All Three Anti-dollar Assets Rally VS The Dollar!

Chuck Butler’s: A Pfennig For Your Thoughts     

January 2, 2018  

* Going back to 2001… 

* Palladium is star performer for 2017!

Good Day….  And Good New Year! 2017, wasn’t very kind to me, so I was glad to see it end… So, A Top of the morning, Tom Terrific Tuesday to you! I’m fighting a cold that all the people that were here on Christmas left me with, and yesterday, the cold won… But I got some decent sleep last night, and my antibiotics treatments ended at midnight last night, so I’m feeling better this morning, at least at this point!   The late, great, Alvin Lee, and 10 years after, greet me this morning with their song: I’d Love To Change The World…  As usual with Alvin Lee, he shows off his guitar playing ability in the song…  Man he was great, and I loved to hear him play, and watch his facial expressions while playing… 

Well, all my followers on Twitter (not a huge crowd by any sense of the imagination) received a Tweet from me on Friday…  Here it is…

Chuck Butler‏ 

what a day for the currencies and metals! And you can’t forget the other anti-dollar asset, Oil! The euro is back to 1.20, Gold is back to $1,300, and Oil has reached $60… Remember what the Bush tax cuts did to the dollar back in 2002?
8:08 PM – 29 Dec 2017

That pretty much sums up the Friday trading and the end of the year trading that I told you would be a lot of position squaring and so on… So, this morning, I was interested in seeing what had happened to this strong run of the anti-dollar assets now that year-end was over… And from what I can see, the currencies, and metals have continued to add to their levels of Friday, and Oil is flat…  So, it’s a “continue to party on Wayne!, Party on Garth, day”

I’ve Been Waiting for a girl like you, to come into my life… – Foreigner

We’ve all been waiting for the inflation that the Fed Heads have been talking about for a couple of years now… And I agreed that there was inflation in assets, and houses, and art, etc. But, wage inflation? Commodity inflation? It just wasn’t there.. But, it’s coming folks… And the Fed Heads will finally get to say, “see, I told you!” Never mind that it took 3 years for their prognostication to come to fruition… So, what has me thinking that it’s finally going to come to fruition? Think Tax cuts… And then sit back and let me tell you a story about the beginning of the last weak dollar trend that began in 2002 and ended in 2011.

It all began innocently with a news story in 2001 that President Bush, had announced that he was imposing tariffs on Japanese steel… I jumped all over that story and everyone around me thought I had gone nuts… but trade wars are not good for the host country’s currency, and I knew that, but apparently everyone else didn’t! So, I started writing the White Paper, The Decline of the Dollar… Our marketing guru, (who was and still is the best!) sent out a press release that I had called for a decline of the dollar. You should have seen the requests for interviews come soaring in to talk to the man who apparently was not paying attention to the currently strong dollar..

Then the second shoe dropped on the dollar… The Bush Tax cuts… And soon the dollar was losing a pound of flesh daily… And what do we have now, once again? Tax cuts… It’s déjà vu all over again, folks!  You see Tax Cuts open Pandora’s Box of inflation problems, and so here we go again… Inflation kills the value of a currency, especially one that only has a small pittance of interest to pay…  Oh, and those people that interviewed me before, wanted to interview me again to ask me how I knew the dollar was going to sink…   

Well, if they had just opened their eyes and gotten past the idea that the dollar was king, and it would be strong forever, they would have been “in the know”…  You know, like all the dear Pfennig Readers back in the day! My old boss, and longtime good friend, Frank Trotter, began calling me the “sage of the Mississippi”  But it took no crystal ball reading, or tarot card revelations, it just took someone to look outside the box, as they used to say, and make a call…  And that person was me!   

Not unlike the call I made last summer that the sentiment had changed for the euro and it was time to look at buying the currency again… At that time, the euro was 1.09…   Today, it’s 1.2065…  I’m just saying…  

OK, well the Aussie dollar and kiwi are firmly on the rally tracks this morning, along with the Sing dollar, pound sterling, Swiss francs, and the Euro-Wannabes…  those aren’t the only currencies with gains, just the ones with the more noticeable gains! I’ve been waiting for kiwi to get some legs under it and run, for a few months now. It IS 2018, right? So that means that the Reserve Bank of New Zealand (RNBZ) will be entertaining thoughts of the beginning of a rate hike cycle soon. So, that gives us something to look for as we go further into this year.  

The Petrol Currencies of Russia, Norway, Brazil, and Canada have all rallied/d alongside the move of the price of Oil back to $60.  It’s about time they traded like this! They had been bucking the trend in recent trading sessions, but on Friday, finally fell under the spell of a higher Oil price. 

