Author: admin

April 22, 2019

* That doesn’t stop the dollar bugs from buying dollars!

* U.S. appears to be ready to drop Iranian Oil Waivers… 

Good Day… And a Marvelous Monday to you! I trust everyone that celebrates Easter, had a grand day, it was probably one of the nicest days, weather-wise, for Easter that we’ve had here in a while… Simply beautiful, as was Saturday too… I broke in my Big Green Egg on Saturday, it took me a couple of hours to get it ready to cook in… How about our Blues! What a thrilling game 5 win with 15 seconds left in the game, and then a natural hat trick by Jaden Schwartz in a Game 6, series winning game! On to the second round! We sent Alex off to his home the next 10 weeks in Montgomery Ala, for clinical work. He texted us last night that he made it… 9 hours drive, alone for the first time… OK… the band Yes, greets me this morning with their song: Rhythm Of Love…

So much for when Chuck’s away the currencies rally, eh? Last Thursday and Friday were awful days for the currencies… As Retail Sales, on the outside, were stronger in March than expected, as they rose 1.6%, and ex-autos rose 1.2%… But there was something interesting in the report that the media failed to uncover, and therefore the markets went bananas over the strength of the report, and that “something ” is better explained by economist David Rosenberg on his Twitter handle… “Strong March for retail sales but look at the entire first quarter. Down to +0.2% SAAR from 1% in Q4, 4.3% in Q3 and 6.1% in Q2. REAL sales in Q1 were -0.7% and followed -0.5% in Q4, first back to back contraction since the first half of 2009.”

Chuck Again… Hmmm… Makes you go Hmmm, doesn’t it? This sure paints a different picture of the report than the markets swallowed hook, line and sinker… Back to back quarters of negative Sales…  Hmmm…. 

The price of Oil has moved upward and past the $65 handle again in the last 24 hours, as it appears the U.S. is going to drop the Iranian waivers come May 2nd…  These waivers are in place for countries that import Iranian oil, so if they get dropped on May 2nd, then economic sanctions would go into place for the countries that import Iranian Oil…  Very interesting, eh? 

And did you see the article in the WSJ this past weekend? Now, how can the markets ignore this… The article was talking about what would make the Fed heads decide to cut rates… Here’s the headline from the WSJ: “Federal Reserve officials are starting to talk about the conditions under which they would cut interest rates, including a scenario where inflation drifts lower even if the economic growth doesn’t falter.”

Chuck again… Didn’t see the major media outlets talk about this? Of course you didn’t!

Just when I thought it was safe to go back to Twitter and see what economists are saying again… I was hit with this Twitter feed by Fred Hickey, who retweeted a post from Jesse Felder, of The Felder Report.com who talked about what could be the biggest thing out there that he fears the most right now, and it is not just the number of short positions in the VIX (volatility index) but the number of leveraged 2x the short in VIX… That’s crazy folks… This is what I would call “extreme positioning” and puts their risk way out on the limb… I’m with these two guys who say this is scary… Something to think about for sure!

Well… things aren’t that rosy around the world either folks… While China printed some better than the average bear data last week, it still wasn’t what you would call, a sign of renewed Global Growth, and like I said last week, I doubt this is enough to slow the momentum of the Globlal slowdown. And in Germany last week, they didn’t print strong data… When you have China, the U.S., Japan, and Germany all having problems generating economic growth, you might as well pick up the phone and call Houston… Hello, Houston, we have a problem…

And Gold… Well at least this morning in the early trading Gold is up almost $4… But it was a wild and whacky week for the shiny metal last week… for sure! Gold a lost a lot of ground, and the salami slicers, (as Ed Steer calls them) Were working overtime to push the price of Gold downward and away from any moving averages that were out there. I just don’t know what’s happening here, folks… It could be a couple of things in play here…  1. The selling of Gold to pay for margin calls is already happening… (I doubt that but who knows right now?  2. The Boys in the Band can’t stop what they started a couple of weeks ago, when Gold looked like it was ready to take out the so-called maginot line of $1,350…  (probably more likely) or 3.  I have no idea… (probably the most likely! HA!)

The U.S. Data Cupboard starts the week very slowly with housing data Monday and Tuesday. On Wednesday, there’s no data scheduled to print. So we won’t be dealing with data until Thursday when March Durable and CAPEX Goods Orders will print… Recall those were negative in Feb… I truly expect both of these to be negative again in March…  I went on and on about CAPEX a couple of weeks ago, if you missed class that day, may I suggest you simply go to www.dailypfennig.com and read the archives… 

To recap…  It was a weird reaction by the currency traders to the U.S. Retail Sales data last week, and the dollar got on the rally tracks and hauled rear down the tracks, taking bits and pieces from all the currencies… Even the Petrol Currencies didn’t get to rally alongside the price of Oil where the news of a drop of the Iranian waivers got the price of Oil on the rally tracks.  Germany prints some very weak data late last week, and feeds into Chuck’s thought of a Global Slowdown, led by the U.S.  for, the U.S., China, Japan, and Germany are all having much difficulty generating economic growth. 

For What It’s Worth…. This came to me last week from longtime reader Bob… It’s about the retail Armageddon that’s been going on in brick and mortar stores. And it can be found here: http://theeconomiccollapseblog.com/archives/its-only-april-and-u-s-retailers-have-already-closed-more-stores-than-they-did-all-of-last-year

Or, here’s your snippet: “If the U.S. economy is in good shape, why have retailers already shuttered more stores than they did in all of 2018? Not only that, we are also on pace to absolutely shatter the all-time record for store closures in a single year by more than 50 percent.

Yes, Internet commerce is growing, but the Internet has been around for several decades now. It isn’t as if this threat just suddenly materialized. As Internet commerce continues to slowly expand, we would expect to see a steady drip of brick and mortar stores close, but instead what we are witnessing is an avalanche. If the U.S. economy really was “booming”, this wouldn’t be happening. But if the U.S. economy was heading into a recession, this is precisely what we would expect to see.

Last year, U.S. retailers closed 5,864 stores.

That was a rather depressing number, but here we are in April 2019 and we have already surpassed it. The following comes from CNN…

This year, US retailers have announced that 5,994 stores will close. That number already exceeds last year’s total of 5,864 closure announcements, according to a recent report from Coresight Research.

Once again, you can’t blame this on Internet commerce. Foot traffic was rising for quite a while, but now what we are seeing is perfectly consistent with an economic slowdown.

Sadly, this could be just the beginning. In fact, one expert quoted by CNBC expects total store closures in the U.S. to hit 12,000 by the end of 2019…
“I expect store closures to accelerate in 2019, hitting some 12,000 by year end,” Deborah Weinswig, founder and CEO of Coresight, said.
If that happens, we will shatter the old yearly record by about 4,000.
We are in the early innings of America’s “retail apocalypse”, and it is going to get much, much worse.”

Chuck Again… Brother can you spare a dime? That’s all I could think of when I was reading this article… But not to worry, folks… The economy is doing just fine, right? NOT!

Currencies today 4/22/19 American Style: A$.7135, kiwi .6675, C$ .7483, euro 1.1250, sterling 1.2988, Swiss $.9855, European Style: rand 14.1095, krone 8.5008, SEK 9.3045, forint 284.20, zloty 3.8037, koruna 22.8298, RUB 63.99, yen 111.92, sing 1.3565, HKD 7.8444, INR 69.80, China 6.7032, peso 18.79, BRL 3.9257, Dollar Index 97.34, Oil $65.29, 10-year 2.57%, Silver $15.05, Platinum $909.36, Palladium $1,428.54, and Gold… $1,279.30

That’s it for today…  Yesterday was not only Easter, but it was also the birthday of my longtime friend, Frank Trotter! And I can’t forget that former colleague, Mike Harrel also celebrates his birthday on 4/21! Well, my beloved Cardinals found a way to take 2 of 3 from the Metropolitans this past weekend…  And our Blues! WOW! After the awful way they played in the first half of the season too! Hockey playoffs are so about who’s healthy, with good goalie play, and on a roll come the playoffs, it doesn’t matter what you did in the regular season, if you don’t have those 3 things, you can start packing your golf clubs! And the Blues… well, they have those 3 things going for them… I’m just saying…   Todd Rundgren takes us to the finish line today with his song: It Wouldn’t Have Made Any Difference…  That song was featured in the movie: Almost Famous, about a rock band in the early 70’s… (I lived that life!)   I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

 

April 17, 2019 

* Currencies see some slippage VS dollar… 

* Chuck looks at another recession indicator….

 

Good Day… And a Wonderful Wednesday to you! Here I am… back from the heart doctor, and I’ll share with you a few thoughts I have for today… Nothing big like a regular letter, just a few thoughts, and a recap… No FWIW, just keeping the juices flowing… I’m greeted as I begin to write today by Paul McCartney and Wings and their song: Band On The Run…

OK… One of the things I want to talk about today is this thought I’ve had for some time now that we are heading for a recession, not that in normal times that would be that big of a deal, but in today’s world, it could be the snowflake that causes the avalanche, if you will… A couple of weeks ago, I told you that the U.S. Treasury yield curve had inverted, and that historically when this happens it’s an indicator that a recession is on the way… But yesterday, I received an email from the St. Louis Fed Research team, and in it they looked for other indicators of a recession…

One such indicator was Manufacturing employment… In the past when Manufacturing employment begins to drop steadily, it’s a very good recession indicator… So, then I went to my research and found that Manufacturing jobs dropped by 6,000 in March… No biggie, but the start of something Big? I guess we’ll have to wait-n-see, eh?

The U.S. Data Cupboard yesterday had another brick for our wall… Industrial Production for March, was negative -0.1%, and Capacity Utilization fell from the previous month. I was hemming and hawing about being negative here, but then I saw one of my fave economists, David Rosenberg, tweet something, and thought he would do it far better than I… So, here’s econoguy David Rosenberg from his Twitter feed: “The three-month trend in production of consumer durable goods has collapsed to a -15% annual rate – this takes out 2016 and takes us back to the late stages of the 2008-09 recession. Shhh! Don’t tell the stock market that the recession may have already started!”

You know me… I like to be right, so that that people listen to me, but I also don’t like to be right, because that means bad things are going to happen… In this case… I told you months ago that most economists were calling for the recession to hit the U.S. in 2020, but I had gone out on a limb and said it would hit us this year…

Maybe, just maybe, ‘cause you never know… I’ll be right on that one too!

