January 22, 2019
* Currencies still giving back gains to the dollar…
* China’s 4th QTR GDP was 6.4%. Signs of Trade War damage?
Good Day… And a Tom Terrific Tuesday to you! What a nice weekend for yours truly… Except that the Chiefs didn’t win on Sunday! I actually wanted the Saints and Chiefs in the Super Bowl, and neither of them made it there, with both losing in overtime! UGH! Now, it’s Rams and Patriots, and I doubt I’ll even turn it on, for I despise both teams! I once was a Rams fan, but then they kicked the St. Louis fans to the curb, and moved… So, there! I heard a lot of the country got very deep cold and snowy weather this past weekend, just to remind everyone that winter still exists… Most people had the day off yesterday, so this will be a short week… So, let’s get going, eh? Chicago greets me this morning with their song: Movin In… It’s from their second album, and a real good one if you’ve never heard it.
Well… The news from this past weekend was different in different parts of the world… First we had China printing their slowest GDP since 1990, and then we had Russia reporting that they had booked A Current Account Surplus for 2018… That’s right, I said Surplus, with a capital “S”! Now, that’s not something you hear talked about very much in this day of debts, and deficit spending with no governor on the spending… I’ve said this for a couple of years now, and it still rings trued if not ever louder today, and that is that the Central Bank of Russia (CBR) Gov. Elvira Nabiullina is the best Central Bank Gov. since the days of Don Brash at the Reserve Bank of New Zealand. And the best going right now… She’s done a wonderful job of dodging the potholes caused by economic sanctions, has grown the country’s Gold reserves, and brought in a Surplus for 2018! All the while beating back inflation that had been a major problem in the country for years!
The Chinese on the other hand, while we know they book HUGE Trade Surpluses, they are in a Trade War with the U.S. and if there’s any sign that there’s a problem it’s going to be seen in the GDP numbers… And China’s GDP print of 6.4% is a level that hasn’t been seen there in more than a decade! In fact if you take out 2009, when every country in the world was ailing and attempting to gain a heartbeat again, the last time China’s GDP was this low it was 1990… Where were you in 1990? Funny to think about that, eh?
The National Geographic Channel had a documentary about the 90’s this past weekend that I watched while looking for something to do besides listening to pre-game talk. And it was about the 90’s… Remember the white Bronco? The Macarena? And so on… Well, if that seems like a long time ago, then that’s how it feels in China right now…
So, the Chinese and President Trump are negotiating again… China says that if the U.S. listens to them they can tell them how to get out of their Trade Deficit problem… Interesting don’t you think?
I apologize for waiting so long to talk about the currencies… Sometimes, there are things that need to be discussed first! Besides, the currencies haven’t really moved since dropping some last week, and giving back the gains they had made the previous week. Of course with yesterday’s U.S. Holiday, the currency markets were thinned out, once the English lads and lasses hit the pubs, which was about 1 pm our time. There have been times in the past where thinned out markets had a major effect on the dollar, but not yesterday… So, we move along at snails speed with currency movements, as investors still don’t have a clue as to which way this whole economic mess is going to turn, and what direction it heads…
Everyone has their opinion, I have mine, and I’ve told you it previously, but in the end, nobody really knows anything in concrete… So, that’s what’s bringing about the questions… And when there are questions, investors sit on their hands… The best people like me can do is put together all the facts and figures and sentiment in the market and come up with an opinion…
For instance, Credit Card use in the U.S. is skyrocketing… What does that tell me? It tells me that consumers are strapped for cash, and that they can’t stop spending, so pretty soon they’ll max out their card, and apply for another one, and do the same with that one… It’ll keep the heart beating on the economy, but the heart beat will be weak, and ready to give out at a moment’s notice…
And fundamentals take a back seat to sentiment these days… That’s a real shame too, because with fundamentals you have real numbers on a score card that you can keep, that leads you to an investment decision, but this sentiment, you have the whims of Traders… Fundamentals may influence their sentiment, but in the end, sentiment is like perception… And we all remember that we are what we are perceived to be… That same goes for the dollar…
OK… The IMF announced this past weekend that they were downgrading their forecast for World Economic Growth (GDP)… Welcome to my bandwagon, IMF… I’m sure you’re highly paid economists will want a seat near the front of the wagon, but not today, for your tardiness to joining the bandwagon, you get what seat you can find! And you’ll like it!
Pound sterling is one of the few currencies gaining on the dollar today, as wage growth surprised to the upside in November… Wait, What? Traders are falling for the old, “the data looks good, even though its stale” trick? I guess so, I guess traders haven’t heard of BREXIT or the near removal of their PM last week? So, I water down the pound sterling’s move, because I don’t think it’s something that can last…. I’m just saying.
The World Economic Forum, AKA known as the Davos boondoggle is going on as I write, and while there are quite a few absences from the boondoggle this year, it still has some heavyweights in attendance… So, we might get a quote or two from the boondoggle, that is if they can get off the slopes long enough to make one!
