Another Day Of Dollar Buying…

April 1, 2019 

* Gold gets a $22 hickey on Thursday… 

* Russia’s reserves cover their external debt! 

Good Day… And a Marvelous Monday to you! And welcome to April! It’s also April Fools Day, but I have no hijinks to play on you today… Well, how did you do with your NCAA Basketball bracket? Crazy games this past weekend, for sure! I’m here by myself, once again, as my wife went home on Saturday. I refused to go home that “early”, and so I’m here, by myself… I have doctor appts. And scans that are due the middle of April, so I guess I have to go home by then! UGH! It was Opening Weekend for baseball, and my beloved Cardinals didn’t get started on the right foot, but there are 158 more games to… So I’ll calm down now… Lynyrd Skynyrd greets me this morning with their bluesy song: The Legend of Curtis Lowe…

Well… what comes next in the U.K.? PM May’s latest version of a BREXIT plan was voted down by the Parliament once again… This divorce is getting quite ugly… sort of like that divorce movie from years ago, Kramer VS Kramer… I guess the people in the U.K. that got the masses all lathered up about leaving the European Union, should have looked at the pre-nuptial agreement’s terms of divorce before making their stance…

It’s the same thing in Greece, Italy, and whatever Club Med country that is up to its respective ears with debt, and think that they can simply leave the euro, and go back to their legacy currency and then devalue the hell out of it, to pay back the debts with devalued currency… It won’t happen!  A few years ago my longtime friend, and former Big Boss, Frank Trotter, handed me a two -inch thick document that outlined the fire hoops a country would have to jump through to leave the euro… And given Greece or Italy, or any other Club Med country’s lack of “get it done” attitude, and would rather things are given to them… I doubt anyone is going anywhere anytime soon!

Now, that was quite the way to start the Pfennig today, wasn’t it? On Thursday last week, I was treated to a phone call from Robert Vrijhof from Weber Hartman of Switzerland! Yes, my phone lit up and it was a call from Switzerland! I had mentioned his interview with good friend, Dennis Miller for a couple of weeks ago, and seeing that I was still writing he contacted me! It was nice to know that someone else with years and years of experience in these markets is as frustrated with the way currencies and metals are valued these days… He told me that going forward, when I needed to talk to someone to contact him! And you can bet your bottom dollar I will!

So, that was my lead-in to telling you that the dollar bugs had their way with the currencies on Friday… Gold was able to eke out a $2.60 gain, but that was after a $22 hickey it had to suffer through on Thursday… Ed Steer of asked, “Is the bottom now in?” The price manipulators like to have a day where they really whack the you know what out of Gold, and then go in a buy at cheaper prices… The Bank for International Settlements (BIS) was really active in the selling on Thursday… Why? Because they didn’t have anything else to do that day, I guess… UGH!

The U.S. Data Cupboard last week, wasn’t anything to write home about for the dollar bugs, but they continued to rule the roost… Personal Spending for January recovered a bit. You may recall that December’s consumer spending was a negative -0.6%… January’s recovery was nascent at best with a 0.1% increase. So, to me, this data is telling us that consumer are maxed out… And since consumers are a big part of the country’s GDP… Well, I think you know where this goes… Another piece of data last week that was eye-opening, was a piece that normally doesn’t get any spotlights shined on it, and that is the Chicago PMI (manufacturing index)… The March print was 58.7, which on paper sounds good, right? Well, not when you look at it VS February’s print which was 64.7…

But like I said, the dollar bugs just won’t step down from their position as king of the hill… But eventually, all this weak data has to pile up an weigh heavily on the dollar, right? Well, I would think so, but then I look at things logically… I have an article from Reuters in the FWIW section today that has them scratching their collective heads too, as to why the dollar is buoyed when the data keeps printing weaker and weaker…

In Russia today, the reports are indicating that Russia’s gross international reserves, including gold, has reached $487.1 billion as of March 22 — enough to cover Russia’s external debt dollar for dollar in cash.   Did you hear that correctly, folks?  Russia’s reserves can cover their debt!   And what does Russia rubles get for this announcement, that should send it soaring to the moon?  It gets sold…  UGH!