The currencies yesterday (Tuesday) and today, have really not done much, a little slippage Vs the dollar, but that’s not the kind of movement we used to see in the currencies… Everything is muted these days… I’m just saying…

Gold got whacked by over $10 yesterday…  this is getting ridiculous folks… I really don’t want to go down that rabbit hole right now, so I won’t… 

China printed some good data this morning… Retail Sales were up, GDP was up, and a report said that they were producing more steel now than in the past… I still don’t think this is enough to stop the momentum of a global slowdown, but China does have this in their back pockets when negotiating with the U.S. on Trade… 

Currencies today 4/17/19 American Style: A$.7180, kiwi .6728, C$ .7493, euro 1.1305, sterling 1.3040, Swiss $.9898, European Style: rand 13.9692, krone 8.4870, SEK 9.2394, forint 282.37, zloty 3.7784, koruna 22.6998, RUB 64.21, yen 112.05, sing 1.3524, HKD 7.8445, INR 69.37, China 6.7094, peso 18.79, BRL 3.8826, Dollar Index 97.02, Oil $63.76, 10-year 2.59%, Silver $14.94, Platinum $889.00, Palladium $1,398.12, and Gold… $1,273.97, 

That’s it for this afternoon… Sorry it’s later than planned… I came home, sat in my recliner, turned on the baseball game, and fell asleep… And slept all afternoon! Slacker!  HA!…  Heart doc told me to keep doing what I’m doing…  Hmmm….   Tomorrow I’ll see my oncologist, and she’ll tell me something different…  Cardinals win today, and come back home for a weekend series with the Metropolitans!  AC/DC takes us to the finish line today with their song: Back In Black… I hope you have a Wonder Wednesday evening and night…  No Pfennig tomorrow, talk to you again next week… and Be Good To Yourself!

Chuck

 

 

April 16, 2019 

* Another economist gets on Chuck’s bandwagon… 

* Forbes: Russia is hot, but investors are still cold… 

Good Day… And a Tom Terrific Tuesday to you! What is it with my beloved Cardinals who seem to be on a roll, but get siderailed by the Brewers? It happened again last night, darnit! Oh, well the Cardinals play them again tonight, and Our Blues play in game 3 of their best of 7 series. We’ll have both TV’s hooked up for viewing both games, as we did last Wednesday night. I don’t believe I’ll be able to get a Pfennig out tomorrow, as I have a very early heart doctor appt. And then on Thursday, I have a very early oncologist appt. So, this will be the last letter of this week… Sorry, but I haven’t seen a doctor in 4 months, and I’m somewhat leery going into the appointments, therefore I want to be well rested… But maybe… and here’s an idea… when I come home, I could sit down and write a few thoughts! Sounds like a plan… And I love it when a plan comes together! The late Great, Leon Russell, greats me this morning with his bluesy song: Stranger In A Strange Land…

Well, well, well.. It now appears that last Friday, while I was away, and the currencies rallied, is going to be a one and done deal… From the looks of the trading on Friday, and the comments that traders were making at the time, I was getting the feeling that this could have been the beginning of something lasting much longer… But that’s not to be, apparently! Yesterday, didn’t see the currencies lose any additional ground to the dollar, but they didn’t gain any ground either… And since they don’t do a shootout in trading , like they do in hockey and soccer… The tie goes to the dollar…

Last week, I told you about how the IMF had chopped their forecast for Global Growth to a very low level… And then yesterday, I talked about Global Growth and how it was really slowing down, despite some upbeat Chinese data last week. And today, we have well known economist Mohamed A. El-Erian, formerly CEO of PIMCO and now with Allianz, send out a note that said: “With the return of Europe’s economic doldrums and signs of a coming growth slowdown in the United States, advanced economies could be at risk of falling into the same kind of long-term rut that has captured Japan.”

OK, how long have I been singing, Turning Japanese, I really think so? Because the U.S. just keeps following the missteps that Japan made in the mid 90’s… Remember back then? Everything was about Japan and the Japanese, their stock market was soaring, And they kept coming up with new budget ideas to stimulate the economy that was slip sliding away… slip sliding away… You know the nearer your destination, the further you’re slip sliding away…

About 15 years ago, a former colleague and I sat down and started putting together yield curves, and growth curves and so on, and everything we printed out that was Japanese, the U.S. had something that was heading in that direction… And here we are 15 years later, our economic growth has stalled, Yields have been zero, and will be back there real soon… And debt has grown to unsustainable levels… I say unsustainable knowing all too well that Japan and their debt has continued to exist all these years… But the unsustainable I’m talking about is the need to finance the debt, and the interest payments that go along with the debt.. For us, here in the U.S. it’s going to get very ugly, when bond servicing takes up a majority of the tax revenues… And there won’t be enough to pay for other things… What will the Gov’t do then?

Last gasp… they default… but not before they go down the road with more Quantitative Easing, negative deposit rates, buying stocks, and raising taxes… We will NOT grow our way out of this mess folks… Japan hasn’t, and we won’t either!

Another thing that caught my eye the past couple of days, is how the mainstream media are warming up to Russia… As an investment not a buddy, buddy… Longtime reader Bob, sent me this last night from Forbes… Titled: Russia Now Best Stock Market After China. But Investors Still Cold…

I’ll, at this point, stop, and point out that Russia has falling inflation that’s below their key interest rates, which means they have positive interest rates! I’ve pointed this out before, but I guess since Forbes is jumping on my bandwagon, that investors should be looking at Russia, I guess it’s as good a time as any, to go back over these things…

Now, the Russian ruble hasn’t exactly gotten on its horse and rode back to the levels the currency traded before they annexed Crimea, and some Ukrainian land… That’s when the economic sanctions on Russia began, and they’ve only gotten worse since 2014. But that hasn’t stopped the Russian economy from working through the rough spots, with economic growth between 1.2 and 1.7%, inflation in control, and a deposit rate over 5% (their key internal rate is 7.25%, is like our Feg Funds rate)

I’ve always looked at the Russian ruble as a play on Oil… If you believe the price of Oil will be supported at current levels, then the ruble should be stable too. But if you believe the price of Oil is to go higher, then the ruble should be the beneficiary, and vice versa if the price of Oil goes down from current levels. With the OPEC countries all practicing patience with their production cuts, the price of Oil has rebounded a bit, but still is trading within a range, and when you’re dealing with a deposit like a CD denominated in rubles, that’s ideal because the currency isn’t volatile during times like that, and then you’re reaping the rewards of a stronger interest rate VS another other country in the world, much less the U.S.

Ok, I didn’t mean to make this a Russia only letter today, but that’s how things go when you write from a stream of consciencousness! Yes, I’ve always said that about how the letter gets put together each morning… So, now that I’ve realized where that was going, I’m prepared to go off in a different direction!

Gold still is unable to find a bid, I’ve searched high and low, far and near, under rocks, around stars, and everything in between, and still no bid for the shiny metal…  Gold was down $2.60 yesterday, but is down another $4 in the early morning trading…   UGH!  

This morning we’ve already seen the Economic Sentiment for April, as put together by the think tank ZEW… And it printed… And the Economic Sentiment was stronger than expected, but the current expectations wasn’t… A kind of mixed bag-o-results, eh?  Maybe that’s why the euro is stuck in the mud once again. 

The U.S. Data Cupboard, that I previously mentioned (yesterday)  has Industrial Production and Capacity Utilization for March… I told you yesterday, and I’m not about to change my mind! HA that both of these would be weak… So, we’ll see a little later this morning… and then on Thursday this week, we’ll see March Retail Sales… This should be interesting in that, you may recall that February’s Retail Sales were negative -0.6%… I’m here to tell you right now, so you can listen to me later that there’s no way in hell that this data will print negative again this month! No way, it ain’t gonna happen, no way Jose’! the BHI (Butler Household Index) indicates to me that it will be a so-so month… nothing great, but nothing bad… So, we’ll see that print on Thursday this week.

To recap…  Friday’s rally in the currencies appears to have been a one and done, as all the euphoria by traders has been thrown to the side of the road.  Forbes has come around to Chuck’s way of thinking that the ruble is undervalued. We got a visit from a very famous economist, who believes that the global growth showdown is for real, and Gold still can’t find a bid anywhere… UGH!

For What It’s Worth… For longtime readers this will ring a bell… sometime ago, I spoke about how I believed the IMF would eventually be forcing the use of the Special Drawing Rights (SDRs) as world money instead of dollars… And now, all these years later, I came across an article that’s talking about it! And it can be found here: https://www.project-syndicate.org/commentary/imf-special-drawing-right-global-currency-by-jose-antonio-ocampo-2019-04

Or, here’s your snippet: “This year, the world commemorates the anniversaries of two key events in the development of the global monetary system. The first is the creation of the International Monetary Fund at the Bretton Woods conference 75 years ago. The second is the advent, 50 years ago, of the Special Drawing Right (SDR), the IMF’s global reserve asset.

When it introduced the SDR, the Fund hoped to make it “the principal reserve asset in the international monetary system.” This remains an unfulfilled ambition; indeed, the SDR is one of the most underused instruments of international cooperation. Nonetheless, better late than never: turning the SDR into a true global currency would yield several benefits for the world’s economy and monetary system.

The idea of a global currency is not new. Prior to the Bretton Woods negotiations, John Maynard Keynes suggested the “bancor” as the unit of account of his proposed International Clearing Union. In the 1960s, under the leadership of the Belgian-American economist Robert Triffin, other proposals emerged to address the growing problems created by the dual dollar-gold system that had been established at Bretton Woods. The system finally collapsed in 1971. As a result of those discussions, the IMF approved the SDR in 1967, and included it in its Articles of Agreement two years later. “

Chuck Again… Nothing more to add… just that the IMF had gone silent on this for a few years now, and I had almost forgotten that I talked about this previously…

Currencies today 4/16/19 American Style: A$.7163, kiwi .6761, C$ .7478, euro 1.1305, sterling 1.3090, Swiss $.9942, European Style: rand 14.0470, krone 8.4822, SEK 9.2553, forint 282.92, zloty 3.7806, koruna 22.6955, RUB 64.28, yen 111.93, sing 1.3540, HKD 7.8425, INR 69.60, China 6.7065, peso 18.88, BRL 3.8752, Dollar Index 96.93, Oil $63.53, 10-year 2.57%, Silver $14.95, Platinum $888.02, Palladium $1,369.18, and Gold… $1,284.04

That’s it for today…  And quite possibly this week, although I do believe I will attempt to get to writing tomorrow afternoon… We’ll see… I also believe that the warm weather will return today, after a few days of very chilly, if not downright cold days were here.  Well, this weekend is Easter Weekend, with Good Friday in a couple of days. The stock market is closed on Good Friday, and everything else will shut down around noon that day…  All three grandkids were here on Sunday for egg dying…  Grandson Braden stayed with us Saturday night. I hadn’t seen him in 4 months, and he appeared to have grown a foot in that time! Poco takes us to the finish line today with their song: Just For You And Me…  I was always a fan of the music from Poco…  I hope you have a Tom Terrific Tuesday, and well Be Good To Yourself!

