Chuck Butler’s: A Pfennig For Your Thoughts
July 19, 2017
* Currencies await ECB tomorrow…
* Krone outperforms other Petrol Currencies
* Chuck goes crazy in the FWIW section!
Good Day… And a Wonderful Wednesday to you! How are you today? I hope you’re having a great day so far! I ventured outside yesterday, and found it to be too hot to enjoy sitting out to watch the ballgame, so I returned to the house to watch it there, and the next 3 days should be even hotter! But that’s OK… I’ll take it over the cold, ice, snow, wind chilled days of winter any time! Neil Young and Crazy Horse greet me this morning with their 17 minute live version at the Fillmore East, of: Down By The River…
OK, I had lots to say yesterday, and said it, which made yesterday’s Pfennig quite long… I’m thinking that today’s version won’t be so long, as there has been little movement in the currencies in the past 24 hours. We did see some slippage during the day, probably profit taking, but the currencies quickly recovered and appear to be trading in yesterday’s clothes today.
I do believe that the markets are now waiting to hear what Mario Draghi, the President of the European Central Bank (ECB), has to say when the ECB meets tomorrow. I told you on Monday that this was going to be a BIG meeting, as the markets are expecting to hear that at least the ECB is thinking about a shift in monetary policy, from uber-accommodating to something less “uber”… Of course, they would love to see some definitive statements about tapering and the removal of negative deposit rates, but I think they’ll be happy just getting a bone thrown to them, which gives the ECB more time under the uber-accommodating umbrella…
Remember last week, when I told you that Lola aka Goldman Sachs had told their clients that they preferred Japanese yen over Swiss francs as a safe haven currency? Well, once again, what Lola wants, Lola gets, as yen has gained more than 2 whole figures in the past week, while the Swiss franc has lost 2-cents… I shake my head in disbelief of this whole scenario, and for my next submission for letters for the Dow Theory Letters (www.dowtheoryletters.com) I’m going to do a deep dive into Japan’s economy and show why I think that believing that yen is a safe haven currency is a real stretch of the imagination!
Kiwi tried to play catchup yesterday, as it lagged the strength of the Aussie dollar (A$)) rally the previous day. I had wondered yesterday morning what the governor was on kiwi, but wonder no more, as a good strong move by kiwi has me forgetting about the governor!
Speaking of the A$, I mentioned yesterday that it appeared that it was setting its sights on 80-cents… And then out of the blue, an article appeared on Bloomberg titled: A$ sets its sights on 80-cents… Monday’s BIG move by the A$ can be attributed to two things… 1. the selling of the U.S. dollar, and 2. the markets believe that they read real optimism in the Reserve Bank of Australia’s (RBA) minutes that printed Monday night (Tuesday morning for them)… I do believe that the RBA has their finger on the rate hike gun’s trigger, but are waiting for further signs of Global Growth revival before moving their rates higher. And that rate move could come before year-end.. That would be HUGE for the A$, since the rate differential to the U.S. had narrowed, with the Fed rate hikes, which now appear to be on hold…
About a month ago I was having an email exchange with former colleague, Antione Lawrence, and he was questioning something I had said in the Pfennig that morning about how the Fed might have hiked rates the last time, in this cycle… He asked, “so no rate hike in Sept.?” And I said, no rate hike for Sept. As by then the recession will be setting in and the Fed will have to begin to talk about reversals of their rate hikes…
And now the Fed Funds Futures are confirming my thoughts, as the odds of a rate hike in July, August, Sept. Oct, Nov. are basically nil… And December only has a 50% odds of a rate hike at this point, which will most likely move downward as we go along this summer. And I think Janet Yellen’s two speeches on Capitol Hill last week, drove the nails in the rate hike’s coffin…
The price of Oil has been stuck in a range of $46.20 and 46.80 so far this week, and while that might seem boring to some, I find it to be refreshing… I read an article yesterday where the writer believes that the most recent rise in the price of Oil was more of a result of speculators moving the markets, and not supplies… Well, I don’t know if speculators were moving the markets or not, but I’ll stick to my guns on this one and continue to say that the supplies dictate the direction of the Oil price!
So, with the price of Oil stuck in a range, the Petrol Currencies, that include: Russian rubles, Brazilian real, Norwegian krone and Canadian loonies, all have to trade on their own fundamentals other than Oil… And the Norwegian krone is the doing the best at that of these 4 currencies. But then the krone has the euro’s coattails to grab hold of that is an extra “helper” that that other currencies don’t have. But even with that extra “helper”, the krone is releasing some pent up frustration that’s been held in for too long!
Gold saw another day of gains yesterday, closing at $1,242, after gaining $8.30 on the day. The early morning trading this morning has Gold down $2.60, but that looks like pure profit taking to me folks, so this could turnaround quickly today… I’d like to talk about Silver more today, as I give some love to the everyday man’s Gold… In Ed Steer’s letter this morning (www.edsteergoldandsilver.com) he highlights an article on the Bloomberg site, and like I always say, if Ed thinks its worth highlighting, then I should too! So, here’s the gist of the article that can be found here: https://www.bloomberg.com/news/articles/2017-07-17/silver-extreme-pits-big-investors-versus-small-as-holdings-surge?utm_content=commodities&utm_campaign=socialflow-organic&utm_source=twitter&utm_medium=social&cmpid%3D=socialflow-twitter-commodities
“Silver, known for being a market of extremes, is living up to its reputation this year.
