Chuck Butler’s: A Pfennig For Your Thoughts
July 20, 2017
* Euro traders get cold feet…
* But they’ll be back!
* Gold down, Oil up…
Good day… And a Tub Thumpin’ Thursday to you! It’s an infusion day for me, and I’m feeling this morning like I already had the infusion! UGH! So, no Tub Thumpin’ for me today. Shoot, I’ve started this letter 3 times already this morning, and stopped, as my mind raced someplace else… UGH! I sure could use something crunchy to eat this morning, maybe that would help! OH well, quit your whining Chuck! OK… Simon & Garfunkle greet me this morning with their song: America…
Well, today is the day, and in fact, the European Central Bank (ECB) is meeting as I write… The euro halted its 3-day rally yesterday, as traders began to get nervous about what ECB President, Mario Draghi, will say when the meeting concludes, and has a press conference to discuss what the ECB talked about. I explained this all yesterday, so if you missed class yesterday, simply go to www.dailypfennig.com and see the past copies for your reading enjoyment!
I have this picture in my mind of currency traders and the euro getting married, and the currency traders getting cold feet, and bolting out the door… You see, they were shaken, not stirred, by some words that came from the euro’s relative, the ECB… But the traders will be back, and eventually the wedding will take place!
So, the Big Dog, euro has returned to the porch, for now, that is… And depending on what Draghi has to say this morning, will determine if the Big Dog and all the little dogs will get to leave the porch and chase the dollar down the street, or not. I should have just slept longer this morning and gotten up to write after the ECB meets! But, that would be cheating, Chuck! Besides there’s always tomorrow… I know, I know today is all that’s promised us, but there will be a tomorrow…
There were 142,000 contracts traded in Gold yesterday, and the price movement was basically no movement at all, as Gold ended the day down $1.00 from the previous day to close at $1,241.00. Unfortunately, Gold is down $5.30 in the early morning trading today… Just when it appeared that Gold had gotten through the gauntlet of “the boys in the band” and their short paper Gold Trades, the shiny metal takes a step back… NO! Don’t do it! Sort of like a horror film, and man or woman decides to open the door to another room, where they’ll meet their fate, and you’re sitting there, yelling at the TV, don’t do it, don’t do it, you’re gonna die! But they open it anyway, and well, you slump back in your chair, and say, “I told you not to do it”…
The price of Oil bumped higher yesterday and now trades with a $47 handle, and the Russian ruble was able to carve out a small gain, but the winner, winner, chicken dinner of the night was the Brazilian real. The real has really been on a strong run for the last two weeks, and it’s good to see, after all the selling that went on with the real previously… I told you last week what the other driver, besides the price of Oil, that was moving the real, and nothing has changed there, so it’s Party On Wayne, Party On Garth!
The U.S. Data Cupboard yesterday had the June report of Housing Starts and Building Permits, and I told you yesterday that the data would OK, since 1/2 of the month took place before the Fed hiked rates… Well, Housing data have been up and down and are now back up as both housing starts and permits easily beat the estimates. Starts jumped 8.3 percent in June to a 1.215 million annualized rate with permits up 7.4 percent to a 1.254 million rate.
Both April and May saw very weak Housing Starts, and you have to go back to that period to think about what was going on that would cause the weak months back-to-back, belly-to-belly… Well, if you recall, those months followed the March rate hike by the Fed, and at that point, the markets were believing the spiel by the Fed that more rate hikes were coming, so higher rates, means reduced buyers of homes…
But the thought that the Fed is going to keep hiking rates every three months is long gone with the wind, folks… I told you yesterday that what was once thought to be the next meeting to hike rates, September, is no longer being thought of, and neither is Rocktober, or November! I’ve said this so many times in the past few months that I think I’m feeling like a broken record… (Hey! I hear vinyl is making a comeback, so I won’t sound so much like an old fuddy duddy when I say that! YAHOO!)
But, here goes… A Central Bank should never hike rates into a weakening economy, and a Central Bank should never hike rates when they are looking for higher inflation… But, OUR Central Bank has done both of those things, and what are these rate hikes going to cause? The economic train in the U.S. is pulling into Recessionville… And that will bring us another round of Quantitative Easing, and maybe even negative rates, depending on how deep a recession it is, which I figure it will be very deep, because The Fed has circumvented the previous recessions here in the U.S. and never allowed the economy to fully clean out the excesses of the boom, so there’s a lot of, let’s say, pent up frustration that will be released with this next recession…
And all that will cause the Fed to lose what credibility they have left, and the dollar will be taken to the woodshed for a long period of time! Of course that’s all my opinion, and I could be wrong, which I’m sort of hoping I am, but not too much, because I know that my Gold & Silver will shine even brighter if all that comes to fruition…
To recap… The dollar wins back some lost ground, but in reality it’s all about what Mario Draghi tells us today, which should be about ready to be told to the markets… Gold lost $1.00 yesterday, but is down more than $5 in the early morning trading today, and the price of Oil bumped higher to a $47 handle… Besides those things, there’s not much else going on.
For What It’s Worth… I saw this article this morning and thought, Hey! I’m not part of a bank any longer, so I can take shots at the CFPB all I want! So, this was on the WSJ, and if you don’t have a subscription you won’t get to read it all, but here is the link anyway… https://www.wsj.com/articles/republican-lawmakers-aim-to-kill-cfpbs-arbitration-rule-by-mid-august-1500490229?mg=prod/accounts-wsj
Or, here’s your snippet: “Congressional Republicans by mid-August hope to overturn a rule put in place by a consumer regulator that could make it easier for consumers to band together and sue banks to resolve disputes.
Sen. Tom Cotton (R., Ark.) said he is working to get enough Senate votes to kill the arbitration rule under a legislative tool called the Congressional Review Act.”
Chuck again… Boy do I have some horror stories about the CFPB that I could share with you, but only on the Butler Patio! And that’s all I’m saying, other than… You go Tom!
Currencies today 7/20/17… American Style: A$ .7902, kiwi .7337, C$ .7916, euro 1.1505, sterling 1.2959, Swiss $ .9579, … European Style: rand 12.9669, krone 8.0887, SEK 8.3201, HUF 265.84, zloty 3.6608, koruna 22.6089, RUB 59.03, yen 112.36, sing 1.37, HKD 7.81, INR 64.39, China 6.7536, peso 17.64, BRL 3.1513, Dollar Index 95.04, Oil $47.12, 10yr 2.27%, Silver $16.17, Platinum $916.21, Palladium $855.87, and Gold…. $1,236.70
That’s it for today… I feel like Mike Leake this morning.. (Cardinals fans know what I’m talking about)… Day baseball today, but I’ll be in the infusion center. I should get out in time to see the last few innings… Went to local establishment last night with friend, Duane, and we listened to a guy play his guitar and sing. He asked me who I wanted him to play, and I said, “Hank Williams” and he did it… Fun time, singing along to: Your Cheatin’ Heart… Jet takes us to the finish line today with their song: Are You Gonna Be My Girl? And with that, I’ll get out of your hair for today… I hope you have a Tub Thumpin’ Thursday… And Be Good To Yourself!
Chuck Butler