Chuck Butler

 

April 15, 2019 

* Currencies rally on Friday, but give some back last night… 

* Chuck uncovers a jobs report that tells the truth… 

Good Day… And a Marvelous Monday to you! It’s also April 15th, Tax Day… and Pfennig Tradition says I need to sing this song by the Beatles… Let me tell you how it will be, There’s one for you, nineteen for me, ‘Cause I’m the taxman, yeah, I’m the taxman…
Man, do I dislike taxes… When I was a young man just starting out and didn’t have two nickels to rub together, I would say, “Give me the income, I’ll gladly pay the taxes”… And then when I began to earn the income, I would say, I hate taxes! At least now, that I no longer have any income stream, my tax burden has reduced tremendously… So, I’m back where I was in 1973! Man, did I see a fun game on Thursday last week! My beloved Cardinals finally broke out their bats, and scored 11 runs! Of course the Dodgers helped with some of those runs… Longtime fave, Billy Squier greets me this morning with his song: In The Dark…

Well, while I was gone on Friday, the currencies decided to get off the porch and chase the dollar down the street… The euro popped back over the 1.13 handle, the Aussie dollar (A$) closed in on 72-cents, and so on… There was good and bad news from the Eurozone on Friday… First, the February Industrial Production printed a negative -0.3%, but that was better than expected which was for a much deeper negative -0.6%… That was the bad news…. The good news was that Speculators were buying the euro in response to reports on Mitsubishi UFJ Financial Group’s planned purchase of the aviation financing business of Germany’s DZ Bank, dealers said. The transaction was announced on March 1 and MUFG said the it was expected to close after June.

Now, I’m sure some of you are scratching your heads and wondering why in the world would that news help the euro? Well, you see when these major merger deals take place across borders, the company in one country has to buy the currency of the other country to fulfill the terms of the transaction… So, based on the news that Mitsubishi is going to be buying the German Bank, they’ll have to be buying euros, and that got the buying in euros started…

However, before we, as non-dollar holders, rejoice, the overnight markets last night took the currencies to the woodshed… How, could, on Friday, the currencies rally so much, and in the overnight markets last night, they give it all back? Well, not all, but most… Did something happen this past weekend that would generate this kind of dollar buying? Well, no… So, I go to my back pocket and pull out my “expose the PPT card”… That’s all I’ll say about that!

OK… so, like I said, “not all the gains, but most of them” were given back last night… The euro is still above 1.13 this morning, but the pep and vigor that the currencies were trading with on Friday, just isn’t there this morning… 

The price of Oil has slipped back below $64 in the past 24 hours so that means that the flyer the Petrol Currencies were trading on last week, as the price jumped higher, is no longer in play…  UGH! Not that I want to see Oil prices soar, but a rise to $70 would do wonders for the Petrol Currencies… 

Gold hasn’t been able to find a bid for a few days now… Last Thursday and Friday were both down days for the shiny metal, and today in the early trading Gold is down $3.80…  I’m finding this downward direction of Gold to be very interesting… My longtime friend, Ed Steer of www.edsteergoldandsilver.com tells me that: “there was another monster decline in the Commercial net short position in that precious metal as well, as it fell by a whopping 42,637 COMEX contracts, or 4.26 million troy ounces of paper gold.”

So, one has to reason that if the short positions are declining, that Gold should be rallying, right?  And if it isn’t, what else is there to move the price of Gold downward? And that my friends, is the $64 question. Could it be, oh, no it couldn’t, could it be? Oh, no, not that! The humanity! But, I guess it could be physical Gold owners selling…   People do the strangest things, folks… 

Last Monday, I spent the day talking about the Jobs report the previous Friday, that just didn’t make any sense to me… And now this whole charade is being exposed… There’s a report that called the JOLTS report, and it shows Job Openings… And it reflected that for the March there were 133,000 less new hires… And this report has now been down 3 of the last 4 months…  Which leads me to believe that the surveys that are done are probably reflecting the proper numbers, but then the BLS adds their “magic”, and things get all out of whack. 

Late last week, China printed some decent economic data that had everyone thinking that things in China aren’t so bad, and that got the Global Growth folks all lathered up… But remember just a week ago. the IMF downgraded their Global Growth forecast, to the lowest level it’s been since 2006-7…  So, I’m not going to get tricked into thinking that Global Growth is going to rally… And I would think it to be prudent that you not think that too!

I just had a chuckle to myself when I was typing the word “prudent”, and thinking of Dana Carvey doing his SNL impression of President Bush back in the 80’s… “No, it wouldn’t be prudent, and we have all these points of light”…  funny stuff!

OK… The Data Cupboard here in the U.S. last week had a late week surprise, when March PPI (wholesale inflation), which had been on a downward plane, surprised everyone with a 0.6% gain in March VS Feb which was just 0.1%, and the expectation for March of 0.3%…  We also saw the Consumer Confidence Index fade a bit this month from 98.4 to 97.5… Still stronger than it should be, in my humble opinion! 

This week’s Data Cupboard starts the week with the Empire State PMI (New York region manufacturing index)  And tomorrow we’ll see two of my faves, Industrial Production and Capacity Utilization for March… I’m better a free undercoat right now that these both will be very weak… 

To Recap…  The currencies had a day in the sun last Friday, but in the overnight markets last night they have given back most of their gains from Friday. Chuck has no explanation for this move last night, expect to pull out his “expose the PPT card”…   Gold can’t find a bid and this is getting very weird… And Chuck points out that the JOLTS report tells us a different story than the BLS tries to pull over our eyes each month… 

For What It’s Worth…  OK, going a different direction this morning and give you something that the GATA folks sent me… And it’s about all the stuff the Central Banks are pulling and getting away with and since it’s the GATA letter I can’t share with you the link to it…  But, I do have a snippet! 

Or, here’s your snippet: “Central banks get away with the flaming hypocrisy illustrated below because mainstream news organizations don’t dare to put a critical question to them.

Here, if David Lawder and Leika Kihara of Reuters were serious journalists, and their editor, Paul Simao, had the wit for his job, someone from Reuters would have asked the managing director of the International Monetary Fund, Christine Lagarde — in the name of the “accountability, transparency, and effective communication” she purported to be advocating — to identify the markets in which her member central banks are surreptitiously trading and when they are surreptitiously trading, and to explain the objectives of their surreptitious trading.

Instead Reuters makes itself a mere press-release service, like PR Newswire.

How easy it would be for any news organization to show central bankers up and shut them up. A single critical question would do it, but there isn’t one in all of Earthly journalism.”

Chuck Again… Yes, wasn’t it just complaining last week about the lack of real journalism?  There’s a whole article on Reuters that is being referred to above, and you can find it here: https://www.reuters.com/article/us-imf-worldbank-lagarde/imf-chief-calls-for-central-bank-accountability-communication-idUSKCN1RP0KW?il=0

Currencies today 4/15/19 American Style: A$ .7177, kiwi .6763, C$ .7510, euro 1.1315, sterling 1.3112, Swiss $1.0028, European Style: rand 13.9570, krone 8.4913, SEK 9.2436, forint 283.18, zloty 3.7760, koruna 22.6458, RUB 64.31, yen 111.95, sing 1.3523, HKD 7.8389, INR 69.45, China 6.7035, peso 18.76, BRL 3.8805, Dollar Index 96.82, Oil $63.23, 10-year 2.56%, Silver $14.89, Platinum $886.81, Platinum $1,369.28, and Gold… $1,286.64

That’s it for today… A bit late, I know…   Well, our Blues won Friday night, and then came home and lost in front of a raucous home crowd last night…  They’re up 2-1 in the series, but, last night was very disappointing to say the least…   My beloved Cardinals played in Mexico this last weekend and split their two-game series… Good thing they weren’t here, because it was downright cold here! I even saw snow falling in Columbia, Mo. yesterday morning! UGH!  My little d… granddaughter Delaney Grace, received the news that she will sing the national anthem at the Independent ballpark across the river, and in St. Charles this summer! WOW!  Well, I have some doctor appts this week, it’s been 4 months since I’ve seen a doctor here! YAHOO!  But that all changes this week! OK, Steely Dan takes us to the finish line today with their song: Kid Charlemagne… Is there gas in the car?, yes there’s gas in the car..   I hope you have a Marvelous Monday, Tax Day… and are you will Be Good To Yourself! 

Chuck Butler

 

 

April 11, 2019 

* Currencies for the most part remain in yesterday’s clothes… 

* EU gives May a 5 month extension for a BREXIT deal… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m heading to the Cardinals day-game with the Dodgers a little later today, so I’m a happy camper, and no amount of manipulation, PPT, or weak data is going to upset me this morning, because…. I’m going to baseball heaven for a day game! OK… I laughed so much yesterday at something that my stomach hurt! CNBC sent out a news article and misspelled the word “refinance” And they had the gaul years ago to tell me to take my thoughts on manipulation to Hollywood? What a bunch of dolts! Mr. Excitement, Jackie Wilson, greets me this morning with his song: Your Love Keeps Lifting Me Higher… They don’t write songs like that any longer, I’m just saying…

Well, it appears that the folks at the IMF are getting on board with me, regarding a global slowdown, led by the U.S. They downgraded their forecast for 2019 global growth yesterday… And I never saw one mention of this on TV, except when I switched over to a show on the markets… But econoguy, David Rosenberg, didn’t miss it. So, let’s hear what he had to say about what the IMF did yesterday… This from his Twitter handle: “The permabull trollers may have missed this, but the IMF just took another hatchet to its 2019 global growth forecast, down to the slowest pace for the cycle. In just two words, the Fund politely concluded that we have reached a “delicate moment”

I have to say front and center this morning, that the comment about having reached a “delicate moment” is a real classic in my book… Now if I were on the journalists team following the IMF, I would have asked them to explain that comment… “Ahem, what do you mean by a delicate moment?” Would it have hurt anyone’s feelings, because we all know we have to be careful not to hurt anyone’s feelings these days, to have asked that question?

Are there any “true journalists” out there these days?

OK, well, there were two currencies that saw gains yesterday… The Norwegian krone, which I talked about yesterday, as having gained recently VS the euro, made strides against the dollar when it was made clear that consumer inflation in Norway is rising, with the March print at 2.7% VS expectations of 2.5%… This has traders thinking that the Norges Bank will hike rates soon…

The other currency to show some gains was the Aussie dollar (A$)… no data here, just people looking at inflation and how it’s probably going to begin to go higher sooner or later around the world, and that spells good times for the commodities, and the further the commodity currencies, led by the A$.

There was also some minor positive moves in the Russian ruble, but they were very small… But gains nonetheless…

Gold found a way to push and shove its way to a $3.80 gain on the day, only to see it given back in the early trading this morning.  The gain yesterday had pushed Gold above its 50-day moving average, and seeing that, the price manipulators couldn’t let that happen, and well, they brought Gold back below the average this morning. UGH!

The European Central Bank (ECB) met yesterday and left rates unchanged, and ECB President Draghi, tried to throw the euro under the bus, but his Eeyore impression didn’t cause too much damage to the euro, and the single unit was able to recover quickly after falling following the meeting. Eeyore, I mean Draghi, had this to say… “The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets.”

Notice how he took the opportunity to take a shot at President Trump’s Trade War? I did, and I’m sure that the folks at the White House did too… But it was like water off a duck’s back to the folks at the White House… They don’t care who the Trade War is hurting, including themselves… I’m just saying…

OK… The EU gave U.K. PM May until Roctober to come up with a BREXIT deal that everyone would accept…  That’s more than 5 months to get a deal done… But let’s see here, they’ve had a couple of years prior to now to get a deal done, and nothing has been accepted, what makes the markets believe that something will get done in 5 months?  I ask that question because just about every article I’ve read talks about how this extension of time is like Manna from Heaven…  And I view it as a stay of execution…

The U.S. Data Cupboard had an interesting print in the Stupid CPI yesterday, with consumer inflation growing in March at 0.4%, which was double the previous month’s print and the expectations.  There was one piece of data that usually gets combed over but I think it’s telling us something, and that is Real Hourly Earnings for March which were negative -0.3%… Wait, What?  I thought earnings were growing? I guess not, eh?  

