December 11, 2018
* A HUGE reversal yesterday in stocks, currencies & metals
* Palladium is the star performer this morning!
Good Day… And a Tom Terrific Tuesday to you! So, did you watch the Army/Navy football game on Saturday? It’s quite the scene, all the pomp and pageantry, and traditions, followed by a football game… I will always attempt to be somewhere where I can watch this each year… It’s not the best football, but it’s football like I used to play it… Grind it out, tough line play, and tough defense. I simply love it! Alrighty then… It’s a Tom Terrific Tuesday today, and with that Chuck is in one foul mood, so he’s listening to Christmas music to calm him down, and right now playing on his iPhone is a jazzy number by Oscar McLollie… Dig That Crazy Santa Claus…
Well, what’s got Chuck all fussed up and in a foul mood today? Could it be the play of our Blues Hockey team? Not exactly… Could it be the cold weather outside? Not today… Well, what then, is it? The Return of the Plunge Protection Team (PPT)… Yesterday when I signed off the currencies were booking gains VS the dollar, and then about mid morning, everything turned on a dime… And it wasn’t just the dollar’s fate… stocks also rallied to erase a very deep loss that was about to get even deeper… The PPT had to be the culprit behind the turnaround in the dollar… There was nothing else going on, and The Fed didn’t exactly come out and say, “We don’t care what everyone thinks, we’re still on course to hike rates throughout 2019”…
What do you believe happened to the currencies’ rally VS the dollar? For the rally ran into a Buzzsaw… And I’ve said my piece on the subject… I can’t say that I’ve really calmed down at this point of the early morning, but I’m ready to talk about something else!
With every day that passes, there’s another article about the Corporate Bonds and the downgrades, the leveraged loans and so on… And yesterday was no different, as a report on Twitter said that: “In the US, about a quarter of junk-rated issuers are now rated at B minus or lower, up from 17 per cent four years ago and the highest level since 2009, according to data from S&P, the rating group.”
And as we inch closer to the same level as we had in 2007… I want to point out that I’ve been sending out the warnings on Corporate Bonds for 2 years… Yes, I’ve been called the boy who cried wolf… But when it eventually happens and the walls come crashing down around us, does it make a difference to the goings on that we had to wait 2 years for this to come about? I don’t think so!
I saw this list of countries and their 2018 projected GDP… I only pulled the major countries that I talk about all the time… India was number 1 with 7.3% GDP, China #2 at 6.6%, Australia #5 at 3.2%, finally the U.S. shows up with a 2.9% GDP, Mexico will book 2.2%, and Canada 2.1%, Germany will then follow with 1.9%, then Russia (despite all the economic sanctions) at 1.7%, France at 1.6%, and then the U.K. at 1.4%… to round out where these 10 countries will place at year end.
Just imagine what the U.S. GDP would be without all the Government spending? And I’m going to go out on a limb here and say that 2.9% will be the highlighted year of growth during the current expansion… Whatever, you call it, but I wouldn’t exactly call it “expansion”, but the technical books say it is, so be it!
Russia has managed to eke out 1.7% GDP despite all the economic sanctions they have to deal with… But the ruble has never been able to recover from the HUGE Chunk that was removed from its value after the conflict with Ukraine began a few years ago… Before all that happened, the ruble was around 35… It’s stuck around 65-66 these days, and until the price of Oil goes significantly higher, or the economic sanctions are removed or both (ruble holders would rejoice) the ruble will struggle to get any real traction…
And here’s a brief update on those international payment systems that are popping up in Russia and the Eurozone… The Eurozone Commission issued a report calling for more international business to be done through the Euro payment system, thus removing the dollar from terms of trade. I’ve read that this Euro payment system is really taking off and getting rave reviews… Depending on how wide the distribution is of this system, will determine the hit to the dollar… I do believe it will be HUGE… But then I cast that line in the water a long time ago…
OK, this happens every time I go to the quotes well, and pull the Bluto quote out and run it up the flag pole, about “was it over when the Germans bombed Pearl Harbor”… I get readers who believe that I believe the Germans bombed Pearl Harbor! Come on… think about that… I just laugh out loud when I see the comments come through… Just shows to go ya that the skimming method of reading doesn’t work! HA!
