Chuck Butler’s: A Pfennig For Your Thoughts
August 10, 2017
* Dollar Bugs have the conn
* Gold soars toward $1,300…
* Zuma wins confidence vote…
Good day… And a Tub Thumpin’ Thursday to you! As I mentioned yesterday, I have an infusion today, so there’ll be no Tub Thumpin’ for me today, so please pick up the slack, eh? I actually feel like I had the infusion yesterday! UGH! I’m really draggin’ the line today folks, I need a pick-me-up… Maybe I’ll get it as I go along here this morning… Carlos Santana greets me this morning with his song: Soul Sacrifice
Well, here we are once again with the dollar bugs holding the conn, and everywhere I search I can’t find one good reason for that! Oh, I find stuff like, “Traders are upbeat about dollar with the flight to safety, dominating markets”, and “Traders think PPI (wholesale inflation) will be upbeat tomorrow, thus showing inflation is coming”… Wait! What? Didn’t rising inflation worries used to deep six a currency? Why, yes it did, Chuck, but these days trading currencies is mostly sentiment, with a little fundamentals thrown in… And so, when traders get it in their collective heads that whatever is going on is good for a currency, like the dollar, then they will be shrug off everything else, and focus on one thing…
I know, I know, it’s crazy, right? But, that’s the way it is these days, so we have to roll with the punches… I still believe the underlying nascent trend is for a weak dollar, but since it’s just starting, it doesn’t have the legs to run from this kind of stuff, so… It’s a dollar day… But, hey! I look at it like this… It gives us an opportunity to buy at cheaper prices, right? Yes, indeed it does!
I saw some really disheartening news this morning from New Zealand… Reserve Bank of New Zealand (RBNZ) Gov. Wheeler, who still has one month to go in his term, was out dissing kiwi again… And telling anyone that would listen that the RBNZ is always assessing the situation with kiwi, and if they have to intervene to keep it from getting too strong, they will… Well, I guess Wheeler can put his intervention arrow back in his quiver, because kiwi really dropped last night… UGH!
For years now, and longtime readers will recall, Wheeler has been a thorn in my side, and I’ll be throwing a party on his last day as Gov. of the RBNZ next month… He just doesn’t “get it” regarding kiwi, and has the Central Bank mentality of a weak currency leads to export growth… But a weak currency has unintended consequences too… But I think he’s been too worried about the export growth to see anything else.
Well there are a few currencies on the rally tracks today… The Chinese renminbi was allowed to appreciate again last night, and Gold & Silver both put in nice days yesterday, along with early morning trading that continues those move from yesterday. Gold really too flight yesterday, so let’s talk about Gold, eh?
Gold closed up $16.20 yesterday to end the day at $1,276.90, and if it weren’t for the “boys in the band” keeping things in order, Gold would have flown even higher, as proved by the high on the day which was $1,281.. The shiny metal is up to $1,284.50 in the early morning trading today, but this is where things get scary as far as I’m concerned… The usual pattern has been for the “boys in the band” to begin an engineered take down of Gold whenever it begins to get near $1,300.. They usually use an excuse like the “dollar index rose” or some other flim-flam excuse to begin their short selling… But recently, the “boys in the band” have been quite brazen, and proved that they don’t need an “excuse” to sell short…
And look at Silver this morning, finally back to $17! Platinum and Palladium aren’t chopped liver either! The flight to safety has really shone the light brightly on these precious metals, as it was about time! I’ve told you about the supply issues in Gold & Silver, I’ve told you about the truck loads of Gold that Russia and China have bought, are buying and will continue to buy, and I’ve told you about how all the saber rattling going on in the world today, there’s no excuse in my mind for Gold and the other metals to NOT rally!
Speaking of saber rattling… James Rickards thinks that the U.S. and N. Korea will be in a war soon.. no boots on the ground kind of warfare.. The 5 Minute Forecast (www.agorafinancial.com) yesterday, had a good update on Rickard’s thoughts on this, and included this quote from Rickards… “The U.S. attack will involve all elements of U.S. military and covert action including cyberwarfare aimed at the North Korean command structure and critical infrastructure, as well as special operations, psychological operations (psyops), drones, strategic bombing and many other salient.”
Well if that’s really what’s in the cards, you can understand right away why Gold is ticking higher and higher each day… And then there’s another reason that’s taking a back seat to the saber rattling right now, but is just as important and that is interest rate talk…
And in an update from something we talked about earlier in the week… S. African President, Zuma, did win the second round of his confidence vote, thus keep the wolves at the door, and thus removing the euphoria that had helped the rand rally earlier in the week… UGH!
Well, I’ve been remiss in not sharing something with you regarding Fed St. Louis President James Bullard… Former colleague and longtime friend, Ty Keough, sent me this note the other day, and well, I guess I still had the ocean on my mind… Well, James Bullard was in the mood to talk about interest rates on Tuesday, when he spoke at a conference in Tennessee, and told the crowd there that the “Fed can leave interest rates where they are now, and that the current level of the policy rate is likely to remain appropriate for the near term.”