So, Gold found its way back to $1,300 on Friday… It sure does help Gold’s ability to rally whenever the “boys in the band” are away… They’ll be back at their desks at some point this week, if not today, so it will be interesting to see if they go after the $1,300 figure or let it be…  I think they should listen to Paul McCartney’s mother and let it be, let it be, let it be, let it be, whisper words of wisdom, let it be…  

The star metal for 2017, was easily Palladium…  As it began the year around $672, and ended the year above $1,000…  When I wrote about the mining President that said that Palladium would overtake Platinum in 2017, in price mind you, I would have thought that readers who know how to read between the lines of what I was saying a year ago, would have gobbled up some Palladium…    Oh, yes, a year ago, when I was under wraps, so to speak… I guess that’s one good thing that happened to me in 2017! I guess it wasn’t all bad!  

The U.S. Data Cupboard gets going right out of the starter’s blocks this week with a Jobs Jamboree on Friday! Until then though there’s just pre-jobs Jamboree prints, like the ADP Employment Report, etc.    We’re going to have to be very vigilant about keeping our eye on the data reports this year, so that we have a clue as to when the tide is beginning to turn on the economy… I know, I know, I thought that the tide would have already been turning by now, but it’s hanging out around the reef, and waiting for the right time to come to shore…     

Saturday, was a day of being down with a cold, and being cold! And that brought me to do some reading… And longtime readers know that when I read… things could become dangerous! HA! Well, in this case I read a line that was passed over in the article, but struck me as something that’s quite scary… According to the last Census report (June 2017), The Median value of a regular checking account was $1,000… OK, now lets go back to statistics class and recall what Median means… According to Google, Median means: denoting or relating to a value or quantity lying at the midpoint of a frequency distribution of observed values or quantities, such that there is an equal probability of falling above or below it.

So, that means the $1,000 figure is the midpoint… The Warren Buffetts, Bill Gates, and so on are brining that figure up, and to me, the normal Joe six pack, probably doesn’t have two nickels to rub together in his checking account. And how is that going to work when the next downturn comes? I’m just saying…    

To recap, Friday was a day for the anti-dollar assets of euros, Gold and Oil to all join together and take their frustrations out on the dollar, and the overnight trading is keeping that thought pattern going for now…  Gold has reached $1,300 again, and the price of Oil is above $60!  Chuck takes us back to 2001 and the two things he believes were the straws that broke the dollar’s back.   

For What It’s Worth…. Well, just because we turned the calendar page on 2017, doesn’t mean that all the risks that were out there went away… And so in my reading this weekend I came across this article on MarketWatch, that goes through those risks… I thought, oh well, we might as well g them out there for everyone to see! And you can find the article here:  

Or, here’s your snippet… “We’ve never had QE like this before, [and] we’ve never had unwinding like this before. Obviously that should say something to you about the risk that might mean, because we’ve never lived with it before.”

That was J.P. Morgan Chase & Co. JPM, +0.65% CEO Jamie Dimon back in July, arguing that investors simply don’t know what to expect as the Federal Reserve and other major central banks unwind their multi-trillion-dollar bond-buying programs.  

Some analysts are cautioning that a bubble is forming in credit markets and that companies are overextended to a degree that could spell trouble.
Stock valuations

Strategists at Société Générale have said they expect “stretched valuations and rising bond yields to limit equity-index performances in 2018 and the prospect of a U.S. economic slowdown in 2020 to further cramp returns in 2019.”   

Chuck again… I understand if you don’t want to start the year going through a list of risks that are out there, but if you do, this is a good one to go through!   

Currencies today 1/2/18… American Style: A$ .7834, kiwi .7113, C$ .7976, euro 1.2065, sterling 1.3560, Swiss $1.0297, … European Style: rand 12.3363, krone 8.1075, SEK 8.1478, forint 255.69, zloty 3.4496, koruna 21.1260, RUB 57.67, yen 112.14, sing 1.3286, HKD 7.8138, INR 63.37, China 6.5096, peso 19.84, BRL 3.3108, Dollar Index 91.84, Oil $60.47, 10-year 2.44%, Silver $17.11, Platinum $938.05, Palladium $1,081.24, and Gold… $1,313.10   

That’s it for today… did you have a nice New Year’s celebration?  We were here with neighbor friends, and had a blast!  And how about that Oklahoma/ Georgia football game yesterday? WOW! Condolences to my good friend, and Clemson alumni, Rick… As Clemson couldn’t muster any offense against Alabama, and lost…  My beloved Missouri Tigers couldn’t muster any offense either last week and lost their bowl game. UGH!  The NFL playoffs teams are set, if anyone cares…  I don’t!  As we turn the calendar page it means its near the time for Chuck to head south for the winter to get away from this frigid cold weather! And next Tuesday is my day (I can’t wait!)  The Pousette-Dart Band takes us to the finish line today with their song: Amnesia…  I hope that it’s only amnesia, believe me I’m sick but not insane…  For those of you who know the song…   And with that, it’s time to get this first letter of 2018 out the door… I hope you have a Tom Terrific Tuesday, and Be Good To Yourself!  

Chuck Butler