May 16, 2019
* Currencies rebound, for the most part…
* Ruble leads Petrol Currencies higher…
Good Day… And a Tub Thumpin’ Thursday to you! I head to my oncologist as soon as I’m finished writing this morning, for her to tell me the results of my scans last week… Spoiler alert, I already know that they were clean as a whistle, and all that remains is the lesion on my mandible ( jaw) that remains in check at this time… She’s going to tell me the virtues of keeping up my regimen of daily chemo, to keep the wolf from knocking on my door… Why am I going again? HA! Well, our Blues had a rough night, as well as my beloved Cardinals… UGH! And I had a great lunch yesterday with one of my fave people in the world… Kathy’s cousin, Kristin, who used to work for me at EverBank… She’s so darling! The Doobie Brothers greet me this morning with their song: China Grove… At an EverBank function quite a few years ago now, they had a karaoke machine, and no one would step forward, until Vinnie Amato, our head of bank operations, took the mic and sang this song, and did a better than the average bear job with it too!
Pouring salt in the wound… That’s what I was thinking that President Trump was doing yesterday to China… He just keeps pouring salt in their economy’s wound… But they deserve it… They’ve been stealing our intellectual Property for years, and well now it’s time to pay the piper, who’s got salt to pour in your wound…. That’s all fine and good, but… Tariffs are not good for anyone’s economy folks… I know that a lot of you believe that all that China sends us is junk, that we don’t need… but try going without the stuff that China sends us… I totally dislike Tariffs, there’s no place for them in today’s global economy… But we have them, we know what they do to economies, so we’ve had time enough to prepare for them…. Got Gold?
In a delayed reaction yesterday, the euro finally got some love from traders for posting a better than expected 1st QTR GDP… But the love the euro received had limits… Traders weren’t going all-in on this love for the euro, that’s for sure!
The British pound sterling is really sinking once again, and this is like deja vu all over again, for the currency, as the reason traders are stating as the key to this selling is the fear that the BREXIT negotiations will lead to a dismissal of PM May, and a disorderly BREXIT in the end…
Gold didn’t do much yesterday, only moving 20-cents on the day. But, as Ed Steer likes to point out… It remained above its 50-day moving avg. One of these days that’s going to be something to hang Gold’s hat on, but for now, Gold can’t seem to get past $1,300, and from there the resistance if very heavy around $,1320 and $1,350… So, it’s like a gauntlet for Gold, but one that I believe will be gone through, eventually, without a problem!
The Russian ruble made a nice upward move in the past 24 hours, as the price of Oil rebounded from the supplies print reveal game of the previous day. You know… I’ve said this before, but it bears repeating… The ruble has been quite steady this past year, trading between 63 and 66… When you have a stable currency, with higher interest rates than you can find anywhere in the developed world, you have a “goldilocks currency”… And I just don’t get it that investors don’t have a taste for the ruble… You have to remove the history of a cold war, and what have you, and look to what this currency can do for one’s portfolio… I’m just saying…
Well, The Aussie dollar (A$) continues to slide further down the slippery slope. As the proxy for Global Growth, the A$ is telling us that Global Growth is just a small image of what it once was… The Trade War with China and the U.S. is spilling over to other countries… For instance, this morning I read a report about how the Eurozone was relieved that the tariff on autos hasn’t been implemented yet… And WalMart issued a report this morning that warned customers that Chinese tariffs are going to increase the price of goods at their outlets… When WalMart sees the tariffs as a problem, then Houston…. We’ve got a problem…
Well, I have an article on the decline of Global Growth in the FWIW section today, so I’ll end that discussion here… don’t miss it!
The Data Cupboard yesterday was as I thought it would be… Recall, I said yesterday that, “I fully expect April Retail Sales to be weak and disappointing, and I fully expect Industrial production in April to be negative… and I was not disappointed, as Retail Sales for April printed negative -0.2% (-0.1% ex-autos), and Industrial Production also printed negative for April at -0.5%… Capacity Utilization, one of the few, forward looking pieces of data, dropped from 78.5% in March, to 77.9% in April… (that’s a big one-month drop for this data) And then something not on my radar printed and was quite curious…
Remember when the trumped up 1st QTR GDP printed so strongly and it was attributed to Government Spending, and Business Inventories, correct?… Well, if that was so… Then why did Business Inventories for March, which printed yesterday, show no growth in the month? Zero, nada, zilch, a big fat goose egg! Curious and Curiouser… for sure!