Bullard has long been a dove and believes like I do that the Fed does not need to raise rates until the U.S. economy breaks out of its pattern of low inflation and about 2% annual growth… Bullard didn’t talk much about the weakening economy, the debt, the car loans problems, the student debt, loan problems, a housing bubble, or anything like that, but I wouldn’t expect him to… That kind of stuff is left up to me to talk about! HA!
That sure was interesting yesterday, that bit I told you about Big Al Greenspan coming out and talking about the Bond Bubble popping, eh? It’s funny, not funny ha-ha, but funny to me that as a former Fed Chairman, that he talks about this stuff now… And here’s some cocktail trivia for you.. The U.S Treasury 10-year’s yield has not been higher than 2.5% since 2012…
The U.S. Data Cupboard yesterday proved me to be correct in my call that Productivity would be weak, which it was only rising 0.9% and the Unit Labor Costs only grew 0.6%… Both of these are used as an indicator of future inflation… And so, given the prints, I would say there are no signs of aggressive inflation in the future, according to the data the Fed uses…
Today’s Data Cupboard doesn’t have much for us… The usual Tub Thumpin’ Thursday fare of the Weekly Initial Jobless Claims, and today we’ll see the Bloomberg Consumer Confidence survey results.. No biggies here…
Before I head to the Big Finish today, I wanted to talk a bit about the news this week from Wells Fargo Bank, who had already admitted that they had opened accounts for people fraudulently, now has another problem… Wells Fargo acknowledged Friday that for six years about 570,000 of its customers were charged for auto insurance they didn’t need, potentially driving some to default on their loan and have their cars repossessed. OMG! What the hell is going on here? Well, the article can be read here : https://www.washingtonpost.com/news/business/wp/2017/07/28/wells-fargo-charged-570000-customers-for-auto-insurance-they-didnt-need-potentially-forced-some-to-have-cars-repossessed/?utm_term=.129747804704
To recap… It was a dollar day yesterday, as the dollar bugs hold the conn on some really flimsy reasons, but sentiment is the key these days, and that’s what ruling the currencies right now… All the saber rattling has the price of Gold soaring once again, and taking Silver, Platinum and Palladium along for the ride, but this is where it gets scary to Chuck, as Gold nears $1,300 which has been a line in the sand by the boys in the band…
For What It’s Worth.. Well, when I saw this article I about fell out of my chair… About 7 years ago, I wrote a Sunday Pfennig at the old place of employment, and I went through “Chuck’s Debt Solutions”, and it was widely thought to be an excellent article by the readers. One of the “solutions” was for the Gov’t to get out of the fixing the roads and bridges business, and instead sell the roads and bridges (and reduce debt) to entrepreneurs who could make the toll roads or whatever it took for them to turn a profit… I went deeper into all that in the article, but for now, that’s the idea… Well, along came the Australians, who want to pitch that idea to President Trump! You can read it here: https://www.bloomberg.com/news/articles/2017-08-10/australia-pitches-trump-on-a-plan-to-fix-america-s-roads-and-bridges
Or, here’s your snippet: “Among his many campaign promises, Donald Trump pledged to fix America’s crumbling roads and bridges with $1 trillion in infrastructure spending. Almost seven months into office, though, and two months removed from his vaunted “infrastructure week,” the president has revealed few details for how to pay for it. As his advisers look for ideas, a group of Australian politicians and executives has been lobbying for the administration to adopt a controversial policy of selling or leasing airports, toll roads, and other public facilities to raise money for infrastructure projects.”
Chuck again… OK, I know I’m not the first person to have that idea and put it in writing through the years, but since I’m the only person I know that did that, I’m claiming it was my idea! I sure hope the Trump administration listens to these proposals to reduce debt…
Currencies today 8/10/17… American Style: A$ .7878, kiwi .7265, C$ .7856, euro 1.1710, sterling 1.30, Swiss $.9657, … European Style: rand 13.3703, krone 7.9677, SEK 8.1670, HUF 260.57, zloty 3.6477, koruna 22.3278, RUB 59.96, yen 110.83, sing 1.3645, HKD 7.8156, INR 63.99, China 6.6818, peso 17.95, BRL 3.1369, Dollar Index 93.78, Oil $49.88, 10yr 2.24%, Silver $17.07, Platinum $978.30, Palladium $901.77, and Gold… $1,284.50
That’s it for today… Well, here I am back in the saddle, at home at my writing desk… It seems like a long time since I was last here! Yesterday, I completely forgot to say Happy Birthday to one of my fave people in the world… Kristin Kuchem! When I sent her a text later in the day, wishing her Happy Birthday, she responded, “UGH”… I take that she doesn’t like getting older! HA! Well, looky there! My beloved Cardinals have won 5 in a row, and are only 1.5 games out of first place! Who would have thunk that to be possible given their level of play this year? Alrighty then, I have to get going to make it to the infusion center on time… The Cure takes us to the finish line today with their song: Just Like Heaven… And with that, I hope you have a Tub Thumpin’ Thursday! And remember to be Good To Yourself!