Oh, and as far as putting another brick on the wall, I had a reader send me a note highlighting an analyst’s comments on the Trucking industry…  It doesn’t look good folks… layoffs, empty trucks, etc. are beginning to pop up, in yet another sign that the economy is heading to recessionville… 

But like I said above, all that stuff isn’t going to dampen my mood this morning!   So, before I ruin that thought with something else to talk about, I had better head to the Big Finish, and hopefully I won’t run into any rabbit holes to fall down the rest of the letter!  Hmmm, but Chuck, what about that FWIW article on derivatives that’s coming up?  Oh, darn it, I knew there would be a rabbit hole I wouldn’t be able to avoid! 

To recap…  The U.K. received a stay of execution, and has until Rocktober to come up with a BREXIT plan that will be accepted… Chuck has his doubts… The ECB met yesterday, and left everything unchanged, while ECB President Draghi, did his best impression of Eeyore! The currencies pretty much remained in the same clothes as yesterday, except the krone, which was bought after a strong CPI printed than expected…   And Chuck is heading to the baseball game today!  

For What It’s Worth…. Longtime readers of the Pfennig, know that I’ve been warning them about how many derivatives there are in the markets these days, and how no one knows what happens if they begin to get execution… There are more derivatives ( and here I mean bad derivatives) now than were on the books of financial institutions in 2007… When their mere existence almost caused a financial collapse, but instead we had a financial meltdown… Well, this is an article on Bloomberg.com that talks about the mess we have in derivatives now, and can be found here: https://www.bloomberg.com/opinion/articles/2019-04-10/derivatives-are-still-too-dangerous

Or, here’s your snippet: “Financial regulators have done a lot to reform the derivatives markets that helped turn the financial crisis of 2008 into a global disaster. But their work is unfinished — and there’s even a danger that, in one way, they might have made things worse.

Derivatives are bets on the performance of something else, such as stocks, interest rates or creditworthiness. They can be useful in mitigating risks and expanding investors’ choices: A bank, for example, might use an interest-rate derivative to protect itself against rising borrowing costs, or a hedge fund might use a credit derivative to bet against a company’s bonds. But because they enable big wagers with little money down, they can quickly generate losses and cash demands large enough to destabilize the entire financial system.

For a long time, governments left the derivatives market largely to its own devices. At best, only the parties to the contracts knew who owed what to whom, or how much collateral had been posted to cover potential losses. The folly of this approach became apparent when, in the darkest days of the 2008 crisis, it emerged that a single company — insurance giant AIG — owed billions on subprime-mortgage bets to several of the world’s largest banks and didn’t have the cash to pay up. Taxpayers had to provide $182 billion to keep the company afloat and avert a broader collapse.”

Chuck Again… This is a good article, and talks about how the Gov’t tried to step in to prevent another 2007, but probably only made matters worse…
Reminds me of the old quote from Ronald Reagan… “The scariest words ever spoken are: “Hi, I’m from the Government, and I’m here to help”…

Now, that wasn’t THAT bad was it Chuck?

Currencies today 4/11/19 American Style: A$.7160, kiwi .6755, C$ .7487, euro 1.1279, sterling 1.3085, Swiss $1.0020, European Style: rand 13.9862, krone 8.5010, SEK 9.2506, forint 284.86, zloty 3.7962, koruna 22.6996, RUB 64.56, yen 111.15, sing 1.3532, HKD 7.8440, INR 68.99, China 6.7147, peso 18.88, BRL 3.8373, Dollar Index 96.90, Oil $64.07, 10-year 2.48%, Silver $15.15, Platinum $900.74, Palladium $1,376.17, and Gold… $1,304.23

That’s it for today…  Another win by my beloved Cardinals over the Dodgers last night… Suddenly, they’ve found their bats… but they are facing the Dodgers’ young stud pitcher today, so their found bats might be lost again after today, but then you never know, right? That’s why they play the game!  Our Blues got the playoffs off to a great start with a comeback in the 3rd period to win on the road! Alex and Chuck had two TVs set up so we could watch the baseball game on one and hockey on the other…   Pretty cool set up…  Alex is going to the game with me today, along with a couple of my spring training buddies, so a good time should be had by all…   The Strawbs takes us to the finish line this morning with their song Autumn…  “hold on to me… I’ll hold on to you… The winter long I will always be with you”…    I hope you have a Tub Thumpin’ Thursday, and will Be Good To Yourself!      Let’s Go Blues!

Chuck Butler

 

 

April 10, 2019 

* U.S. data continues to print very week… 

* What the heck is going on in Italy? 

Good Day.. And Wonderful Wednesday to you! Well, I was away from the laptop, research, reading and writing yesterday, and guess what the currencies did? They had a mini rally! My day of travel began very early in the morning, and ended back in St. Louis, with the temperature in the 70’s! YAHOO! It’s warm! I know it’s spring here, and warm weather can be fleeting, but at least for now, I’m a happy camper! I want to start today off with a note to my former asst. and colleague, Jennifer Mclean… She’s celebrating her 20th year at the bank, even though it’s no longer EverBank, it’s still 20 years… We had a lot of good years together, I’m sure I mad her mad on occasion and vice versa, but we still got along just fine… So… Happy 20 years there Jennifer! Leon Bridges greets me this morning with his song: I’m Coming Home…

Front and Center this morning I have to talk about the news from Italy, where there was an announcement of tow laws that could strip the Gold reserves from the Central Bank … Taking a page from FDR, who instead seized it from citizens… One draft law may, reportedly, oblige the central bank’s owners to sell their shares to the Italian Treasury at prices from the 1930s, while the second law is set to declare Italian nationals to be the owners of the Bank of Italy’s reserves.

What the heck is going on over there? I sure hope they don’t give the U.S. lawmakers any ideas! Gold guru, Jeff Clark had this to say about the news… “Revolution is in the air! Seems like it’s similar to the movements in those countries that want to repatriate their gold back home.

Yeah, it’s not clear what the full ramifications will be, we’ll see if the law passes.” – Gold guru Jeff Clark

Yeah, it’s too early to go Rambo on them, just for coming up with laws like this, but then one never knows for sure, now does one?

Ok, back to our regular programming… So the mini-rally in currencies was yesterday, and in the overnight markets… they moved a little higher, as they must not have figured out that I’m back in the saddle! HA! 

And Gold got back up on the rally horse yesterday… And I think it’s because of some words uttered by the President, about “how the world hasn’t seen the last of my Trade Wars”… So, while the China and U.S. talks are winding down, the jabs at Europe and the rest of the world are being made… OK, for those of you new to class… I understand that our trade partners have taken advantage of our good will for a long time… And negotiations are the way to end that, not placing tariffs on goods with your trade partners… That’s what causes slowdowns in economies folks…

Remember, this folks… Trump wants a narrower Trade Deficit… Why else would he be complaining that the dollar is too strong? And chancing major slowdowns in economies with trade tariffs?

The ministers at the European Summit are expected to grant the U.K. yet another extension to iron out their BREXIT details. 1. I’m really surprised that U.K. PM May is still in control, and 2. that the pound sterling isn’t just falling like a rock off a cliff…  Everything is muted, as everybody is holding out hope that a deal can be ironed out…  Well, that is everybody but me! 

How about the price of Oil? It just continues to ratchet higher, inch by inch, step by step, and before you know it, Oil is trading with a $64 handle this morning.  I’m not a fan of higher Oil prices, except that they help the Petrol Currencies like rubles, krone, real, loonies, and others… 

Speaking of the krone… I read this morning that recently the krone has been moving positively VS the euro… I was very skeptical of this, headline, so I read on, and saw the facts… The krone has been moving positively VS the euro, which is something that I don’t know that I’ve seen, as the krone has always taken its cue to move in one direction or the other from the euro… 

Many years ago, the people from Forbes Magazine came to me and asked me to write an article that talked about alternative currencies other than the euro… I told them that I would be writing about the Norwegian krone… and after I sent them the article and backing graphs, etc. they decided to make it a cover story, and they called the krone, “The safest currency in the world”…  They had their Oil revenues, and their largest in the world Sovereign Wealth Fund to support the krone…  Well, they still have their Oil revenues, albeit much smaller VS back “in the day”… And they still have their Sovereign Wealth Fund, so I get that traders would take a flyer on krone…  But it can’t get too far out in front of the Big Dog, euro, folks…. I’m just saying. 

Well, there was a lot of hub-bub in Russia the past few days, as their Central Bank Reserves were nearing $500 Billion ($487 Billion), and the calls for the Central Bank to cut of purchases of their reserves grew louder and louder until this was said… “In the latest statements the bank said it is necessary to “increase FX and gold reserves even more” from the current highs, given the “persisting sanction risks and current economic structure,” deputy head of the CBR Sergey Shvetsov told the press on April 3.”   

So, it appears to me as this was nothing more than a tempest in a teacup, and Russia will continue to buy Gold for its reserves…  

The U.S. Data Cupboard didn’t have much for us yesterday, and today they step it up a bit, with the stupid CPI, The Federal Budget, and the Fed’s Meeting Minutes… OK, before we get all giddy about the meeting minutes, let me offer that I used to think that we would get the true goings on at the Meetings with these minutes, but over time that’s just not the case… But I’m sure the markets will be looking for any sign, wink or nod that the Fed Heads are getting scared, and are readying their battle stations for a return to a rate cut cycle… 

If you recall, on Monday this week, I told you that February Factory Orders would probably print negative, and that’s exactly what they did, printing negative -0.5%…  all in all, it’s just another brick in the wall…  I mean what did everyone expect? Durable and CPAPEX Orders for the same period already printed negative, there’s no way Factory Orders were going to be anything but negative!  

The economic data here in the U.S. continues to print weaker and weaker with every passing month, except the lies that the BLS tells us each month about the labor picture…  

I told you Monday that the European Central Bank (ECB) was meeting this week… I do believe it’s tomorrow, but could be today… either way I don’t expect anything exciting to be mentioned here… So move along, for these aren’t the droids we’re looking for… 

Before I head to the Big Finish…  Bloomberg is reporting this morning that The BIG BOYS are heading to “the hill” today… Here’s Bloomberg’s take on this… “JPMorgan Chase & Co.’s Jamie Dimon and Goldman Sachs Group Inc.’s David Solomon are among U.S. bank CEOs set to face a grilling in front of the House Financial Services Committee from 9 a.m. this morning. They are likely to be questioned on pay, profit and regulation during the session in which Democrats are expected to go on the attack on the industry’s track record a decade after the financial crisis.”