To recap… The currencies fought back on Wednesday, as there was more rhetoric about the strength of the tariffs on Chinese goods, as Chuck said it was like pouring salt in China’s wound… The dollar should be getting sold like funnel cakes at a state fair, because of this Trade War, but so far it’s been bits and pieces… Gold only gained 20-cents yesterday, and is down a buck or two in the early trading today…
For What It’s Worth… Well, I’m so concerned about Global Growth, suffering a long illness that stems from the Trade War, and then I read this article, and was even more convinced that this is going to happen! This is from zerohedge.com and can be found here:https://www.zerohedge.com/news/2019-05-15/global-trade-collapsing-depression-levels
Or, here’s your snippet: ” With the trade war between the U.S. and China re-escalating once more, investors are again casting frightened glances at declining global trade volumes, which as Bloomberg writes today, “threaten to upend the global economy’s much-anticipated rebound and could even throw its decade-long expansion into doubt if the conflict spirals out of control.”
“Just as tentative signs appeared that a recovery is taking hold, trade tensions have re-emerged as a credible and significant threat to the business cycle,” said Morgan Stanley’s chief economist, Chetan Ahya, highlighting a “serious impact on corporate confidence” from the tariff feud.
A similar deterioration was observed in the US, where retail sales unexpectedly declined in April while factory production fell for the third time in four months. Meanwhile, over in Europe even though Germany’s economy emerged from stagnation to grow by 0.4% in the first quarter, “the outlook remains fragile amid a manufacturing slump that will be challenged anew by the trade war.” As a result, investor confidence in Europe’s largest economy unexpectedly weakened this month for the first time since October.
Framing the threat, a study by Bloomberg Economics calculated that about 1% of global economic activity is at stake in goods and services traded between the US and China. Almost 4% of Chinese output is exported to the U.S. and any hit to its manufacturers would reverberate through regional supply chains with Taiwan and South Korea among those at risk.
U.S. shipments to China are more limited, though 5.1% of its agricultural production heads there as does 3.3% of its manufactured goods.”
Chuck again… I hope you get to the article at the link above, because it goes really deep into the problems for Global Growth, and the chart/ graph included really illustrates what’s going on…
Currencies today 5/16/19 American Style: A$.6921, kiwi .6575, C$ .7450, euro 1.1205, sterling 1.2813, Swiss $.9909, European Style: rand 14.1412, krone 8.6978, SEK 9.5967, forint 289.32, zloty 3.8340, koruna 22.9330, RUB 64.73, yen 109.65, sing 1.3689, HKD 7.8489, INR 70.08, China 6.8743, peso 19.02, BRL 3.9854, Dollar Index 97.59, Oil $62.79, 10-year 2.38%, Silver $14.79, Platinum $846.43, Palladium $1,338.98, and Gold… $1,294.27
That’s it for today… What a awful loss for our Blues last night, as the Sharks scored a goal with just seconds remaining in regular time, and then won in overtime… A real heartbreaker, for sure! Darn the luck! Oh well, that’s why they play 7 game series! Let’s Go Blues! Well, I’m a little later than usual this morning, as I just couldn’t answer the bell this morning when I was supposed to! UGH! Well, I received the news the other day, that my darling granddaughter, Delaney Grace, will be singing the National Anthem at a River City Rascals baseball game on May 26! WOW! (she’s not even 12 yet!) That’s Memorial Day Weekend, so if you are in the area, come out and support that darling little girl! The Marshall Tucker Band takes us to the finish line with their great driving song: 24 Hours At A time… I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday and Wonderful Weekend, and you remember to please Be Good To Yourself!
- Chuck Butler