Boy, you sounded really sarcastic there Chuck, is there something on your mind that’s bothering you? Well, yes, there is, thank you for noticing… In the summer we have Jackson Hole, and in the winter we have Davos, and what do these boondoggles ever deliver to us? As Edwin Starr used to say in his song… Nothing, absolutely nothing, say it again!
The U.S. Data Cupboard is something of a mystery these days… As we still haven’t seen the color or last Wednesday’s scheduled report on Retail Sales. There are some reports that slip by the road block but I would be surprised to see anything of real importance like Durable Goods print while the Gov’t shutdown continues… So, there’s nothing here to see, move along for these are not the droids we’re looking for…
When I left you last Thursday, Palladium was slipping from the moon shot it took earlier in the overnight markets, where it shot up $70… But by the time I hit send on Thursday morning, Palladium was giving a lot of that $70 gain back… Later that morning I Tweeted: “Well, the moon shot move in Palladium overnight (up over $70) has settled down, and is back to reality… I still think it was probably a the reversal of a flash crash in pricing that caused the moon shot move.”
In other words… I thought that someone had mistakenly entered a trade to buy Palladium that had a bad decimal placement, and that made everyone jump and buy into the rally… But buy noon, Palladium had seen the best price of the day, and was experiencing a sell off. it still gained a very nice $34 on the day… Which was $38 off its high.. Just to bring this back around to something concrete… there seems to be a shortage of Palladium that’s used in the catalytic converters on gas powered autos, which seem to be more in demand these days than electric cars…
Gold on the other hand, lead a boring life compared to the trading in Palladium… And speaking of a shortage, there sure has been a documented shortage of Silver for a couple of years, but has that gotten the everyday man’s Gold (Silver) anywhere? No… it hasn’t! And it won’t either as long as their are still over 185 days of Silver production needed to equal the number of ounces of Silver sold short on paper trades…
To recap… Russia prints a Current Account SURPLUS for 2018, and Chuck sends flowery notes to the CBR Gov…. China on the other hand printed a weaker than expected GDP of 6.4%, and that scared the bejeebers out of most of the Global Growth currencies… The U.S. is still shutdown, and that means there’s not much in the way of economic data slipping through the road block. And Gold is attempting to keep up with the Joneses (palladium)
For What It’s Worth… Well, I grew up on a street named Wyoming in South St. Louis, and I always thought as a kid that Wyoming sounded like a cool place, with the cowboys and wide open spaces… Well, now I can think about Wyoming as a cool place for another reason… The Wyoming Gov’t wants to buy Gold & Silver… Really? Yes, and the article can be found here: https://www.soundmoneydefense.org/news/2019/01/17/wyoming-derisk-gold-silver-000205
Or, here’s your snippet: “A group of Wyoming legislators have introduced three bills this week to de-risk the state’s financial holdings with modest allocations to physical gold and silver in the state’s pension fund, reserve fund, and mineral trust fund.
Introduced by Representative Roy Edwards (R-Gillette) and co-sponsored by 15 others, the Wyoming Sound Money Trust Act (HB 174) empowers the State Treasurer to hold at least 10% of the Permanent Wyoming Mineral Trust Fund in the monetary metals in a depository in or near the state of Wyoming.
The Permanent Wyoming Mineral Trust Fund is the state’s oldest and most well-funded permanent fund with over $8 billion in assets.
Last year, Rep. Edwards successfully passed the ground-breaking Wyoming Legal Tender Act, a measure which reaffirmed that gold and silver are constitutional money and removed all state taxation of them.”
Chuck Again… Wow! Now if more states would get to using this idea for their own needs that would be tre cool! And would go a long way toward ending price manipulation… I’m just saying…
Currencies today 1/22/19 American Style: A$.7123, kiwi .6713, C$ .7506, euro 1.1360, sterling 1.2910, Swiss $1.0038, European Style: rand 13.9217, krone 8.5935, SEK 9.0320, forint 279.89, zloty 3.7705, koruna 22.5388, RUB 66.35, yen 108.45, sing 1.3610, HKD 7.8462, INR 71.28, China 6.7894, peso 19.22, BRL 3.7501, Dollar Index 96.34, Oil $53.02, 10-year 2.76%, Silver $15.29, Platinum $793.51, Palladium $1,347.68, and Gold… $1,283.65
That’s it for today… A cold snap filtered its way down here in S. Florida yesterday, but that just meant that the air conditioner got a break! Our construction project is finally beginning to take shape. I know one thing and that is that people move at a much slower pace down here in the deep South… I was going through my Spring Training Tickets, and noticed that the NY Yankees are coming to Roger Dean Stadium this year… It’s been a bout 10 years since we last saw them play the Cardinals at Roger Dean… That was a memorable day, 10 years ago, as it was also St. Patrick’s Day… I’m just saying… OK, time to get going… And the Guess Who is singing their song: No Time! How about that for timing? HA! I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!
Chuck Butler