Author: admin

June 5, 2019 

* Currencies and metals take a pause for the cause Tues.

* Jeopardy James, loses!!!! How’d that happen? 

Good Day… And a Wonderful Wednesday to you! A day of catching breaths was the order of the day on our Tom Terrific Tuesday… The Blues had won on Monday night, so all the people that stayed up late to party into the wee hours Monday night, were basically out of it yesterday… And last night, after another lengthy rain delay, Cardinals fans were at the ballpark very late… For a loss! UGH!  But that’s just here, not the center of financial activity, such is New York City… And brother am I glad that’s the way it is, there’s no way I would want to live in that area… It’s a nice place to visit, but not live… in my book. However, having said that, tens of millions of people would disagree! INXS greets me this morning with their song: What You Need

Well, I can tell you straight up that what I need is to go back to sleep this morning… After a couple of days of my leg feeling better, it let me know it still have cellulitis last night, and I was up half the night with tremendous pain… UGH! Much better now so I have to stop complaining! HA!

The currencies took a pause for the cause yesterday, as the dollar’s plunge from last Thursday to this morning is quite evident in the Dollar Index, which last Thursday morning sat at 98.11, and this morning it sits at 97.10… ( and was down to 97.02 last night) But I’m of the opinion that we’ll see more dollar selling as the week goes on, due to the data prints that are scheduled, of which haven’t been kind to the dollar lately…

Gold didn’t do much either yesterday, so it was a full-on, pause for the cause… But… But.. But… Gold is up over $9 in the early morning trading today…  As we draw nearer to the so-called maginot line of $1,350, I worry about the boys in the band gearing up for a good whacking…  I’ve got my fingers crossed in hope that the boys in the band keep tuning their instruments, and don’t begin to play… 

In another case of “boy you missed the sign again, Chuck”… Yesterday, I talked about how Fed St. Louis president, James Bullard, had signaled for rate cuts, and how that had put the kyboshes on the dollar rally… But I missed the sign! Oh, the third base coach is going to be mad at me again! The sign was a simple…. This was a case of the Fed coming to the rescue of the failing stock market, who had seen a number of down days… The proof is in the pudding folks… U.S. stocks rallied over 500 points yesterday… And to add on, Fed Chairman Powell, said yesterday that he’s “open to rate cuts”… How did I miss that sign? I do only have one eye, but even someone more blind than me could have seen the Bullard comments for what there were… A life preserver thrown to the stock jockeys… Hey! The Fed’s got your back, Jack!

I’ve had my eye on the Singapore dollar lately… late last month, the Sing dollar (S$) started getting sold, and it weakened very quickly… I noticed it and thought, well, it has for over 10 years now been following the performance of the Chinese renminbi, which I had told you was being marked down almost daily, even though we were told the Chinese wouldn’t do that in reaction to the Trade War. But then the S$ turned around and started getting bought again, and just like that… it was right back to where it was before the selling began!

Longtime readers know my affection for the Singapore way of fighting inflation… They allow the Currency to go up and down a in a band to fight inflation, and not depend on willy nilly rate moves… The Monetary Authority of Singapore (MAS) sets the band width, and they use the old currency axiom that a strong currency holds down inflation… So, if the MAS is allowing the S$ to strengthen like this again, then maybe they’re seeing inflation coming out of the Global economy that won’t pass them by… I’m just saying…

Speaking of a Global slowdown… and higher global inflation… There sure seem to be quite a few analysts, economists, and market observers jumping on my “the economy is weak” bandwagon these days… A dear Pfennig reader sent me a note yesterday with a list of new warnings made by different people… Amazing… But when other people see it, it’s usually too late folks… I’m just saying once again…

Last week there was a shocking Deutsche Bank report that showed global equity fund outflows over the last 6 months in dollar terms have now been larger than over any prior 6-month period. Uh-oh…  And I just thought of something… the global equity funds are seeing large outflows, just as Gold has begun its upward move…  Co-inki-dink?  I don’t believe so… I guess my message of “Got Gold” is taking hold… 

Speaking again of Gold… I’ve got a related story in the FWIW section today, that is quite interesting… So, don’t skip over it! I’m warning you, don’t do it, you’ll be sorry! HA!

The U.S. Data Cupboard never printed the May Factory Orders report that was due yesterday…  Hmmm…  Ok, you know me, I  immediately go to the idea that there’s a reason that it hasn’t printed, and it’s not good!  Today, we’ll see the ADP Employment report for May, the precursor to the Jobs Jamboree on Friday this week.  

There’s also a Fed Economic Conference going on in Chicago, and we might get a verbal grenade tossed from left field or maybe we won’t, but it’s there, so I thought you should know the risks… 

Last week I went the whole 9 yards on the guy that paid the college expenses for a graduating class at a college… And I had a dear reader send me a note that made me think of something else this does… It reinforces what these knucklehead college students have been taught, and that is… someone else will pay… Whenever a lawmaking group comes up with some new plan/ policy, I always ask the same question… “Who’s going to pay for that?” Of course knowing all the time that taxpayers like me and you, will be the payers of the bill… But don’t tell that to those college grads, that just had all their irresponsible spending for 4, 5, 6 however many years it took them to graduate, paid for… A very bad precedence was set that day, and I can’t believe I’m the only one that thinks it was a very bad thing to do!

To Recap… It was a “take a pause for the cause” day of trading in the currencies and metals yesterday… But Gold has jumped the gun on trading today and is already up more than $9 this morning…   No new news on Tariffs, except President Trump says they’ll start next week with Mexico, and the congress says, “not so fast”…  This will be interesting, no? 

For What It’s Worth…   I saw a headline story on the Bloomberg pate this morning about how Deutsche Bank had taken a large chunk of Venezuela’s Gold, and you know me, that got my spider sense tingling, and I had to find out more… So for the rest of the story, you can find it here: https://www.zerohedge.com/news/2019-06-04/venezuela-defaults-750-million-gold-backed-swap-deutsche-bank

Or, here’s your snippet: “Somewhere Hugo Chavez, who several years ago successfully repatriated much of Venezuela’s gold, is spinning in his grave.

It started in March, when Venezuela’s embattled leader Nicolas Maduro defaulted on a $1.1 billion gold-backed loan with Citi, in the process losing several tonnes of gold placed as collateral by Venezuela’s central bank after the deadline for repurchasing them expired. Now, Bloomberg reports that Venezuela has also defaulted on a gold swap agreement valued at $750 million with Deutsche Bank, prompting the German bank to seize the precious metal which was used as collateral, and close out the contract.

As part of a financing agreement signed in 2016 which we profiled here, Venezuela received a cash loan from Deutsche Bank and put up 20 tonnes of gold as collateral. The agreement, which was set to expire in 2021, was settled early due to missed interest payments as Venezuela has now effectively run out of foreign reserves.”

Chuck again….  Whoa! 20 Tons of Gold was the collateral? That means Deutsche Bank gets to keep the 20 tons of Gold!  That’s crazy folks, and I would think that Venezuela’s Gold holdings were the last financial asset worth anything in that country…  And now they’re losing large chunks of that?  Not good folks… not good. 

Currencies today 6/5/19  American Style: A$.6986, C$ .6640, C$ .7474, euro 1.1256, sterling 1.2705, Swiss $.9923, European Style: rand 14.7195, krone 8.6833, SEK 9.4370, forint 285.46, zloty 3.8013, koruna 22.7949, RUB 65.21, yen 108.32, sing 1.3653, HKD 7.8397, INR 69.27, China 6.9070, peso 19.56, BRL 3.8724 (this currency sure has turned around! ) Dollar Index 97.10, Oil $53.01, 10-year 2.12%, Silver $14.85, Platinum $831.43, Palladium $1,342.75, and Gold… $1,334.81

That’s it for today…   Well, the weather people weren’t wrong about the rain storms last night! I sure hope they’re wrong about the next 6 days, especially tomorrow, as I have tickets to the day game at Busch!  The Stanley Cup Finals have gone to 2 full days of rest between games… Nothing like dragging this thing out to July! UGH!  I’m torn between going up stairs and getting a cup of coffee or going back to sleep! I’m awake now, might as well stay that way, until I can’t! HA!  How about Jeopardy James? He finally lost! after 80+ days of being Jeopardy Champion! Amazing!  He was astute with every topic they threw up on the board!  Well, he’s got some winnings that he gets to share with the U.S. Gov’t, but after that, he’ll have good base of savings!   The Rolling Stones take us to the finish line today with their song from the Sticky Fingers album: Bitch…  great song, for the Stones, if I’m allowed to say so myself!  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

June 4, 2019

* Currencies and metals continue to move higher VS the dollar

* A hedge fund refuses redemptions… Got Gold? 

Good day… and a Tom Terrific Tuesday to you! Another beautiful day here yesterday, too bad they weren’t playing baseball here last night! For tonight the weather people say that we’ll see T-Storms that won’t stop for 7 days! OUCH! The rivers crest today, and then we’ll go through all the pain and angst about flooding again in a few days… UGH! Our Blues were back on the ice last night, here in a very loud St. Louis Arena… And despite dominating the game the Blues had to score a late goal to be a winner and tie the series at 2-2.  Whew!   We have a few things to talk about today, so let’s not beat around the bush and get to them! Maroon 5 greets me today with their song: This Love…

Well, well, well, what do we have here? A very influential Fed Head, St. Louis Fed President, James Bullard, saying yesterday that with inflation running under the Fed’s targets, and the inversion of the Treasury yield curve, that the Fed’s current rate may be too high, and in need of a rate cut soon…

Well, that sent whatever dollar bugs that were still running around, for a run to the wall boards for protection, for the dollar selling was coming hard and fast… Wasn’t I just a week ago, complaining that I just didn’t get why traders were so gung-ho on the dollar? Well, Bullard put an end of that gung-ho for buying and shifted it to a gung-ho for selling!

The euro is trading well into the 1.12 handle this morning, and the Japanese yen is trading with a 107 handle… I had also just talked last week about how the flight to safehavens had historically included euros, but not this time… Well, no more… Now it’s dollars that are being left at home and not allowed to go to the party! I have no idea if this is the start of something that could last years, shoot Rudy, I have no idea if this will continue today! There should be some additional buying, but one never knows, until we are well entrenched in a trend… Then and only then will you be able to wake up each day knowing that the dollar was losing ground to some currency overnight…

Ok, the other thing I want to talk about today is Silver…. Yes, I know, I talk all the time about Gold, but believe me I have the same interest in Silver… And yesterday, it was announced that the price of Silver had dropped when compared to Gold, to its lowest level since 1993… OK, longtime readers of mine know that a few years ago, I wrote about how Silver demand was going to be going higher because of its use in Solar Panels… But that didn’t fan out… And then there were articles going around that there was a shortage of Silver… And I said, my usual, “there’s no such thing as a shortage, it’s simply something that’s in need of a price adjustment”… Which in Silver’s case should have been higher… But that didn’t fan out… But now….

Now, that we’ve reached a low for Silver VS Gold… I’m getting my spider sense tingling again… which means that Silver could very well be ready for a moon shot! I say that knowing all too well that JPMorgan has truck loads of short silver trades ready to unload on the COMEX, when they feel it necessary to do so… I have to think that JPMorgan et, al. are going to be on the sidelines this time, just like there were in 2009-2011, when Silver rose to $50 an ounce… In 2010, I wrote an article for a publication titled: Is Silver The New Gold? I wish I could find that article and reprint it!

