Chuck Butler’s: A Pfennig For Your Thoughts
August 24, 2017
* Weak U.S. data sends the dollar down
* Sweden’s Unemployment Rate drops!
* Norway’s 2nd QTR GDP beat expectations!
Good day… And a Tub Thumpin’ Thursday to you! I saw a sign yesterday in a doctor’s office that I’m going to adopt as one of my own, it read: Today is a good day to have a good day… Loved it! It’s amazing what they can do these days. Yesterday, they put four probes on me, waved a wand in front of my pacemaker, and voila! The computer lit up and reports started printing with all the data about what my heart has been doing in the past 3 months… And they could do it remotely! Journey greets me this morning with their song from their early days (before Steve Perry): Of A Lifetime… If you’ve never heard the pre-Perry, Journey stuff, you should take a listen…
As we start the day today, the dollar, which got sold yesterday for a couple of reasons, has recovered some of those losses in the overnight trading.. But the Dollar Index which yesterday morning sat at 93.41 is lower this morning at 93.31… Front and Center this morning, the dollar got sold yesterday because of weak economic data, even if it was 2ns Tier data, the large drop in New Home Sales of 9.4%, to a 7-month low of 571,000… Apparently, new home prices are soaring and that kept the sales out of the reach of the Joe-six pack crowd.
The other thing weighing on the dollar was the Trump speech in Arizona, where he threatened to shut down the government if he didn’t get funding for his wall… This wasn’t the first time the President had mentioned shutting down the government. Is he sending a message to Congress to get off their duffs and get something done? Maybe, or then maybe he was just playing to the crowd in Arizona yesterday who would love a wall! Either way, the dollar got sold on the comments.
We were supposed to see the color of the Markit PMI for the U.S. yesterday, but apparently the folks at Markit, hadn’t finished working the numbers… So, comparatively speaking yesterday, we had Eurozone Flash Composite PMI rise, and in the U.S. we saw New Home Sales drop 9.4%, so the dollar got sold, and the euro got bought… One thing I’ve noticed and I’m sure of you currency round up watchers have too, is that the euro has seen some good performances during the U.S. markets, and then sees selling in the overnight markets… You don’t think , nah… that couldn’t ever happen! Oh, shoot Rudy, I’ll just throw this out there… You don’t think that the European Central Bank (ECB) is intervening to keep the euro in check? Well, if the markets get wind of that, the ECB will be in deep dookie for sure!
Old school traders would love it if they found out a Central Bank was intervening in a market that the traders were thinking should be higher… There used to be an old saying that I used over and over again, and that the markets have deeper pockets than any Central Bank… But that thought has to be reviewed and changed, because these days, as we’ve found out, Central Banks print money like there’s no tomorrow, and there’s no recourse for doing so…
I shake my head in disgust at what Central Banks have become… But that’s a discussion for the Butler Patio, which BTW is the name of my weekly letter that the paid subscribers at Dow Theory Letters get to read each Thursday night… If you’re interested in checking them out, go to: www.dowtheoryletters.com
Earlier this morning, Sweden printed their July Unemployment data, and Sweden’s unemployment rate decreased less-than-expected in July, figures from Statistics Sweden showed Thursday. The jobless rate dropped to 6.6% in July from 7.4% in June. Economists had expected the rate to fall to 5.9%. So, the real good news we hoped for here didn’t materialize, although a drop from 7.4% to 6.6% isn’t chopped liver, but I don’t think that this will be enough to get the Riksbank (Sweden’s Central Bank) to begin to significantly unwind their monetary policy of bond buying and negative rates.
In Norway this morning we saw the color of their 2nd QTR GDP… REcall I had told you in a previous Pfennig that the hopes here were that 2nd QTR GDP would rise from the first QTR’s 0.2% print to 0.6% in the 2nd QTR… Well, Norway’s economic growth accelerated in the second quarter largely driven by investment and exports, Statistics Norway said Thursday with GDP rising to 1.1% , which using my new math skills is faster than the 0.2% expansion in the 1st QTR. At the same time, growth in Mainland-Norway held steady at 0.7% in the 2nd QTR. This is all good for Norway, folks, and should be a strong underpin for the krone’s rally.
Today, on this infusion Thursday, the Fed’s Jackson Hole Boondoggle gets started, with the usual meet and greet, and cocktail reception, I’m sure, but tomorrow is what the markets and observers are waiting for… And that is the day that both Janet Yellen and Mario Draghi will both give speeches… Oh to be a bug and be able to read what they are going to say ahead of time would be cool… I’m thinking it’s going to quite the market moving speeches you don’t want to miss, that is if you’re into that kind of thing… Some people could give two hoots about currencies, and economies as long as they have a job, put money in the bank so they can pay their bills, and have some left over for gas, groceries and giggles…
The folks over at the FXStreet.com who, first of all, think enough of my writing that they repost the Pfennig each day on their site, sent me a note and said if I had any initial reaction to the speeches tomorrow to send it to them… Well, I might have some reactions, but I’m sure I won’t be able to focus on them long enough to write them out… But, I might be ready to focus on Saturday or Sunday, when I just might Tweet out some thoughts…
Gold wasn’t much of a participant in the markets yesterday, and this morning’s early morning trading has the shiny metal down $3, I guess the olive branch that President Trump extended to N. Korea is playing out here, but I wouldn’t get too upset with the $3 drop today, or Gold’s inability to move past $1,300 right now, and instead think of it as the train getting ready to leave the station, and keeping its doors open an extended time to allow everyone that wants to get on board to get on board!
