November 6, 2019
* Currencies have given back, all gained ground from Friday…
* Gold & Silver both get taken down on Tuesday…
Good day… And a Wonderful Wednesday to you! After experiencing a cold front going through our region last week, and then warming up again, the cold front is coming back again tonight! UGH! I totally despise having to put on a winter coat, hat, scarf and gloves just to go outside! But this is one of the things my mom loved about St. Louis, we get to experience all 4 seasons… It’s just that spring and fall always seem to be short compared to winter and summer… Oh well, it is what it is… I had to cut the Uni-boot off yesterday, as the problems arose with it… My leg wound is NOT getting any better, and this is after 1 month of being seen by a wound specialist doctor… I get very discouraged about things that move along in a timely manner, so you maybe you can imagine just how discouraged I am right now! The Ozark Mountain Daredevils greet me this morning with their song: Jackie Blue…
Well, the currencies didn’t live up to the challenge I laid before them yesterday, and instead of adding to their Friday gains, they lost more ground to the dollar, with the euro falling back below 1.11 and the Aussie dollar falling back below 69-cents… It was a good day, however, for the Chinese renminbi, which saw another appreciation that has taken the onshore currency to the brink of falling below the 7 figure… The offshore version of the renminbi did fall below 7 yesterday… That currency is more a market driven currency and not the State controlled version that I usually quote and talk about.
An old friend from his Agora days, Tom Dyson, is back writing again, as he and his family are traveling the world, and for the past 3 weeks they’ve been in China, and he sends his daily postcard each day, that chronicles his travels, and what he sees going on in economies of countries he visits… His latest postcard mentioned all the building that’s going on in China, of infrastructure, bridges, roads, and most of all apartment buildings…
Many years ago at a Conference a dear reader cornered me and plead his case that he thought that the Chinese were overbuilding and it would end up in ruins for their economy… I pointed out to him then and even more so now, that there are hundreds of Millions of people throughout China that I saw eventually moving into these apartments… Maybe not the mom and pops but the kids when they grow up, and China’s Capitalist economy matures more… That’s how I see it… period. Oh, and did I mention their Treasure chest of reserves, that need to have some spending out of it each year?
Reuters says that the dollar rally is buoyed by strong data…. OK, am I missing something here? Did we not just print a second month of negative Factory Orders? Maybe they’re referring to the uptick in the services index… OK, big deal, we have become a servicing country, and we suck at service! Or the Trade Deficit, which narrowed in September, and could be viewed as a good thing, but when you get right down to it, U.S. consumers cause the Trade Deficit as they buy hand over fist goods from China and elsewhere… Well, this narrowing only indicates, to me that is, that Consumers aren’t spending what they normally do… And this is a very bad thing for our economy folks… We are a consumer based economy, and without the consumer contributing, there will be no economic growth!
I’m waiting for the results of the Retail Sales data in the Eurozone this morning, and it looks like it might not be out before I hit send… I guess there’s always tomorrow… No wait, we are only promided today… Oh, well if we’re not here tomorrow, we won’t care what the data was! But much to my surprise, there they are! And they aren’t as bad as I expected them to be! For September, Eurozone Retail Sales were up 0.1%, but on a year on year basis, they were up 3.1%.
Not the results that would say that the Eurozone is out of the woods… No way, no how, just plain no! But better than the average bear Retail Sales for the Eurozone… but the euro can’t find a bid this morning… hmmm?
Gold got taken back below the $1,500 figure once again, this time by $25 on the day, closing at $1,483….. Back and forth over and below the $1,500 figure was my call when Gold finally went over $1,500 a couple of months ago… And that’s exactly what we’ve seen… Back and forth, back and forth, until one day… When it makes a definitive move either way… I keep thinking about the Gold chartists told me a month ago, and that is that Gold could very well see a correction back to $1,425… Before beginning it’s move higher once again… There’s an old saying by traders about these kinds of moves… And it is that the asset needs to go back and fill in the prices it skipped over on the way up…
Ahhhh, trader talk… It used to be something you had to be pretty good at doing, each day as you bought and sold currencies… But it’s a dead art, folks… Currency traders now a days, simply put their trades into a computer and they get back their prices… no horse trading, no bidding back on the price. The new way is obviously quicker, more efficient, as the computer then generates the tickets for the back office so they can settle the trade. But… no trader talk, any longer… Old time traders like me, have been put out to pasture…
OK… history lesson for the day is over with… Let’s move on… The Trade War negotiations continue to make progress or so says the media… China’s president, Xi, seems to want to get this done, so maybe, just maybe, because you never know… it will get done… The euphoria over the idea that it could get done is what has Gold at the selling window the past couple of days.
I read where Xi wants Trump to drop the Tariffs and never use them again… I’m guessing here that Xi is speaking for the rest of the world, like Europe, who has suffered from the Trump Tariffs as well. Isn’t that what the knight in shiny armor does as he rides in on his white stallion? He speaks for the “little people”… Whoda Thunk it… “Xi, a man for the people of the world”…
The U.S. Data Cupboard has the stupid Productivity report for the 3rd QTR today. In addition we’ll also see the Unit Labor Costs for the 3rd QTR… I would only be half interested in the latter of the two, but it will be interesting to see how the markets view them.