I’m in the middle of another interview with Dennis Miller, and in I talk about currencies that I like…  I talk about the Russian ruble and that was before I read that their reserves were large enough to cover the debt! Here’s the thing that I especially like that’s going on in Russia with regards to finances…  The Central Bank of Russia (CBR)  has worked their magic and gotten inflation down to 5%…  The internal rate (like our Fed Funds rate) is 7.25%…  So, in Russia, their key rate is higher than inflation!  There aren’t many countries in the world that can claim that! But in today’s world, the ruble gets sold…  Oh, well, it does give investors an opportunity to buy at cheaper prices, now doesn’t it? 

In great challenges lies great opportunities… 

According to Bloomberg this morning, it appears that the Trade talks between the U.S. and China are getting somewhere… Bloomberg reports that China has announced that they are willing to give some concessions… Of course Bloomberg didn’t say what those “concessions” were… And if they’re not in the neighborhood of “intellectual property”, then they might as well go back and star all over again!    Because when you boil this issue down you find that “intellectual property” has been the cheese that binds all the time, not tariffs on Big Screen TV’s!  

The U.S. Data Cupboard stars this week with a BANG! We’ll see February Retail Sales, and the March ISM today…  That’s some heavy lifting for the Data Cupboard!  February Retail Sales should print and be just ok…  The BHI (Butler Household Index) indicates that February’s report could be better than the average bear, but… we were under different circumstances in February, than the average bear…  So, I’m going with just OK!

The March ISM (manufacturing index) is what I’m really looking forward to seeing print. Recent months have shown the index number dropping in small moves… If this trend continues it would be a very good indicator that a recession is just around the corner. 

To recap…  The dollar bugs continue to hammer away at the currencies. Gold received a $22 hickey on Thursday, tried to come back on Friday, but was held in check, and is down a buck or two in the early trading today…  The BREXIT debacle carries on… Trade Talks with China and the U.S. seem to be moving along, and Russia announced that their reserves are now large enough to cover their external debt…  Good new like that for a country usually sees the currency rewarded…  But not this time… UGH!

For What It’s Worth… Well, I already told you what today’s FWIW is about, so with no further ado… Here’s the link to the article on Reuters website:

Or, here’s your snippet: “With many currencies on the defensive, the dollar has brushed aside a decline in benchmark U.S. Treasury debt yields to 15-month lows. The dollar index, which measures the greenback against a basket of six currencies, gained 0.46 percent to 97.219, at two-week highs in its third day of gains.

The rally continued even after the Commerce Department announced it had cut its measure of U.S. gross domestic product growth in the fourth quarter, when corporate profits fell by the most in a year. The third reading estimated growth at 2.2 percent, down from the initial estimate of 2.6 percent.

The euro weakened 0.2 percent to $1.122 as speculation grew that the European Central Bank will introduce a tiered deposit rate, a sign that policymakers plan to keep interest rates low for longer. The euro remains above 21-month lows of $1.117 touched a few weeks ago. “

Chuck again… Yadda, yadda, yadda, they keep talking about how other Central Banks are just as dovish as the Fed… But we’re the U.S. aren’t we supposed to be better?

Currencies today 4/1/19 American Style: A$.7118, kiwi .6826, C$ .7485, euro 1.1236, sterling 1.3091, Swiss$1.0058, European Style: rand 14.2640, krone 8.5867, SEK 9.2566, forint 285.55, zloty 3.8267, koruna 22.9410, RUB I65.63, yen 111.02, sing 1.3545, HKD 7.8496, INR 69.32, China 6.7111, peso 19.30, BRL 3.9219, Dollar Index 97.09, Oil $60.63, 10-year 2.44%, Silver $15.08, Platinum $848.96, Palladium $,378.63, and Gold… $1,290.78

That’s it for today…  It’s April! If April showers bring May flowers, what do May flowers bring?  Pilgrims! HA!  This is my friend and IRA guru April’s month! I call her April Showers… And she just smiles…  Well, the cellulitis is back in my leg… I know, I know, with me, it’s always something, right? When the NCAA Tournament began, Kathy asked me, “who will be the Cinderella team this year?”  Well, I guess there are two of them… Auburn and Texas Tech… They join Michigan St. and Virginia in the Final Four! It’s supposed to a normal day here, (sunny and 80), so I’ll take the book I’m reading and sit outside to soak up some vitamin D…  Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Devil With the Blue Dress…  I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler