Chuck Butler’s: A Pfennig For Your Thoughts Craziness
* Another day of little movement…
* BOC and RBA to meet this week…
* Wait till you read about this new craziness!
December 5, 2017
Good Day… And a Tom Terrific Tuesday to you! I flipped a coin this morning after hooking myself up to my antibiotic… Heads, I go back to sleep, Tails I begin to write the Pfennig.. Well, I guess you’ve figured out that it came up Tails… I don’t mean to be so flippant about whether I write the letter or not, but I have an excuse… Doing these antibiotics through the PICC-line every 6 hours, is like having a baby in the house again, and I’m only getting about 4 hours of sleep at a time… UGH! But you didn’t click on this email to hear about my problems, so I’ll get to work! Derek and the Dominoes (Eric Clapton) greet me this morning with their classic rock song: Layla…
Well, another day, another day of no currency movements, or whatever there is, it’s small… For instance, the Dollar Index yesterday morning was 93.15, this morning it’s 93.11… Whoa better pull back on the reins, that’s to much movement! NOT! The important thing is that the dollar’s rally last week has fizzled out… I guess the PPT has better things to do these days… HA!
As I look at the landscape for the currencies, it appears to me that currency traders are waiting for “something big” to trade on.. The Aussie dollar (A$) and kiwi are the two best performers overnight, and their moves aren’t anything to get all lathered up about. But… they were positive, so they had that going for them!
I had to laugh this morning when I was going through the process of obtaining the currency prices… On the Bloomberg site, they had two headline stories highlighted back to back, belly to belly.. One said something about how the pound sterling was rallying on the BREXIT talks, and the other one, right below the first one said something about how the pound can’t rally right now because of the BREXIT talks… Hello? Is this the Editor’s desk? Good… I want to point out this point, counterpoint thing you’ve got going on this morning… It’s confusing to say the least! What? you don’t care? Ok, I’ll hang up now and go yell at the walls, thank you for taking my call!
Yesterday, I highlighted the craziness of the painting that garnered $127.5 Million… Well, this beats that craziness in the markets, check this out!
Did you hear the news (probably not) that a European corporation, Veolia has issued a 500 million 3-year EUR bond (maturity November 2020) with a negative yield of -0.026 %, which is a first for a BBB issuer, and if that’s not crazy enough for you, the bond was oversubscribed by 4:1! Are you kidding me? In Grant William’s Things That Make You Go Hmmm… he quoted the great analyst James Grant, who had this to say about this issue… “Said another way, three out of four investors who wished to lose money on a yield-to-maturity basis were left disappointed.” – James Grant
WOW! Investors lined up to take negative yields for 3 years in a bond… I told you yesterday about the painting lunacy, well this item and the fact that it was oversubscribe 4:1, is worse, if you ask me! Negative yield has become acceptable by investors… That’s just crazy! The Craziness is all around us folks… Stocks that won’t quit moving higher, Bitcoin at $10,000 no, wait is it $11,000 now? Bonds at negative yields, painting that go from $10,000 in 2005 to $127.5 Million now, and the list goes on.. I feel like George Costanza’s dad… Serenity NOW!
Another example of the craziness in the world today… A dear reader sent me a photo of a man in flood waters, and a CNN reporter asking him what he thought about Melania’s shoes… Of course that was photo-shopped but I wouldn’t doubt it happening, do you?
Well, the overseas news isn’t completely void of anything new… The Bank of Canada (BOC), and the Reserve Bank of Australia (RBA) are going to hold meeting this week… But that’s about all they are going to do, as I don’t expect any rate movements from of the two…
Gold still can’t find a bid anywhere, and wouldn’t you know it, yesterday I highlighted Palladium, and then the precious metal went about having the stuffing knocked out of it! Well, I think I mentioned this last week, but the news is gaining more traction this week, and I’m talking about the BRICS (Brazil, Russia, India, China, S. Africa) mulling over whether or not to go at a Gold Trading payment system…
Why wouldn’t they? They have to be getting tired of the West dominating the price of Gold with their paper trades… The Shanghai Gold Exchange (SGE) was created as a physical Gold trading system only, so they have a base trading mechanism in my view… I’m excited about this possibility, so I have to say that I hope that the BRICS do go about implementing a Gold payment system…
Oh! And did you see/ hear what the former Fed Chairman, Alan Greenspan said about deficits and Gold? Well, first I need to remind everyone that Big Al was a Gold Bug long before he was the Fed Chairman, schooled by Ayn Rand… But as Fed Chairman he forgot all about his lessons about Gold, and started this whole mess we’re in… Now skip ahead to now, and Big Al is back to being a Gold Bug, and was recently quoted as saying, ” Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.”
The U.S. Data Cupboard yesterday, had the Rocktober Factory Orders, which printed negative at -0.1%… I told you that it would probably be a weak report, and there you go! it was exactly that! Today’s Data Cupboard, has the Rocktober Trade Deficit… Well, in Rocktober, the dollar was fighting back and since it had gained ground, I’m going to say that the Trade Deficit will show it by widening in the month…
Look for the deficit to widen to over $47 Billion, up from the previous month’s (when the dollar was getting sold) $43.6 Billion…
To recap… Another day of no movements in the currencies… Well there were some movements but they were small and barely noticeable.. The BOC and RBA meet this week, and Chuck thinks that’s all they are going to do, with no rate movements expected. Chuck also points out some real craziness in the markets… And Gold still can’t find a bid…
For What It’s Worth… This article is from the Russian Times (RT) and I found it in Ed Steer’s email this morning. Ed has been having some website problems so I forgo the link to his site today. This article is about how Russia and China are moving toward the goal of removing the dollar from their trading… and it can be found here: https://www.rt.com/business/411877-russia-china-bonds-dollar/
Or, here’s your snippet: “The Moscow stock exchange will soon issue nearly $1 billion-worth of yuan-denominated bonds. It could become the start of a new financial system not based on the US dollar, analysts say.
Russia will issue the 6 billion yuan (about $900 million) bonds with a five-year maturity in December or January. The Central Bank says it is testing the water for future investments.”
Chuck again… Hey! we brought this on ourselves, with all the deficit spending through the years, bringing the value of the dollar lower, and giving holders of the dollar a reason to want to remove it from their reserves…
Currencies today 12/6/17… American Style: A$ .7645, kiwi .6898, C$ .7911, euro 1.1867, sterling 1.3417, Swiss $1.0159, … European Style: rand 13.4888, krone 8.2985, SEK 8.4091, forint 264.59, zloty 3.5424, koruna 21.6216, RUB 58.83, yen 112.50, sing 1.3459, HKD 7.8127, INR 64.40, China 6.6199, peso 18.61, BRL 3.2513, Dollar Index 93.11, Oil $57.17, 10-year 2.38%, Silver $16.32, Platinum $922.26, Palladium $996.36, and Gold… $1,278.40
That’s it for today… Last evening I had a visit from former neighbors and good friends, Rick and Laura, and then another neighbor left a plate of homemade donuts at the door for me, saying that she had heard I was having stomach problems again and thought the donuts might help! WOW! Thank you Lynn! What a sweetheart! I had a doctor appt. yesterday. This doc is always amazed that I keep a smile on my face through everything… I assured him that there were days when I didn’t smile… He calls me the Energizer Bunny, because I just keep going and going… And with that… The Michael Stanley band takes us to the finish line today with their song; Rosewood Bitters… I hope you have a Tom Terrific Tuesday, and be Good To Yourself!
Chuck