OK… There’s just no civil place to have a discussion about the economy any longer, except here in the Pfennig, because, if someone gets snotty with me, I simply delete their response to me! But check out Twitter sometime, and follow the threads of arguments that go on and on about who’s responsible for this, and how someone doesn’t agree with them! I’m just so happy that I don’t have to deal with that stuff when I point the finger of blame at a policy or Fed heads, or whatever! So, let’s keep it at that, and we’ll have a good relationship!

I have a good friend, who is retired as a shop foreman in a tool & die shop… I tell you this because I, for years, while he worked, would ask him about the business etc, to help me determine if the economy was slowing or booming…  So, I have to turn to someone else now…  And he doesn’t know it but he’s being asked about the pace of business to help me determine the direction for the economy…  

See? I use real physical economics in my studies on the economy… I just don’t depend on data, because these days, who knows if the data has been massaged and had hedonic adjustments before it prints…  And then you have guys like White House economist Navarro saying, “the U.S. economy is expanding at an “unprecedented” rate. Really? Well, I’m a monkey’s uncle if that’s true… 

Yesterday, when I was looking up the currency prices, I came to the Swiss franc, and thought, well, the franc should be pushing the envelope to get back to parity with the dollar, only to see that it had fallen from the previous day’s trading figure…  So, I set out to find the real story here… And there it was!  The Swiss National Bank (SNB) announced that they were considering moving their current negative rate even lower!  YIKES! 

No wonder the franc can’t find a bid while the rest of the currencies are moving higher VS the dollar.  Even lower negative rates? Really SNB, you can’t think of something else to….. No wait! I’ve got it! The SNB doesn’t want the franc back at parity, they want to see it cheaper…  That’s been their MO for sometime now, and I’m surprised I didn’t see it for what it was from the get-go! 

The U.S. Data Cupboard had some data prints yesterday of importance… First there was the ISM (manufacturing index) which continued to show slippage in the manufacturing sector, as the index fell to 52.1 VS 52.6 in April.  The private firm, Market, also printed their version of the manufacturing index and their number was 50.5, oh so close to falling below 50… Uh-oh!   There was also a check of the pulse of Construction Spending, which was flat as a pancake (Head East!)    

This economy has no legs folks… and the White House economist, is way off base with his comments…  OK, what do these economic prints say about where interest rates are going?  Well, if you ask me, I think they would already be going lower, but Fed Chairman Powell, doesn’t want to look like he was ordered to do so by the President…  Powell, will cut rates soon enough folks, he’s just waiting for the right time, which means… he’ll be too late to the party, and the Fed will be behind once again…   

Recall last week, when I told you that I believed China was selling Treasuries and buying Gold?  Well, do you think that explains why Gold has been on a one-way move higher since then? I do!  I had a longtime reader send me a note yesterday that said he had read that other Central Banks around the world are following China’s lead on this… If that’s so… I’ve got one question for you…. Got Gold? 

To recap…  That wild and crazy guy, Fed St. Louis President, James Bullard, is calling for rate cuts, and that got the dollar bugs scared to come out of the wall boards… The currencies and metals rallied strongly throughout the day, and through the overnight markets too. Chuck gets into his thoughts for Silver… Spoiler alert… he’s talking about a Silver rally… 

For What It’s Worth…  Well, this is something that should scare the bejeebers out of everyone…  A hedge fund blocked redemptions! The skinny on that and more can be found here:https://www.zerohedge.com/news/2019-06-03/it-begins-multi-billion-hedge-fund-blocks-redemptions

Or, here’s your snippet: “

In a moment of financial serendipity, earlier today we tweeted that as a result of the sudden collapse in the market’s most crowded positions (which as we noted over the weekend, now face the biggest risk of a wipe out), “hedge fund redemption requests re-emerge.”

It turns out we were very much spot on, because just a few hours later, the Financial Times reported that Neil Woodford, the U.K.’s equivalent of David Tepper, has blocked redemptions from his £3.7bn equity income fund after serial underperformance led to an investor exodus, “inflicting a serious blow to the reputation of the UK’s highest-profile fund manager.”

The freeze on redemptions, exactly five years after Woodford opened his eponymous fund management group, underlines his increasingly precarious position. It follows a steady stream of investor outflows, which have occurred each month for two years, with the fund shrinking by two-thirds to £3.7bn since a peak of £10.2bn in May 2017.

The severity of this latest hit to the hedge fund industry can not be underscored enough. The FT quoted a veteran fund manager who has known Woodford for more than 20 years, who said that “this is one of the bigger events for the U.K. asset management industry of the last decade. A bonfire of reputation and a terrible moment for investor confidence.”

Chuck Again…  How would you like to call your hedge fund manager, and ask for a redemption of your investment in his fund, and he tells you, sorry, no can do?  YIKES!  I will bet a dollar to a Krispy Kreme that this is just the tip of the iceberg on these stories, to come, folks… 

Currencies today 6/4/19 American Style: A$.6984, kiwi .6598, C$ .7444, euro 1.1260, sterling 1.2686, Swiss $.9926, European Style: rand 14.6282, krone 8.6976, SEK 9.4370, forint 286.17, zloty 3.8015, koruna 22.8675, RUB 65.36, yen 107.98, sing 1.3681, HKD 7.8391, INR 69.21, China 6.9031, peso 19.75, BRL 3.9077, Dollar Index 97.12, Oil $52.61, 10-year 2.10%, Silver $14.71, Platinum $821.82, Palladium $1,332.30, and Gold… $1,325.27

That’s it for today…. I wonder how many folks will actually be able to get up this morning and go to work after partying went well into the night after the Blues victory last night…  It was the first time in over 50 years of hockey in this city, that the home ice crowd saw a winner!  What a complete domination too!   A lot of “firsts” this year for the Blues… About time if you ask me! HA!  Well, my doctor visit yesterday, had him gushing about my weight loss… I go to my oncologist next week, I’m betting she’s not going to be so “gushing” about it… But it had to be done… my weight was inching higher and higher, and getting bad…  The Cellulitis in my leg is still hurting like a son-of-a gun, but I think I’m finally on the winning side of the ledger with it, and that would be a good thing!  Brian Setzer takes us to the finish line today with his remake of the Santo and Johnny song: Sleepwalk…   Man, he’s a good guitar player!  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

 

June 3, 2019 

* FSOC meeting spooks the markets and sends the dollar reeling… 

* An addition Trade War begins with Mexico… 

Good Day… And a Marvelous Monday to you!  And Welcome to June! Pfennig Tradition calls for:   June is busting out all over, all over the meadow and the fields….  Wow! What a gorgeous weekend, weather-wise here in my neck of the woods. The only blemish was a violent storm that came through our area Saturday night… I was at the ballpark, the game was tied 2-2, and it was the 5th inning… We looked at our phones and saw the storms coming, and decided to bail… Good thing we did, it was a 3 ½ hour rain delay! The weekend was made extra sweet because my beloved Cardinals swept the Cubs! The only downer was our Blues and their poor showing in Game 3, the first Stanley Cup Finals Game played in St. Louis in 49 years, and the Blues didn’t show up… They had 46,000 at the ballpark, 19,000 at the ice rink, and 50,000 in the street for a street watch party… Downtown was hopping! That is until the storms came… The Young Rascals greet me this morning with their song: A Beautiful Morning… Quite apropos eh?

Well, not much happened on Friday, other than another Trade War being waged, this time with Mexico… That was enough to send the dollar bugs scampering to the wall boards… That, and the two other things… 1. The economic Data was so-so…. And 2. There was a report of a secret meeting in Washington, D.C. to discuss the highly leveraged Credit markets… Uh-Oh, what’s up with that?

Here’s the skinny from the Street.com… “The Financial Stability Oversight Council, a panel of top U.S. regulators charged with preventing future financial crises, met Thursday to discuss the past decade’s surge in corporate borrowing, much of it by companies with junk-grade credit rating. An economic downturn likely would bring a wave of credit-rating downgrades and debt defaults that could ripple across markets.

The Financial Stability Oversight Council, formed in the wake of the 2008 financial crisis to prevent a repeat, met “in executive session,” or behind closed doors, according to a statement released by the Treasury Department’s public-affairs unit following the meeting.

Members of the group include Federal Reserve Chairman Jerome Powell as well as the heads of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, Securities and Exchange Commission and Commodity Futures Trading Commission. “

You may be saying to yourself, why on earth is Chuck making such a big deal out of a meeting? Well… that’s easy enough to answer! You see, if the folks at the Financial Stability Oversight Council, see these corporate junk bonds as a problem, well then it’s too late, baby now, it’s too late!

The cow is out of the barn, as my grandparents would have said… They admit that they are worried about a downturn in the U.S. economy, and what these leveraged loans might do in that situation… And you can bet your sweet bippie that you had better be aware of this, potential problem, and has a very high percentage chance of becoming reality…

And keep this in mind…. Remember…. the rating agencies had Enron as investment grade two days before they went bust. I’m just saying…. 

And don’t tell me that this news didn’t have anything to do with Gold’s romp higher on Friday! Gold is back above $1,300… Now, it’s time to begin to scrutinize the short Gold paper trades each day… Because they’re coming, I’m not mixing your mashed potatoes here! The shiny metal is up another $12 this morning in the early trading… So, it’s on a roll… Don’t stop it now! 

I came across something interesting this weekend… Malaysian Prime Minister Mahathir Mohamad on Thursday mooted the idea of a common trading currency for East Asia that would be pegged to gold, describing the existing currency trading in the region as manipulative.

Mahathir said the proposed common currency could be used to settle imports and exports, but would not be used for domestic transactions. I Immediately had a flashback to 2004… WOW that long ago, Chuck? What made you think of 2004… Well, in 2004, the folks at Agora Publishing came to me and asked me if I thought that with the success of the single unit, euro, if other countries would form unions for their currencies… So, Frank Trotter and Chuck sat down and put our heads together and came up with the Asian Countries could form a union and create a single currency called “The Pan”… The article became well liked and publicized at the time…

Could this be the beginning of “The Pan”?

It’s a beautiful morning… I think I’ll go outside for a while…. And just smile… Breathe in some clean fresh air… The Trade War talk now with Mexico, and continuing with China, and possibly the European Union for trading with Iran, has got me really fidgety this morning, and had me that way all weekend thinking about what I would say today… So, I think I’ll stop for a minute or two, and go outside, for there Ain’t no sense in staying inside If the weather’s fine and you got the time
It’s your chance to wake up and plan another brand new day
Either way, it’s a beautiful morning, ahh

See how mature I’ve gotten through the years… Shoot Rudy, maybe even my former marketing person would like me now! HA! The U.S. economy is heading to disaster, The Oversight Committee sees it, and it’s not going to be pretty, We have two Trade Wars going on, and a possible third one in the making, and… I’m singing along to song…

As far as I’m concerned… It’s about time!  What now Chuck? Oh, I’m talking about the dollar bugs scampering to find protection in the wall boards…  The euro traded very near 1.12 overnight, the Aussie and kiwi dollars are looking healthier, as is the Brazilian real, which has seen some hot and heavy selling for the last 9 months. 

The price of Oil got whacked like it’s never been whacked before on Friday, dropping $5 in one day!  The thinking here is that even though our friends at OPEC (NOT!) are still cutting production, that the Global Slowdown is going to reduce demand for Oil…  I have to question their thinking on this, as we begin the summer driving season here in the U.S.  And there’s no amount of slowdown that’s going to keep June and Ward from taking Wally and the Beaver on a road trip this summer!  

But it is what it is… and the price of Oil is trading with a $54 handle this morning…  I will say that on Saturday, I stopped to fill my gas tank, and noticed, as usual I must say, that the filling station had been slow to move the price of gas down to match the moves in the price of Oil…  Oh, well, bad timing on my part I guess, which is par for the course… Always choosing the wrong lane when driving in traffic, always choosing the wrong line when checking out at the grocery store, etc.    

The thing I don’t like about this downward move in the price of Oil is the negative affect it has on the Petrol Currencies of Russia, Norway, Brazil, Canada, and a few others… 

I just can’t get that news of a not so secret meeting took place last week… One of my fave economists: Danielle Di Martino Booth, was all over this story, and had plenty to say about it… You should probably check her out on Twitter… 

The U.S. Treasury yield continues to become more inverted daily…  The 10-year’s yield is down to 2.11%…  I’ve told you all dear readers for years, to pay attention to what the bond boys were telling us about the economy, and this time is no different…  But let’s check with someone else on his thoughts on the Treasury yield curve inversion… 

I can’t go any further without allowing one of my fave economists throw his 2-cents into the conversation this morning. So, here’s David Rosenberg, from his Twitter handle… “I’m hearing comparisons to ‘98 when global risks caused bonds to rally into inversion. Well, back then, the Fed didn’t just go on hold, it eased 3x. We were also in the midst of the dotcom boom and heading into the Y2K spending binge. These differences can’t be ignored.” -David Rosenberg on Twitter… 

The U.S. Data Cupboard gets restocked this week with data prints, and first out of the Cupboard today is the May ISM (manufacturing index), which has been slip sliding away in recent months and stands at 52.6 this morning….  Tomorrow we’ll see the color of Factory Order for May, and then after some other not-s0-important data prints, we end the week with the Jobs Jamboree for May…  What will the BLS have up their Bullwinkle sleeve this month?  Remember that last month… The BLS reported an increase in jobs created (with created being the operative word here) of 263,000 for April, but when the curtain got pulled back, we saw that the BLS had added 281,000 jobs after the surveys were received!  

And the media and markets took that number by the BLS and swallowed it hook, line and sinker…  Again!  How many months are the BLS going to be allowed to “fix the jobs report”? 

To recap… The dollar’s hold on the currencies and metals ended on Friday last week, and has continued in the Asian and European markets overnight.  A new Trade War was announced, this one with Mexico, and there was a private not-so-secret meeting late last week of the Financial Stability Oversight Committee regarding Corporate bonds…  If this committee is seeing this as a problem, folks, then it’s too late baby now, it’s too late… 

For What It’s Worth…. I told you last week that China was thinking of suspending their shipments of rare earth minerals and metals to the U.S. in retaliation for the Tariffs on their goods… And a dear reader asked me why these were so important… I scoured the internet and found this article on the Bloomberg.com sight that discusses what the rare earth minerals and metals are used in, and it can be found here: https://www.bloomberg.com/news/articles/2019-05-29/all-the-things-you-never-knew-rare-earth-metals-were-used-for

Or, here’s your snippet:” Washing machines. Cars. Disk drives — if those are still a thing. The rare-earth minerals that China is threatening to withhold from the U.S. as a trade war escalates are more present in consumer products and manufacturing than people might think. Here are some of the surprisingly common things they’re used to make:

The Gasoline in Your Car
Oil refineries depend on rare-earth elements as catalysts in units called fluid catalytic crackers. In fact, they’re some of the biggest consumers of the stuff. These FCC units basically “crack” apart oil molecules to make gasoline and diesel.

Other energy industries use them, too: They’re in wind turbines and may be used to make solar panels and run nuclear power plants. According to the U.S. government, they can also be used in lights, semiconductors, superconductors and batteries. Large-scale energy storage projects, however, may see little impact as they don’t typically make use of the elements, according to BloombergNEF.”

Chuck again… It’s a very BIG Deal folks… So, let’s hope that calmer heads prevail in these Trade Wars, eh?

Currencies today 6/3/19 American Style: A$.6960, kiwi .6563, C$ .7410, euro 1.1186, sterling 1.2635, Swiss $.9981, European Style: rand 14.5230, krone 8.7334, SEK 9.4815, forint 289.36, zloty 3.8295, koruna 23.0920, RUB 65.42, yen 108.35, sing 1.3702, HKD 7.8359, INR 69.19, China 6.9036, peso 19.66, BRL 3.9119, Dollar Index 97.65, Oil $54.04, 10-year 2.11%, Silver $14.72, Platinum $802.25, Palladium $1,344.42, and Gold $1,317.43

That’s it for today…  June…. Well, at least the weather should begin to be more consistent…  The rivers all around us here in the St. Louis area are all up from all the rain, and they expected to crest this week… So, far, fingers crossed, the creek behind my house is behaving…  Well, how about that crazy night, this past Saturday night, in downtown St. Louis?  WOW!  Too bad the Blues and the rain storm ruined it for most…  A few years ago, my beloved Cardinals were a .500 team on June 15th, and then went on a roll to win the division… I’m hoping this team can duplicate that this year!  See what sweeping the Cubs can do to one’s psyche and out look for a team? HA!  Ok…  Chicago takes us to the finish line today with their song: Hard To Say I’m Sorry…    (kind of a sad song… )  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

 

 

May 31, 2019  

* Dollar bugs bask in the sunlight of a flight to safety… 

* German Unemployment rises in May for first time since 2013… 

Good Day… And a Tub Thumpin’ Thursday to you! Our Blues evened the best of 7 series known as the Stanley Cup Finals last night… YAHOO! An overtime win on the road, made it even sweeter of a win! The first win in Stanley Cup Finals history for the Blues too! And I know for fact I’m right about that one! Lots of chances to score for both teams last night in the 3rd Period, but once it got to overtime, the Blues dominated the Bruins! As excited about that game as I was, I was also as dejected about the Cardinals latest futile effort to win… I told my good friend, Dennis Miller, yesterday that the Cardinals had brought up a young kid to pitch tonight, that I had seen in Spring Training, and he couldn’t get anyone out there, what made the Cardinals think he could do the job here? Well, he didn’t… I sure wish I ran the team! OK… Midnight Oil greets me this morning with their song: Beds Are Burning…

Well, I beat around the bush long enough this morning, I might as well tell you that the dollar hit a 2-year high in the Dollar Index… Investors are rushing to Gold and Treasuries, and the buying of those Treasuries is a boon for the dollar bugs. Gold is a different animal, as Gold for a lot of the world is priced in dollars, but not in China… And the Gold Russia buys is from China, with renminbi they earned from selling the Chinese Oil… So, two major players in the Gold arena don’t use dollars to buy Gold… I told you yesterday the historically the safe havens included euros… But not this time around… Yen and Swiss francs are seeing some buying on the side, but not the type of buying that really moves a currency stronger… Just enough to keep it steady Eddie.

Well… China isn’t buying those Treasuries as safe haven investments, in fact they are unloading them in small amounts, as to not move the markets violently… China also made a statement yesterday about their retaliation in the Trade War, and they mentioned that they would use rare earth minerals as a tool… In other words, you can  get rare earth minerals from China, so if they hold them back from exporting them to the U.S. what will the U.S. do?  I understand that there are other countries that may have rare earth minerals, but what if one of this Iran? YIKES!

That’s the fear that the markets have and thus the flight to safety…. I mentioned that Gold is one of the Safe Havens, and it is, but the boys in the band are keeping Gold from gaining too much… They can’t have investors thinking that Gold is what they need to own in times like these! Oh, and on a side bar… one of the members of the Plunge Protection Team here in the U.S. stepped down… I guess he just couldn’t stomach what they were doing any longer! I don’t know… Like I said I guess… But I put myself in his shoes, and I would be sick to my stomach too, if I had to live with all the stuff the PPT did!

This story gets more interesting folks…  Simon Potter was the head of the Fed NY’s FOMC, and Richard Dzina, head of the Fed NY’s Financial Services Group, both quit this week and only gave 4 days notice…  My spider sense tingled when I read that they only gave 4 days notice…  Was their departure voluntary? Seems to me that with only 4 days notice, it was forced… 

Now what could be the reason that 2 stalwart Fed NY markets guys get the boot?  Please tell me it’s not because their GDP reporting system FEDNOW, just printed a revision to their 2nd QTR GDP forecast, from 2.2% to 1.41%?

 I can Imagine  hearing  their boss telling them…  “What are you two thinking? We can’t have this kind of reporting hitting the streets? But you two decided that it was the “right thing to do”… Well, I’m here to tell you that it wasn’t the “right thing to do”, now go clean out your respective desks, and don’t look back!  Oh, and there’s a nice parting gift for you at the door! 

In the Eurozone yesterday, German Unemployment jumped higher, unexpectedly, and caused even more slippage in the euro to the dollar. The Eurozone is not immunized against economic problems that the Trade War between the U.S. and China are causing… I have to tell you this before I go on… I’m so glad that today is Thursday, and since I don’t write on Fridays any longer, I won’t have to talk about the strong dollar for 3 more days…. YAHOO!

But for those of you keeping score at home… here’s the skinny… For the first time since 2013, the German unemployment rate rose: the ranks of the jobless made up 5% of the labor force in May, a tiny nudge up from 4.9% the month before.  In case you were wondering… That’s 60,000 Germans that lost their jobs in May…  

Parts of the world that are Catholics are off today for Ascension Day… Here in the U.S. we are no longer a God fearing country, as we once were… And I don’t know why I went down that rabbit hole… but my fat fingers were flying around the keyboard, and then it happened… I said it! Oh, well. Can’t take it back now… HA!

Remember when our former President wanted to remove the Star Spangled Banner as our National Anthem? Just goes to show how far these people that want to take over our history and twist it to their liking, will go… And that’s all I’m going to say about that! Today that is…

Every time I think of Gold, it always comes back to the price manipulators… and then the silly song from the 60’s by Nancy Sinatra rolls through my head… These boots are made for walking, and one these days these boots are gonna walk all over you…. Gold is the boots… and the you, is the price manipulators…

The U.S. Data Cupboard was empty yesterday… So no news is good news for the U.S. economy… Today, we’ll see Pending Home Sales, and the final revision of 1st QTR GDP, which previously was 3.2%… I’ll betcha a dollar to a Krispy Kreme that it gets revised downward…. Probably not by much, but still downward, because that’s the direction the economy is headed in the 2nd QTR…

I was reading longtime friend, Bill Bonner’s letter yesterday, and he sounded a lot like me regarding the signs of a recession coming being evident. Let’s listen in… “Retail sales are headed down. Appliances, too. GDP growth. Industrial production. Hours worked. New hires. Durables. Manufacturing new orders (excluding defense). Construction spending. All down…
A recession is approaching. And our Crash Alert Flag is up on the pole… flapping… waiting… warning.” – Bill Bonner

Nothing’s changed in the U.K. folks… they’re still bickering back and forth about BREXIT, with nothing getting done, which is what caused PM May’s departure, as she couldn’t bring the deal home…  And the poor pound sterling just keeps getting caught in the middle…  

You know, when I first became a currency trader, after having done foreign bonds for years, and wanted to have control of the other side of the bond trade, the currencies, everything was priced off of pound sterling…  Traders would use the sterling / dollar cross  as the base and then D-marks, both francs (Swiss and French), etc. were priced off that cross… 

Of course this was pre-euro…  and pre-computers that did the cross for you gave you the price VS dollars right on the screen!  Pretty nifty, I thought at the time…   

But times change, and the pound sterling is no longer held in high regard as the base currency to price other currencies from…  Another step downward for sterling, as before WWII it (sterling) was the reserve currency of the world… 

To recap… The dollar bugs are basking in the sunlight of a flight to safety that is seeing tons of Treasury buying…  The Trade War got notched up in the fear meter yesterday when China announced that they may suspend rare earth minerals to the U.S.  Germany sees its first Unemployment rise since 2013 in May, as the Trade War filters through to other countries for sure… Gold can’t get off the bench without being put right back on the bench by the price manipulators… And The Fed NY’s FEDNOW system is forecasting 1.41% GDP for the 2nd QTR…  Ahem…. 

