A One And Done This Week!

Chuck Butler’s: A Pfennig For Your Thoughts

December 27, 2017

* All Three Anti-dollar assets rally!

* Kicking the can down the road again… 

* Tax Bill is ready to put in place… 

Good Day…  And a Wonderful Wednesday to you! I hope your Christmas celebration was grand, mine was! And yesterday was Kathy’s birthday. We were celebrated out, and spent a quiet night at home. Alex has been here with us for the weekend, for now, it’s nice that he’s here. Gerry & the Pacemakers greet me this morning with their 60’s hit song: Ferry Cross the Mersey… I used to sing that song to Alex when he was a baby to help him fall asleep…  That was 22 years ago, and the song was old then! HA!

Well, remember when we came back from the Thanksgiving holiday and I talked about how nice it was that the NY traders were out for a few days, as the currencies and meals rallied in their absence?  Well, so far this week, this is a rinse and repeat of those days after Thanksgiving.

The currencies, led by the Big Dog euro, have all gotten off the porch to chase the dollar down the street. Yesterday, the first day back from the Christmas holiday, saw widespread dollar selling. The euro is knock, knock, knocking on heaven’s door, no wait! The euro is knocking on the 1.19 handle this morning, and Gold found a way to carve out an $8.50 gain yesterday…

Friday, last week, I sent out a tweet, regarding the lawmakers once again, kicking the can down the road. They still don’t have a budget, and they are still playing around with a possible government shutdown. I told you when they “extended” the negotiations the last time for two weeks, that it was ridiculous to think that these guys and gals could come up with a budget in two week’s time, given they had all year up to that time to do it!

And, they didn’t! So, now we’re looking at the deadline being in two weeks… But what says that the negotiations will be finished by then? I just shake my head and wonder what it will take to bring the two sides together to make a budget? It’s a sad, sad state of affairs, if you ask me!

And this morning I came across an article on the Bloomberg that was titled: Subprime Auto Defaults Are Soaring…  Not that these Subprime Auto loans are any near the size of the problem with the subprime Home Loans back in 2007, when that meltdown began.

But yet, Consumer Confidence is soaring higher and higher with every new print… Man, this reminds me of 2000 all over again… The stock market led by the Tech stocks, was soaring, but there were all these problems going on that should have affected the stock market, but it didn’t, and Consumer Confidence was soaring back then like it is now…  And then we drove our Chevy to the levee but the levee was dry… And all the King’s horses and all the King’s Men couldn’t put the stock market back together again until all the excesses were cleaned out…

Can you imagine h9w nasty this correction will be given how high the stock market has run? OUCH! Now that’s going to leave a mark!  But a lot of pundits are waking around with egg on their faces right now, because they’ve been calling for this correction in the stock market for months now and it just hasn’t come to fruition…  I’m not putting any timeline on this thought, instead, I’m just saying that it will be nasty when it happens…

I’m already on the hook for saying that I thought the Fed’s rate hikes were over, and by now they would be talking about the reversal of their previous rate hikes… I still think it’s coming… sort of like the old 3 Dog Night song. Eli’s coming…  And as usual I’m out in front on this call, and my timing is ahead of the crowd…  I wouldn’t be a good comedian, because my timing has shown that it needs a lot of work!

The price of Oil hasn’t taken any passes on all this dollar selling, and has moved to the $49 handle. Last week’s supplies numbers were lower than expected, and that got the price of Oil moving in the right direction, and the momentum is moving in Oil’s favor right now…

So, all the anti-dollar assets, Gold, euros, Oil, are kicking some dollar tail this morning, and taking names later. It’s been awhile since I could talk about all three anti-dollar assets moving against the dollar at the same time.  As I said above, Gold carved out an $8.50 gain yesterday, and is looking ready to move past $1,300 to end the year…

I gave my grandkids some Silver coins for Christmas… Of course the coins didn’t match their legos and American Dolls, but one day… maybe when they’re going off to college, and need some dough, they’ll ask their parents for those coins, and find out that the present from me all those years ago, was something special…

Last week I was reading an article from Ted Butler (no relation that I know of) the Silver Guru, and he was talking about how JP Morgan got into the short paper trades in Silver… They inherited the business from Bear Stearns, when they bought the failing company back in 2007… Ted Butler’s thought was that the agreement to take on the short paper trades was a 10-year deal that would be expiring soon. And guess who probably has the largest holdings of physical Silver?  That’s right, JP Morgan…  Do, you see the reason they not only took over the short paper trades in Silver business but enhanced it?   Ah, said the blind man as he spit into the wind, “it’s all coming back to me now”…

Of course that’s Ted Butler’s opinion, of which I agree with wholeheartedly…  What do you think?