Well, since I’m no longer employed at a bank…  Man, let’s see, I started at the old First National Bank of St. Louis, in 1978, so that means I had been in banks for 40 years!  Ok, what I was going to say is that since I’m no longer employed by a bank, I can say I hope these guys get fileted!  and the fire is so hot that the meat sticks to the grill! 

To Recap…  The Currencies and metals have a mini-rally on Tuesday while Chuck was away, and flying the friendly skies, and so far in the overnight markets nothing has changed… BREXIT may get a stay of execution from the European Summit today, and while the China / U.S. trade talks seem to be winding down, President Trump, is making sure that everyone is on notice!  Chuck talks about some stupid stuff going on in Italy…  And the ECB meets tomorrow… 

For What It’s Worth…  Well, since I was on Bloomberg this morning looking for things that would catch my eye, I did find this, and it plays well with my mention of Russia continuing to buy Gold above… It’s about China’s renewed physical Gold appetite and can be found here:https://www.bloomberg.com/news/articles/2019-04-07/china-continues-gold-buying-spree-as-pboc-adds-for-fourth-month

Or, here’s your snippet: ” China’s on a bullion-buying spree as Asia’s top economy expanded its gold reserves for a fourth straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings. Prices advanced back toward $1,300 an ounce.

The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website on Sunday. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.

China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the U.S. The latest data from the PBOC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018.

Last year’s bullion buying by emerging-market central banks was the most robust in a long time as countries diversified reserves, Ed Morse, Citigroup Inc.’s global head of commodities research, said in a Bloomberg TV interview on Monday. The bank’s positive on gold, targeting $1,400 by year-end.”

Chuck again… I continue to monitor these Central Bank physical Gold purchases, because of numerous reasons, but most of all, to prove in my mind and yours that physical Gold demand is still strong, and should see a strong Gold price in tandem with this demand… 

Currencies today 4/10/19 American Style: A$.7150, kiwi .6755, C$ .7505, euro 1.1276, sterling 1.3083, Swiss $1.0005, European Style: rand 13.9669, krone 8.5067, SEK 9.2524, forint 285.27, zloty 3.7966, koruna 22.7080, RUB 64.81, yen 111.22, sing 1.3527, HKD 7.8383, INR 69.38, China 6.7117, peso 18.86, BRL 3.8499, Dollar Index 96.90, Oil $64.42, 10-year 2.50%, Silver $15.25, Platinum $891.68, Palladium $1,384.60, and Gold… $1,303.80

That’s it for today… A nice win VS the Dodgers last night for my beloved Cardinals!  And our Blues begin the playoffs tonight… Let’s Go Blues! I’m all excited about the hockey playoffs! And I bought some tickets last night to tomorrow’s day game! YAHOO!  Day Baseball… Love it like a kid loves cake! I’m going to be very busy with doctor appts. and scans next week, so this day game came at the right time!  This is the longest period of time that I’ve gone without a blood draw, doctors, scans and other fun things, in 12 years! But that reprieve from those things ends next week. UGH!  I’m sure the docs aren’t going to be happy with the cellulitis in my leg, but it is what it is…   Cat Stevens takes us to the finish line today with his song: If You Want To Sing Out, Sing Out…  I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

April 7, 2019

* BLS tries to pull a rug over out eyes… 

* Currencies remain stuck in the mud… 

Good Day… And a Marvelous Monday to you! My last day here in what I call paradise, as I leave for home base tomorrow morning… A friendly spiderman reminder that there’s no Pfennig tomorrow… Well, Opening Day was in St. louis on Friday… I love the Clydesdales… I used to get goose bumps when I was in the stadium and they would come prancing in… They are such large animals, but beautiful in my eye! Well, we’ve got lots to talk about today… I really don’t want to get started on the Jobs Jamboree, but something inside of me tells me I must be me, and do it anyway! Graham Nash greets me this morning with a song from his Songs For Beginners album: Military Madness… I used to not only play guitar to most of the songs on that album, but the piano too! I’m not much of a piano player, but I can bang out chords with the best of them!

Before I get started… This is going to be a Trade Talk, BREXIT talk, free zone today… 

OK… Didn’t I tell you that there would be some major shenanigans played with the Jobs report for March? Recall, I played out a scenario, where the chief bean counter at the BLS was called on the carpet after last month’s dismal 20,000 gain for Feb., and reminded that there’s a shelf full of hedonic adjustments at his disposal, and that 20,000 should never happen again! And guess what happened? 196,000 jobs were created in March, according to the BLS… Really? We went from 20,000 one month to nearly 200,000 the next month? Don’t give me weather problems in February either… If, you lost your job in February, I don’t care how bad the weather was, you would be at the unemployment office filing for benefits! So, really, markets, you believed this BS from the BLS?

I guess you did, swallowing it, hook, line and sinker! What a shame, what a shame… Don’t you know by now that the BLS is there to just make you feel better, so you’ll go all-in buying stocks? I shake my head in disgust, folks… Of course there were 51,000 jobs added by the BLS after the surveys were received, and then they massaged the surveys, added some eye of newt, and other magical things, and voila! Nearly 200,000 jobs created!

Speaking of the surveys… I’ll  let the folks at the Burning Platform explain what they saw in the surveys, this will really get you scratching your head… “And this isn’t some one month hiccup. The Household Survey showed we had 156.9 million Americans employed in December, but only 156.7 million employed in March. Does that sound robust?” – the Burning platform.com

OK, I give up! Quite a few months ago, I told you I didn’t care about what the BLS was printing any longer… But that proved to me false, because when I saw that number on Friday morning, I about came out of my recliner swinging! Screaming at the walls! (good thing they’re concrete walls and no one is next door to me!) So, I guess I do care, because it hurts the people that keep investing thinking the economy is strong and robust, when it’s really just all smoke and mirrors…

Currency traders didn’t exactly fall for the numbers, as the dollar remained well bid, but didn’t gain any more ground on Friday, and the currencies remained in Thursday’s clothes… Gold was able to eke out a $2.60 gain, to follow up on Thursday’s $2.80 gain… Whoopee! Right?  Oh well, you have to take gains any way you can… I’m just glad the price manipulators didn’t whack it again like they did earlier in the week! 

While Gold is fresh on my mind…. Well, there I was, minding my own business, filling out a Saturday Crossword puzzle online, and an email hit my box… it was a notification of a Twitter posting. So, needing to get my mind off the crossword clue I couldn’t figure out, I clicked on the email and it took me to Twitter, where a graph of Annual Returns for the last 20 years (1999-2018) was staring me in the face… This was so good, as far as I was concerned because, there are still so many people out there that don’t believe in Gold…. So, here’s the lineup for 20-year Annualized Returns by Asset Class…
REITS 9.9%
Gold 7.7%
Oil 7%
S&P 5.6%
Bonds 4.5%
Homes 3.4%
Inflation 2.2%
And the average individual investor…… 1.9%…

Now, one more time…. Got Gold?

And don’t look now, but it sure looks like the scenario I talked about a month or so ago is coming to fruition… I’m talking about the pricing of Platinum and Palladium. I talked about how it could be possible that the price of Palladium had gotten too expensive and auto makers could switch back to Platinum…  The pricing action of the two metals are looking very much like this is happening, as Platinum has been going up and Palladium’s price is getting cheaper by the day…  Just something to think about, this fine morning! 

Ok… So, all-in-all it’s just another brick in the wall… For those of you new to class, I’ve been singing the Pink Floyd song, whenever we see a piece of data that’s weak and we add it to the “wall”… On Friday, I came across something that really caught my eye… It was from G. Edward Griffin’s letter, which can be found here: https://needtoknow.news/2019/04/americans-borrowed-88-billion-dollars-last-year-to-cover-their-medical-bills-in-spite-of-insurance/

And it says… “Americans had to borrow 88-billion dollars to cover their medical bills last year, proving the abject failure of the American healthcare system. While most Americans have ‘health insurance,’ many are afraid to go to the hospital because of high cost. Two-thirds of personal bankruptcies in the United States are caused by medical bills, and most of the people going bankrupt had health insurance”

Chuck again… As someone who’s had to convert my employer insurance coverage to a private insurance, I can tell you that it stinks! And I completely understand where these people are coming from, for I’m in the same boat, with one more year to go…

I know, I know, I’m really getting carried away talking about things today…   But this has got to be talked about, before…. Well, I’ll let you read and see where this it taking you….  The weekend Bloomberg Opinion had this juicy bit…. “President Donald Trump said the Fed should juice up the economy, but central banks around the world are in a bind over what to do.” – Bloomberg quoting Donald Trump…

What to do, what to do… Well, I sure hope they don’t resort to following Janet Yellen’s call for the Fed, to do when the going gets tough… and that was to buy stocks and corporate bonds… Longtime readers may recall me going bananas over this shocking announcement by Yellen, back when she made it… And how I said, “ She’s just greasing the tracks, folks”… Of course back in 2016, there wasn’t this black cloud hanging over the economy like there is now…

You know… this has all been done before… the Bank of Japan has been buying stocks for years now… Has it had anything to do with stirring economic growth? No… has it supported the Japanese stock market… yes…
And in Europe, the European Central Bank (ECB) had been buying corporate bonds for years, (just stopping on 12/31/18)… Did the buying of these bonds do anything to stir economic growth? No… did it support the bond market? … yes…

So, when we get back to the beginning of QE here in the U.S. did all that bond buying stir economic growth? Well, not if you expected more than 2.2% economic growth for the past decade… It did support housing, bonds, stocks, and leveraged loans… And now, we’re thinking of going back to the drawing board? Oh My!

I’m now wishing I had bought a private island somewhere in the S. Pacific…   Yes, we’re turning Japanese yes, I really think so!

I’ve been a little harsh with the Beaver this morning, June… And reminds me that you don’t read this letter to just read about what’s going on in the U.S. right?     I’m reminded of a dear reader who chastised me for always banging on the U.S….   My response is simple…  Most of my readers are here in the U.S. so these are things that should matter to them regarding their investments… And two… We’re the U.S…. aren’t we supposed to be better than this? 

My good friend, Dennis Miller of www.milleronthemoney.com, sent me a note yesterday from an email he received, that had a picture of the Economist magazine and they are quoting a former big shot in the IMF, as saying we’re heading to a global currency… all for one and one for all… 

I immediately, told him of the times on the trading desk, when we used to hear about the Amero, all the time… We even had customers that claimed they had some Ameros in their hands…   Well, we don’t hear about the Amero any longer now do we?   Oh, and there’s also the “great revaluation of the Iraqi dinar” We had some many people call us and “guarantee the great revaluation” was going to happen on X-day… So many X-days came and went, with no great revaluation, that I doubt they hear anyone talk about any longer on the trade desk… (I wouldn’t know, I’m no longer there!)

The Petrol currencies are the only currencies moving stronger VS the dollar and their moves are muted in a way… The Price of Oil is trading with at $63 handle this morning, so you can see why the Petrol Currencies are stirring… 

I’m not seeing anything market moving on the data calendar from around the world this week, except for an ECB meeting on Thursday…  Things haven’t looked to strong in the Eurozone economic data lately, I wonder what the ECB will have to say…  ECB President Draghi, will probably attempt to throw the euro under the bus again… We shall see… 

The U.S. data Cupboard today has February Factory Orders… Given what we already know about the Durable and CAPEX Orders for February printing negative… I would suspect Factory Orders will print negative too…   So, much for that robust economy, eh? 