Well then… The currencies are back on the rally tracks this morning attempting to pick up where they were cut off at the knees yesterday, by what I feel was the PPT. The euro is knocking on the door to 1.14 again, and so on… Gold, which lost $4 after all the dust settled yesterday, is up about $3.20 this morning. And once again the star performer for the day was Palladium which is up $20 in the early morning trading.
The Trade War is taking its toll on car sales in China… Imports to China are also falling at an alarming rate… But here in the U.S. we, as consumers, continue to buck up and buy Chinese goods, while running up massive credit card debt…
The U.S. Data Cupboard will print November PPI (wholesale inflation), which I believe we’ll see weakening in November, and the NFIB Small Business Index for November, no great shakes here, but I do believe the markets will take notice of any weakness in PPI, for Wholesale Inflation leads to Consumer Inflation, and if that’s going to weaken too, that reduces the Fed’s need to hike rates.
Speaking of Fed’s rate hikes… I see that Lola, aka Goldman Sachs is calling for the Fed to pause next March and not hike rates at the meeting. And John Tudor Jones, the hedge fund guy, is saying that the Fed will not hike rates at all in 2019… Well, I’m of the opinion that the Fed will be ceasing their rate hike cycle ride in 2019, but not before going kicking and screaming…
To Recap… The currencies and metals, along with stocks were saw their moves yesterday morning all reversed on a dime, which indicates to Chuck that the PPT was in to flex their muscles, buying dollars, and stocks… The currencies are attempting to pick up the pieces this morning once again.. Gold lost $4 yesterday, but is up $3 this morning, while Palladium once again is kicking tail and taking names later with a $20 gain so far today…
For What It’s Worth… I’ve been talking about credit card debt a lot lately and when I saw this article on MarketWatch, well I knew that I had to highlight it so here it is: https://www.marketwatch.com/story/this-state-is-the-most-burdened-by-credit-card-debt-2018-12-10?mod=MW_section_top_stories
Or, here’s your snippet: “Where you live in the United States makes a difference when it comes to paying off credit card debt.
It takes the average New Mexico household nearly twice as long to pay off their credit-card debt as it does households in Massachusetts, according to a new report from CreditCards.com. New Mexico had the highest credit-card burden of all 50 states, while Massachusetts had the lowest.
The disparity comes down to the relationship between debt and income, CreditCards.com industry analyst Ted Rossman said in the report. “The states where residents owe the most on their credit cards (Alaska, Virginia, Texas, Maryland and Connecticut) do not rank among the five highest debt burdens because their median household incomes are higher,” he said.
The problem for people who live in New Mexico, Louisiana, West Virginia, Alabama and Arkansas isn’t just how much they owe, it’s compounded by how low their incomes are by comparison.”
In New Mexico, a household earning the median annual income of $46,744 would take nearly 1.5 years to pay off the state’s average household credit card balance of $8,323.
Chuck again… I think it’s more a case of: Wages just aren’t keeping up with rising credit card debt…
Currencies today 12/11/18: American Style: A$.7220, kiwi .6885, C$ .7470, euro 1.1395, sterling 1.2607, Swiss $1.0128, European Style: rand 14.2795, krone 8.5788, SEK 9.0425, forint 283.70, zloty 3.7707, koruna 22.6620, RUB 66.46, yen 113.20, sing 1.3720, HKD 7.8156, INR 71.82, China 6.9015, peso 20.22, BRL 3.9076, Dollar Index 96.89, Oil $51.57, 10-year 2.88%, Silver $14.64, Platinum $783.77, Palladium $1,249.21, and Gold… $1,247.66
That’s it for today… A strange day yesterday, I was busy and then the day was over… UGH! I don’t like days like that… Closer and closer we draw nearer to my annual Christmas vacation! And when the alarm goes off in the morning, I will be able to simply turn it off! YAHOO! Can you feel it? I was out for a bit yesterday, and people are smiling and being friendly… The Christmas spirit has touched them… And it will only grow stronger as the days go by… The St. Louis band, Mama’s Pride takes us to the finish line today with their song: Blue Mist… I hope you have the opportunity to make this a Tom Terrific Tuesday, and remember to Be Good To Yourself!
Chuck Butler