July 3, 2019
* Currencies see a non-movement day…
* Strange couple of days for the price of Oil…
Good day… And a Wonderful Wednesday to you! The day before our country’s Independence Day, on the Fourth of July. On July 4, 1776, the 13 colonies claimed their independence from England, an event which eventually led to the formation of the United States. My dad fought in WWII as an army infantryman, and was always very excited to celebrate the 4th of July… The shooting off of fireworks had become illegal in the city of St. Louis, but that didn’t stop my dad, he always would say that as a true patriot, he had the right to shoot fireworks! So, however, you celebrate it, be careful, but have fun… Three Dog Night greets me this morning with their song: Mama Told Me Not To Come… ( a great song from the 70’s!)
OK… I do believe that the senior currency traders have already squared their books and headed to the Hamptons, for there was little to no movement in the currencies yesterday. The metals traders have to hang around to combat the short paper traders… And on Monday we saw Gold get whacked badly, only to see it all reversed on Tuesday, and the shiny metal added to its level on the day in a BIG way, closing at $1,418, and the buying continued after the close to a show Gold last night trading at $1,431…. I didn’t believe my eye at first, so I checked both Bloomberg and Kitco for the current Gold price and was pleasantly surprised to see that the reports were correct! Things did begin to come unglued after the markets closed, and the $1.431 level didn’t hold… but Gold is up $5 in early trading today at $1,423.72, so we have that going for us!
Nice move, eh? I sure liked to see it rebound from Monday’s whacking! Remember about 10 days ago, when I told you when Gold got to $1,400 that I was scared that the price manipulators would have something to say about this upward move? Well, I guess they had their say on Monday… And on Turnaround Tuesday, they were nowhere to be found!
So, it’s only fitting that I take the rest of the week off, since traders are doing the same, eh? But until tomorrow, we have to get through today, which I think will be the same result as today for the currencies… Gold, will have a different story of course…
The Price of Oil has had two consecutive sessions that have been quite interesting… First Oil suffered one of the worst 1-day losses on record, which was very strange, given that the OPEC boys confirmed that they were maintaining their production cuts… But, I guess traders don’t care about supply and demand, eh? But then the price of Oil won back some of the lost ground in the second session, when it was announced that Oil supplies in the U.S. had dropped… So, like I said, a very strange couple of days for Black Gold, Texas Tea!
I wonder how many dear readers, or attendees of my many presentations in 2009, remember me telling them about the Chinese swap agreements with other countries that would eliminate, eventually that is, the need for countries to hold so many dollars to settle the terms of trade?
Well, I thought it would interesting to see just how many countries had signed these agreements… The total is…. Drum roll…. 34! That’s right 34 countries, big and small have signed these agreements with China that removes the dollar from the terms of transactions!
Yesterday, good friend, Sharon, sent me a link to a YOUTUBE from Mike Maloney… I’ve always liked Mike Maloney, and his ideas, as they, for the most part, followed my own… He tells us in this video that China has created “instex” which they will use to replace SWIFT… (SWIFT is the U.S. controlled system for passing funds across borders) You have to be a member in good standing to belong to SWIFT… We know that Europe and China have been working on their own versions of SWIFT, and now they are in place… That starts the sand trickling through the hour glass that marks the end of time for the dollar as the reserve currency…
Yesterday, I told you that the EU was using their new system to continue to trade with Iran and not use dollars… The Trump administration immediately called for new tariffs totaling $4 Billion on Cheese, whiskey, coffee and pasta… hey! It’s not like your trips to the grocery store are getting cheaper, eh? Why shouldn’t we increase prices for food even more? The Fed removes food and energy from their inflation calculations anyway! UGH!
That’s two paragraphs in a row that started with the word: Yesterday… So… yesterday, all my troubles seemed so far away… Now it looks as though they’re here to stay, Oh I believe in yesterday…
So, let’s keep this going…
Yesterday, the Dollar Index was 96.75 and this morning its 96.67, so that will pretty much tell you that the currency books have been squared and not much will happen today… That is unless we get a rogue data print today…
Speaking of data prints… The U.S. Data Cupboard showed that auto sales were still strong in June, and that amazes me… Today, we’ll see the ADP Employment Report for June… And then Friday, we’ll see the Jobs Jamboree for June… I read a report on Bloomberg this morning that they believe the Fed’s decision on a rate cut will be determined by the Jobs Jamboree number on Friday… Really?
