks selling their extra dollar reserves in preparation of a long sweeping downward move in the dollar because of the pending Trade War.    

The U.S. Data Cupboard will be very busy this week with ISM (manufacturing index), Factory Orders, Car Sales and the ADP Employment Report that will print ahead of the Jobs Jamboree on Friday…  Lots o’ data, and the dollar won’t be the beneficiary if the data disappoints like it has for the last 1/2 year.   

To recap… Chuck’s singing I’m dreaming of a White Easter, and wishing he was back in S. Florida!  The currencies and metals didn’t move much on Friday, as it was a holiday for the stock jockeys, that the bond and currency guys just piled on to. But Gold is up $8 in the early morning trading today, and China went ahead and began their tariffs on 128 U.S. products today… 

For What It’s Worth… Ok, I already spoiled the surprise, if there is one, with the FWIW article today, which is about how the dollar reserves are falling and it can be found here: http://www.themalaymailonline.com/money/article/us-dollar-share-of-global-currency-reserves-hits-4-year-low-says-imf  

Or, here’s your snippet: “Reserves held in U.S. dollars rose to US$6.28 trillion (RM24.2 trillion), or 62.7 per cent of allocated reserves, in the fourth quarter, from US$6.13 trillion, or 63.5 per cent, in the third quarter.

The share of U.S. dollar reserves declined to its smallest level since reaching 61.24 per cent in the fourth quarter of 2013, IMF data showed.
Ranked second behind the greenback, the euro’s share of global reserves reached 20.15 in the fourth quarter, up from 20.05 per cent in the third quarter. This was its biggest share in three years, but well below the single currency’s peak share of reserves at 28 per cent in 2009.

The yen’s share of currency reserves rebounded from a dip in the third quarter to 4.89 per cent, which was its biggest since the fourth quarter of 2002, IMF data showed.

China’s share of allocated currency reserves was 1.23 per cent, up from 1.12 per cent from the prior quarter. The IMF had reported the yuan’s share of central bank holdings for the first time in the fourth quarter of 2016.

IMF data also showed that global reserves climbed to US$11.425 trillion, which was the highest since the second quarter of 2015 and was up from US$11.297 trillion in the third quarter.”  

Chuck Again…  It’s all happening right before our eyes folks… I sure hope you’ve properly diversified your investment portfolio using currencies and metals!  

Currencies today 4/2/2018… American Style: A$ .7683, kiwi .7236, C$ .7776, euro 1.2330, sterling 1.4065, Swiss $1.0490, … European Style: rand 11.82, krone 7.8390, SEK 8.3408, forint 253.35, zloty 3.4140, koruna 20.5668, RUB 57.17, yen 106.27, sing 1.31, HKD 7.8480, INR 64.93, China 6.2795, peso 18.18, BRL 3.3038, Dollar Index 89.89, Oil $65.20, 10yr 2.76%, Silver $16.47, Platinum $936.77, Palladium $952.76, and Gold… $1,336

That’s it for today…  Friday night was the Lindbergh High Water Polo alumni game, and I got to watch both my sons score goals for the winning team. I also got to catch up with my buddies, Kevin, Mike, Duane, Rick, Carl and Aaron at my local watering hole on Friday afternoon. Mike was nice enough to buy me a ticket bet on the Cardinals to win the World Series. I used to do that every year that I was sent to Las Vegas in the spring. but since I don’t go there any longer, I need to have those that do go there make my bet for me!  Otis Redding takes us to the finish line today with his classic song: Dock of the Bay…  And with that, I’m late, so this had better get out soon! I hope you have a Marvelous Monday, and please remember to always Be Good To Yourself!  

Chuck Butler

Hey Markets… Can’t You See I’m Tapped Out?

March 29, 2018  

* The PPT springs to action!   

* Consumer Confidence falls? What gives with that?

