July 11, 2019
* Gold soars on the Powell comments that a rate cut is coming…
* Currencies get on the rally tracks too, as the dollar gets sold…
Good Day…. And a Tub Thumpin’ Thursday to you! I’m going to try to do some Tub Thumpin’ this weekend ahead of my hospital visit next week… It’s also 7-11 day! We have to observe this day by getting a Big Gulp! HA!This waiting for the Pfennig Replies box to be back in the saddle is getting very old and causing me to have a rash! I’m very sorry about this, but things happen, and then well, you start over, which is what I told them to do if they can’t fix it! UGH! No baseball last night had me watching some re-runs of The Big Bank Theory, which happened to be my favorite show on TV, for many years, but now they’ve ended their run as the number # comedy on TV… double UGH! I’ve really swallowed this hook, line and sinker, on reading Lee Childs books on Jack Reacher… I’ve got them lined up as ones read and ones to read, but the ones to read stack is getting pretty low… Prime Monday is next Monday, so maybe I can pick up some more of his books at cheaper prices! The Late Great Leon Russell, greets me this morning with his song: This Masquerade…
Well, it looks like the Fed Heads weren’t fooled by the BLS jobs report last Friday that the currency and metals traders were thinking they would be… I sent out a Tweet yesterday to my Twitter followers and said, “ Fed Chairman Powell is talking about a July rate cut in his speech to congress today… Gold is back on the rally tracks!”
And back on the rally tracks it was for not only Gold but also the currencies! I also read a few economists that don’t believe the Fed should cut rates, and while I’m not on either side of that fence, I’m just stating what I think they’ll do!
Because I said a year ago, that the Fed would send the economy into a recession, and that it would turn out to be so bad, that the Fed would reverse their rate hike stance, and begin cutting rates, and eventually going to negative deposit rates, ala Sweden, Japan, Eurozone, and others…
I also said that eventually we would see another round of Quantitative Easing, although it would be called something else this time around…
To my surprise, (not really, or as Sheldon would say Bzinga! ) Fed Chairman Powell didn’t use my portrayal of him earlier this week… darn it! Wouldn’t it have trey cool to hear Powell, say, “in the words of Chuck Butler”…
So, Gold closed up about $20 on the day, I told you that when it turned around again the move would be swift, didn’t I ?
Aren’t you glad you use Dial? Don’t you wish everyone did? HA! Aren’t you glad you didn’t sell your Gold? Don’t you wish everyone didn’t sell their Gold?
So… is it time for the price manipulators to show up at the COMEX’s window with arms full of short Gold paper trades? Or, do they see that it would be costly to step in front of moving bus right now? I think it’s a case of the latter…
OK, I was doing some reading yesterday, and came across this and thought I’ve got to mention this tomorrow, but now it seems too late, but then it’s important to remember these things… I had the good folks at GATA send me this yesterday from one of their contributors, Craig Hemke…. “Hemke concludes that both gold market indicators compiled by the U.S. Commodity Futures Trading Commission “are flashing warning signals for the short term.” But he adds, “The conditions that led to the most recent price spike will persist — and will only deepen — in the months ahead. So don’t let the next pullback frighten or otherwise concern you. This is just the natural ebb and flow of these bank-dominated ‘markets.’ Higher highs are still pending in 2019 as Comex Digital Gold posts its best annual gain since 2010.”
So… As I’ve been telling you this week, don’t let the selloff scare you into selling your Gold… Don’t let it bring you down… it’s only castles burning, just find someone who’s turning and you will come around… (Neil Young)… Use the dip as an opportunity to buy at a cheaper price… let me say that again… No… wait, no need to say it again, you’ve said it enough this week, Chuck!
But now Gold has reversed the selling and the cheaper prices…
For those of you who follow the Dollar Index, you’ll be interested to hear that the Index fell from 97.50 on Tuesday to 96.86 this morning. For the new readers… The Dollar Index is supposed to tell us how the dollar is doing VS its trading partners… But Years ago, all the legacy currencies of Europe were converted to euros, and now the Index is over weighted with euros… So, I always contend that’s it’s easier to just check the euro / dollar price… But many still use the Dollar Index , so there it is for all to see this morning!
What the Dollar Index is telling us this morning is that the euro has recovered about 3/4’s of a cent on the day… But in reality, the dollar was sold by that amount VS the euro, because, we all know that the Eurozone is not worthy of a stronger currency, but it will receive one, as it benefits from being the offset currency to the dollar.