The Fed Heads maybe dolts at times, but they, as a whole, are pretty smart cookies, and I can’t see them getting all caught up in the Trumped up BLS jobs report… I would rather like to think that they use the ADP report…
To recap… Well, it was a no movement day for the currencies yesterday, as Chuck believes the senior currency traders have already squared their books and headed for the Hamptons… Gold fought back bravely yesterday, after spending the previous day in the woodshed, it was turnaround Tuesday for the shiny metal, and it gained $34 on the day…
For What It’s Worth… Way back in 2003… 16 years ago, I wrote about the lack of funding in state Pensions, and private pensions… That’s right 16 years ago… I recall it because, I was riding in a convertible Mustang with two of my Spring Training buddies for the first time, and I talked to them about my latest Review & Focus article… Well, over the years, the problem hasn’t gotten any better… In fact it’s gotten worse, so bad, that now a mayor wants a Gov’t bailout for the state of Illinois’ pension problem… I shake my head in total disgust because, this could have all ben eliminated long ago, but Corporation leaders took cash and ran… State leaders gave more stuff away free, and interest rates went to hell in a hand basket…. So, after all that’s been said and done, here’s the article about the pension bailout that got me all lathered up! And it can be found here: https://www.zerohedge.com/news/2019-07-01/new-chicago-mayor-wants-state-taxpayer-bailout-chicago-pension-debts
Or, here’s your snippet: “t didn’t take long for new Chicago Mayor Lori Lightfoot to propose a plan that would wash her hands of Chicago’s pension crisis altogether. According to a recent report in Crain’s, Lightfoot wants the state to take over Chicago’s pension debts and merge them with the other pension plans throughout the state. The move would make all state taxpayers responsible for paying down the city’s debts.
The plan to shift city debts to the state would bail out the mayor from having to raise about $1 billion in additional taxes to pay for increasing pension costs by 2023. A massive tax hike is something she’s desperate to avoid.
But while Lightfoot may think the cost-shift is a solution, it will only make things worse for Illinois. She should expect significant pushback from many sides.
Start with downstate and suburban residents. Sure, their public safety pension funds would get consolidated under the state, too, but it’s the Chicago funds that are some of the biggest and worst-funded in the state. The four city-run funds are collectively funded at just 27 percent and face an official shortfall of $28 billion.
In contrast, the 650 downstate pension plans are 58 percent funded and have a shortfall of nearly $10 billion. The end result of any statewide pooling of pension funds will be a net bailout for Chicago.”
Chuck Again… I talked to a former colleague of mine last Friday, and she told me that her family was moving to Missouri, from Illinois… She listed a ton of reasons why Illinois was going to hell in a hand basket, and why they wanted to move out of the state… I didn’t even attempt to talk her out of it!
Currencies today 7/3/19 American Style: A$.7025, kiwi .6690, C$ .7635, euro 1.1296, sterling 1.2570, Swiss $.9844, European Style: rand 14.1097, krone 8.5525, SEK 9.3032, forint 285.60, zloty 3.7577, koruna 22.5306, RUB 63.17, yen 107.65, sing 1.3562, HKD 7.7964, INR 68.80, China 6.8632, peso 19.03, BRL 3.8426, Dollar Index 96.67, Oil $56.77, 10-year 1.96%, Silver $15.27, Platinum $833.84, Palladium $1,558.38, and Gold… $1,423.72
That’s it for today, and the rest of this week! Happy Independence Day tomorrow and basically all weekend long! Can you believe that we’re already this far into summer already? WOW! Cardinals played too late for me to watch the whole game last night, but they ended up losing… UGH! Does any team want to win the Central Division? Because none of them are playing like they do! We’re about 3 weeks away from my annual summer vacation… I’m not going to wish for it to get here fast, because that would mean the summer month of July was about to end! A quick update on my cellulitis in my leg… It still won’t heal… I believe the chemo I’m taking is keeping it from healing.. A losing battle… But in the end I think I’ll win the war! Blood Sweat & Tears take us to the finish line today with their song: You’ve Made Me So Very Happy… I hope you have a Wonderful Wednesday, and an Intergalactic Independence Day weekend! But be careful out there! And please Be Good To Yourself!
Chuck Butler