Rocktober 1, 2019
* Currencies get sold again in the overnight markets…
* Apparently Investors don’t really like negative yielding bonds!
Good Day… And a Tom Terrific Tuesday to you! And welcome to Rocktober! No baseball for me last night, so I read, but not research stuff, I’m currently in the middle of the last of the existing Jack Reacher books, (I’ve preordered the new one out for delivery, later this month) and it had my attention for most of the night. I even skipped dinner, because I was captivated… Well, my choice for Cy Young winner in the NL this year is Jack Flaherty, of the Cardinals, and yesterday he was named pitcher of the month of Sept. You may recall that he was also named pitcher of the month in August! And .091 ERA since the All-Star break, folks… I haven’t seen pitching dominance like this since Bob Gibson… And don’t get me wrong I’m not comparing him to the Great Bob Gibson! OK… It’s Indian summer here in the Midwest, as temps will be hot again today, but the cooling off is coming… And Jimmy Cliff greets me this morning with his song: Hello Sunshine… not familiar with that one? It’s a catchy tune, for sure!
OK, before we get into the goings on in the markets this morning, what a year it’s been for Deutsche Bank (DB) they were raided for a second time this year, just last week… And as I put on my conspiracy hat… And think back to what was going on last week… The banks weren’t lending to each other, and the Fed has to step in with cash liquidity… But… if we look under the hood, here would we find that the banks just weren’t lending to DB? A couple of years ago, in the old defunct, Review & Focus, I spent a whole month’s work on talking about DB’s problems… bad loans, derivatives, etc. etc. Old customers of the now defunct EverBank might still have that copy hanging around… I would reprint it be I wasn’t allowed to take any of that stuff with me when I “retired”….
OK… conspiracy hat is off… but I guess you can read what you want into what I just discussed… The dollar bugs took a breather the rest of Monday after pulling an all-nighter on Sunday night into Monday morning… The euro crept back to the 1.09 handle, and then lost it again in the overnight moves… What’s up with these overnight moves? Or do I say… no, wait! I don’t want to say that, oh, yes you do Chuck, you just don’t know how to say it politely! OK, here’s goes, bluntly as usual because I have no bedside manner…. While things around the world don’t look very stable economically wise, they do seem to be more stable than the currency traders are giving them credit for… And quite frankly, I truly believe that the Plunge Protection Team (PPT) is working the sidelines and sending in plays, to beef up the dollar’s value, ahead of the coming dark clouds for the economy…
So, call what you will… But the dollar bugs sure have had their way with the currencies in the last month… And Henry Kissinger is getting his wish that he made back in 1971, when he warned people in the Nixon administration of the fear of Gold becoming more popular than the dollar… This is in a Wikileaks memo on State Dept letterhead folks… I don’t, and haven’t made this stuff up!
Gold closed down $25 yesterday, and is down another $4 this morning… I don’t want to spoil your appetite for the FWIW article today, which will help explain what’s going on in Gold these past few days… So, I’ll just give you a teaser… Did you know it’s Golden Week in China? And besides Russia, who among the major countries in the world has been buying physical Gold by the boat loads? That’s right, it’s China! And that’s I’ll I’m going to say, for now about that, but you be thinking about how those two things go together, and then when you get to the FWIW article you’ll give yourself a head slap and say, Wow! I could’ve had a V-8! HA!
OK… Well, Japan held a bond auction overnight, and well, it didn’t go to well, and that send bond’s around the world down, thus raising the yields and stopping the bond rally that had brought bond yields to their recent lows. I don’t think this will continue and be the absolute end of the bond rally, for the bond boys & girls here in the U.S. are hell bound and whiskey bent to show the stock jockeys that a recession is coming… But so far, the stock jockeys have their hands in the air and just don’t care!
In the Eurozone this morning, we saw the September print of their PMI (manufacturing Index) actually moved upward during the month VS August… The move was miniscule, and doesn’t prove anything other than the Eurozone manufacturing is contracting…. For those of you keeping score at home today, the Sept PMI was 45.7, and the August PMI was 45.6…
The Eurozone also saw their core Consumer Inflation figure bump higher by a smidgen too. September Core Inflation was 1.0% VS an August print of 0.9%… This too doesn’t prove anything other than the fact remains that all the negative interest rates, and bond buying isn’t spurring any inflation here, so why go through all those gyrations?