To recap…  not much movement once again in the currencies and metals, with Gold able to eke out $2.60 in gains on Friday… The Jobs Jamboree has got Chuck all up in arms this morning… Good thing there’s no one in the unit next to him, as he screamed at the walls on Friday!  Lot’s of other things going on too, that since Chuck won’t be writing tomorrow, he really went to town on today… So, happy reading!

For What It’s Worth…. Well, last Friday, my former colleague, and metals guru, Tim Smith, sent me a link to an article, and I soon found out that it was FWIW worthy! It’s about a change in Russia that will allow gold purchases by individuals without the special tax that’s put on Gold now, and can be found here: http://www.sbma.org.sg/media-centre/publication/crucible-issue-9/changes-coming-to-russias-gold-market/

Or, here’s your snippet: “This year is highly likely to be a year of changes for the investment gold market in Russia: the Ministry of Finance will assess the feasibility of VAT exemption on investment gold, the State Duma will consider a bill to allow citizens to purchase precious metals in individual investment accounts, and the Central Bank will make changes to its pricing policy when conducting its market operations.

Moscow Exchange sees potential in attracting the demand of non-residents through the International Clearing Members mechanism and has launched three new Asian POPs (point of presence) – Singapore, Hong Kong and Shanghai.

According to the World Gold Council, the demand for precious metals from individuals in Russia in 2018 was near 2.8 tonnes per year, whereas in China it reached 304.2 tonnes, 162 tonnes in India, and 96 tonnes in Germany. The main reason for such low figures is the current tax regime on physical precious metals. As an instrument of savings, gold is promising, but individuals buying the metal from a bank must pay VAT at a rate of 20%, which is not refunded to the individual investor when he/she sells it. This makes investing in gold unattractive.

The VAT exemption on investment gold in Russia is a promising change that may occur. If this happens, it would lead to a significant change in the structure of the precious metals market, growth in demand for this class of assets among individuals, and a significant increase in market liquidity.”

Chuck Again… Ok, it’s not a done deal… yet! But it looks like it could very well be a done deal soon, and that, could open up a brand new vein of Gold buying by individuals in Russia!

Currencies today 4/8/19 American Style: A$.7105, kiwi .6735, C$ .7477, euro 1.1237, sterling 1.3057, Swiss $1.0001, European Style: rand 14.1415, krone 8.5747, SEK 9.2795, forint 286.16, zloty 3.8168, koruna 22.8188, RUB 65.28, yen 111.45, sing 1.3560, HKD 7.8476, INR 69.69, China 6.7172, peso 19.09, BRL 3.8723, Dollar Index 97.26, Oil $63.39, 10-year 2.50%, Silver $15.15, Platinum $911.70, Palladium $1,377.78, and Gold… $1,297.26

That’s it for today… Well, I told you all a month ago, that my beloved Cardinals can’t hit… That was in Spring Training, and I know lots of people that would say “so what, it’s Spring Training”.. But I’ll contend that you play for real the way you practice… I’m just saying… Our Blues are back in the playoffs! Who would of thunk that given their start to the season?  But they’re back and playing good as the playoffs start, let’s hope they can keep going this year! Let’s Go Blues! The song that’s playing as we head to the finish line, reminds me of the good movie Almost Famous… I lived that life depicted in the movie, so that’s why I think it’s good!  It’s Elton John singing his song: Tiny Dancer…  I hope you have a Marvelous Monday, and I’ll talk to you again on Wednesday! Be Good To Yourself! 

Chuck Butler

 

 

 

April 4, 2019 

* Dollar continues to hold down the currencies and metals

* Chuck gives us a glimpse into his old Presentations! 

Good Day… And a Tub Thumpin’ Thursday to you! I heard the weather channel did a bit from Palm Beach Gardens, which is right next to us here in Juno Beach. And they talked about how bad the weather was… I looked outside, and wondered what planet they were on, for here on the beach, the sun was mostly shining and it was 75 degrees… A bit windy, but that’s the beach! This will be my last weekend down here, as I return to St. Louis on Tuesday (no Pfennig that day) next week. I don’t want to go home, I don’t want to go home! But, all good things must come to an end, right? I’ll be back though, probably mid summer… Carlos Santana greets me this morning with his band’s song: Black Magic Woman…

I’m going to start the letter a little differently today, and give you the results of the Data Cupboard, first, because, well, the Data Cupboard revealed quite a lot to us yesterday… First, the ISM, (non-manufacturing index ) for March printed, and it showed a large weakening in the index number to 56.1 VS 59.7 in Feb… That’s a huge drop for that data folks… Did any cable news casts talk about this? I doubt it… There was also the ADP Employment report, which is a precursor to the BLS Jobs Jamboree on Friday, showed that only 129,000 jobs were created in March… The so-called experts are forecasting an increase of 179,000, so we’ll see which one we get, eh?

But once again, currency traders didn’t give any notice to the data… As there was little to no movement in the currencies yesterday, with a slight move down being the only thing happening… And Gold lost a few bucks in trading on the day… Thanks to those of you who sent along a note thanking me for saying what I said yesterday regarding Gold pricing… I know of a former colleague and friend, that was shaking his head no, to all that I said… But that’s OK… I know where he stands on it, and he knows where I stand on it… I’m not here to attempt to get someone to change their position… Just present the facts, as I know them, mixed with some speculation!

OK… So, when will the weak data finally get recognized that it’s not something good for the dollar? A weak economy, means smaller interest rates… And OMG! I totally missed something in Fed Chariman Powell’s recent talk… He said that instead of allowing Treasuries that the Fed holds, to mature, that they were going to reinvest them… This, folks, is what I’ve been talking about… that the Fed would be reversing their tightening… And it’s also what I’ve told you is going to happen with regards to QE… Yes, it’s not going to be called QE… But you can put lipstick on a pig, and it’s still a pig… I’m just saying!

This morning in Germany, the Eurozone’s largest economy, the economic print was not so good… In fact it was miserable!  Factory Orders for February fell -4.2%, and year on year the were -0.4%…  A few weeks ago, we saw data from Germany that painted a different picture for the economy, but this new picture is not a good one, and the euro got sold on the news…  Hmmm… Bad data is noticed by euro traders, but not the dollar…  Double hmmm…   

That fact alone tells me that the dollar is still hanging onto its strong trend, for when a currency is in a strong trend, the old saying that “the trend is your friend” couldn’t be more correct!  Bad things are ignored, while bad things for the currency not in a strong trend get magnified… 

But what I’ve been talking about for some time now, is that all this bad data that’s piling up on the dollar will be too much weight for the dollar to bear, and it will bring about a shift in trends… This current strong dollar trend has been around since 2011, when the debts of Greece were exposed…  A look at trends history would be a good thing here, Chuck, just like you used to go through it in your Presentations!   Are you ready for this?  If you never attended a conference that I spoke at, this is what it would have sounded like… 

It all began in of August of 1971, when then President, Nixon, closed the Gold Window and removed the backing of Gold from the dollar. Within a couple of years, after some failed attempts to restore a Gold backed currency system, the rest of the world succumbed to this new “fiat currency” era.

You see the debts of President Johnson’s, “ great society”, and Vietnam disaster, had grown so much that countries holding dollars were skeptical that the U.S. would be able to pay off their debts with Gold… So, as the story goes, France called the U.S.’s bluff, and that’s when Nixon closed the Gold Window.

And the first currency trend was born… It was a weak dollar trend, that began in 1971, and ended in 1978… Do you recall this time period? Remember WIN buttons? WIN stood for Whip Inflation Now… But before that we had the first Oil embargoes and stagflation, a Presidential resignation, from a scandal, and it wasn’t all bad, we did get to celebrate our Bicentennial, and Chuck and Kathy were married!

During this weak dollar trend, the Swiss franc gained 186% going from 4.30 to 1.50, and if a currency diversification investor like yourself (hopefully) were to own a simple combination of DMarks, francs and yen, they would have had a 131% gain VS the dollar or a 17% annual return… Not too shabby for a defensive move in your investment portfolio, eh?

But by 1979, interest rates in the U.S. were beginning to go sky high, and fundamentals being a HUGE part of currency valuations in those days (before the financial meltdown) the weak dollar trend ended, and a new strong dollar trend began and lasted for 6 years, from 1979 to 1985… Do you recall what happened in 1985, that would have turned the dollar’s fortunes around? It was a meeting of the finance ministers around the world, who came to the Plaza Hotel in NYC, to discuss the dollar’s strength, and their fear that the U.S. Current Account Deficit had reached 2.5% of GDP… It was decided then that the dollar would back off from its strong trend. But during its strong trend it gained back 47% of its losses to the Swiss franc going from 1.50 to 2.85, and our combo of DM, Sfr, and yen, gave back 39%, or a -6% annual return.

So, now we’re into the 3rd trend, and it’s another weak dollar trend, that began in 1985, and lasted ten years to 1995. By 1995, interest rates in the U.S. were above 6%, and the U.S. stock market was experiencing, in the words of Al Greenspan, “irrational exuberance” And the weak dollar trend ended, but during its run of 10 years, the Swiss franc gained back 138% of the ground going from 2.85 to 1.20, and our combo of three currencies gained 171%, or another 17% annual return.

The years 1995 to 2002, 7 years, saw good times and bad times, and through it all the dollar gained back 30% of the ground it had lost VS the Swiss franc, with the franc going from 1.20 to 1.72, and our combo of currencies lost 36% or a -5% annual return. By 2002, with the Dot-Com bust, corporate scandals left and right, and people around the world feeling squeamish, about owning dollars they took a flyer on a relatively new currency, the euro, and the next weak dollar trend was born.

2002, though 2010, 8 years… this weak dollar trend was different than the others before it due to stops and starts… from 2002 through 2004, and in those 3 years, the Swiss franc gained 40% VS the dollar. In 2005, the dollar rebounded on a tax rebate for Corporate earnings, and once that ended in 12/31/2005, the dollar went right back to its underlying weak trend. So, the total, including a down year in 2005, gain for the franc 2002-2010 was 52%… And our combo, which now was euro, francs and yen, gained, are you ready for this? 155%!

But just when it looked like the dollar might not ever rebound, along came the discovery of the debts of the Club Med (Greece, Italy, Spain, Portugal) countries of the Eurozone, and the euro, which had quickly become the offset currency to the dollar in a very short time period, was sold like funnel cakes at a State Fair! And so it began the last full trend that we’ve seen, a strong dollar trend, that lasted 7 years, from 2010 to 2016, and during that time the dollar gained back 8% VS the Swiss franc, and our 3 currency combo also lost a total of 48% during those years. Since 2016, we’ve witnessed a couple of false dawns, when it appeared that the strong dollar trend had ended, only to be fooled once again… UGH!  But now that fundamentals are no longer the king of the hill in valuing currencies, it’s been quite difficult to read trader’s minds, for the sentiment of traders is what moves markets these days, along with a dash of fundamentals… 

So to add it all up… The dollar has lost a total, net of strong dollar years, 291% to the Swiss franc, and our 3 currency combo was up 334% to the dollar…

So, as you can see, during weak dollar trends, the dollar loses far more than it ever recovers during strong dollar years. Now there one thing I want to make perfectly clear, and that is that during a trend, there can be volatility, which means a trend is not a ONE-WAY Street!   But from this little exercise we know for sure that a “trend is YOUR friend”! 

