December 12, 2019
* Currencies & metals rally on Wednesday
* First ECB meeting for Lagarde today… Chuck’s watching…
Good Day… And a Tub Thumpin’ Thursday to you… On our triple T-day, we will attempt to unravel the mystery of What The Hell the Fed Is Up to! OK, I’m just kidding… I doubt anyone can figure those guys and girls out! Least of all little old me, down here in my basement, at my writing desk, in my little river town outside of St. Louis, Mo! Although I still try to figure them out… My 2nd day being alone… I kept busy… and the day went by fast! With two men in the house for dinner, I made steak and potatoes… I thought about a salad, but… then I unthought about it! HA! I sautéed some mushrooms, for the steak, and Alex and I ate like Kings! The original band Journey, (sans Steve Perry) greet me this morning with their song: Of A Lifetime… That’s one of those, classic rock songs, that you might have heard, and wondered who is that? Well, now you know!
Well, the Fed didn’t pull any surprises yesterday, and left rates unchanged… As far as the word on the street that I told you about yesterday, that a couple of Fed Heads were clamoring for a rate hike, Fed Chair, Powell, said, that “ he’d prefer to let inflation rise and hold above the central bank’s target before considering future interest rate hikes.” So, the dollar bulls were sent to the woodshed for the day for thinking that a rate hike would be discussed… Of course we won’t know for sure for a few weeks what was actually said by whom… But for now, the Fed is on hold, with 1.75% Fed Funds rate…
Like I said above, the dollar bulls got sent to the woodshed, and the euro rallied all the way up to 1.1135… For those of you new to class, the euro is the offset currency to the dollar, so if the dollar gets sold, it shows up first with euro strength… I call the euro the Big Dog that sits on the porch, and the other currencies the little dogs that sit there too, but are ready and willing to chase the dollar down the street, but the Big Dog has to get up from its prone position on the porch, first… The little dogs may outrun the Big Dog, once they get going, but they don’t dare move off the porch until the Big Dog does first….
And yesterday, the Big Dog got up and moved off the porch… Now it will be interesting to see if the Plunge Protection Team steps in and limits the dollar’s fall… Which they have been doing lately…
The strong dollar trend has to end one of these days folks, it might as well be now, right? The trends started in 1971… and have been 7, 7, 7, 9, and now 8 years… Seems a little long in the tooth, doesn’t it? By the way it goes like this… Weak dollar, strong dollar, weak dollar, strong dollar, weak dollar, and now strong dollar, so guess what’s next?
Gold took yesterday morning’s $1.75 gain, and said, to hell with that! And gained $9 on the day to end the day at $1,477… Good day… I guess the Fed’s press conference afterward didn’t help the dollar any, and why should it have? I read an article this morning that said that Central Banks around the world are buying physical Gold and ditching the dollar… This, of course is not new news to us, right? I’ve been telling you this was going on for some time now… But it’s always nice to see someone else notice it, eh?
OK, enough on the Fed’s meeting yesterday… They are all somewhat suspect if you ask me… I was asked the other night if I like the St. Louis Fed President, James Bullard, and I said, “yes, I think he’s a smart man, but as far as the rest of those guys and gals, I’m not so sure”….
The European Central Bank (ECB) is meeting while I my fat fingers are flying across the keyboard this morning… This will be Christine Lagarde’s first meeting as the head of the ECB… So, here’s the thing to look for today… Will Lagarde follow in Mario Draghi’s footsteps and throw the euro under a bus this morning, thus knocking it back down? Or… will she begin to carve out her own identity? I guess we’ll know in an hour or two this morning…
In the meantime, back at the ranch… the day for reckoning is coming quickly folks… And that day is the one I talked about yesterday, with all the things that could go wrong for the dollar… Or better yet, go right for Gold!
Here around St. Louis, BJC, the health conglomerate, announced that they would cut 200 jobs… I understand that to be 200 jobs in their tech area, as BJC is ready to move their IT jobs to oursourcing… Oh great! So, you have kids that went to college to learn IT and thought, “when I get out of college I’ll be inundated with job requests, and then find a job at BJC, only to find out that they are going to cut your job and replace your job with outsourcing… Lucky you… right? I know this stuff has been going on for years, but never in IT…
I was not upset by my youngest son, Alex’s, choice to go to Physical Therapy School, and not IT school, but I was, at the time, thinking that IT was the future… I guess I was wrong, because, Alex, who will graduate in May with a doctorate degree in PT, will also graduate with a pocket full of job offers! I guess he was smarter than his old man, eh?
The recent runup of pound sterling has been interesting, given the roadblocks ahead on the road for sterling… but yesterday saw some selling of sterling, bringing its price back down below 1.32. The U.K. has seen a rash of rotten economic data this week, things like Industrial Production and manufacturing production… they were not what you would call, economic prints that would garner a stronger currency…
In the Eurozone today, besides the ECB meeting, the German think tank ZEW printed their Business Sentiment index, and it was a mixed bag-0-nuts, with the outlook picking up, but the current view being negative… Usually, the ZEW can be blamed for a slight move in the euro, but with it being printed on the same day as an ECB meeting, it was moved to the back burner this morning…
The U.S. Data Cupboard still is leaving the markets “wanting” real economic data, that it won’t get until tomorrow, when Nov. Retail Sales will print… I think I said this earlier this week, but this Retail Sales report will include the Black Friday Christmas shopping, so we’ll be able to see if the reports of a great day were really bang on… The BHI (Butler Household Index) indicates to me that this could be a good strong print… But that’s tomorrow…
First… today we’ll have to sit through PPI (wholesale inflation) and the Household net Worth numbers… Yesterday, the stupid CPI printed, and it showed that there was little inflation… That’s nice… I just received Alex’s last term tuition payment… And the Gov’t is telling me that there’s no inflation there? Yeah, that thought and a quarter still won’t buy you a cup of coffee! HA!
