March 14, 2019
* Currencies & metals see Wednesday’s gains wiped out
* China slows down, as Trade War bears weight on their economy…
Good Day… And a Tub Thumpin’ Thursday to you! A very restful day yesterday, as I did a lot of reading, and mixed in some research on the economies… Through the years, I’ve changed my focus quite a bit, in that, when I first began to write the Pfennig, I rarely talked about the U.S. economy, and the Fed, choosing to focus, instead, on foreign Central Banks and economies. But when more than a dozen European Central Banks became a thing of the past, and the debt of the U.S. began to grow by leaps and bounds, I eventually, over time, that is, changed my focus to the U.S. because the U.S. economy dictates what the rest of the world does… So, if a foreign currency was going to gain VS the dollar, the U.S. economy had to be doing badly… I have no idea why I just went through that, I just began typing, and well… here we are! The 80-‘s band A-ha greets me this morning with their song: Take Me On… (that should get my good friend Rick all lathered up to start his day!)
Poor Boeing, eh? Their 737’s getting grounded all over the world… Better that than to have any more aircraft problems…
The euro continued to climb VS the dollar yesterday, and moved higher into the 1.13 handle once again. The Aussie dollar (A$) is within spittin’ distance of 71-cents, and the price of Oil moved higher to a $58 handle in the past 24 hours. I have to ask the question here… What have the Currency traders been waiting for? The U.S. data prints continue to point to a turn over of the U.S. economic 10-year recovery… Yesterday’s data didn’t come in as weak as I thought it would with small gains in both Durable and Capital Goods Orders… I’m going to question this report, for its accuracy, given that last month was weak, and now this month, it’s strong? Give me a break!
But in the overnight markets, all the good ground the currencies gained on Wednesday was given back, and quite frankly, I can’t see what caused the overnight markets to reverse Wednesday’s gains… Sure the Trade War talks have been delayed again, and in Britain, there’s another vote on the BREXIT deal that most likely won’t be good for the divorcees… But I just don’t see these things as “new items” that would cause a knee jerk reaction by traders… So… I’m befuddled…
Earlier today, in China, we saw a few data prints that have given credence to the global slowdown folks, as Industrial Production and Retail Sales Retail Sales showed no growth from the previous print, and Industrial Production slipped… So, the evidence in the data is that things are slowing down in China, probably not as badly as they are in the U.S. but slowing down, for sure.
I don’t mean to slap myself on the back, but back when the Trade War began, I told you, dear Readers, that there would be no winners of the Trade War, unlike shooting wars… I also told you the history of the Smoot-Hawley tariffs may have not be the cause of the Great Depression, but they were at the scene of the crime… And with that, I basically said that the Trade War would accelerate the recession’s arrival to the U.S. And the other day I highlighted the Atlanta Fed’s forecast of just .2% growth for the U.S. economy in 2019… Uh-oh! From there, it’s just a rounding error, that could put us in the negative growth arena…
My good friend, the Retirementor, Dennis Miller of www.milleronthemoney.com sent me a note yesterday giving me a heads up that a future article of his will be feature Corporate bonds, and junk bonds. I can’t wait for this article to hit my email box! I’ve been harping about Corporate bonds and their leveraged bonds for some time now, so it will be good to get another person’s viewpoint of this mess… A couple of weeks ago, Dennis interviewed me on the Fed… if you missed that, you should go to the website link above and find it… I don’t hold back any punches…
Well, Gold found a way to add to its price yesterday without interference from the paper trades… But, heaven’s to Murgatroid what the heck is happening early this morning? Gold is getting sold and is down nearly $11 in the early trading, so just like the currencies, Gold can’t hold its gains from yesterday either. Now, a simpleton would just shrug their shoulders and walk away thinking that everything is as it should be, because that’s what the market does… But then there’s me… And I smell a rat…
Remember that phrase? I smell a rat? I’m guessing I can still use that one, as the PC police haven’t got around to pointing out how that’s insensitive to rats! So, what’s the rat I’m smelling? I’m thinking that’s it’s the work of the Plunge Protection Team (PPT) once again… In one fell swoop, both currencies and Gold got whacked and lost their respective gains from the day before… It’s not a co-ink-e-dink here, for I have a difficult time believing co-ink-e-dinks… There’s always something behind moves like this, that appear to be coordinated takedowns… I’m just saying…
The U.S. Data Cupboard has the latest New Home Sales for us today, and maybe some others that have been delayed, we’ll have to see if Feb Retail Sales makes the cut of data reports getting printed today…
To recap… The currencies all rallied along with Gold on Wednesday, and then both saw their gains from Wednesday wiped out in the overnight markets. Chuck can’t make sense of the selloff overnight, so he smells a rat… The Trade War talks are being delayed again, and there’s another vote on the BREXIT stuff today… But that’s all old news…
For What It’s Worth… Well, for months we waited to hear about China’s Gold additions and received nothing, but then 3 months ago, they began announcing their Gold additions again, and this article talks about their latest announcement, and can be found here: https://news.goldcore.com/us/gold-blog/china-gold-reserves-rise-to-60-26-million-ounces-worth-just-79-5-billion/
Or, here’s your snippet: “China increased its gold reserves for a third straight month in February, data from the People’s Bank of China (PBOC) showed this morning.
The value of China’s gold reserves rose slightly to $79.498 billion in February from $79.319 billion at the end of January, as the central bank increased the total amount of gold reserves to 60.260 million fine troy ounces from 59.940 million troy ounces.
Chinese foreign exchange reserves, the world’s largest, rose by $2.26 billion in February to $3.090 trillion, central bank data showed on Thursday, marking the highest level since August 2018. The U.S. trade deficit hit its highest in a decade in 2018, in a resounding failure for President Donald Trump’s global trade offensive, U.S. government data showed yesterday.
We have long pointed out two other entities, besides the PBOC, have also been buying gold – the State Administration of Foreign Exchange (SAFE) and the China Investment Corporation (CIC).
These potentially sizeable sources of demand are not included in the PBOC figures.
It is important to note this lack of transparency regarding total aggregate Chinese central bank and sovereign fund demand. Therefore, it is likely that we are underestimating Chinese and thus global gold demand.”
Chuck Again… An important take out from this is that there’s really no way to know exactly how much Gold China has accumulated through the years, but when the financial system implodes due to debt, and all the countries meet to discuss the new financial system, China will come to the table with their true amount of Gold reserves… And it will be HUGE!
Currencies today 3/14/19 American Style: A$.7050, kiwi .6818, C$ .7505, euro 1.1308, sterling 1.3240, Swiss $.9960, European Style: rand 14.4454, krone 6.6020, SEK 9.3295, forint 277.99, zloty 3.8045, koruna 22.6954, RUB 65.48, yen 111.60, sing 1.3560, HKD 7.8497, INR 69.29, China 6.7060, peso 19.29, BRL 3.8141, Dollar Index 96.71, Oil $58.13, 10-year 2.63%, Silver $15.25, Platinum $831.51, Palladium $1,547.29, and Gold… $1,297.93
That’s it for today… and tomorrow, and this week! The sun is rising right now, it’s so darn beautiful as it rises, seemingly, out of the ocean… I head back to the ballpark today. Spring Training is half-over already! UGH! Well, spring break will finally come for the kids in St. Louis, which gives Delaney Grace and brother Everett time to come down and spend time with us… YAHOO! I sure hope the weather remains nice for their visit! I almost bagged writing today, to sleep instead, as I just couldn’t get going this morning, but here I am, and the letter is finished! The band Yes, takes us to the finish line today with their song: Rythm Of Love… And with that I hope you will Be Good To Yourself!
Chuck Butler