And it wasn’t just the speech by the Fed Chairman yesterday that sent the dollar to the woodshed… The Fed’s FOMC Meeting Minutes from their June meeting revealed that several members were interested in talking about a deep rate cut (50 Basis Points)… Recall when I told you that the Fed Head Kashkari was touting a 50 Basis Points cut , and I wondered how many fellow Fed Heads he would get to see things his way? Well, it looks like there’s a grassroots campaign to cut rates deeper in one fell swoop.
I still am not wavering on my call that I made months ago that the Fed would cut 25 Basis Points in July… Now that everyone is on board with a rate cut later this month, does everyone recall that I was the lone wolf out there saying the Fed would cut rates in July? Not that buys be a cup of coffee, or anything, but it makes me feel better about my ability to see what’s going on!
The U.S. Data Cupboard today, has the stupid CPI (consumer inflation) and it will most likely tell us that in June, there was no inflation increases… What a bunch of bunk! But they made their beds with their hedonic adjustments and now they have to lay in them! This report is of no use to me, but to the markets they still follow it… So a flat or negative CPI print today will only cement the markets’ ideas about the rate cut…
To recap… Well, Jerome Powell, threw a cat among the pigeons yesterday, with his comments about how the Fed is ready to cut rates at their July meeting. Those comments and the fact that the FOMC Meeting Minutes yesterday showed that more than a few Fed Heads were talking about a deeper rate cut of 50 Basis Points… WOW! Chuck still believes that the plain old vanilla 25 Basis Points cut is in the cards for July… All this got the currencies and Gold up on the rally tracks, erasing the bad that was caused by a hedonically adjusted BLS jobs report last Friday…
For What It’s Worth… OK… I finally got around to reading Ed Steer’s letter yesterday, and he highlighted this story on Zerohedge.com that I too am going to highlight, for it’s another brick in the recession wall folks, and it can be found here: https://www.zerohedge.com/news/2019-07-04/class-8-heavy-duty-truck-orders-crushed-70-june-following-may-collapse
Or, here’s your snippet: “Class 8 heavy duty truck orders were down for the eighth month in a row, falling a stunning 70% in June to 13,000 units, according to FTR data. The figure was up 20% sequentially, but still follows a 71% decimation in May. Jefferies’ Stephen Volkmann wrote in a note that the figures indicate a SAAR of ~178,000 Class 8 trucks and noted that the sequential growth compares to a sequential drop of 27% in May, when SAAR estimates were 139,000 units.
Kenny Vieth, ACT’s President and Senior Analyst said: “Fraying freight market and rate conditions along with a still-large Class 8 order backlog contributed to the worst NA Class 8 net order performance since July of 2016. May saw NA Class 8 orders fall below the 15,900 units averaged through the year’s first trimester, and year-to-date Class 8 net orders have contracted 64% compared to the first five months of 2018.”
The industry has been dealing with bloated backlogs as a result of aggressive ordering in 2018, coupled with headwinds from the ongoing trade war and the onset of a recession.
The good – and bad – news is that the backlog is starting to decline, and is expected to continue eroding until late summer. However, there is still downside risk for the industry in 2020 as a result of a slowing manufacturing, coupled with recessionary caveats.”
Chuck again… I was taught years ago to always check 1. The shipments on sea, and 2. By Truck as true indicators that an economy is headed for trouble… All in all it’s just another brick in the wall… but did you hear this reported on the nightly news? Or how about the 24/7 cable news? of course you didn’t…
Currencies today 7/11/19 American Style: A$.6980, kiwi .6673, C$ .7660, euro 1.1271, sterling 1.2561, Swiss $.9857, European Style: rand 13.8933, krone 8.5472, SEK 9.3856, forint 288.89, zloty 3.7853, koruna 22.7075, RUB 63.47, yen 108.13, sing 1.3554, HKD 7.8215, INR 68.26, China 6.8781, peso 19.13, BRL 3.7810, Dollar Index 96.86, Oil $60.61, 10-year 2.06%, Silver $15.27, Platinum $827.88, Palladium $1,584.07, and Gold… $1,428.89
That’s it for today and this week… No baseball again tonight, what’s a Chuck to do? A cold front moved through yesterday afternoon, and the temps all cooled off after a downpour, and left us with sunny days and warm temps for the weekend. YAHOO! I haven’t bought a fishing license for a decade, but I’m going to buy one today… I have fishing gear and tackle here somewhere! I used to fish all the time, come home from work and go down to the river and cast a line… I always thought it was a good way to unwind… and think… especially when your all by yourself! The Moody Blues take us to the finish line today with their song: In Your Wildest Dreams… I hope you have a Tub Thumpin’ Thursday, and please remember to Be Good To Yourself!
Chuck Butler