 

Good Day… And an Opening Day, Tub Thumpin’ Thursday to you! IT’S OPENING DAY… YAHOO! Yes, Major League Baseball begins its new season today. I’ve long said that Opening Day should be a National Holiday, for our National Sport! So, since I believe today should be a holiday, this will be short-n-sweet this morning! HA!  Seriously, I’m going to talk a bit about the markets yesterday and last night, and then turn a long discussion about the U.S. consumer for today’s letter…  R.E.M. greets me this morning with their song: It’s The End Of The World…  leave to my iPod to shuffle and spool up a song like that on a day when I’m going to give you some dire news on the U.S. Consumer…    

Well, while I was jetting through space yesterday, sipping on a Bloody Mary, and chomping down some peanuts, the currencies and metals were getting whacked! And when I checked everything last night I thought to myself that this didn’t really shock me one iota. In fact, earlier this week I told you that Gold had gone past $1,350, which was the line in the sand that the price manipulators had drawn, and every time Gold had climbed to that level and beyond in recent times, it got whacked, and whacked good… 

And that’s exactly what happened with Gold… The currencies on the other hand were subjected to a taste of the PPT (Plunge Protection Team), who saw to it that stocks recovered their losses last week, and brought the Dollar Index back above 90…  So, not to worry, as I attempt to do my best Alfred E. Newman, for this was all an engineered take down to protect the dollar…  And that’s my thought on this, and I’m not going to change it!

Wait, What? you don’t believe in this thought that stocks, currencies and Gold were all subjected to a taste of PPT seasoning?  Well, then you explain to me and everyone else what caused the stocks to rebound, and the dollar to rebound?  Come on, I’m waiting!     OK… So the euro has dropped below 1.24 again, and is barely holding on to the 1.23 handle. Aussie and kiwi dollars have given back most of their hard fought gains of recent trading days, and Gold lost $20 yesterday…   

So, I’m going to give you some information now about the U.S. Consumer that’s going to make you scratch your head and say, “How in the world are stocks rebounding when investors stop and think about this stuff?” 

Alrighty then with no further ado, let’s get to the information I’ve compiled…  The U.S. savings rate has fallen from, an already reduced figure of 3.2% in Jan to 2.9% in Feb… This savings rate level of 2.9% represents the lowest level since November 2007…  Now, do I need to tell you what happened right after 11/2007?   

Digging further into the U.S. Consumer’s plight…  we have credit card usage…  but first I need to tell you that this data is only recorded quarterly, so the last data we have is the quarter ending Dec. 2017…  But that’s recent enough for this discussion…  And Credit Card debt has risen like a rocket leaving a launch pad…  In the past year Credit Card Debt is up $779 Billion from the previous year or,  a change of 3.22% from last quarter and 7.06% from one year ago. 

Can you say, “tapped out”? I knew you could!  Well, if you think the U.S. Consumer can rebound given the tax cuts that are coming his way, you better think again… Even knowing that tax cuts are coming the Consumer Confidence Conference Board reports that plans to buy things like autos, home, large appliances, etc. has plunged in recent months…  

U.S. Household Debt’s graph looks like a the hill that you wouldn’t want to climb as it continues to grow, with last year’s gain at 4.55%…  In fact, when you break Household Debt down you see the pain levels… Auto Loan Debt is up .66% to the previous quarter. And Auto loan Delinquencies greater than 90 days is up 2.02%… Student Loan Debt is up 1.55%, and I already told you about Credit Card Debt..  

Who’s going to “bail out the consumer”   No one… foreclosures, debt defaults and all those other niceties that come with debt that cant’ be paid back is in our future folks…   I don’t like talking about this stuff, but unless you read it here, you won’t hear about it on the nightly or cable news, and if you didn’t read it here,  then one day, the crash and burn happens and you say, “I didn’t realize the U.S. Consumer was in trouble”…  

The U.S. Data Cupboard has seen the past two days some interesting data prints, like the Consumer Confidence report for March fell from 130 to 127.7…  I was surprised by this fall in Confidence… Maybe there something here? I guess we’ll have to see next month’s data to know for sure… We also have seen the Case/Shiller Home Price Index for January slip from 6.3% to 6.2%…  Again, something there?   