For What It’s Worth….  I told you some months ago that the U.S. had warned Europe not to trade with Iran, and the Europeans said, “don’t tell us what we can and can’t do” and proceeded to trade with Iran… Well, now the U.S. is retaliating and threatening to cut the Eurozone out of the SWIFT system… That story is kind of long, and can be found here: https://www.zerohedge.com/news/2019-05-29/us-threatens-europe-loss-access-us-financial-system-over-its-iran-funding-spv

Or, here’s your snippet: ” It’s going from bad to worse for Europe, whose currency had just hit session lows after Brussels confirmed that Italy faces a massive fine over its debt, when the Euro was hit with a double whammy after Bloomberg reported that the Trump administration is escalating its battle with “European allies” over the fate of the Iran nuclear accord, and is “threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from U.S. sanctions.”

According to Bloomberg, the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that Instex, the European SPV to sustain trade with Tehran, and anyone associated with it could be barred from the U.S. financial system if it goes into effect.

As a reminder, last September, in order to maintain a financial relationship with Iran that can not be vetoed by the US, Europe unveiled a “Special Purpose Vehicle” to bypass SWIFT. Back then we predicted that Washington would not be too delighted with this development seeking to undermine the dollar’s reserve status. We were right.

“I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker wrote in the letter to Instex President Per Fischer. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

Germany, France and the U.K. finalized the Instex system in January, allowing companies to trade with Iran without the use of U.S. dollars or American banks, allowing them to get around wide-ranging U.S. sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.

Not surprisingly, a senior admin official behind the letter said the U.S. decided to issue the threat “after concluding that European officials, who had earlier downplayed the significance of Instex in conversations with the Trump administration, were far more serious about it than they had initially let on.”

Chuck again…  Believe me when I say that I don’t understand why we must tick off our allies…    

Currencies today 5/30/19 American Style: A$.6930, kiwi .6525, C$ .7413, euro 1.1140, sterling 1.2628, Swiss $.9907, European Style: rand 14.6000, krone 8.7523, SEK 9.5436, forint 291.64, zloty 3.8497, koruna 23.1905, RUB 64.94, yen 109.70, sing 1.3793, HKD 7.8477, INR 69.80, China 6.9114, peso 19.11, BRL 4.0039, Dollar Index 98.11, Oil $59.04, 10-year 2.26%, Silver $14.42, Platinum $795.73, Palladium $1,345.23, and Gold… $1,276.60

That’s it for today, and tomorrow…  I sure liked this 3-day workweek, I’ll have to look at my contract to see if I could swing that more often! HA!  Well, when I talk to you next it will be June… The year is flying by…   Cubs come to town this weekend, and I get to go the Saturday night game. YAHOO! The cellulitis in my leg is not getting any better, I’m at a loss as to why, except I keep thinking that the chemo I take each day, causes cuts and bruises I get to heal very slowly… So, in my mind, the chemo is holding the healing process up… In which case there’s not a thing I can do about it… Except grin and bear it…  Let’s Go Blues, Let’s Go Blues, Let’s Go Blues!  the Blues will play on home ice, also on Saturday night… I don’t know why the Cardinals couldn’t reschedule the game on Saturday night to a an afternoon game, so that fans don’t have to choose…  Oh well, it is what it is…  Del Shannon takes us to the finish line today with his song: Runaway… I always loved that song…   I hope you have a Tub Thumpin’ Thursday and a Fantastico Friday tomorrow, and will Be Good To Yourself! 

Chuck Butler

May 29, 2019

* The dollar recovers its losses from Friday… 

* Midwest rains are cause for concern… 

Good Day… And a Wonderful Wednesday to you! Our Blues get back on the ice tonight in Boston, and try to tie up the best of seven series that is the Stanley Cup Finals… I misspoke yesterday when I said that the Blues hadn’t scored in the Finals before… I was just going on my memories of those series from 68, 69 and 70… Sorry to all that caught that! I’m so sad about my car… I bought this car 8 years ago, with 29,000 miles on it, and it was 1 year old. I’ve only put 50,000 miles on it in the 8 years that I’ve bought it, and to date I hadn’t had to spend more than normal maintenance on it… But that will all change today… UGH! I wish I could take my beloved Cardinals’ bats to a shop to be fixed, because they need it badly! The Main Ingredient greets me this morning with their song: Everybody Plays The Fool… There’s no exception to the rule… is how the song goes, from the 70’s…

OK… The dollar was able to hold onto to its move from Monday, on Tuesday and through the overnight trading last night. For some reason, currency traders are betting that the U.S. dollar is going to be the main beneficiary of the Trade War… And you know how they say, “you can’t beat City Hall”… An older guy on the trading desk of a firm where I worked back in 1979,  told me… “Son, the markets are never wrong”… In other words, don’t try to be a contrarian… I’ve applied that to my trading and investing for a long time… The markets my not be wrong, but they sure are barking up the wrong tree, as far as I’m concerned, most of the time!

Yesterday, I said something nice about the Russian economy, and then longtime reader, Bob, sent me a note from intellinews.com that talked about how the Russian economy is stagnating… The Central Bank of Russia (CBR) Gov. Elvira Nabiullina, recently said that she expected the economy to grow, but put parameters on the growth saying, “ GDP growth rate is bound to be low: less than 1% next year and 1.5-2% in 2018 and 2019”

She also gave an interview the other day and talked about how she saw a Global recession coming… See? She thinks like me! No wonder I think she’s the best Central Banker around! Anyway, the Russian ruble gave back some of its gains on the news that GDP had slowed so much… As it should! Fundamentals folks! It’s good for the ruble to use fundamentals, but not the dollar these days…

Another thing weighing on the ruble and the rest of the Petrol Currencies is the drop in the price of Oil… The drop in price is really beginning to show on the faces of the Canadian dollar/ loonie, and Norwegian krone… 

And the pound sterling continues to feel the heat of the failed BREXIT talks and PM May…   Political uncertainty is abundant in the U.K. and I’ve told you all for years that currency traders don’t like political uncertainty, and so pound sterling is feeling the heat… 

And Gold couldn’t hold its gains from Friday, after the holiday thinned markets on Monday left it at $1,284, but yesterday, Gold slipped about $4 on the day… I don’t believe it was profit taking, just because Gold rose more than $10 on Friday… I would have thought that given the flight to safe havens like Treasuries and yen that Gold would follow suit… But so much for the best laid plans of mice and men, eh?

But not to fret, Gold has recovered that loss yesterday in the early morning trading today… Now, let’s see how long the boys in the band allow that to continue once they arrive at their desks this morning! 

Speaking of Treasuries… The 10-year’s yield has dropped to 2.24%… Last week on Wednesday the 10-year’s yield was 2.41%.. So that’s quite a move down in yield in just a week, folks… And remember that bond pricing goes like this… When the yield goes down the price goes up and vice versa… So, bonds have been rallying strongly, and it has to be from the flight to safe havens because of the Trade War…

The bond rally isn’t just about fears from the Trade War…  The “bond boys” see the U.S. economy for what it is, and where interest rates are going, which is down…  Things just don’t look, feel, or smell right here in the U.S. economy, to me folks…And don’t look now, but guess who’s waking up on the same side of the bed as Chuck? JPMorgan, who yesterday said that “the economy was deteriorating, and was now on recession watch”… Ok, I have to admit I don’t like being associated with the kind of folks that short Gold & Silver the way this firm does, but at the same time it’s not too shabby to have a Big Brokerage with tons of research people, say the same things I’ve been saying for months now…   And…  don’t look now but the yield curve is inverted more than it was in 2007…  I’m just saying…. 

The U.S. Data Cupboard had the March Case/ Shiller Home Price Index yesterday, and just like I said I thought it would, the report showed that Home Prices slipped again in March… I do believe that makes 4 consecutive months of slippage here…  And get this… sit down because you’re going to want to be sitting when you hear this one….  Consumer Confidence rose this month from 129 to 134!  Crazy, simply crazy… 

But it does prove that the Gov’t and all the Gov’t’s men have done a great job of pulling the wool over investors’ collective eyes… I just wonder what’s going to happen here once Humpty Dumpty falls off the wall, and all the government’s men can’t put it back together again!  

And I don’t know about you, but I’m worried about the farmers in the Midwest…  We’ve received so much rain this spring, that the Mississippi River is going to crest this week at a level higher than the record level that was set in 1993, which was supposed to be a 200 -year flood…  I read yesterday that the price of corn in contracts is falling because of all the rain, and if my yard is squishy from all the rain, I can easily imagine what the fields of a farm feel like…  

Econ 101 tells me that when supplies diminish (like they will with food from the Midwest farms that don’t yield what they normally yield) and demand remains high, that inflation rears its ugly head…  Remember the line I’ve told you about many times through the years that my dad taught me…  There’s no such thing as a shortage… It’s merely something that needs a price adjustment…     So, get ready for those price increases folks… 

OK… one more note before I head to the Big Finish today… In the past the safe havens were: Euros, yen, francs, Gold and Treasuries…  But now the safe havens appear to be yen, and Treasuries along with dollars…  One would think that the other, historically favored safe havens would join in at sometime, but the back of my brain is telling me that we should doubt that will happen… UGH!   

To recap…  The dollar fought back throughout the day, yesterday, and the overnight markets, last night, and has recovered just about all of its losses from last Friday. Strange that the dollars have replaced euros and francs as safe haven investments, but it is what it is, folks…  Treasuries are really rallying and Chuck thinks that it’s more than just the fear of the Trade War, but the direction of interest rates in addition…  And JPMorgan says the U.S. economy is deteriorating…  

For What It’s Worth…  Well, this article came to me from the folks at MarketWatch, and its about how more annuities are going to be available in 401k’s if a bill passes…  You can find the article here: https://www.marketwatch.com/story/the-house-passed-a-bill-that-would-allow-more-annuities-in-401k-plans-is-that-actually-a-good-thing-2019-05-28?mod=MW_section_top_stories

Or, here’s your snippet: “he SECURE Act is one step closer to becoming law, and with it, Americans would see a few tweaks to the way the retirement system works.

As part of the SECURE Act, which the House of Representatives passed last week, individual retirement accounts’ age cap would be lifted, small businesses would have more avenues to offer retirement plans to their employees and part-time workers would get access to 401(k) accounts. The legislation would also boost the use of annuities in retirement accounts — something that may tilt a few heads considering the bad reputation annuities typically get for being an upfront expense with an uncertain payout (such as, if the owner of an annuity dies before reaping the benefits, or being tied to a seven- to 10-year contract).

Currently, plan providers have the fiduciary responsibility to vet annuities but under the safe harbor provision of the SECURE Act, the onus would be placed on insurers to provide employers with the right products. Employers would be given guidance on how to ensure those providers and their products are up to par, including reviewing the insurers’ status under state insurance regulation and enforcement.”

