January 16, 2019
* Dollar continues to win back recent losses
* Chuck is the ghost of the future…
Good Day… And a Wonderful Wednesday to you! Have you ever had “one of those days” where you just can’t wake up, and every time you sit down to relax you fall asleep, and the next thing you know it’s 3 0’clock in the afternoon? Well, I had one of those yesterday… Joe Walsh sang a song in the 70’s that went like this: Sleep all day, out all night, I know where you’re going… Well, I don’t go anywhere at night, but I did sleep all day! I’m here by myself, and it’s very quiet around here, so the sleeping was made easier with it being so quiet. And one would have thought that sleeping all day would keep one from sleeping at night… But Nooooooooo! I didn’t find that to be challenging! Ok… Yes, greets me this morning with their song: Owner of a Lonely Heart… (it’s much better than an owner of a broken heart)
Well, I got the first part of my call on the BREXIT vote correct, as it was defeated soundly yesterday. Now we sit back as watch how the U.K. deals with this. I’m still of the opinion that PM May will have to resign after being so soundly defeated, and that the U.K. economy will begin to slow down to a snail’s pace. None of that is good for pound sterling folks… I’m just saying…
I’ve been quite the naysayer about the U.K.’s fortunes, and economy… And it all began with rising debt… Just like every other country that has gone down this road, the U.K. is feeling the pinch of the amount of debt they have and how it takes up all their time effort and tax money to deal with it, leaving nothing else for the governmental programs.
The same thing has had a grip on the U.S. economy, as our debt figure continues to climb toward $22 Trillion. Wanna know what I think caused this all to happen? Well, you’re going to hear about it any-old-way! Go back to August 1971… I had just obtained my driver’s license… And Richard Nixon was removing the Gold backing from the dollar, allowing it to float and therefore removing the Governors from issuance of the dollar. With no governors holding back the issuance of dollars, the U.S. Gov’t went bananas, and began to deficit spend every year… And that’s how we got here…
Of course, if we ever had voted in representatives that had their eye on the debt ball, instead of their getting voted in again for another term, we wouldn’t have needed governors, but we did… And we didn’t have responsible people to keep the spending in check. And from humble beginnings we now have more than $1 Trillion in deficit spending every year! Soon, it will turn to $2 Trillion every year… But before it gets too unruly… The whole shootin’ match will collapse, and guess where we’ll end up? With a currency attached to Gold again… Will the circle be unbroken, by and by, lord, by and by…
I’ve given you all this scenario before, but since this is the road we’re on this morning, here goes… I imagine there will be a meeting of the leaders of the great nations of the world, and there will be two tables like in a large household for Thanksgiving. At that adults table, will be the major holders of physical Gold, including the U.S., China, Russia, Germany, and so on… And at the kids table will be the minor holders of Gold. And this is where China finally shows their hand, and reveals just how much physical Gold they actually have. My guess is that China holds more than the U.S’s holding of 8.965 metric tons… Which means that China will be at the head of the table… Now, that’s scary isn’t it? It’ll be too late to rue the day you thought Gold was a barbaric relic…
Reminds me of one of my fave sayings… It’s too late to remember that your main goal was to drain the swamp, when you’re up to your rear end in alligators!
Well, the dollar continued to gain back its losses from late last week, yesterday. At one point in the day the euro had given up the 1.14 handle, but has recovered that figure in the overnight trading. Yesterday, Germany posted that its economy grew by just 1.5 per cent last year, down from 2.5 per cent in 2017 and the weakest performance since 2013. Well, when you print weak data like that, you’re bound to see your currency get sold…
Like I said the other day, it’s time for the Eurozone to drop their economic sanctions the hold on Russia… The sanctions aren’t doing either economy any good. In other news from the region, did you hear that the U.S. is thinking of sanctioning Germany for their gas deal with Russia? And right there is the reason that IF it comes to the physical Gold holders of the world coming together to determine the next currency regime, that the U.S. will get treated like… Well, let’s just say the other countries will not be nice towards the U.S.
