May 7, 2019
* The dollar continues to be bought after the jobs report last week…
* It’s Game 7 tonight!
Good day… And a Tom Terrific Tuesday to you… Well, as Rod Stewart sang first… Tonight’s the night… and hopeful for our Blues, everything is gonna be alright… And here’s my take on the lyrics, Cause we love you Blues, and there ain’t no stopping us now… In Sports… There’s nothing like a Game 7… Stress, anxiety, and all those things will be weighing on me and all Blues fans tonight! My beloved Cardinals sure like home cooking! They erupted offensively last night and beat the Phillies, with Bryce Harper! Well, the National College Football Champion, Clemson, had their coach Dabo Sweeney visit the ball park last night and take batting practice… This is his second visit to St. Louis… I hope he’s not stealing any recruits from Mizzou! HA! Jimmy Buffett greets me this morning with his song: The Weather Is Here, Wish You Were Beautiful… I’ve seen Jimmy Buffett two different times in concert, and thoroughly enjoyed myself at both concerts!
Well, economists that know the score, have been taking to Twitter and their blogs to blast the BLS’s Jobs Jamboree for April… So, I’m no longer the lone wolf, pointing out the BLS for what they are… But, I sure wish I could keep my thought from months ago that I didn’t care about the BLS any longer… I don’t care what they print, for it’s all rubbish… But you know me well enough to know that I’m going to point out dolts any chance I get!
I have one example of what I’m talking about, and although she doesn’t call out the BLS, it’s the same as doing so when you point out problems with the report… Here’s Danielle Di Martino Booth from here Twitter page:
“While the unemployment rate hit a 50-year low in April, the labor force has contracted for four straight months while household employment has fallen in three out of the last four months driving the labor participation rate down to a seven-month low…” -Danielle Di Martino Booth from Twitter…
The Currencies were slipping a little more to the dollar yesterday, but last night when I turned on the screen, the euro had recovered as was back to 1.12… This morning, the euro has slipped back below 1.12.. There seems to be this magic spell cast on currency traders at the moment that prevents them from selling dollars… Yeah! That’s the Ticket!
The pound sterling is still in rally mode, albeit small rally mode, but rally mode nonetheless, as it appears that their BREXIT talks are going much better than the China/U.S. talks… So, why isn’t the dollar getting taken to the woodshed as long as their talks go on unproductive, and cause more tariffs to be implemented? Beats me, folks… I guess the “powers that be” aren’t ready for the dollar to begin a long trend move downward…
Remember when Chinese officials said that they would not allow the renminbi to weaken to offset the tariffs, and I said, hogwash? Well, don’t look now but the renminbi is sitting at a 2 1/2 month low this morning after a night when the Peoples Bank of China (PBOC) allowed the renminbi to weaken to this new level of weakness. I believe the Chinese official that said that had his fingers crossed behind his back… yeah, that’s it, that’s the ticket! HA!
Speaking of China… They posted their April currency reserves this morning, and there wasn’t much movement from March’s number of 3.099 Trillion, with April coming in at 3.095 Trillion… And they didn’t have any positive currency revaluations propping up the numbers either, so this was a good thing for China, in that they haven’t dipped into their reserves, as of yet, to help out the floundering economy.
The Trade Talks with China / U.S. have not gone swimmingly… in fact they’ve swam like I do… Like a rock! This morning there’s news that a Chinese negotiator is coming to the U.S. Well, the markets are all lathered up about this development, but in my mind, this is just another stall junket for someone in China that was next on the list of people that were rewarded a trip to the U.S. This is NOT an indication that the talks are nearing an end, and I wish the markets would see this for what it is, and not what they want it to be!
I read an article this morning on Ed Steer’s letter (www.edsteergoldandsilver.com) That the U.S. mint has halted minting of Silver Eagle coins, as they have sold out of supply… And yet, the price of Silver can’t find a bid anywhere? Robin Trower is singing his song, Bridge of Sighs, as I write this, and I think its very apropos, given that I just keep the sighs of exasperation coming… Robin Trower was the guitar player for Procol Harum and this is his solo effort…
Gold was able to eke out a $2.80 gain yesterday, but is down a buck or so in early trading today… I have an interesting article for you in the FWIW section today, and then I list some of the things that should be weighing on the dollar right now, and yet none of them are doing anything, but how long will that last? Got Gold?
One Currency that seems to be able to hold onto its level is the Canadian dollar/ loonie… It’s been 74-cents and change for sometime now… There aren’t a whole lot of good economic things to say about Canada right now, but they will print their April PMI (manufacturing index) today, so this will give us something to work with… Getting economic reports from Canada is like pulling teeth with no Novocain! I have a few friends, and Pfennig Readers, north of the border who send me notes from time to time giving me the update, of which I’m very appreciative of!