Chuck again…  Yes, annuities have a bad reputation but not all annuities should be thrown in the bad reputation pile… In my opinion, only variable rate annuities should be banned from 401k’s…  But then I’m no expert in the matter, and for that expertise, you should go to www.milleronthemoney.com and get his annuity brochure…  

Currencies today 5/29/19 American Style: A$.6918, kiwi .6518, C$ .7405, euro 1.1158, sterling 1.2647, Swiss $.9943, European Style: rand 14.7905, krone 8.7453, SEK 9.5933, forint 292.93, zloty 3.8545, koruna 23.1845, RUB 64.54, yen 109.34, sing 1.3820, HKD 7.8493, INR 69.80, China 6.9076, peso 19.22, BRL 4.0325, Dollar Index 97.99, Oil $57.93, 10-year 2.24%, Silver $14.38, Platinum $793.01, Palladium $1,338.57, and Gold… $1,283.99

That’s it for today… Well, I received bad news yesterday on the Delaney video front… It appears that the video didn’t turn out good, and the audio was bad, so we’ll try again when she sing the national anthem at the Gateway Grizzlies game in August… I guess you’ll just have to take my word that she sounded awesome! I may be just little biased, but don’t let that get in the way! HA!  What’s it going to take to get the Cardinals straightened out? They can’t fire the manager and hitting coach, they already did that last year… A major trade?  Change the look of the team? Whatever it is, the GM has his work cut out for him!   Ok, my fave Supertramp song is playing as I head to the finish line today….  Hide In Your Shell…    I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself!

Chuck Butler

 

 

May 28, 2019

* Currencies rebound on Friday, but give back some gains yesterday!

* Durable and Capital Good Orders both print negative in April… 

Good Day… And a Tom Terrific Tuesday to you! I hope you all had a wonderful weekend, that ended yesterday with our Memorial Day… Andrew, Rachel and Braden spent the day with us yesterday, and I had both the Big Green Egg, and my Weber smoking up a plethora of pork steaks… Yummmm… Sunday, we attended the River City Rascals game in O’Fallon, Mo. Not for the baseball, but for my granddaughter, Delaney Grace, who sang the national anthem before the game. I heart swelled with pride, as she belted out a very good rendition of the song, which because I sing it at every game I go to, out loud, I know it’s very difficult song to sing… Our Blues got off on the wrong foot in the Stanley Cup Finals last night, after leading 2-0, they lost 4-2… UGH… The Steve Miller Band greets me this morning with their song: Serenade…

Well, my broken record was pulled from the turntable on Friday, as the currencies fought back… The euro traded above 1.12, (but is back below it this morning) and the Aussie dollar (A$) found some life… It appeared to me that the icing is on the recession cake that will be served soon, as the real pieces of economic data, Durable & Capital Goods Orders for April printed… Both Durable & Capital Goods Orders were negative in April… I’ve been through the Capital Orders or CAPEX before, so I won’t go down that rabbit hole here again, but this makes two consecutive months of negative growth in CAPEX… That’s not a good sign for the economy folks… Businesses are NOT putting money back into their operations… Uh-Oh!

The other thing weighing on the dollar on Friday was the stone cold facts that the Trade War is really beginning to put the hurt on the U.S. economy… There was an article in our local paper, the Post Dispatch, over the weekend siting how a furniture maker here in Missouri, was feeling the pinch of tariffs on Chinese imports… And then there was a report last week the Beer makers are blaming the tariffs for the beer industry losing thousands of jobs… I tell you these two completely different sectors because I wanted to illustrate how wide ranging the Trade War is going to hurt…

Speaking of economic data… There isn’t much on the Data Cupboard’s docket for this week, until we get to Friday, where Personal Income and Spending will print… The foreign data calendar doesn’t look very promising either, with the IFO Business Sentiment and other things scheduled as the high point this week… So, it’s going to be more of the same old rhetoric between Trump and Xi… The U.S. & China…

When the Trade War began a year ago, I wrote about how there would be no clear winners, and that both countries would end up ruing the day they signed up for a Trade War… A year later, and Bloomberg did report on who’s winning the Trade War… And the result? No clear winners, with China ahead in some areas, and the U.S. ahead in others… Tom Orlik, Bloomberg Chief Economist, had this to say… “In terms of economic growth, no one wins in a Trade War. In terms of geographical rivalry, what matters is who loses more… The U.S. is betting that will be China, and China is betting the U.S. won’t have the stomach for the fight.”

The key in all of that is that there are no clear winners, a year after the Trade War began, and as we go along, it’s my feeling that the losers will begin piling up…

And remember that old saying that “When the U.S. sneezes, the rest of the world catches a cold?” I do believe it’s going to come to pass that the Global Economy goes to hell in a handbasket too… One country that could be setting itself up to insolate itself from this cold that will be going around, is Russia… But I’ve gone down that road before telling you all the reasons why this is happening, with not the least being their Central Bank Gov., who’s one sharp tool in the shed…

How many of you read Dennis Miller’s letter www.milleronthemoney.com ? Last week, he used the game of Monopoly to illustrate how the banks are taking over the game from us… And then on Friday, Ed Steer, from www.edsteergoldandsilver.com had this picture in his letter… It was a picture of the Monopoly board looking down on it, and in the middle it said this: You’re playing Monopoly… And every trip around the board you pass Go. If you’re the leader, you must pass one piece of property to the player with the least property. Same goes for Houses, Hotels, etc. Instead of collecting $200 for passing Go, you must pay 35% tax to be split among the other players. Soon, no one is buying property, Houses, Hotels. Eventually everyone quits trying and just waits for their handout when someone else passes Go…    Socialism in a nutshell… 

I found the relationship of the two articles in the same week to be quite interesting…

On a sidebar, I’ve really got a bone to pick with this guy… Billionaire, Robert Smith, pledged to a group of graduates that he just gave a commencement speech to, that he would pay for their college expenses… OK… Mr. Smith… how about reimbursing all the people, like me, that paid for their kids’ college expenses? Yes, I know nothing in life is free, or fair… But that really gets my dander up… Sure it’s his money and he can do with it what he wants… but I worked my tail off for years so that my kids weren’t saddled with large college debts when they started out in the world, and shouldn’t I get reimbursed if someone else is going to pay?

To follow up… I feel like it’s a slap in the face to the people took the burden of paying the tuition without loans, makes me feel as if my efforts were in vain… And that’s all I have to say about that!

OK, quit your beehiveing Chuck! It is what it is…  let’s get back tot he markets…  Gold had an interesting day on Friday, moving higher by $10, and then with the U.S. Markets closed, there was no movement whatsoever in the price of Gold, and it remained at $1,284…   this morning, in the early trading, Gold is down a buck or two…  I think the participants had it right on Friday… The saber rattling is building in volume between the U.S. and Iran, The Trade War is beginning to show up on everyone’s doorstep, and the U.S. economy took another hit from negative data…  What these knuckleheads are doing this morning, beats me… Because it’s not as if all those things just went away… 

The downward cycle for the price of Oil continues… I’ve gone through this before, but for new readers…  The price of oil is price range bound, and every time it ticks higher, the shale producers jump in with both feet and begin pumping, and with that the supply increases, which brings the price of Oil back down, causing the shale producers to get back out because it’s too costly to keep pumping…  The price of Oil is on the downside of that cycle, right now, which is strange given that we’re heading into the summer driving season! 

I already gave you the skinny on the U.S. Data Cupboard this week… But I did skip over a few non-important pieces of data that will print before Friday, and they are: The Case/Shiller Home Price Index for March… this data has been showing consecutive months of downward pressure on Houses… But it’s from March!   That’s today…  And tomorrow there’s not much, but on Thursday we’ll get the final revision of 1st QTR GDP, and Pending Home Sales for April…    See? Not really too much to see here, but sometimes you get a wild and wacky print that sends us all for a walk around the corner… 

To recap…  The Currencies had a good day last Friday, along with the price of Gold, and yesterday, with the U.S. out on holiday, nothing much happened, but this morning, the dollar seems to be back to pushing the non-dollar assets around.  Durable and Capital Goods Orders printed negative (April), last Friday, and that sent the dollar to the woodshed for the day, along with hard facts that the Trade War is beginning to show up on everyone’s doorstep. 

For What It’s Worth…  The good folks at GATA sent me this article and link last week and I thought it to be very FWIW worthy… And no, it’s not about price manipulation! So, it’s safe to read, and can be found on the WSJ and here: https://www.wsj.com/articles/the-dollar-may-be-knocked-off-its-pedestal-11558565449

Or, here’s your snippet: “Will the U.S. dollar soon lose its status as the world’s pre-eminent currency? The consensus is no—it’s said that any move away from the dollar would take decades. This view is too complacent.

Developments in foreign-exchange markets during the past 18 months point toward dedollarization. Consider that Chinese “petroyuan” crude-oil futures, launched last year in Shanghai, now sit right behind Brent and West Texas Intermediate in trade volume. The world’s central banks bought more gold last year than at any time since President Nixon took the U.S. off the gold standard in 1971. Markets recently learned that China added gold to its reserves for the fifth month in a row. Earlier this year, the U.K., France and Germany created a new payment-processing system to permit payments to Iran. It will begin quietly with humanitarian aid, then move to other goods and services, potentially competing with the American-influenced Swift system.

The increasing use of economic sanctions under Presidents Obama and Trump is the immediate cause of dedollarization. In European finance, few have forgotten the $8.9 billion fine meted out to French bank BNP Paribas in 2014 for violating U.S. economic sanctions against Iran. It’s not that surprising, or even that significant, when Russia shifts $100 billion of dollar-denominated reserves into Chinese yuan, euros and Japanese yen, as it did last year. But the change in posture among the trans-Atlantic democracies is noteworthy. At his final European State of the Union address, European Commission President Jean-Claude Juncker said: “It is absurd that European companies buy European planes in dollars instead of euros.” 

Chuck Again…  As always, I hope you get to read the entire article, for it lays out the things I’ve been trying to get across to everyone.. 

Currencies today 5/28/19 American Style: A$.6923, kiwi .6550, C$ .7422, euro 1.1190, sterling 1.2670, Swiss $.9956, European Style: rand 14.6170, krone 8.6914, SEK 9.5540, forint 292.00, zloty 3.8373, koruna 23.1020, RUB 64.40, yen 109.40, sing 1.3776, HKD 7.8485, INR 69.60, China 6.8965, peso 19.11, BRL 4.0264, Dollar Index 97.766, Oil $59.19, 10-year 2.29%, Silver $14.47, Platinum $808.25, Palladium $1,340.21, and Gold… $1,283.56

That’s it for today… What a rotten weekend for my beloved Cardinals…  Things had better change quickly, or the season will have been a bust once again, and that’s not going to sit well with the fans…  I really had my hopes up when the Blues went up 2-0 last night… Only to have them quashed! Oh, well, that’s just one game…  At least the Blues finally scored a goal in a Stanley Cup Final Game, after having been shut out in their previous 12 SCF Games…  Little Delaney was so good on Sunday, singing the national anthem at the ballpark… I had a reader send me a note asking me to video it and post it online with a link so everyone could see her…  I’m working on that… I’ll let you know… OK… Soft Cell takes us to the finish line today with their song: Tainted Love…   I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself! 

Chuck Butler

May 23, 2019  

* The broken record says… “Another day, another day of dollar strength”

* Happy Birthday, Braden Charles Butler! 

