Chuck Butler’s: A Pfennig For Your Thoughts
September 1, 2017
* Currencies rebound VS dollar
* Gold gains $12.70 on the day!
*More trouble for Wells Fargo…
Good day…. And a Happy Friday to one and all! Since this is the official start of the 3-day Holiday weekend here in the U.S. I ask, why shouldn’t this be a Fantastico Friday? And with that, I announce today to be a Fantastico Friday! I hear that my beloved Cardinals won last night, so that makes today even sweeter! I say that today is the official start of the 3-day Holiday weekend, because as of noon yesterday, traders began closing their books and heading to the Hamptons! Billy Joel greets me this morning with his song: Scenes From An Italian Restaurant…
Well, It’s 3 o’clock in the morning and I couldn’t sleep, so I thought, what the heck, go write the Pfennig and then go back to bed, and see if that works… So, if the time stamp on the email seems a little early/ odd, it is, it’s just Chuck, and his awful sleeping habits…
The euro was able to gain some of the ground it had lost the previous two days, yesterday. Fundamentals in the Eurozone are looking healthier all the time, with inflation for the Eurozone rising to 1.5% from 1.3% in July. The Eurozone continues to see inflation rise toward the European Central Bank’s (ECB) 2% target rate, and the thing to look at here is the trajectory of inflation, and it’s not stalled out like it has in the U.S., and will hit 2% probably by year-end… So, the euro was given some love by traders, who see this as an indication that the ECB might be ready to begin to remove monetary stimulus… Germany, the Eurozone’s largest economy, saw their inflation rate rise to 1.8%, so it won’t be long now before the unwinding of monetary stimulus begins, here folks…
When I checked the currencies last night before going to bed, the euro had climbed back above 1.19 on the day, but as has been the recent trend of events, in the overnight markets, the euro saw some slippage, and slipped back below 1.19… But still better than it was yesterday morning…
On the other side of the “pond”, U.S. inflation can’t find any traction, and only gained 0.1%… And like I said, inflation is stalling out… Remember the old cars that would stall out? It always came a the worst time, and usually on a first date, when you’re trying like hell to impress the young lady… I have a funny story I’ll share with you… I had a 62 Ford Falcon, that almost always needed help starting with a shot of ether in the carburetor, and sometimes the carburetor would catch fire, so I always carried with me this thick rag that I could put over the fire and put it out… I really impressed the fathers of the young ladies I took out back in the day, when I would open the door for my date, and then open the hood… Class, eh?
OK, sorry about that discussion, I just had to tell you about that because, well… I can’t be all business all the time… I’ve never been that way, and never will be . There has to be a silver lining, or funny story in just about everything, right? Ok… back to the lifelessness in U.S. inflation, even though Personal Income was the highlight of the day rising 0.4% in July… Oh, and Personal Spending was up 0.3% missing the expectation of 0.4%, and that’s better than the revised upward previous month’s 0.2% rise… But again, these aren’t the kinds of numbers that equal what the Gov’t told us the previous day was going on in the 2nd QTR, Spending-wise… I’m just saying…
Not that I would ever be someone that called out the Government for cheating, fudging & cooking the numbers, right? HAHAHAHAHAHA! I wasn’t in a funny-Ha-Ha mood until being facetious there… Alright then let’s begin our talk! Ahem, Chuck, you started it already! Oh… Well then let’s continue…
I was writing down the currency prices the other day, and noticed that the Aussie dollar (A$) had rallied but kiwi didn’t follow it’s kissin’ cousin across the Tasman, so I began my daily hunt to find out what the heck was going on in New Zealand… Well, according to the Bloomberg, it appears there could be some political upheaval going on in New Zealand, and longtime readers know that since I’ve pounded into their collective heads for years now, that traders don’t like uncertainty… And when there’s uncertainty in the political arena, that country’s currency is going to suffer… And so it is with kiwi right now…
But I view this as a prolonged opportunity to get some kiwi while the price of the currency is cheaper, and before the Reserve Bank of New Zealand (RBNZ) starts their rate hike cycle… You may recall me telling you months ago, that I saw the RBNZ hiking rates maybe by year-end, but for sure in the 1st QTR 2018, and we had an opportunity to buy kiwi before traders began to smell what the RBNZ was cooking…
Another fixing in China and another appreciation for the renminbi last night… Simply impressive, how much the People’s Bank of China (PBOC) has allowed the renminbi to appreciate in the recent months… But like I said yesterday, I think the Chinese are up to something here.. I would keep an eye on them and how they respond to the proposed tariffs on their exports to the U.S.
I mentioned earlier in the week that the S. African rand had not gotten caught up in the dollar buying that was going on… Well, the rand has continued to steadily move higher and now trades with a 12 handle, instead of the 13 handle it held for what seems like a month of Sundays… But remember the rand is a very volatile currency, and could just as easily be back to 13 and change in NY Minute on some political circus that always seems to be going on there!
Well, Gold found some traction yesterday, and in the after hours trading through to the early morning trading, and is sitting at $1,324 and change right now as I write… A couple of days ago, Gold hit $1,331, and was quickly sold like funnel cakes at a state fair, by “the boys in the band”, so we’ll have to see what happens now, especially with most traders waking up in the Hamptons this morning instead of at their trading desks!
Nevertheless, Gold gained $12.70 yesterday, and there were 335,000 contracts traded in the shiny metal! WOW! We had a day of 433,000 contracts traded earlier this week, and now 335,000… Gold is one popular investment asset, eh?