Last month I was talking about how the price of Oil just kept ratcheting upward, and this month the price of Oil has just been ratcheting back down… like the Frank Sinatra song>>> Flying high in April, shot down in May… I can’t believe that the report that officials pulled out from up their Bullwinkle sleeves a couple of weeks ago, showing that supplies were larger than previously reported, is still keeping the price of Oil down…
Don’t get me wrong, I don’t want to see the price of Oil higher, but… I also don’t want to see manipulations going on…
Not too many notes in the Pfennig Replies box yesterday that disagreed with me on my take of the Fed… I took that as a sign that the major majority agreed with me… Or, should I take that as a sign, that people are tiered of telling me differently? I know I’m a hard headed Irishman, but come on… I can take a different point of view, without throwing rocks at someone! HA! Yeah, and I have some land to sell you in the desert, and my first wife was a young Elizabeth Taylor, yeah, that’s the ticket!
There isn’t much in the U.S. data Cupboard this week… Today we’ll see Consumer Credit (read debt) which will be huge… Thursday we’ll see PPI (wholesale inflation) for April, and then on Friday we’ll see the stupid CPI (consumer inflation)… In between there will be several Fed Head talks, that won’t move markets unless they say some rouge comment…
I’m expected that the Consumer Debt skyrocketed in March, given all the hoopla of the other data from March…
For What It’s Worth… A dear Pfennig Reader sent me this link and all the time I was reading the article that it took me too, I was thinking, Oh no, not again! It’s about the HELOC loans and what problems they possess for the economy and can be found here: https://www.msn.com/en-us/money/markets/easy-equity-loans-threaten-homeowners-and-the-economy/ar-AAAY6Ge
Or, here’s your snippet: “According to Equifax, between 2013 and the third quarter of 2018, close to 12 million new home equity loans were originated in the U.S. with a total of nearly $1 trillion in new installment loans or HELOC credit limits. Roughly two-thirds of these loans were HELOCs.
Three or four years ago, the standard HELOC had a combined loan-to-value (CLTV) limit of 80%. This meant that together, your first and second mortgages could not exceed 80% of the current value of the property. The restriction gave the lender a 20% equity cushion against another price downturn. A few lenders would go as high as 90% only if you had an extremely high credit score.
Standards have loosened up a lot since then. If you go online, you will see dozens of ads offering tantalizing deals for a new HELOC. In doing a quick search, I found at least 10 lenders that offer a 100% CLTV HELOC if you have a high FICO score and clean credit history. They must be highly confident that home prices will not go down again. Sounds much like 2005 and 2006.
Why are HELOCs and home equity installment loans a cause for concern? That is a reasonable question. After all, haven’t the worst of them been washed out of the system through foreclosures and refinancing?
One big problem is that we don’t even know how many of these second liens are still outstanding. Despite the Equifax report showing 12 million new HELOCs and home equity installment loans, they asserted that there were 3.2 million fewer home equity loans outstanding at the end of this period than at the beginning.”
Chuck Again… As I said above… Oh no… not again! Gov’t Debt… Student Loan Debt… Corporate Debt… States Debt… underfunded pensions… and bubble-mania in stocks… This will all work out just peachy, right?
Currencies today 5/7/19 American Style: A$.7017, kiwi .6598, C$ .7425, euro 1.1180, sterling 1.3062, Swiss $.9796, European Style: rand 14.4101, krone 8.7261, SEK 9.5776, forint 290.03, zloty 3.8340, koruna 23.0105, RUB 65.25, yen 110.60, sing 1.3626, HKD 7.8477, INR 69.46, China 6.7542, peso 19.01, BRL 3.9489, Dollar Index 97.57, Oil $61.72, 10-year 2.47%, Silver $14.82, Platinum $872.76, Palladium $1,336.32, and Gold… $1,280.36
That’s it for today… Let’s Go Blues! I joked with my buddies the other day, when one of them said, “we need to get together to watch Game 7” and I said, “no, we all need to be exactly where we were when we watched them win Game 6” HA! Superstitions… I have them I know… And I know they are malarkey, but I have them nonetheless… We’ve had 2 1/2 days of sunshine, and now the rain returns today, and will be around for the next few days… UGH! Aren’t all these rainy days supposed to have come in April? Living in a little river town, we don’t like to see all this rain… I’m just saying… OK… got your Blues jersey on? It’s Game 7! The Blues have had nothing but disappointments in their history, so, I’m hoping that this year will change all that! R.E.M. takes us to the finish line today with their song: Losing My Religion… Which is what I’ll be doing tonight! HA! I hope you have a Tom Terrific Tuesday, and continue to Be Good To Yourself!
Chuck Butler