Good Day… And a Tub Thumpin’ Thursday to you… I had a much better day yesterday with regards to the pain in my lower leg from cellulitis… Maybe, I’m finally winning the battle? I sure hope so! Well, the city was still buzzing yesterday about our Blues, and their 6 game series win that will take them to the Stanley Cup Finals… I love it… I even had tears in my eye, yesterday, morning when I was writing about how my two sons had never seen the Blues go this far… All the talk about the Blues, has given my beloved Cardinals a flyer, if you will, on their poor play recently… Well, in less than 2 weeks, the hockey season will be over, so the Cardinals had better get things turned around soon! The Beatles greet me this morning with their song: The Long And Winding Road… That leads to your door…

Another day, another day of the dollar bugs still holding the conn… The currencies seem to have dug in here at current levels… I’m taking the fact that the dollar bugs didn’t bat an eye at the Fed’s FOMC Meeting Minutes, that the markets took the message that the minutes had for them that basically said, “Minutes of the Fed’s May 1-ending interest-rate meeting revealed that the members of the Federal Open Market Committee seemed comfortable with their “patient” stance on interest rates, agreeing it could last for “some time.”

So, interest rates are going to remain steady Eddie for the time being and near future, unless we see some drastic changes to the muddle through economy we have going on and has been going on for over 10 years now.

You know… I often wonder to myself about “what if the Fed Heads read the Pfennig”… I then laugh hysterically, and come back to my senses… But, having said that… They always seem to do the opposite of what I say ahead of time I think they’ll do…  A Co-inki-dink? I doubt it! Me admit that I’m just wrong all the time? Has as much chance as a snowball’s chance in hell… Then it must be that they are readers, plain and simple… And are pledged to perform acts that counter any and everything I say!

OK, let’s get back to the markets… The Fed Heads are on hold and don’t see the dark storm clouds gathering off in the distance… I see them, and I have seen them for months now… I guess if the Fed Heads took off their rose colored glasses, things might look a bit different, eh?

The Big News of the day yesterday came from Nevada, and no it wasn’t a new gambling license…. Voters in Nevada voted to eliminate the Electoral College…. Sure you dolts, just go ahead and wipe our history, tradition, the republic that the founding fathers left us… what do they teach kids in school these days? It certainly isn’t the true history!

I’m sorry, I just got all heated and exhausted thinking about what to say there, without ticking off half the readers… But I’m like a bull in a China shop at times, eh?

OK… The Fed heads may not be the only Central Bankers who read the Pfennig… Remember earlier in the week when I said that I thought the Chinese official who said that China would not allow the renminbi to weaken to offset the tariffs, had his fingers crossed behind his back? And that the renminbi had done nothing but continue to weaken, to 6.91 that morning, and I said soon it could be 6.95 and then 7 and so on… Well, ever since I pointed all that out, guess what the People’s Bank of China (PBOC) has done with each passing day? They have allowed the renminbi to appreciate! And yesterday, the head of the nation’s foreign-exchange regulator, assured investors that the renminbi will remain stable.

It’s all a conspiracy to get me to quit! Yeah, that’s gotta be the ticket! Central Bankers are ganging up to make me look bad, which they believe will cause me to quit! I’m sure of it, and yes, I do have my tin foil hat on! HA! But they have no idea who they’re messing with, that’s for sure! Don’t they know that I looked Cancer in the eye and spit in it? Don’t they know the Butler spirit, will not allow me to quit?

One of my longest known friends in the world, Mike Karvas, (we met in 2nd Grade) grew up with me in South St. Louis, and knows me like the back of his hand, and he likes to joke and always say, Those doctors didn’t know they were talking to the Chuck I know!

OK… Gold lost little footing yesterday… So like Gold’s brother in arms against the dollar, the currencies, Gold held steady Eddie for the most part, losing $1.40 for the day. But… the shiny metal is up nearly $4 (3.83) early this morning… 

I’ve Got it! I need to say that I believe the stock market is going to the moon, Treasury yields will remain steady, the currencies are going to zero, along with Gold… I’ll aveha ym ingersfa rossedca ehindba ym ackba! (think that attempt at pig latin will confuse them? )

I went through some research on consumer debt yesterday… And believe me it sure wasn’t pretty! Credit Card Debt, and Student Loan Debt have tripled since the financial crisis to $1.46 Trillion in the 4th QTR of 2018… Auto debt is $1.27 Trillion… And Auto delinquency rates are at a 19-year high! OMG! Consumers now have more debt than they had before the Financial Meltdown…  

And don’t give me that line about there’s more people in the country than before because I’m not buying that they had anything to do with these numbers… 

That’s crazy folks… simply crazy! Nearly 8 of 10 Americans live paycheck to paycheck… And earlier this week I told you that nearly ½ of Americans are just one paycheck, not received, from a crisis…

But can you blame Americans for taking on all this debt? They’re just following the lead of their Government. The U.S. current debt (not unfunded liabilities) is now 108% of GDP… Wanna guess where the percentage stood before the Financial Meltdown? I’ll let you stew on that a bit and get back to you on Tuesday next week!

Back to Gold for a moment, as this thought almost slipped my mind, but I reached out and caught it before it flew away… Russia added 500,000 ounces of Gold to their reserves in April… Russia has not hid the fact that they are buying physical Gold left and right, like the Chinese, who every now and then will tell us when they buy some Gold, when everyone and their brother knows that they buy Gold every month! They may not import it every month… But it’s being bought…

When the you know what hits the fan, and the countries of the world come together to show their hands (how much physical Gold) , Russia and China will be “players” for sure! Will the U.S. ? I guess that depends on whether you believe or not that the U.S. still owns the physical Gold that’s in their vaults or has it all been swapped / or leased out? Remember when the you know what hits the fan, calling in loaned Gold will be difficult at best… It’ll be a case of… Show what you’ve got right here, right now…   and the old saying that possession is 90% of the law, will come into play for sure! 

The U.S. Data Cupboard today has the New Home Sales for April… Remember the previous few months have shown falling Sales each month… We’ll also see the Markit Version of PMI (manufacturing Index) for April… Recall that March saw the index fall to 52.6, so precariously close to 50… So it will be interesting to see if the index falls closer to 50 or moves further away from the line in the sand number of 50.

Tomorrow, we’ll get to see some real economic data, as Durable and Capital Goods Orders will print for April… I’ve been quite vocal about the lack of Capital orders in the past and its weight on the economy, so I’ll be watching for that one for sure!

To recap… The currencies remained Steady Eddie along with Gold on Wednesday, but the bid is still with the dollar, even after the Fed’s FOMC Meeting Minutes said that rates were on hold for the near future… Which meant that what was once thought that rates would be coming down soon, is fading… The dollar which began this run because the Fed was hiking rates while no other central bank was doing so, didn’t get sold… Hmmm…

For What It’s Worth… A month or so ago, I wrote about the Brazilian real and how it was getting sold left and right… Well, that selling hasn’t stopped and caused this article that was on Reuters and can be found here: https://www.reuters.com/article/uk-brazil-markets-currency-analysis/brazil-markets-on-forex-intervention-alert-as-real-slide-accelerates-idUSKCN1SN2BB

Or, here’s your snippet: “The rapid acceleration of the Brazilian real’s slide against the dollar this week has put traders on high alert for intervention from the central bank to stop the rot, although so far there is no sign the central bank has shown its hand.

With messy politics slowing the government’s fiscal reform agenda in Congress, the domestic economy deteriorating and global trade war tensions rising, the real has plunged through 4.00 per dollar to its lowest level since September.

It has depreciated 3.5% this week, one of its biggest weekly declines since Brazil emerged from a brutal recession in late 2016.

A spokesman for the central bank declined to comment.

The last time the central bank intervened in the spot foreign exchange market was February 2009. Its interventions since then have been in the FX swaps market where it is routinely active, by adjusting the size and maturity of contracts it rolls over.

Market participants say it is inconceivable that policymakers will not be more sensitive than ever to the real’s price, liquidity and volatility.
“It’s a perfect storm for a speculative attack on the real. They (policymakers) will definitely be monitoring this,” said a broker in Sao Paulo. “What the market is looking for is the point at which the central bank gets uncomfortable.”

Chuck Again… The real was falling still today, and is trading well within the 4 handle… it’s a sad, sad thing for the currency that was once the best performing currency in the world…  But this is what happens when a country has political scandal, and then they attempt to do something about their underfunded pensions…  Is this a look at our future here in the U.S. with lawmakers trying to do something about Social Security, Medicare and Medicaid?  for those are the elephants in the room when it comes to causing problems for the U.S…. 

Currencies today  5/23/19 American Style: A$.6876, kiwi .6492, C$ .7426, euro 1.1136, sterling 1.2642, Swiss $.9917, European Style: rand 14.4396, krone 8.7525, SEK 9.6415, forint 293.57, zloty 3.8680,  koruna 23.1810, RUB 64.32, yen 110.11, sing 1.3816, HKD 7.8487, INR 69.91, China 6.4049, peso 19.02, BRL 4.0340, Dollar Index 98.20, Oil $60.46, 10-year 2.36%, Silver $14.49, Platinum $789.83, Palladium $1,319.20, and Gold… $1,277.17

That’s it for today…  and for tomorrow, and Monday! Yes, Monday we will celebrate Memorial Day…  Today is my grandson, Braden’s Birthday… Happy Birthday Buddy!  Yes, Memorial Day is more than the opening of public pools, BBQ’s and graduation parties… it’s about remembering our fallen heroes…  those that died while in service for the U.S. As far as Holiday’s go, this is a fairly new one, beginning in 1971, and previously called Declaration Day…   Cardinals split the doubleheader with the Royals, winning the night cap…  They needed that win last night, as their skid was beginning to become very glaring…  At the beginning of the month the Cardinals were 10 games over .500, and today a little more than 3 weeks later, The Cardinals are 1 game over .500…. UGH!    The Turtles takes us to the finish line today with their song: Happy Together…  I hope you have a Tub Thumpin’ Thursday, Fantastico Friday, and Wonderful Holiday Weekend, and promise you’ll Be Good To Yourself!   Bye~

Chuck Butler

May 22, 2019

* Dollar Bugs still rule the roost… 

* Blues Win!

Good day… And a Wonderful Wednesday to you! I’m still feeling the wrath of cellulitis in my leg, but for right now, it seems to be bit better… Blues Win! Blues Win! Blues Win! And they won the Western Conference Finals 4 games to 2, and advance to the Stanley Cup Finals, of which the Blues franchise hasn’t played in in 49 years! The last time they played in it I was 15… and they played the Boston Bruins, the franchise that they’ll play this year too! WOW! Now I’m getting nervous… The Blues need 4 more wins… come on boys, skate! Let’s Go Blues! Cardinals and Royals were rained out, and play a double header today, something you just don’t see much of any longer, and in fact, it won’t be a true double header, as after the first game, they’ll clear the stadium out and start the 2nd game a few hours after the first one… (You know, gotta get that ticket revenue, you can’t be giving away a home game!) Kansas greets me this morning with their song: Play That Game Tonight…

Well, another day, another day of dollar strength… I know I sound like a broken record, which I can use that phrase again, with the return of vinyl records! But the trading each day is what it is, and it’s full of dollar bugs ignoring everything that’s going on, and pretending that it’s all sunshine and lollipops out in the real world…

Yesterday, here in the U.S. we had Existing Home Sales for April, disappoint for a 2nd consecutive month… And the dollar bugs didn’t even wince, shrug, or bat an eye… Gold lost $3 and some change, the euro is weaker still this morning, and the U.S. Treasury 10-year yield is 2.41%… the yield has been inching higher in recent days, which means there’s more selling of Treasuries than buying of them… A report last week told the story of how China’s U.S. Treasury holdings had dropped to the lowest level in some time last month… Uh-Oh… Could we already be seeing China exercising the nuclear option I talked about yesterday? It’s difficult to call at this point, but it sure seems to be at the scene of the crime…

Well, it appears that the end of May is near… And no I’m not talking about the month! I’m talking about PM May, who once again has placed her PM-ship on the line with the acceptance of the latest BREXIT deal, which most observes believe doesn’t have a snowball’s chance in hell, So, goodbye PM May, we hardly knew ya… And every day the pound gets whacked a little more because of this dang BREXIT thing…

The daily march higher for the price of Oil stopped yesterday, hit a speed bump, whatever, but the price slid downward for the first day in a about  10 days…  I would think that the saber rattling with Iran would have pushed the price of Oil much higher than it did… But I guess I’m happy it didn’t… It’s like I’m torn between two lovers here…  I would prefer, for my wallet’s sake, that the price of Oil remained weak… But in my heart of hearts I know that without manipulation, the price would be higher…  I don’t like manipulation of any kind, free floating, markets are my bag baby! 