This is where in my younger days I would have said, “who cares?” We’re the U.S. of A! We don’t need no stinkin’ other countries! But that was before I grew up and realized that the U.S. does need foreign countries so that their ever growing debt can be financed…
OK… Gold lost $2.10 yesterday on not much volume comparatively speaking to other days when volume is a moon shot. I’m still waiting patiently, no what am I talking about? I’m not a patient kind of person! But I’m still waiting for Gold to breakout to the upside… I’m convinced that it will happen, when is the $64 question…
The U.S. Data Cupboard yesterday, had the December PPI to print, and it printed negative -0.1%… That means that wholesale inflation that feeds consumer inflation was very weak in December, thus proving my point I made yesterday that inflation has stopped rising… There was a minor piece of data yesterday that was also interesting… The Empire State manufacturing index fell from 11.5 to 3.9… That means manufacturing in the NY region fell out of bed this month…
This morning we’ll finally get some real economic data with the December print of Retail Sales… Was the Christmas shopping season as weak as I think it was? Well, November’s Retail Sales only grew 0.2%, and the BHI indicates to me that December’s print will be even weaker…
To Recap… The BREXIT deal was defeated soundly (by 230 votes!) in the U.K. yesterday, and now the bad scenario of having to deal with this defeat is on the table… This will all be negative for pound sterling. The currencies saw the dollar gain back more of its losses from last week, yesterday… And Chuck takes us a trip to our future…
For What It’s Worth… Thanks to longtime reader, Bob, who sent me this link that highlights the World Bank and their call regarding the world economy… And it can be found here: https://countercurrents.org/2019/01/15/world-bank-warns-of-storm-clouds-over-global-economy/
Or, here’s your snippet: “The World Bank has added its voice to those warning of a worsening outlook for the global economy this year, amid signs that some major economies could experience a recession.
In its Global Economic Prospects report issued last week, entitled “Darkening Skies,” it stated that “storm clouds are brewing for the global economy” and contrasted the situation with that of a year ago.
“At the beginning of 2018 the global economy was firing on all cylinders, but it lost speed during the year and the ride could get even bumpier ahead,” the World Bank chief executive Kristalina Georgieva said.
Pointing to the main reasons for the slowdown, the bank said international trade and investment had softened, trade tensions remain elevated and several large emerging markets experienced “substantial financial pressures last year.” Growth in emerging markets and developing economies is expected to remain flat, the pickup in economies that rely heavily on commodity exports is likely to be much slower than hoped for and “growth in many other economies is anticipated to be decelerate.”
Chuck Again… Well, at least the World Bank is trying to tell us the truth, whereas the Fed continues the company line of the U.S. economy is strong and robust… Which one is reality? I’ll take what’s behind door number 1!
Currencies today 1/16/19 American Style: A$.7190, kiwi .6783, C$ .7540, euro 1.1410, sterling 1.2877, Swiss $1.0120, European Style: rand 13.6788, krone 8.5305, SEK 8.9660, forint 283.20, zloty 3.7584, koruna 22.4238, RUB 67.00, yen 108.67, sing 1.3544, HKD 7.8441, INR 71.04, China 6.7563, peso 19.01, BRL 3.7059, Dollar index 95.94, Oil $51.79, 10-year 2.73%, Silver $15.58, Platinum $800.60, Palladium $1,334.41, and Gold… $1,289.58
That’s it for today… The Gov’t shutdown continues onward, but certainly not upward… I read where there are 800,000 government workers now furloughed or working without pay… Ouch! That’s going to leave a mark! Well, our Blues’ winning streak came to an end last night on Long Island where they lost in overtime, but were still awarded one point for the tie at the end of regulation time… They go to Boston now for a date with the Big Bad Bruins Thursday night! We had a cold front move through last night, and I have to admit it’s a little chilly outside this morning. But nothing like the overnight lows up north! OK… do you like old Motown music, The Temptations, Four Tops, Marvin Gaye, etc. ? Well if you do, and you miss that kind of music, you’ll want to listen to Leon Bridges, who takes us to the finish line today with his song: Coming Home… Great groovin’ music for sure… I hope you have a Wonderful Wednesday and make sure that you continue to Be Good To Yourself!
Chuck Butler