Yesterday’s Data Cupboard had the final revision of 4th QTR GDP, and surprisingly, it jumped higher than the last revision which was 2.5%, and ended the year, supposedly, at 2.9% GDP for the 4th QTR…   Today’s Data Cupboard has two of my fave data prints… Personal Income and Spending. In addition, we’ll see Core Inflation from Feb…   The Personal Spending data will be the key to today’s take on just how “tapped out” the U.S. Consumer is…   

Gold got whacked by $20 yesterday… I wish I could say that I didn’t know it was coming…   And the price of Oil slipped below the $65 handle. So all three anti-dollar assets were in the dumpster yesterday, euros, Gold and Oil…  

Hey! for all of you who are looking for a silver lining in all of this today… The Chinese renminbi saw an appreciation last night… So, we’ve got that going for us! HA!    

To recap… In Chuck’s mind, the PPT was out in force and bought dollars and stocks yesterday… I remember telling my good friend Walt on Sunday as we talked on the Butler Patio South, that not to worry about the HUGE sell off of stocks on Friday, the PPT would make sure that selling didn’t carry on… And looky there! Once again, I would slap myself on the back, but my arms aren’t long enough! HA!    

For what It’s Worth…  You won’t believe this when you read it, so stop, take a deep breath, and reread it… It’s an article about how Goldman Sachs, aka Lola, is touting Gold and fearing a stock market crash, and can be found here: https://www.cnbc.com/2018/03/26/goldman-sachs-expects-gold-to-outperform-amid-growing-fears-of-a-stock-market-correction.html    

Or, here’s your snippet: “Goldman Sachs is expecting gold to “outperform” over the coming months.

For the first time in more than five years, commodity analysts at the U.S. investment bank are bullish on yellow metal prices. Goldman’s analysts said signs of an uptick in inflation and the “increased risk” of a stock market correction should both prove to be price supportive for bullion.
“Our commodities team believes that the dislocation between the gold prices and U.S. rates is here to say,” Goldman Sachs analysts, led by Eugene King, said in a research note published Monday.

“Based on empirical data for the past six tightening cycles, gold has outperformed post rate hikes four times,” the analysts added.”

Chuck Again…  I want to thank Ed Steer, for he posted this article first, and is always first out of the chute each day with his letter, that can be found at www.edsteergoldandsilver.com     

Currencies today 3/29/18… American Style: A$ .7666, kiwi .7193, C$ .7742, euro 1.2306, sterling 1.4055, Swiss $1.0442, … European Style: rand 11.8244, krone 7.8675, SEK 8.3575, forint 253.80, zloty 3.4127, koruna 20.65, RUB 57.57, yen 106.60, sing 1.3120, HKD 7.8483, INR 65.04, China 6.2876, peso 18.29, BRL 3.3279, Dollar Index 90.08, Oil $64.51, 10yr 2.77%, Silver $16.23, Platinum $937.31, Palladium $971.72, and Gold… $1.328.00 

That’s it for today…  Basically an uneventful trip back to St. Louis yesterday from my little place in S. Florida. And today, my beloved Cardinals, injuries and all to start the season, open up in NYC against the Metropolitans (Mets)… The Mets have all that pitching, and getting them to start the season before they get hurt, which they have a history of doing as the season goes on, is not a good way to start the season… But we’ll have to see what happens…  Tomorrow is Good Friday… and it’s a holiday for the stock market, and therefore I’m calling for a holiday for me too! So, no Pfennig tomorrow, I hope, if you observe Easter that you have a blessed one. It’s supposed to be cold here for Easter, which will cut short the Easter Egg hunts for sure! I can’t wait to see what my darling little d is wearing on Easter… I really enjoyed getting to spend time with her last week, and her brother too! OK… time to go…  The Jackson Browne song that always makes me tear up, takes us to the finish line today, as he sings his song: Late For The Sky…   And with that, I hope you have a Tub Thumpin’ Thursday, and a happy Opening Day!   And Be Good To Yourself!

Chuck Butler