Well, look at me… almost to the Big Finish and I haven’t mentioned that it’s a Jobs Jamboree Friday! I told you yesterday that I am intrigued by what the BLS prints this morning… The so-called experts think that the number of jobs created in August will equal 170,000, which is not a very optimistic forecast. I went on record this week saying that I thought that the report would be disappointing, and I’m sticking with that thought…
But the BLS jobs report isn’t the only piece of economic data that will print today… We’ll also see the color of the August ISM Index (manufacturing index), which I would think would print an increase in the index number… If China and the Eurozone can print increases in their manufacturing indexes, then the U.S. can too!
Before I head to the Big Finish, I can’t let this go without a comment…Oh man these problems that keep popping up for Wells Fargo, reminds me of the early 2000’s when one corporate scandal was reported after another one… Yesterday, Wells Fargo just discovered another 1.4 million bogus accounts it opened without its customers’ knowledge or consent.
These are accounts dating to roughly 2009–2011… on top of the 2.1 million we already knew about from 2011–15. And the bank ever so quietly took fees and charges from about 190,000 of them — up to $39 a month. OMG! That’s just downright shameful… As Gomer Pyle used to say… Shame, Shame, Shame… and I’ll add, and more shame! I just have one question for the Gov’t Authorities in charge… Why aren’t the lawmen lining up at the doors of Wells Fargo to arrest the leadership and board members? I’ll stop there, because this is just not right, and I’m getting ill talking about it!
To recap… The currencies, led by the euro, recovered some ground lost the past couple of days, yesterday. Gold gained more than $12 on the day, and it’s a Jobs Jamboree Friday! Chuck thinks the labor report will be disappointing, we’ll have to wait-n-see, eh? There’s some political upheaval going on in N. Zealand, and kiwi is getting ignored while the A$ rallies…
For What It’s Worth…. I had quite a few readers send me a link to this article that was on zerohedge.com yesterday, regarding how the Wall Street Journal is finally seeing the trees in the forest, and calling out the Fed as political… I said it during the election (and got called our for that) and said it, in so many words, on Monday this week… One of the readers said, “Look Chuck the WSJ agrees with you!” So, you can find the article here: http://www.zerohedge.com/news/2017-08-30/wall-street-journal-lashes-out-our-political-central-bankers?utm_medium=email&utm_source=sharpspring&sslid=M7G0NDc0NDMxNzexAAA&sseid=MzM1NDAwsDA2AwA&jobid=41bb03fa-ff6d-4402-8098-03de59217f33
Or, here’s your snippet: “
While the concept of ‘independence’ among the unelected central bank cognoscenti is as cute as the tooth fairy or Santa Claus, it is nevertheless defended by those on high as sacrosanct to our very democracy. That is until The Wall Street Journal’s editorial board finally had enough of Fed officials joining the ‘resistance’ against financial reform…
Janet Yellen didn’t run for President, but you wouldn’t know it from her policy démarche Friday at the Federal Reserve’s annual Jackson Hole retreat. The Fed Chair unleashed a defense of post-crisis financial regulation that shows how political the world’s central bankers have become.
“Already, for some, memories of this experience may be fading-memories of just how costly the financial crisis was and of why certain steps were taken in response,” Ms. Yellen said.
She added that regulatory changes “should be modest” and retain the superstructure built under Dodd-Frank.
Ms. Yellen’s comments followed a blunter recent warning from Fed Vice Chair Stanley Fischer, who told the Financial Times that “one can understand the political dynamics of this thing, but one cannot understand why grown, intelligent people” would “reach the conclusion that” you should “get rid of all the things you have put in place in the last 10 years.” Thank you, Senator Warren, er, Fischer.
You have to ignore history to believe that regulators are suddenly so wise that they know the current regulatory regime will prevent the next crisis. The Fed misjudged the economy in the mid-2000s and kept feeding easy credit that produced the housing bubble. Fed officials Ben Bernanke and Tim Geithner then underestimated the financial risks in early 2008 when the stresses were already apparent.
So until she runs for public office, she and the Fed ought to stick to executing regulatory policy rather than trying to dictate it.”
Chuck again…. WOW! And this came from the WSJ folks! Not some blogger, not some country bumpkin in Missouri, but the WSJ! If they’re seeing what’s going on, why haven’t the markets, yet? Hmmmm….
Currencies today 9/1/17… American Style: A$ .7930, kiwi .7160, C$ .7746, euro 1.1884, sterling 1.2910, Swiss $.9613, … European Style: rand 12.9495, krone 7.79, SEK 7.9789, HUF 256.88, zloty 3.5759, koruna 21.9518, RUB 58.25, yen 110.18, sing 1.3569, HKD 7.8254, INR 63.91, China 6.5938, peso 17.88, BRL 3.1531, Dollar Index 92.77, Oil $46.75, 10yr 2.12%, Silver $17.61, Platinum $997.57, Palladium $937.90, and Gold… $1,324.10
That’s it for today… The start of a 3-day Holiday weekend, and the unofficial end of summer. I’ll be cooking all day tomorrow in preparation for the Annual Butler Labor Day BBQ… My good friend Duane, is helping with some of the cooking, and I’m grateful to him for that help. Tomorrow is the real beginning of the College Football Season. YAHOO! My beloved Mizzou Tigers take on Missouri State in their opener… And I’ll have the Tigers game first, and then the Cardinals game to watch tomorrow while cooking… Actually after I get it all steadied and loaded, the Big Green Egg does the cooking for the next 8 hours! Sunday looks like a beautiful very warm day, so let’s get this weekend going! Paul Young takes us to the finish line today with the Hall & Oates song: Every Time You Go Away… What a great song… And with that, I send you on your way to having a Fantastico Friday! Be Good To Yourself, and don’t forget, today is a Good Day to have a Good day!