OK, that was fun…  In 2006, the year before I was diagnosed with Stage 4 cancer, I spoke 35 times…  That’s right 35 times… I was everywhere!  And in demand from anyone holding a conference. I was interviewed for the Wall Street Journal on two different occasions by two different writers, with one of those writers carving out one chapter in his book, about me! It was very much like the Frank Sinatra song…  I was flying high in 2006, shot down in 2007…  

But during my time as a conference speaker, I nearly always told the story of the dollar trends…  I once had an audience of 750 in Vancouver, singing along with me the Lemon Tree song…   Now that’s something that had never been done at a financial conference!  

Ok, sorry, I got going down that memory road, and just couldn’t turn around!  

The U.S. Data Cupboard is pretty much empty today, and is preparing itself for the grand entry of the Jobs Jamboree tomorrow…  What happens to the dollar, if we get another disastrous jobs report tomorrow that’s much like February’s 20,000 number?  I would think that this could be the straw that breaks the camel’s back, but then I’ve been wrong before, and I’m not afraid of being wrong…  Like I said earlier in the week, I’m sure that the folks at the BLS (Bureau of Labor Statistics) got the “memo” reminding them that they have a shelf full of hedonic adjustments to use to keep a disastrous jobs report from happening again…

Before I head to the Big Finish…  I wanted to mention this… In my old office we had a bank of windows on the east side of the building, and during the winter, Mike Meyer and myself would note the position of the sun each day, as it moved north in the sky, and would always give us a feeling of hope that spring wasn’t far away…  I mention this because I noticed this morning that the sun is moving north across the sky, as my view to the east no longer has the sunrise in it…  

You know, my dad always told me that “just when you think you’ve got something, somebody has something greater”…  I was on a boat recently and the captain pointed out a house that he explained had a rotating living room, so that the owner could watch the sunrise, and the sunset without leaving his couch!  WOW!  I guess I just need more windows down here!

To Recap…  Another day of dollar strength, albeit soft dollar strength, but strength nonetheless was what Wednesday was all about, and the overnight markets didn’t give an inch either. Germany received some bad economic data today with factory orders for Feb. falling -4.2%! The euro took a bit of a hit on the news…   And Chuck gives us a glimpse of his old presentations! 

For What It’s Worth…  Ok, longtime reader Bob, sent me this and while reading it, I thought it to be FWIW worthy… It’s about a Financial Tax that’s being talked about by lawmakers… and it can be found here: https://www.globalresearch.ca/why-us-needs-financial-transaction-tax/5673391

Or, here’s your snippet: ” The financial transaction tax is an issue that never goes away from the public agenda completely. It keeps coming back to the policy and political discussions in different forms across the world. Currently, the idea of a financial transaction tax (FTT) is gaining in popularity within the Democratic Party of the United States as a policy tool to curb excessive speculation and high-frequency trading that destabilizes markets; and to generate a significant amount of revenue to finance social programs such as free college tuition.

On March 5, Democrats in both houses of Congress introduced bills to introduce a financial transaction tax in the US. Senator Brian Schatz of Hawaii introduced a bill titled, “The Wall Street Tax Act of 2019”[1] in the Senate while Representative Peter DeFazio of Oregon introduced a companion bill in the House of Representatives. The bill proposes a 0.1 percent tax (i.e., 10 cents on every $100 financial transaction) on stocks, bonds, foreign exchange, derivatives and other financial assets traded in the US markets. While initial public offerings (IPOs) and short-term debt of fewer than 100 days would be exempted from the proposed FTT. Further, the proposed tax would apply to the actual payment for the derivatives contracts between the seller and the buyer, rather than to the notional value of derivatives contracts.”

Chuck Again…  Well, I’m no fan of taxes, folks… And this tax would be a real problem for investors… I’m just saying… 

Currencies today 4/4/19 American Style: A$.7115, kiwi .6780, C$ .7487, euro 1.1230, sterling 1.3156, Swiss $1.0018, European Style: rand 14.1660, krone 8.5829, SEK 9.2732, forint 284.63, zloty 3.8206,  koruna 22.868, RUB 65.23, yen 111.40, sing 1.3533, HKD 7.8492, INR 69.12, China 6.7101, peso 19.24, BRL 3.8547, Dollar Index 97.15, Oil $62.46, 10-year 2.50%, Silver $15.08, Platinum $886.71, Palladium $1,412.52, and Gold… $1,291.65

That’s it for today, tomorrow and the week!  This letter was a bit long today, but since I don’t write on Fridays any longer, I like to extend the Thursday letter a bit…  Like I said above, no Pfennig next Tuesday, as I’ll be traveling early in the morning.  Well, today was supposed to opening day for my beloved Cardinals in St. Louis… But they’ve already called off the game and the opening day ceremonies, because of rain that scheduled to hit there today… So, Opening Day in St. Louis, which is like no other city when it comes to Opening Day, will be tomorrow… I used to be lucky enough to gain a ticket or two for Opening Day, from my good friend, Sandra, but… times change… And now I’m not even “in town” for Opening Day! The Moody Blues take us to the finish line today with their song: I Know You’re Out There…   I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler

 

 

 

April 3, 2019 

* Dollar holds its gains during the day yesterday… 

* But the currencies fight back in the overnight markets! 

Good Day… And a Wonderful Wednesday to you… Well, as I predicted yesterday, the first part of the day here was beautiful, and then later a heavy downpour came, but went quickly, and soon the sun was shining again! I think I’m beginning to believe that I can predict the weather down here better than the meteorologists! HA! Isn’t that the way it always is: Someone believes he can do a better job than the person holding the job? Give them the keys, and let them drive, we’ll soon see just how good they are! No baseball for hockey for me last night… The Rolling Stones greet me this morning with their song: Wild Horses…

Well, we start today the same as we have for the past week… The dollar bugs continue to have their way with the currencies and metals… I have to say this right here, right now… I truly believe and always have that the U.S. Gov’t is behind the price manipulation of both the dollar and the metals… Sure, it’s the likes of the JPMorgans that do the dirty deed, but the way I see it, is they get the wink and nod from the government, and the government keeps the regulators off their backs… It goes back to those WikiLeaks papers I presented to you years ago… Where, oh, Chuck forget about it, either the readers are believers or non-believers… And I can’t change their minds…

OK, I had to get that off my chest, because things are becoming more and more frustrating to me on a daily basis… So much so, that I can easily get myself all riled up reading articles, but have been able to, so far that is, stop and do something else when I feel my blood pressure rising…

Gold was able to gain $4.80 on the day, but in my eye, this is small potatoes compared with what should be happening.. We have a Trade War going on… We have the U.K. failing miserably at leaving the EU… We have debt everywhere… We have tons and I mean tons of negative yielding bonds in the world… And wars going on that never seem to end, and Gold can’t find a bid on a daily basis?  I shake my head in disbelief, and disgust, but that’s doesn’t change anything, Chuck… So, chin up, Wilbur! 

The overnight markets have been much kinder to the currencies than they received during the day yesterday…  The euro has pushed to a 1/2-cent gain, and the Aussie dollar (S$) is back above 71-cents this morning. All-in-all, things look a little better this morning than they did all day yesterday!  Maybe someone with an ounce of gray matter looked at the U.S.’s data cupboard and decided holding dollars just didn’t seem like the thing to do…  maybe?

On the Data Cupboard front yesterday, we had the Durable and CAPEX Orders for February… let me see if economist guru, David Rosenberg had something to say about the negative CAPEX orders… This from his Twitter feed: “Core capex orders dipped 0.1% in February and have declined now in three of the past four months. Over that time, they have contracted at a 3.5% annual rate. Nothing I see tells me Q1 weakness was transitory.” – David Rosenberg on Twitter 4/2/19

For those of you new to class… CAPEX stands for Capital Expenditures… And this is where I find that most of my thinking about a coming recession comes from… You see, I learned in Economics 101 that Businesses should take their profits and invest in equipment, work places, people to insure economic growth for not only themselves but the economy as a whole. Without CAPEX, you have an economy that’s not growing, and one that’s not growing is soon to be contracting… Now, I’m not sure what you learned in Economics 101… But I learned from some of the greatest economic minds of our time… I’m just saying.

And now… we’re in that position of being able to say that CAPEX has been negative 3 of the last 4 months… And that doesn’t look good for the economy going forward… Recall the tax reform last year, and how it was supposed to get Corporations to invest in their respective companies, making CAPEX purchases, but I told you when the tax reform was announced that it wouldn’t be used for CAPEX, but instead these mental giants that run Corporate-America would be using the tax gains to buy-back their respective company’s stock…  And so, that ends today discussion on CAPEX… aren’t you glad you sat through that?  HA!

I was doing my daily reading yesterday, and came across an article on Reuters that sums up what’s been going on so far this year, quite nicely… They talked about how Currency Traders fret as sleepy markets slow to calmest in years…    Yes, I would imagine that currency desks around the world are spending a lot of time cruising the internet at work these days… 

Today’s Data Cupboard here in the U.S. has the ADP Employment Report for March, and is the precursor to the Jobs Jamboree which will take place on Friday this week…   I wonder what the BLS has in store for us this week? Recall that last month they surprised everyone and their brothers with a very small 20,000 jobs created in February report…   I would suspect that whomever released that report got called on the carpet, and told that the BLS does not deal in truths, and to go back and revise their numbers, for this month’s report… 

And in BREXIT news… The articles on the subject seem to be more positive this morning, as U.K. PM May requests an extension… Anytime things look better on the BREXIT front, pound sterling gets to rally, and vice versa when things go sour… 

To recap…  Yesterday saw the dollar gain VS the currencies most of the day, but in the overnight markets things seemed to have shifted, and the euro fought back… Gold was able to gain $4.80 on the day, but Chuck is convinced that these kind of daily gains are small potatoes VS what he believes they should be.  The U.S. Data Cupboard yesterday had some negative numbers for Durable and CAPEX Orders reports, and Chuck talks about how CAPEX orders are the root of the economy… 

For What It’s Worth…  In yesterday’s reading I came across an article on Reuters regarding Gold Sales at the Perth Mint, and thought it would be a good FWIW article, and when I went back this morning to find it… It was nowhere to be found (was I really on Reuters?) But Ed Steer saved the day, and he posted it in his daily letter: www.edsteergoldandsilver.com and you can find the article here: https://finance.yahoo.com/news/perth-mints-gold-sales-jump-09320

Or, here’s your snippet: “The Perth Mint said on Monday its gold products sales in March surged about 68 percent from the previous month, touching the highest level since November last year.