To Recap… The dollar bugs have taken back all the ground they lost on Friday, and we’re back to the currencies trading with levels seen before last Friday. Gold got taken down by $25 yesterday… That along with Silver which also got taken down, are seen to be caught up in the Trade Talk euphoria, but Chuck thinks that’s just an excuse the price manipulators throw out there to confuse us…
For What It’s Worth… I wanted to print this yesterday, when I mentioned Christine Lagarde’s comments to the Germans, but I already had my FWIW article all cued up. So here it is today, Lagarde says something that I bet she’ll eventually wish she hadn’t said, and more is all chronicled here: https://www.zerohedge.com/economics/lagarde-we-should-be-happier-have-job-have-savings
Or, here’s your snippet: “ Any hopes that the replacement of Mario Draghi, who on Halloween left the ECB more polarized than ever, as the core European nations revolted against the Italian’s profligately loose monetary policy in an unprecedented public demonstration of discord within the European Central Bank…
… with the ECB’s new head, former IMF Director and convicted criminal, Christine Lagarde would result in some easing of tensions, were promptly crushed when Lagarde picked up where Draghi left off, calling on Germany and the Netherlands to use their budget surpluses to fund investments that would help stimulate the economy, in a sharp rebuke that will not win the former French finance minister any friends in fiscally conservative Germany.
In an appeal to Germany’s sense of solidarity, and in hopes that Germany’s memory of hyperinflation has faded enough, Lagarde said that there “isn’t enough solidarity” in the single currency area, adding: “We share a currency, but we don’t share much budgetary policy for now.”
“Those that have the room for manoeuvre, those that have a budget surplus, that’s to say Germany, the Netherlands, why not use that budget surplus and invest in infrastructure? Why not invest in education? Why not invest in innovation, to allow for a better rebalancing?” asked Lagarde, blaming Germany and the Netherlands for living within their means, and demanding they should no longer do so, just because most other Europeans decided to pull a page out of the American playbook, and live exorbitantly outside of their means.
Lagarde’s direct attempt at shaming Europe’s fiscal conservatives was nothing short of shocking: normally ECB officials avoid naming individual countries in public statements, because their mandate is to act in the interests of the eurozone as a whole. But when Lagarde made her speech she had not yet officially taken over at the Frankfurt-based institution – she succeeds Mario Draghi on Friday.
And just to guarantee she is as resented by Germany as was Mario Draghi, she said that the German and Dutch governments, which last year had budget surpluses of 2% and 1.5% respectively, “have not really made the necessary efforts,” she added, referring to establishment’s increasing desperation to force anyone with an even remotely normal balance sheet to sink to the same level as their insolvent peers.
As for the punchline, Lagarde defended the negative interest rates introduced by her predecessor Draghi, arguing that people should be happier to have a job than a higher savings rate. This, as a reminder, comes at a time when virtually everyone who is not named “Draghi” or “Lagarde” thinks that negative rates are catastrophic, and assure doom for the Eurozone.”
Chuck again… Zerohedge.com said it best when they called her comment “ We should be happier to have a job than to have savings” The new Marie Antionette quote about letting them eat cake! What a, now wait a minute Chuck no need to go to calling her names… Remember what you mother taught you!
Currencies today 11/6/19 American Style: A$.6898, kiwi .6377, C$ .7595, euro 1.1085, sterling 1.2885, Swiss $1.o085, European Style: rand 14.7924, krone 9.1556, SEK 9.6105, forint 298.97, zloty 3.8501, koruna 22.9996, RUB 63.41, yen 109.02, sing 1.3585, HKD 7.8238, INR 70.78, China 7.0069, peso 19.21, BRL 4.0030, Dollar Index 97.83, Oil $57.21, 10-year 1.84%, Silver $17.54, Platinum $926.19, Palladium $1,784.70, and Gold… $1,485.57
That’s it for today… I’ve not been getting my full night’s sleep the last two nights, as the pain in my leg acts up when I lay down… UGH! I’ve got a high tolerance of pain, but this is getting ridiculous! I don’t like it when I don’t get a full night’s sleep! Well, our Blues sure are on another roll, winning their 5th straight game last night in Vancouver in overtime. In fact, a good number of their wins this year have come in overtime… Which is far better than losing or having to go to a shootout! The Blues are finding a way to win without their star player, who will be out for 5 months! UGH! I have another test tomorrow, this one to see if I have a perforated vein in my leg… The doc hasn’t told me yet what it means if I do have one… Oh, boy, I get another conversation with a doctor! Where do I sign up for that one? Oh well, it is what it is, and life goes on, right? The Late great Dan Fogelberg takes us to the finish line with his song: The Last Nail… (I used to play this one on my guitar!) I hope you have a Wonderful Wednesday, and will Be Good To Yourself!
Chuck Butler