I had a dear reader ask me a question the other day, that I thought I would discuss here… He asked me why the dollar isn’t considered a Petrol Currency, since they now produce so much Oil? Hmmm, I thought… and thought, and finally came to an answer… The U.S. shale fracking producers are relatively new to the Oil production game… And the countries that are considered Petrol Currencies have been doing this a long time… But given the fact that the U.S. does produce more Oil these days, although given my recent claims that shale producers are drying up, and it could be added at some point in the future…
Later this morning, we’ll finally see some data from our neighbors to the north, Canada… Canadian GDP for July, will print today… And here’s where I believe we could see a crack in the 75-cent plus armor that the loonie is wearing these days… I don’t expect the GDP print to be anything to get all lathered up about, and therefore it will bring questions of when the Bank of Canada is going to follow the Fed and cut rates again… That kind of talk won’t be good for the loonie… But then the loonie has been quite resilient lately… So, it should be interesting today…
The U.S. Data Cupboard will also have our form of a manufacturing index, which we call the ISM, print today for September… Recall that August saw the multi-month fall of this index number come to rest at 51, just a shade over the line in the sand figure of 50… So, will the multi-month fall of the number continue in September? The Eurozone’s index number is 45.7, and they’re in a heap of trouble there, when does that heap of trouble come to our shores? This month? could be check back tomorrow, for a recap I guess…
To recap… Gold is getting hammered this week, while China is on holiday, more on that in the FWIW coming up next! The currencies keep getting sold in the overnight markets, and Chuck thinks that somethings going on there that doesn’t smell right… Japan held a bond auction overnight that didn’t go to well, apparently investors don’t want negative yielding bonds… And that caused some worries abroad, but Chuck doesn’t think that the bond rally in the U.S. is over, as the bond boys & girls are attempting to show the stock jockeys that a recession is coming….
For What It’s Worth… Well, thanks to the folks at GATA for sending me this link to an article on Zerohedge.com that talks about how China is on it’s Golden Week holiday, which could be the reason the price manipulators are going guns a blazin’ on Gold & Silver… The article can be found here: https://www.zerohedge.com/commodities/gold-prices-plunge-right-cue-china-golden-week-begins
Or, here’s your snippet: “ight on cue, as we detailed here, precious metals prices have been pummeled as China Golden Week begins…
Silver futures have accelerated lower since losing $18… as of today, China will be on vacation for its Golden Week National Holiday and this weakness appears to be traders front-running the traditional chaos that the rest of the world plays when China leaves the playing field.
China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.
We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.”
Chuck again… yes in the website article you can see each year the downward movement in the price of Gold during the Chinese Golden Week holiday… So, it makes sense that this is the week to look to buy more or an new position in Gold… I’m just saying…
Currencies today 10/1/19 American Style: A$.6699, kiwi .6225, C$ .7535, euro 1.0905, sterling 1.2280, Swiss $1.0008, European Style: rand 15.2870, krone 9.1160, SEK 9.9040, forint 306.84, zloty 4.0140, koruna 23.6093, RUB 64.77, yen 108.28, sing 1.3860, HKD 7.8403, INR 70.87, China 7.1359, peso 19.77, BRL 4.1567, Dollar Index 99.43, Oil $54.73, 10-year 1.73%, Silver $17.13, Platinum $886.73, Palladium $1,665.70, and Gold… $1,468.53
That’s it for today… This is going to be a short week for me, as I will be heading to the wound center bright and early on Thursday morning, which means there won’t be a Pfennig that day… No biggie… A few years ago, the tumor in my mouth was so bad, that I contemplated going to Mexico for treatment, for they used the hyperbaric treatment. They’ve come a long way here in the U.S. with the use of hyperbaric treatments for wounds. I’m hoping that this is what’s used on my leg… It’s just been to damn long! sorry for the swear word, but I wanted to emphasize just how long it’s been! Well, it’s Rocktober… The air will begin to cool down, and it’ll be time to get the woolies out, and we’ll begin to smell the aromas of bonfires… Fall is the best weather we have here in the St. Louis area, and Rocktober is the pick month of the fall! Ok, Neil Young takes us to the finish line today with his song: Out On The Weekend… It’s from the great Harvest album from the early 70’s… I hope you have a Tom Terrific Tuesday and please Be Good To Yourself!
Chuck Butler