The U.S. Data Cupboard will yield the Fed’s FOMC Meeting Minutes from their last meeting in April this afternoon…  I think the markets are bracing themselves for a wild and wacky Meeting Minutes… I also think they’re going to be disappointed, that is unless you want to hear the same old B.S. about a strong and robust economy…  

The MarketWatch people sent me a note yesterday about the 16 reasons why Americans can’t save money…  They include: tattoos, vacation, college, restaurants, opportunity lost, cars, credit cards, lottery (this one I questioned, but then read that the lowest income sector spends more on lottery tickets than any other sector), clothing, shoes, tchotchkes and stuff, and the list goes on…  the point here is that many of these things we need, but do we need the very best of them?  So we need that Cadillac hybrid SUV, instead of a regular SUV? (I know you’re trying to do the economy good, right? )  So, hopefully, you get my point, otherwise you’ll fall victim to these spending habits that keep you from saving for retirement…  And shouldn’t that be the goal?  it was for me…

Basically, I watched my dad work and toil in his job for 7 days a week, every day until he was 65, then he was diagnosed with cancer and died 5 years later, never getting to enjoy his retirement… I swore to myself then that the same thing wouldn’t happen to me, and I began to save for my retirement, I was 40 years old, so I was late to the game, but it didn’t matter to me… 

OK… data wise… Yesterday, in New Zealand, we saw their 1st QTR Retail Sales figure, and while it had dropped considerably from the 4th QTR 2018, it didn’t drop as much as expected, so in the strange way the markets viewed the report as favorable…   4th QTR Retail Sales were 1.7%, and 1st QTR 2019 Sales were 0.7%…    but were expected to fall to 0.6%…  I’m not so “relieved” that it only fell to 0.7%… I’m disappointed that it fell that much!  But kiwi didn’t move much on the data, so once again the strength of the U.S. dollar is outweighing any foreign data that prints… 

Well, bust my buttons! Look at what time of the morning it is! I can’t believe this has taken me so long to put together this morning!  I think I was daydreaming a bit, and zoned out, during writing! yeah, that’s the ticket!  Any-old-way…  I’m heading to the Big Finish, will you come with me? 

To recap… The dollar bugs still have the conn on the currencies and metals…  Existing Home Sales in April fell for a second consecutive month, and the dollar bugs didn’t bat an eye…  Today we’ll see the Fed’s FOMC Meeting Minutes…  I can’t imagine they have a grenade to throw at the markets from left field here, so let’s move on…  

For What It’s Worth…  OK, I first want to thank Ed Steer, for pointing me to this article. Ed can be found at www.edsteergoldandsilver.com. this article is written by the great James Grant and it’s about the Fed, so you know it’s going to be a good one, and it can be found here: https://www.nysun.com/national/regime-change-for-the-fed-and-honest-rates/90694/

Or, here’s your snippet: “Ladies and gentlemen, it’s a blemish on the age that so many of us know the name of the Federal Reserve chairman. In a better world, that government functionary would be as obscure as what’s-his-name, the home plate umpire who got no arguments calling balls and strikes at Yankee Stadium the other night.

Who elected the Greenspans, Bernankes, and Powells to be the arbiters of interest rates, asset prices, the rate of inflation and who knows what else? It wasn’t Alexander Hamilton. Nor was it the Fed’s own founders. If the authors of the 1913 Federal Reserve Act could return to earth to inspect their handiwork, the shock might kill them all over again.

Congress envisioned an institution to function in the context of the international gold standard. This meant a dollar defined as a fixed weight of gold. You should have heard old Carter Glass, the congressional father of the Fed, berate the critics who dared to suggest that he was scheming to replace the gold dollar with a scrap of green paper.

Well, Glass himself is to blame for much of the evil that followed. The legislative preamble to the act that Woodrow Wilson signed describes a bill “to furnish an elastic currency, to afford means of discounting commercial paper, to establish a more effective supervision of banking in the United States-and for other purposes.”

These other purposes quickly became the principal ones. No sooner did America enter the Great War than the Fed lent a hand to facilitate the government’s borrowing. By the time the system celebrated its 30th birthday, in 1943, the central bank was pegging interest rates to suppress the costs of financing an even greater war.”

Chuck Again…  Longtime Pfennig Readers know that I love to highlight anything that I can from James Grant that’s free!  And if you have the time today or tonight, or whenever, I would certainly click on the link above and read the article in whole… I think you’ll come away thinking, “boy that James Grant” knows what he’s talking about… 

Currencies today 5/22/19 American Style: A$.6886, kiwi .6504, C$ .7470, euro 1.1168, sterling 1.2667, Swiss $.9923, European Style: rand 14.3620, krone 8.7384, SEK 9.6335, forint 292.28, zloty 3.8530, koruna 23.0863, RUB 64.43, yen 110.40, sing 1.3783, HKD 7.8496, INR 69.71, China 6.9048, peso 19.01, BRL 4.0768, Dollar Index 97.99, Oil $62.58, 10-year 2.41%, Silver $14.47, Platinum $811.48, Palladium $1,311.31, and Gold… $1,275.45

That’s it for today…  Up late last night watching the post game shows. This is a BIG DEAL for St. Louis, folks… 49 years is a long time to wait for your team to have a chance to win it all… My sons have never seen the Blues in the Stanley Cup Finals, but Andrew on the other hand has witnessed 3,  and Alex 2, Cardinals World Series Championships…  Now the Blues need to win one at time to total 4, and this town will light up like Christmas!  My good friends, Duane and Rick are bigger fans of the Blues than most people I know, I know today they are smiling like the Cheshire Cat…   Elton John takes us to the finish line today with his song: Honky Cat…   I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

May 21, 2019 

* Dollar bugs continue to rule the roost… 

* What’s a nuclear option? Chuck explains… 

Good Day… And a Tom Terrific Tuesday to you! Tom Terrific and his wonder dog, Mighty Manfred, need to pull Crabby Appleton ( me ) out of his crabby mood this morning… My leg was screaming at me all night, and I just couldn’t get comfortable without pain… UGH! I’ve lived with pain somewhere in my body since I was 21, when I first threw my back out, only to find out a few years later, that I had ruptured the disk and no amount of pain pills, acupuncture, chiropractic work was going to relieve it… It’s been one thing after another year after year, something else hurts me… Pain is part of my life I guess… if I had known I would live this long, I would have taken better care of myself in my youth, instead of hurling my body in football games… But what’s done is done… As my mom would say, “you made your bed, now lay in it”… Big Head Todd and the Monsters greet me this morning with their song: Bittersweet…

But I don’t let it get me down, or hold me back from doing what I want to do… Although I am very limited with what I can do physically these days, since my 2nd major cancer surgery in 2007… Next month is an anniversary for me that I rejoice in observing… In June it will be 12 years since I was diagnosed with Stage 4 cancer… I know, I’m lucky to have lived this long, but the one thing I always had in my mind, was that I wanted to see my kids grow, and I thought that my work in writing had not been complete, that investors needed me… I was kind of full of myself back then, but cancer took care of that!

I’m sorry that I’ve turned today’s letter into some Chuck info… Sorry… But in reality, there’s nothing really to talk about, as the dollar bugs still rule the roost…. The currencies and metals can’t find bids… There was more talk about tariffs yesterday, but in reality the cat is out of the bag with regards to the Trade War… It’s here… And the only thing we can hope doesn’t happen, is that the Chinese who can’t match the U.S. tariff dollar for tariff dollar ( in other words we import more of their goods than they import of ours), that they don’t invoke the nuclear option… What’s that I hear you asking? Well, it would be to either begin to sell Treasuries, or just not show up at the auction window any longer… That would require the Fed to step in and begin buying Treasuries again… only this time it wouldn’t be called, Quantitative Easing, for it would be the for survival of our economy! Because, as I’ve explained many times in the past, we as a country use the sale of Treasuries to finance out deficit spending…  And you don’t see a major cut in deficit spending do you?  Well then, somebody would have to buy the Treasuries! 

And the Data Cupboard has basically nothing to help us make decisions… Yesterday, today and tomorrow are jam packed with Fed Head speakers…. You know, I really don’t care what they have to say any longer, because they don’t have any idea what’s going on in our economy… Tomorrow we will see the Fed’s FOMC Meeting Minutes to see if they did talk about rate cuts, or was Powell’s press conference after the last meeting, where they left rates unchanged, but changed their verbiage, was just a providing cover for the stock market… Speaking of the stock market, a slow burn seems to be taking place folks… Sort of like the old adage that if you put a frog in boiling water it will jump out, but if you put him in water in a pot, and slowly turn up the heat, he’ll never notice until it’s too late…. Consider yourself warned… for the markets seem to want to turn up the heat on stocks very slowly…

The price of Oil seems to be the only anti-dollar asset that’s on the rise these days… But we’ve seen the game played before… The price of Oil rises, and brings back all the players again, and they then proceed to ramp up supply, which brings the price of Oil back down, and all the players go home again, and we rinse, lather and repeat…

And with the price of Oil rising again, that means the Russian ruble is also on the rally tracks… But the ruble’s daily moves are so minimal that they are hardly noticed, except for someone with a keen eye on rubles like me! HA! There! I finally had some feeling for what I was writing this morning…  I knew it was there, it was just playing hard to get to this morning! 

We will see 1st QTR Retail Sales from New Zealand today… But like I’ve been talking about in recent letters, it matters not, right now that is, that foreign data prints strong or expectantly… Not with the sentiment toward the U.S. green/peachback going on in the markets right now…  Maybe the Fed’s FOMC Meeting Minutes will shake the tree and cause some dollar bugs to fall off the limbs today…

 The U.S. Data Cupboard does have Existing Home Sales for us today, but since this data has been on the slippery slope downward in recent months, traders just shrug it off, so there you have it… I believe the data will disappoint once again, but who’s counting, besides me? 

To recap…  The dollar bugs still have the conn, and no amount of bad stuff going on in the U.S. (Maybe a slow burn in stocks, among other things) will change the sentiment of dollar traders…  Chuck talks about the nuclear option that China holds… But doubts that it comes to that…  Gold can’t find a bid, but the price of Oil continues to ratchet higher daily… 

For What It’s Worth… I was looking through Reuters yesterday, just perusing articles that were the re when I cam across this one, about GDP and Debt… When an article has a title that goes like this: U.S. growth would have contracted without trillions in government, consumer debt: It’s bound to catch my eye… I think it’s a good one, and it can be found here: https://www.reuters.com/article/us-funds-doubleline-gundlach/u-s-growth-would-have-contracted-without-trillions-in-government-consumer-debt-gundlach-idUSKCN1SK2KW

Or, here’s your snippet: “U.S. growth appears to be based “exclusively” on government, corporate and mortgage debt and the economy would have contracted if the United States had not added trillions in debt, Jeffrey Gundlach, chief executive of DoubleLine Capital, said in an investor webcast on Tuesday.