Well, the Tax Reform Bill did get sent to the President who signed it before Christmas.. I was shocked that it got done that quickly or so it seemed.  I’ve dived deep into the tax bill, and I just don’t see it turning around the economy like it’s billed to be… And it certainly isn’t revenue/ spending neutral like it was supposed to be. $1.8 Trillion and probably more once they get going, will be added to the National Debt in the coming years…  So, much for it being neutral, eh?  

So, it’s all finished, signed, sealed, delivered it’s yours…  Happy Days are here again, the… no wait! Let’s see what this does for us first, eh?  

There’s not much in the Data Cupboard this week for us to look forward to seeing. We will see the Consumer Confidence for the first two weeks of this month today, but besides that, it’s all non-market moving data, which is a good thing, because I’m convinced that the major players in NYC are still away, and we don’t need any wild swings going into the end of the year.  

We will see book squaring, and positions close outs going into the end of the year, but those shouldn’t cause too much volatility. So, it’s all about the currencies, Gold and Oil this week as far as I can tell, as the major players are still opening presents and filling their stomachs with pumpkin pie. 

And with that thought, it’s a good week to end early for me… Tomorrow morning is an infusion morning, so no Pfennig Tomorrow or Friday…  But check your Tweets, for you never know when I’m going to send out a Tweet! 

To recap… The U.S. lawmakers had to kick the can down the road again on Friday, as they avoided a Gov’t shutdown, but still couldn’t agree on a budget. This got the currencies and metals moving and yesterday they really took a pound of flesh from the dollar, and Chuck thinks this will be the theme for the week. All three anti-dollar assets, Gold, Oil and currencies are moving against the dollar for the first time in a while..   

For What It’s Worth… Longtime dear reader Bob, sent me this since I’ve been talking about China’s moves against the dollar for a long time he thought it played nicely in the sandbox with my previous thoughts… It’s about China’s petrol-renminbi move and can be found here: http://www.informationclearinghouse.info/48497.htm   

Or, here’s your snippet: “Petrodollars have dominated the global energy markets for more than 40 years. But now, China is looking to change that by replacing the word dollars for yuan.

Nations, of course, have tried this before since the system was set up by former US Secretary of State Henry Kissinger in tandem with the House of Saud back in 1974

Vast populations across the Middle East and Northern Africa quickly felt the consequences when Iraq’s Saddam Hussein decided to sell oil in euros. Then there was Libya’s Muammar Gaddafi’s pan-African gold dinar blueprint, which failed to create a splash in an oil barrel.

Fast forward 25 years and China is making a move to break the United States petrodollar stranglehold. The plan is to set up oil-futures trading in the yuan, which will be fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets. ”  

Chuck again… nothing new to regular Pfennig Readers, but a good recap of what’s going on… 

Currencies today 12/27/17… American Style: A$ .7770, kiwi .7075, C$ .7917, euro 1.1894, sterling 1.3410, Swiss $1.0111, … European Style: rand 12.4303, krone 8.2926, SEK 8.2993, forint 261.41, zloty 3.5221, koruna 21.7173, RUB 57.82, yen 113.23, sing 1.3394, HKD 7.8146, INR 63.98, China 6.5448, peso 19.78, BRL 3.3248, Dollar Index 93.04, Oil $59.45, 10-year 2.47%, Silver $16.66, Platinum $922.75, Palladium $1,057.90, and Gold… $1,289.10  

That’s it for today, this week, and this year! Yes, when I come back next week it will be 2018! I’m getting around much better these days and the pain has, not gone away, but has weakened… YAHOO!  I heard from some longtime friends over the weekend.. Ed, and Jack, and Lauren, and Suzanne, and I can’t forget about Kathy G! Now, please be careful this weekend going out and about… Kathy’s dad used to call New Year’s Eve, “amateur’s night”…  And let’s all think a lot about how to make 2018, a better year…  I’m so ready for 2017 to end, I had some major steps backward with my health in 2017, and 2018 had better be better or I’ll not be here next year at this time! I’m just saying…  Steely Dan takes us to the finish line today with their song: Aja…  from my fave Steely Dan album of the same name…  I hope you have a Wonderful Wednesday, and fun filled New Year’s Eve, and Be Good To Yourself!  

Chuck Butler