My darling daughter Dawn stopped by to see me last night… We talked for a bit, and then I asked if she still wanted me to read to her class… Tradition, has always been that the week before Christmas I would go to her kindergarten class and read: The Night Before Christmas… And she gave me the time to be there! So, once again, I’ll be reading to her class… I absolutely love doing this… I put everything I can into reading it, believe me on that! And the faces of the kids as my voice grows louder, and I say “to the top of the porch, to the top of the wall, now dash away, dash away, all” I don’t know how Dawn gets them settled down after I’m there, but that’s her problem! HA!
To recap… The Fed did as promised and left rates unchanged yesterday, and Fed Chairman Powell, quieted those rumors that a couple of Fed Heads were talking about a rate hike… This news was not taken as good news for the dollar bugs, and soon the dollar was getting sold… The euro climbed back over 1.11, and Gold gained $9 on the day. Central Banks are ditching the dollar and buying Gold instead… That thought is really catching on these days…
For What It’s Worth… OK, I’ve beaten this dead horse (no animals were actually hurt here! ) quite a bit through time, and I’m going to go back and beat the dead horse again. I’m talking about the fact that so many jobs that have been created in the last 10 years have been low wage jobs, and that doesn’t help the economy… And this article talks about that very thought, and can be found here: http://www.informationclearinghouse.info/52686.htm
Or, here’s your snippet: “A Brookings Institution study shows 44 percent of all American workers toil in “low-wage” jobs, with median earnings of $18,000 a year. Most of them are adults in their prime working years, whose paychecks provide the main sustenance for their families, 20 percent of which live at below 150 percent of the poverty line. Blacks and Latinos are overrepresented in low-paid employment, but more than half of these bad jobs are held by whites.
The corporate consensus, shared by its monopolized media, is that the economy is booming – which only confirms that the Race to the Bottom is ruling class policy, no matter how much the “liberals” at places like Brookings bemoan the hardships inflicted on the working poor.
Working class precarity is built into the system, by design. Another study, measuring the Job Quality Index , shows that the proliferation of low-paid work isn’t a hangover from the 2008 meltdown, but a characteristic of late stage capitalism. “In 1990, the jobs were pretty much evenly divided” said one of the creators of the index.
“We discovered that 63% of all jobs that were created since 1990 were low-wage, low-hour jobs.” The data show the Race to the Bottom has accelerated for U.S. workers under both Republican and Democratic administrations: the elder and younger Bushes, Clinton, Obama, and now Trump, who is running for re-election on the strength of the economy.
“Precarity is built into the system.”
The duopoly system is a magnificent mechanism of corporate rule and working class ruin. When only corporate parties are permitted to govern, and corporate mouthpieces monopolize the media, capitalist-inflicted misery is made to seem natural and inevitable. The highly-educated researchers at Brookings can imagine only one way out of the downward spiral for those localities where bad jobs are the norm: “attract and grow more high-wage jobs by drawing new companies in and helping existing companies grow and increase their productivity.” In other words, more capitalism, of the more socially-conscious kind. But clearly, the stock market favors precarity capitalism, which it rewards with high returns, and punishes capitalists that don’t immiserate their employees or farm them out to low-wage contractors.”
Chuck again… Yes, when Chuck says these things not too many people pay attention, but when the Brookings Institute says them, people sit up and listen… Sort of like that old EF Hutton Commercial… HA!
Currencies today 12/12/19 American Style: A$ .6892, kiwi .6588, C$ .7587, euro 1.1133, sterling 1.3282, Swiss $1.0175, European Style: rand 14.6523, krone 9.0932, SEK 9.3795, forint 295.87, zloty 3.8450, koruna 22.9247, RUB 63.48, yen 108.63, sing 1.3566, HKD 7.8055, INR 70.80, China 7.0357, peso 19.12, BRL 4.1323, Dollar Index 97.13, Oil $59.03, 10-year 1.80%, Silver $16.87, Platinum $942.92, Palladium $1,934.90, and Gold… $1,474.73
That’s it for today and tomorrow… The Big Army / Navy Football game is Saturday… I always take time to watch that game… It’s not the most exciting brand of football, but pageantry, tradition, and all the other stuff make it all worth watching! I’ll be by myself this weekend, hopefully, I can rest for long periods of time! HA! Our Blues get back on the ice tonight VS Vegas, and a BIG Saturday Night Special will have the Blackhawks in town… Those games used to be real barn burners… My beloved Missouri Tigers have a new football head coach… (It’s not who I thought would be good for the program, but I’m sure the AD knows more than I do!) And there’s just 65 days until pitchers and catchers report to Spring Training! Def Leppard takes us to the finish line today with their song: Bringin’ On the Heartbreak… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow… and Please Be Good To Yourself!
Chuck Butler