“Nominal GDP growth over the past five years would have been negative if U.S. public debt had not increased,” said Gundlach. “One thing everybody seems to miss when they look at these GDP numbers … they seem to not understand that the growth in the GDP it looks pretty good on the screen is really based exclusively on debt – government debt, also corporate debt and even now some growth in mortgage debt.”

If the U.S. Treasury had avoided increasing its debt then nominal GDP would have been negative in three of the last five years, “even with all of the exact mortgage, corporate, and student loan growth that occurred,” Gundlach told Reuters in an email, following the webcast.

“If those non-Treasury debt categories had not grown, either, GDP would have been very negative.”

Chuck again… You tell ‘em Jeff! The article goes on to explain his position on this, so like I said I think it’s a good one…  

Currencies today 5/21/19 American Style: A$.6875, kiwi .6504, C$ .7456, euro 1.1146, sterling 1.2692, Swiss $.9898, European Style: rand 14.4353, krone 8.7857, SEK 9.6699, forint 293.12, zloty 3.8646, koruna 23.1284, RUB 64.54, yen 110.27, sing 1.3793, HKD 7.8492, INR 69.70, China 6.9138, peso 19.08, BRL 4.0980, Dollar Index 98.10, Oil $63.60, 10-year 2.42%, Silver $14.43, Platinum $814.98, Palladium $1,330.15, and Gold… $1,275.38

That’s it for today…  Again, sorry about all my whining above… Our Blues are back on home ice tonight for Game 6, which could be the deciding game in the series if they win… Come on Boys, win it in front of your home crowd!  The K.C. Royals come to town for 2 quick games starting tonight, that is if the torrential rain that’s being predicted stays away for the game. Every time the Cardinals play the Royals, I have bad memories of a World Series being stolen from us by Don Denkinger…  The Umpire that called a runner safe at first, but was out by 2 feet!  No replay in 1985, so that was that…   Sort of like the 5th down play at Missouri when they had beaten the eventual national champions that year, Colorado, but the refs forgot how to count…  And then in game 3 of the hockey series, the NHL stole a game from the Blues…   Why does this stuff happen to my fave teams?  AC/DC takes us to the finish line today with their song: You Shook Me All Night Long…  Which is exactly what that cellulitis pain in my leg did to me last night! UGH!  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

 

May 20, 2019 

* Dollar bugs continue to hold the conn on the currencies & metals!

* Blues Win! Blues Win! Blues Win! 

Good Day… And a Marvelous Monday! What a great weekend for our Blues, after having game 3 stolen from them by the NHL, the Blues bounced back to win the next two, and go up 3-2 in the best of 7 series, with game 6 on home ice… Friday night was a real nail biter, but yesterday, the Blues dominated the Sharks on their way to 5-0 win in San Jose! So, the Blues are one win away from facing the Bruins in the Stanley Cup Finals… Pretty amazing considering where this team was in December! My beloved Cardinals limp home from an awful road trip last week… We will celebrate grandson, Braden’s birthday this coming weekend, and find out the gender of his baby sibling to be! I was outside all day on Saturday and Sunday this past weekend, and I was plum tired come Sunday night! Live greets me this morning with their song: All Over You…

Well, the dollar bugs continued to take liberties with the currencies and metals on Friday, with the Dollar Index moving as high as 97.97 to end the day, starting the day on Thursday at 97.59… With the euro so heavily weighted in the Index this price move indicates the euro lost a lot of ground on Friday, which it did… And proves once again that as long a currency is in a strong trend, bad data doesn’t upset it, and good data from other countries don’t do it any harm, and the foreign currency with the good data doesn’t get any love… A year or so, I wrote that I had read that Traders’ sentiment toward the euro was changing. At that time, it was looking as if the European Central Bank (ECB) was going to be able to remove all stimulus, including negative deposit rates, very soon… And at that time I said that it appeared the strong dollar trend was over… But just as soon as sentiment changed to favorable to the euro, it changed back… And the euro and other currencies haven’t been able to shake the confidence of the dollar bugs…

Remember last week, when I told you that Eurozone 1st QTR GDP had proved resilient and didn’t lose any ground from the 4th QTR print? The euro received no love for that data… which was another sign to me that the strong dollar trend was still in place… UGH!

And then on Friday, the Italian PM said some things like “The euro harms his country”…  Really? Come on Mr. You should get down on your knees and thank the Good Lord above that you were included in the Euro…  Otherwise Mr., your borrowing costs would have been through the roof this past decade, as you dealt with your debt buildup… Think about that before you make stupid comments like that, that will end up causing damage to the euro’s value…  What a knucklehead! 

Gold got whacked to the tune of $9.20 on Friday… Someone has to explain to me, why? The world is a tinder box looking for a match… The debt of the world is unsustainable… The Data here in the U.S. continues to point to a downturn in the economy, and the Fed doesn’t have enough arrows in their quivers to combat a deep recession… Need I go on, because I will, don’t tempt me! HA! Seriously though… Gold gets sold because someone shows up at the COMEX with an armful of short Gold trades… There isn’t one thing going on in the world today that would signal to me that Gold needs to get sold… Not one thing!

To add to the world’s miseries, this past weekend the U.S. began a verbal assault on Iran…  Saber rattling if you will… of which, saber rattling that is, usually gives Gold a boost…  

Before I say something I’m sorry for later… I had better move on to other things… The foreign Data Cupboard this week is pretty barren, as there will just be some Industrial Production data from Japan, and Current Account data from the Eurozone this week…

The price of Oil continued to ratchet higher and now trades with a $63 handle this morning, as our friends at OPEC (NOT!) are talking about further cuts in production, and the then there’s the saber rattling that we just talked about as another reason for the boost to the price of Oil…  Hmmm…  Now there’s a real, if the great writer, Grant Williams, doesn’t mind me borrowing his tag line… Things that make you go Hmmm…. 

The U.S. Data cupboard this week will be interesting, in that we won’t get any real economic data until Friday this week, but in the meantime, on Wednesday, the Fed’s FOMC meeting minutes will print… I read a piece sent to me from longtime Reader, Bob, yesterday, that was all about how over ½ the families in this country are one paycheck missing from an economic calamity…

And that reminded me of a cartoon that I copied and sent to my friends, and said: “This Is Kathy in a few years”… Here’s the cartoon:

Late last week, Non-Sequitor, in the comic strips had a very funny to me that is, comic strip that day… it was Titled: Post Economic Apocalypse Campfire Stories: And it had a family that was living in a cave, and the woman was cooking something over an open fire, and she says: OK, kids, gather around to hear your father tell us again how he tried to warn everyone this was coming, but no one would listen….

I even had a dear reader send me a note and tell me that the cartoon strip had reminded him of me that day! So…. Got Gold?

In India this past week, they held elections (Yes it was that time again) and PM Modi was reelected to another term… Longtime readers will recall me talking about Modi during his first campaign was someone that India needed, as his reforms would unlock the economy of India and set the country up for a decade of economic growth… And that the rupee would rally on his election… And it did for about 9 months, and it was at that time that all the euphoria of a Modi win was fading, as he was unable to get his reforms through in a timely fashion… So, I’m not putting a lot of sugar on his reelection, but just hope that his second term is better than his first…

In China, the renminbi continues its slow march to a deep dark abyss… I just can’t get past the comments by the Chinese official who stated months ago, that the Chinese would not weaken the renminbi to offset the tariffs… HOGWASH! I know, I know, you kept your fingers crossed behind your back when you made that statement, eh? Well, how much weaker will the renminbi get? The renminbi has already fallen to a 6.91 and change figure… 6.95 is next, and then 7.00… But what’s a country to do to offset the tariffs being placed on their goods for delivery to the U.S. ? I mean, besides admitting that they HAD been stealing our intellectual property, and promise to stop? Countries have learned a popular way to deal with economic problems… Allow their currency to weaken… The Chinese are no different, folks… And one day we’ll be having this discussion about the U.S. and the dollar… THAT I’m sure of!

And in Australia, they held an election that created a majority for the current PM’s, Morrison, conservative coalition had secured 77 seats, with 76 needed for a majority… So, now there’s a real gov’t. in place in Australia, and no hodge podge makeup of a government…  This news should have pushed the Aussie dollar (A$) a bit higher, but any attempt to do that, was pushed back by the U.S. dollar bugs… 

To Recap…  The dollar bugs are in complete control this morning, and it all started late last week… Weak U.S. Data won’t budge the dollar from its lofty perch, and good foreign data doesn’t help the respective currency related to the good data… As Chuck reminds us, these are typical signs of a strong dollar trend… One that he thought had ended a year or so ago, but with sentiment ruling the roost these days, instead of fundamentals, the changes happen so fast…  Oil is up, Gold is down, India and Australia held elections, and the Blues are one win away from the Stanley Cup Finals! 

For What It’s Worth…  Well, I first saw this on Zerohedge.com and then Ed Steer highlighted it in his letter on Saturday, and since I talked about this above, I thought what the heck let’s talk about it… This is an op-ed by Pat Buchannan about Who Wants a War with Iran?  and it can be found here: https://buchanan.org/blog/who-wants-this-war-with-iran-137040

Or, here’s your snippet: “What would such a war mean for the United States?
It would not bring about “regime change” or bring down Iran’s government that survived eight years of ground war with Saddam Hussein’s Iraq.

If we wish to impose a regime more to our liking in Tehran, we will have to do it the way we did it with Germany and Japan after 1945, or with Iraq in 2003. We would have to invade and occupy Iran.

But in World War II, we had 12 million men under arms. And unlike Iraq in 2003, which is one-third the size and population of Iran, we do not have the hundreds of thousands of troops to call up and send to the Gulf.
Nor would Americans support such an invasion, as President Donald Trump knows from his 2016 campaign. Outside a few precincts, America has no enthusiasm for a new Mideast war, no stomach for any occupation of Iran.

Moreover, war with Iran would involve firefights in the Gulf that would cause at least a temporary shutdown in oil traffic through the Strait of Hormuz — and a worldwide recession.”

Chuck again… Mr. Buchannan does a good job of explaining why Iran doesn’t want the fight, and why the U.S. shouldn’t want the fight either, of which I agree with… 

Currencies today 5/20/19 American Style: A$.6917, kiwi .6537, C$ .7442, euro 1.1158, sterling 1.2743, Swiss $.9907, European Style: rand 14.3855, krone 8.7826, SEK 9.6478, forint 292.26, zloty 3.8522, koruna 23.0895, RUB 64.70, yen 109.90, sing 1.3762, HKD 7.8494, INR 69.68, China 6.9176, peso 19.13, BRL 4.0959, Dollar Index 97.96, Oil $63.01, 10-year 2.39%, Silver $14.48, Platinum $823.00, Palladium $1,328.00 and Gold… $1,276.70

That’s it for today…  Crazy stuff going on in the world, eh?  Man, the cellulitis in my leg just won’t heal, and brother is it painful! When you take chemo, you subject yourself to slow healing of cuts, wounds, etc.  And when you have something as strong as cellulitis, it’s going to take a long time! UGH!  But I don’t let it stop me from what I want to do!  So, did you all read last week, that my darling granddaughter, Delaney Grace is going to sing the national anthem before a baseball game this coming weekend?  We have a wagon full of people all signed up to attend… OK… Nazareth takes us to the finish line today with their song: Holiday…  A classic rock song for sure!  I hope you have a Marvelous Monday, and please remember to Be Good To Yourself!

Chuck Butler