Today’s U.S. Data Cupboard has Existing Home Sales for July, along with the usual Tub Thumpin’ Thursday fare, of the Weekly Initial Jobless Claims, so not much here, but as yesterday’s 9.4% drop in New Home Sales proved, if the data moves that much, the markets will react accordingly!
Tomorrow’s Data Cupboard finally has a real economic data print for us, in the July print of Durable Goods, along with Capital Goods… I expect these two to be very disappointing tomorrow, but I’m not sure the markets will even see them, as their focus is going to be on the Jackson Hole speeches later in the day…
To recap… Weak data in the U.S. deep sixed the dollar once again yesterday, although the dollar has rebounded a bit in the overnight markets. Chuck thinks there’s some funny business going on at the ECB… Trump talked about a government shutdown again yesterday, which weighed on the dollar too. Sweden’s Unemployment Rate didn’t fall as much as they expected but still had a significant fall from 7.4% to 6.6%, and Norway’s 2nd QTR GDP printed better than expected at 1% with strong domestic activity… And Gold couldn’t find a bid or offer yesterday, but is down $3 in the early morning trading today.
For What It’s Worth… Last Friday, at our Fantasy Football League Draft, I don’t know how the conversation got to this, but I put on my tinfoil hat and began to preach to the guys about how the cashless society would mean the end of their privacy, and so forth… They all looked at me like a deer with the headlights on them… So, I stopped… Well, this is an article / opinion by William Engdahl that I have no link to, that’s about a cashless society, that dear reader Bob sent me…
Here’s your snippet of this blog:
“Has it ever occurred to you that when you have no cash, you have no privacy?
An operation that began as a seemingly obscure academic discussion three years ago is now becoming a full-blown propaganda campaign by some of the most powerful institutions in the industrialized world. This is what rightly should be termed the War on Cash. Like the War on Terror, the War on Cancer, or the War on Drugs, its true agenda is sinister and opaque. If we are foolish enough to swallow the propaganda for the complete elimination of cash in favor of pure digital bank money, we can pretty much kiss our remaining autonomy and privacy goodbye. George Orwell’s 1984 (1949) will be here on steroids.””
Let me be clear. Here we discuss not various block-chain digital technologies, so-called crypto-currencies. We are not addressing private payment systems such as China’s WeChat. Nor do we discuss e-banking or use of bank credit cards such as Visa or Master Card or others. These are of an entirely different quality from the goal of the ongoing sinister war on cash. They are all private services, not state.
What we are discussing is a plot, and it is a plot, by leading central banks, select governments, the International Monetary Fund in collusion with major international banks to force citizens – in other words, us! – to give up holding cash or using it to pay for purchases. Instead, we would be forced to use digital bank credits. The difference, subtle though it may at first seem, is huge. As in India following the mad Modi US-inspired war on cash late in 2016, citizens would forever lose their personal freedom to decide how to pay or their privacy in terms of money. If I want to buy a car and pay cash to avoid bank interest charges, I cannot. My bank will limit the amount of digital money I can withdraw on any given day. If I want to stay in a nice hotel to celebrate a special day and pay cash for reasons of privacy, not possible. But this is just the surface.”
Chuck again… I can’t even begin to express how important it is that we attempt to stop this in its tracks… But then most people just don’t care about this stuff, because it’s not the latest crazy Despacito song! But one day when there is no cash, they’ll look around and say, “how’d this happen?”
Currencies today 8/24/17… American Style: A$ .7894, kiwi .7213, C$ .78, euro 1.1786, sterling 1.2820, Swiss $.9650, … European Style: rand 13.2085, krone 7.8557, SEK 8.0723, HUF 257.12, zloty 3.6311, koruna 22.1067, RUB 59.03, yen 109.34, sing 1.3615, HKD 7.8253, INR 64.00, China 6.6607, peso 17.69, BRL 3.1542, Dollar Index 93.31, Oil $48.18, 10yr 2.18%, Silver $17.01, Platinum $974.66, Palladium $932.34, and Gold… $1,291.70
That’s It For Today… And this week, as I explained earlier this week, on infusion weeks, there’ll be on Pfennig on the Friday following the infusion… Well, order was restored in the kingdom last night, as my beloved Cardinals beat the Padres… The heart doc says I’m doing fine, but wishes I wasn’t on chemo that messes up his numbers, I told him, “I feel for you” He laughed and said, “I didn’t mean to minimize your problems with chemo”… I’ve been home alone the last two nights, which meant I was on my own for dinner, which in the old days would have meant eating food that’s not exactly good for you… But these days my appetite has gone to hell in a hand basket, so it’s not big deal as I don’t eat anyway! And with that… The Temptations takes us to the finish line today with their song: Papa Was a Rolling Stone… Now go out and do some Tub Thumpin’ today, OK? And Be Good To Yourself! And remember today is a good day to make it a good day!