Prices rallied 17 percent in the first four months of the year, only to reverse and wipe out those gains. Despite the selloff, investors are pouring money into exchange-traded funds, and assets have reached a record 21,211 metric tons, valuing the holdings at $11 billion. At the same time, the picture is bearish in the futures market, where hedge funds now hold the first net-short position in two years.
Different kinds of investors are driving the opposing trends, according to George Coles, an analyst at research firm Metals Focus Ltd. Large, active hedge funds shorted Comex futures because of the risk of higher U.S. interest rates, driving silver prices lower, he said. ETF buyers tend to be smaller traders that use silver for long-term diversification of their portfolios. They’ll be rewarded for their bullishness as slower U.S. economic growth spurs demand for haven assets, Coles said.
“This may be a case of the smaller investors versus the big guys,” Coles said in a phone interview from London. “In this case, the smaller guys may be right.”
Chuck again I had to laugh when Ed sarcastically pointed out that George Coles had called for a rally to $20 for Silver… As, Ed, and Chuck, and many others think Silver should be trading much higher than $20!
The U.S. Data Cupboard has been quite quiet this week, and today we’ll see Housing Starts & Building Permits for June… Should be OK data, given that 1/2 of the month took place before the Fed hiked rates again… tomorrow’s Data Cupboard is just as weak with data, and then on Friday there are no data prints scheduled… So, a real nothing week for data, which should have been good for the dollar, but wasn’t…
To recap… The currencies gyrated a bit yesterday, but in the end they were right back where they started the day, and are still trading in those clothes this morning. Lola is getting what she wanted… AGAIN! And the markets seem to be waiting for tomorrow’s ECB meeting for further direction… I sure hope Draghi doesn’t disappoint tomorrow… And Gold gained $8 yesterday…
For What It’s Worth… THIS IS BIG FOLKS! And I hope you read it and begin to boycott any business that goes completely cashless! Because, going completely cashless will be the end of our civil liberties (what we have left, after the Patriot Act), our freedoms, and a lot of our money, because, well, the Gov’t will now have control of it… Don’t believe me? Well, so be it, I can lead a horse to water but I can’t make it drink the water! Anyway, thanks to reader Tom for sending me this first… It can be found on NBC News site, or here: http://www.nbcnews.com/business/consumer/war-cash-intensifies-visa-offers-restaurants-10-000-go-cashless-n782276
Or, here’s your snippet: “Visa has declared war on cash and its “opening salvo” is to start paying restaurants $10,000 to go completely cash free.
The credit card giant is this week announcing a new plan to hand out thousands of dollars to up to 50 small food and restaurant vendors if they agree to stop taking cash.
Visa will also upgrade the restaurants’ checkout terminals so they can accept contactless payments, like Apple Pay, and invest in some of the stores’ marketing costs. When you pay at one of the stores you would only be able to do so with a credit or debit card, or via mobile payment. The program participants will be picked from an online application that starts in August.
It’s all part of the trend of moving towards a “cashless” society. Sweden is leading the pack, with that nation already predicted to become the world’s first truly cash-free society; over half the banks there already do not keep any cash on hand.
But the U.S. is catching up: Amazon’s brick-and-mortar retail stores only accept credit cards and mobile payment methods; Facebook recently added a peer-to-peer payment option with its Messenger service; and Apple’s iOS11 will include an upgrade to its ApplePay system that allows users to send money to each other via text message. This is all in addition to services like Venmo, a popular way for consumers — especially the younger generation — to send money to each other easily and quickly.
Chuck again… I guess that maybe it’s too late baby now, it’s too late, though I really did try to stop it… I’m dead serious about this folks… just think about that for a minute… Sure it makes things convenient, but at what cost? Well, I think I spelled that out for you at the top of this section… But when you give someone else complete control over your money, guess what happens? It seems to end up in their hands… Well, I don’t need to be getting all riled up, so boycott the businesses that go completely cashless and let the millennials eat there! For soon, mom and pop aren’t going to pay for their meals any longer!
Currencies today 7/19/17… American Style: A$ .7935, kiwi .7369, C$ .7914, euro 1.1535, sterling 1.3032, Swiss $ .9538, … European Style: rand 12.9224, krone 8.0612, SEK 8.2908, HUF 265.70, zloty 3.6476, koruna 22.5678, RUB 59.17, yen 111.95, sing 1.3677, HKD 7.8086, INR 64.29, China 6.7538, peso 17.52, BRL 3.1705, Dollar Index 94.76, Oil $46.55, 10yr 2.27%, Silver $16.19, Platinum $922.54, Palladium $863.61, and Gold… $1,239.30
That’s it for today… A nice job of pitching last night by the Cardinals’ Michael Wacha… A month ago, I was ready to send him to the bullpen… Good thing I’m not the manager! HA! After reading the Visa article featured above, I think I need Bob Marley’s 3 little birds singing their sweet song at my doorstep… Don’t worry, about a thing, cause every little things is gonna be alright… One day closer to my summer vacation, I’m getting excited… Jimmy Buffett takes us to the finish line today with his song: Son Of A Son Of A Sailor… And with that, it’s time… I hope you have a Wonderful Wednesday, and remember to… Be Good To Yourself!