Sales of gold coins and minted bars in March rose to 32,757 ounces from 19,524 ounces in February, the mint said in a blog post.

Silver sales last month jumped 60.2 percent from the previous month and touched their highest since October last year at 935,819 ounces.

In March, benchmark spot gold prices posted their second straight monthly decline, falling about 1.6 percent, hurt by a strong dollar.

The Perth Mint refines more than 90 percent of newly mined gold in Australia, the world’s second-largest gold producer behind China.”

Chuck again…  OK, so demand for physical Gold remains strong… where are the daily gains of Gold? 

Currencies today 4/3/19 American Style: A$.7120, kiwi .6796, C$ .7516, euro 1.1247, sterling 1.3178, Swiss $1.0035, European Style: rand 14.1275, krone 8.5508, SEK 9.2636, forint 284.15, zloty 3.8157, koruna 22.8393, RUB 65.33, yen 111.50, sing 1.3525, HKD 7.8494, INR 68.94, China 6.7197, peso 19.13, BRL 3.8541, Dollar Index 96.99, Oil $62.76, 10-year 2.52%, Silver $15.14, Platinum $858.74, Palladium $1,426.21, and Gold… $1,291.81

That’s it for today…  no sunrise to be seen this morning, as it’s very cloudy out right now… But the sun will be out later, I’m sure of that! So, how’s the start of the season going for your baseball team?  My team is pretty shaky right now, but I think once they get their sea legs, they’ll be fine…  Speaking of Teams… My pick for the NCAA Basketball Champion is Michigan St. (I had to pick them two weeks ago) And they’ll play in one of the two Semi-finals on Saturday… The Final Four day is a pretty exciting day for basketball fans…    Weezer takes us to the finish line today with their song: Island In The Sun…   catchy tune…  I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

 

 

 

April 2, 2019

* Another day of dollar buying, on mixed data prints… 

* Petrol Currencies gain on bump up in Oil to $62… 

Good Day… And a Tom Terrific Tuesday to you!  A good day here yesterday, turned to an even better day, when my beloved Cardinals found a way to win a game, and our Blues kept the pedal to the metal with a shootout win last night. I still say a shootout is the dumbest way to settle a match, that is unless the match involves shooting guns! I think the Cardinals’ front office is beginning to have some buyers’ remorse feelings about their purchase of an aging pitcher, of whom I won’t mention… I hope he can ‘find the magic” he once possessed…  Little Feat greets me this morning with their song: Fat Man In The Bathtub…  I think that only Little Feat fans would know that song… 

Another day, another day of dollar buying…  And to answer Ed Steer’s question about “has the bottom been reached” in Gold, I would say no…  The data prints yesterday, here in the U.S. were mixed and in no-way reflect the kind of buying that took place with the dollar. Something is fishy about this dollar buying folks…  Stocks aren’t getting bought, bonds have backed off their buying, currencies aren’t getting bought, and neither is Gold / Silver. 

The one asset I do see gaining is the price of Oil… Oil is trading with a $62 handle this morning, and the Petrol Currencies are the only currencies with a some form of gain VS the dollar…  The ruble, real, and loonie are the best examples of that.  I read something the other day that scared the bejeebers out of me, regarding Oil…   The Mexican peso has long been considered a Petrol Currency, but recently their Oil production has fallen from the sky! A major fall in production in 2018, has Oil traders wondering if the well is running dry in Mexico…   I’ll have to do more research on that subject folks, so stay tuned… 

Oil trading pales in comparison to Bonds, currencies and even stocks with regards to size, but still this move higher is something to behold, and comes to us by way of a deep plunge in Oil production by the Saudis…  Just in time for the summer driving season… I’m just saying… 

Another thing I read recently is something that I’ve talked about previously on many occasion, and that is the dumping of U.S. Treasuries by Russia and China (and Japan to a lesser degree)…  Yesterday, I told you that Russia had announced that the value of their reserves, including Gold, were greater than their external debt. ( A very BIG DEAL in Chuck’s book!) But failed to give you the skinny on Russia’s Gold accumulation…  And for that we have… Data from the Russian central bank cited by Bloomberg show that its gold reserves have nearly quadrupled over the past ten years, and that 2018 marked the most “ambitious year yet” for Russia gold-buying, which coincided with the Central Bank of Russia’s mass-dumping of its Treasury holdings.

Remember when I told you that Russia’s central bank had liquidated $81 Billion in Treasuries, nearly its entire holdings. And how that sales had dropped Russia out of the top 30 countries with Treasury holdings?  Well, It appears now that Russia didn’t just buy Gold with their Treasury sale funds…  The Chinese renminbi got bought up by the truck load, and has led to a mess of Central Banks buying renminbi…  

All these external things going on around the world have really caused the Chinese architects of getting the renminbi greater distribution in the world, to take their eye off the ball, in recent months…  But news like this has to be like manna from heaven to the Chinese leaders… 

This relationship between China and Russia has gotten a little strange… Two countries that were historically at odds all the time, have gotten together to trade Oil for Gold, to develop a new transfer payments system to use if they get kick out of using SWIFT again.  And now their buying each other’s currency as reserves…   I don’t like these goings on folks… I’m just saying, but it’s more than that, I’m afraid…  

The U.S. Data Cupboard, as previously stated, was a mixed bag-o-nuts yesterday, with February Retail Sales printing a Big Fat negative number to match the January red numbers… Feb. Retail Sales were negative -0.2%… And when they take out Auto Sales the number gets even more red at negative -0.4%…  I’m said this before folks, but spending is a Big Deal here in the U.S. and when spending isn’t taking place, the economy grinds to a halt…  

The positive side of the Data Cupboard yesterday was the increase of the ISM Index (manufacturing) in March… I told you yesterday that  the recent index direction has been to weaken each month, but March’s result was a positive gain from 54.2 to 55.3…    I don’t know that happened, given the other data prints, like the Chicago PMI that printed last week, so I’ll put that down to smoke and mirrors… That’s what the deal is as far as I’m concerned…  

Negative yielding bonds are making a comeback… As the rest of the world deals with low to zero interest rates, their bond issuance reflects this, and to highlight this, Germany’s recent bond auction saw a huge cover and interest in their negative yielding bonds…  Wait! What?  Yes, investors are lining up to say, “yes sir, may I have another?” to negative yielding bonds…  So for the next 5, 10 or whatever maturity length they buy, they’re saying that this is the best we can get, and we realize that at maturity, I will have taken a loss…  

I don’t know, maybe you have to be a little strange in your thinking to sign up for something like that, eh?  I don’t see it, as something that I would hear me telling my financial advisor to look into buying for my investment portfolio…  So, let’s hope it never happens here in the U.S.  But one never knows, right? 

This dollar trend has really been hanging around much longer than I would have suspected it to hand around, but then even a blind squirrel can find an acorn, right?  But if you’re diversified with currencies and metals, you’ve reduced the overall risk of your investment portfolio, and when things turn around, and they will, no trend grows to the moon, you’ll be set to see those asset classes perform nicely…   

Well, a new and improved BREXIT deal is being worked on as I write…  And all the while the U.K. economy suffers, and pound sterling does too…  Hey Bank of England Gov. Mark Carney, Hello… Is that really you on the phone? OK, Great! I’m humbled that you would take my call, but I have a question for you… How’s that call that you made about how interest rates would be going higher?   Oh, I seem to have lost you, the line went dead… I’ll call back to get my answer… 

Today’s Data Cupboard here in the U.S. will have February Durable Goods and CAPEX Orders… I suspect them to be negative once again… I’ve played the record of me talking about how important CAPEX orders are to an economy, that I’ve worn a groove in the vinyl, and now it’s stuck, and keeps playing the same thing over and over!   

And remember when I was talking about Retail Armageddon?  Well, longtime reader, Bob, sent me a link to something that is pretty scary to me… Walmart has been closing stores…  Wait! What? Walmart? not Walmart?  Yes, it’s true… And on a much smaller scale, I saw yesterday that Steak-n-Shake restaurants are being closed here and there…  I Googled the nearest Steak-n-Shake to me, down here, and it’s 34 miles away… Just reading that made me crave a double steak burger with cheese!  HA! 

To recap…  Another day, and another day of dollar buying yesterday, with the only exceptions the Petrol Currencies, who saw their values increase along with the Price of Oil that is trading with a $62 handle this morning. The U.S. Data yesterday, was mixed with Retail Sales printing negative, but the manufacturing index increasing this month…  Gold can’t find a bid, and keeps dropping, and has Chuck scratching his balding head once again… 

For What It’s Worth…  I was doing my usual research yesterday, and checking out what the Reuters people were writing about, and came across this article about the White House calling out the Fed rate hikes, and thought it to be FWIW worthy… So here’s the link to the article: https://www.reuters.com/article/us-usa-fed-trump/white-house-calls-for-fed-to-reverse-u-s-rate-hikes-idUSKCN1RA2MB

Or, here’s your snippet: “U.S. President Donald Trump said on Friday that the Federal Reserve made a mistake by raising interest rates and blamed the central bank for hurting the U.S. economy and stock market.

“Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0 percent GDP, and Stock Market, would have both been much higher & World Markets would be in a better place!,” Trump tweeted.

The remarks were part of a new attack the White House has launched against the independent central bank in their unusual public split. The Fed’s Board of Governors did not immediately comment.

No fewer than five Fed officials this week have touted the underlying strength of the American economy and argued a recent spate of weak data on business activity is more likely to prove fleeting than lasting. None said they currently back a rate cut.

Prior administrations have taken care not to comment on Fed policy, but Trump has railed repeatedly against the U.S. central bank’s rate hikes. Friday’s comments were uniquely specific about the course of action now favored by the president.”

Chuck Again… You know, love him or hate him, the guy doesn’t have a problem speaking his mind on things, and for that I applaud him…  And that’s all I’ll say about that!

Currencies today 4/2/2019 American Style: A$.7078, kiwi .6770, C$ .7506, euro 1.1205, sterling 1.3052, Swiss $1.0003, European Style: rand 14.1787, krone 8.6087, SEK 9.3181, forint 287.23, zloty 3.8373,  koruna 22.9835, RUB 65.35, yen 111.38, sing 1.3555, HKD 7.8496, INR 69.16, China 6.7092, peso 19.16, BRL 3.8913, Dollar Index 97.37, Oil $62.04, 10-year 2.47%, Silver $15.02, Platinum $850.00, Palladium $1,404.52, and Gold… $1,288.50

That’s it for today…  It was a real foggy day outside this morning down here… Fog is something I’m used to see back home in my little river town, but now down here!  A nice sun-filled, warm day, today is supposed to turn nasty this afternoon, so I had better get out and enjoy the sun while it’s still shining this morning!  Played email catchup with a former colleague yesterday… it was great to hear from Lauren again… Day one, alone was OK… Onto Day two… And most of the “renters” here in this building have gone home, so there aren’t many people here… So, there’s no one to bug me! HA!  The Reverend Al Green takes us to the finish line today with his song: Love And Happiness…   I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler