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Rocktober 1, 2018

* Currencies attempt to rebound after sell off 

* Gold continues to get whacked… 

Good day… And a Marvelous Monday to you!  Welcome to Rocktober! A longtime Pfennig Tradition of calling this month Rocktober continues… And if I’m about anything in life, it’s “tradition”… A great weekend on my part this past weekend, except my beloved Cardinals blew it and didn’t make the playoffs for the 3rd consecutive year… UGH! But other than that, my Missouri Tigers had a bye, I watched my darling granddaughter, Delaney Grace play soccer, and spent the better part of yesterday with my good friend Rick… I’m no longer employed by anyone, so that makes me officially retired, except I get up early in the morning to write this letter… for free! My dad used to have a saying, he’s say, “I had better get my head examined” , which is what comes to my mind when I wake up before the farmers and begin to write… But it is what it is… The Killers greet me this morning with their song: Somebody Told Me…

OK… well, Thursday morning the euro was trading at 1.1710, and that didn’t last too long, as the trap door under the euro was sprung, and by the end of the day it was trading with a 1.15 handle… All because the Fed hiked rates, and removed the “accommodative” wording from their statement… Need I remind everyone out there buying dollars because of the Fed’s stance, that 1. Interest rates are still only 2-2.25%, and 2. If the Fed is looking at 2nd QTR GDP as their key to hiking rates and being so hawkish, that they might want to step back and take a look at recent history…

Remember back in 2009, when economists and the government, saw “green shoots”? What happened to those green shoots? They saw their vines get brown and die… that’s what… And then we’ve had on couple of occasions in the past 9 years, where we saw a quarter of good growth, only to be disappointed the following quarter…

The Daily Reckoning (www.dailyreconking .com) highlighted these for me last week… check this out… In the first quarter of 2015, growth was 3.2%, but by the fourth quarter that year growth had fallen to a near-recession level of 0.5%.
In the third quarter of 2016 growth was 2.8%, but it fell quickly to 1.2% by the first quarter of 2017. In the third quarter of 2017 growth was 3.2% but then returned to 2.0% by the first quarter of 2018, about the average for the past nine years.

I shake my head in disgust at these numbers… and think, Hey! Oh, and don’t forget that year or so ago, I started writing about the tent revival in Global Growth, right? Well, guess what has gone to the wayside? That’s right Global growth… One day it’s here, the next day it’s gone…

So, this all plays well in the sandbox with my call before the 2nd QTR GDP printed that it was going to be like a star that’s about to burn out, that it shines the brightest right before the burn out…

The Fed Heads are out of touch with reality folks… They sit up in the Eccles Building and chart their dots for rate movements, without stopping to take a look around at the economy… The Trade War… and themselves!
So, as I’ve said before over and over again, let the Fed Heads keep hiking rates, they’ll have to reverse them sooner or later…

The euro got oversold on Thursday and recovered a bit on Friday and in the overnight markets last night, and trades with a 1.16 handle this morning. 

The BIG NEWS overnight has been centered on a New and Improved NAFTA… Where’s Ross Perot, when you need him to explain to the public what this is going to do? HA! Well, the New and Improved NAFTA won’t get the seal of approval from Congress until next year, and who knows, by then it could be completely different! But I have to say Kudos to the negotiators who got this done right under the deadline wire… 

The Canadian dollar / loonie, and Mexican peso are both beneficiaries of this new Trade deal, with the loonie out pacing the peso’s gains…  The loonie gets the extra push from the rise in the price of Oil late last week… Yes, don’t look now, because I’ll tell you…  The price of Oil is trading with a $73 handle, and continues to rise despite President Trumps desire to have a cheaper Oil price. 

The Russian ruble is also seeing a lot of love from currency traders and investors, as it is the leading Petrol Currency these days. I have to say that, once again, I’m quite impressed with Russia’s ability to work through the economic sanctions placed on it by the U.S. and European Union. 

A quick perusal through the economic calendars here and abroad, reveals that there’s just not much on the agenda of anyone’s Data Cupboard, until we get Retail Sales from the Eurozone on Wednesday, August Factory Orders here in the U.S. on Thursday, and of course with it being the first Friday of the month this week, we’ll see the Jobs Jamboree take place on the back-end of this week. 

There are a lot of “little data prints” along the way, but I’ve highlighted the real economic data prints for you. 

I haven’t seen the Trade figures from China, but all the reports coming from there have Trade figures falling by a significant amount, due to the tariffs and Trade War with the U.S. I’ve said it before, and I’ll say it again, nobody wins in a Trade War, and sooner or later, we’ll begin to see the Trade figures here in the U.S. also start to fall… I told you last week that the CEO of Ford Motor Co. blasted the steel tariffs and said that his company would lose $1 Billion because of the tariffs… That’s just the tip of the iceberg folks… There will be more losses, and strains on the already shaky economy… 

I say shaky economy, Jerome Powell says robust economy… I guess we’ll see who’s right, eh? I read this morning that 2/3rds of economists believe the U.S. will be in recession by 2020… I believe it will be before that, but then that’s just me being me… 

Longtime readers will recall me warning the Reserve Bank of Australia (RBA) for not hiking interest rates while there was a housing bubble going on in the country… Well, I read an article this past weekend that talked about the housing bubble… Look, folks, when the media finally gets around to writing about something it’s probably really to be over… But Australia isn’t the only country that’s experiencing a housing bubble… I’ve chronicled the housing bubbles in Toronto and Vancouver, and all they’ve seen to stop them is one 25 Basis Points rate hike from the Royal Bank of Canada (RBC)… When will these Central Bankers ever learn, when, will, they, ever, learn?

What on earth is going on with Gold these days? I was stopped by a longtime Pfennig Reader in a restaurant yesterday, and he asked me when Gold was going to begin to rise again?  I told him that the Chinese were controlling the price of Gold at the moment, with the blessings of the U.S. (because otherwise it would be illegal to do what’s being done!) And if the Trade War and tariffs ended, the governor would be removed from the price of Gold…  

I don’t know if you’ve been watching, but Silver has quietly moved higher while the price of Gold has been beaten around the head and shoulders. Silver’s moves are in cents, not dollars like Gold, but the moves are there, you just have to look for them! 

And what’s all this talk going on these days about lifetime earnings, and other socialism thinking? Last night I had a brief conversation with Alex’s girlfriend, Grace, who was telling me about a class she’s in that the professor is touting Marx and socialism… I said, OMG Grace, you’ve got to tell her that in the history of mankind Socialism has NEVER worked! And after she had gone, I sat here thinking that we as a country are in deep dookie, because that’s the $&# that young minds are being taught… God help us, that’s all I can say about that! 

Before we head to the Big Finish today, I wanted to mention the passing of Marty Balin, the lead singer of the Jefferson Starship, who’s record: Miracles, is one of my all-time fave recordings… RIP Maty Balin…

To recap…  The new and improved NAFTA deal has been reached by  U.S., Mexican and Canadian negotiators, and that has seen the loonie and peso receive some love from Traders. The price of Oil continues to ratchet higher, and gives the Petrol Currencies led by the Russian Ruble… Then Chuck goes all crazy on pointing out the blips of growth we’ve seen in the past years, only to be disappointed a month or so later.  

For What It’s Worth… Well, it’s happening again… Argentina has economic problems… The IMF is about to announce a funding for Argentina, but I don’t think that’s going to make a difference… I found this on Ed Steer’s Saturday letter (www.edsteergoldandsilver.com) and it’s about the Argentine rate hike and can be found here:https://www.zerohedge.com/news/2018-09-28/aregntina-hikes-rates-65-peso-plunges-new-record-low

Or, here’s you snippet: ” It appears the market is willing to test BCRA’s mettle as it pukes pesos down to a new record low against the greenback and pushes towards the bottom of its new “no intervention” band.
The new record low is now 41.54/USD…

While not ‘allowed’ to intervene directly until 44/USD, Bloomberg reports that Argentina just hiked its Leliq rate to 65%.

The sharp drop follows Thursday’s 2.8% decline and comes despite the IMF agreeing on Wednesday to increase its bailout package to the Latin American country by an extra $7.1bn.

Paging Christine Lagarde…”

Chuck again… Crazy stuff going on down in south America, eh? But what else is new there? 

Currencies today 10/1/18… American Style: A$ .7218, kiwi .6607, C$ .7816, euro 1.1610, sterling 1.3040, Swiss $1.0176, … European Style: rand 14.1109, krone 8.1432, SEK 8.9082, forint 278.55, zloty 3.6818,  koruna 22.1931, RUB 65.56, yen 113.98, sing 1.3699, HKD 7.8274, INR 72.81, China 6.8665, peso 18.53, BRL 4.0507, Dollar Index 95.11, Oil $73.42, 10-year 3.09%, Silver $14.56, Platinum $812.03, Palladium $1,056.93, and Gold… $1,184.64, 

That’s it for today…  Can you believe that the regular season for baseball is over? Man did that go fast or what? Or, it’s probably just me getting older, and thinking things go by fast! UGH! No Cardinals in the playoffs once again, this is not a trend, it’s become a bad habit! But I still love them anyway… Was that not the worst play call in the history of college football on Saturday night, when Penn St. tried to run the ball on 4th and 5, when they hadn’t been able to run the ball all night? Strange call indeed! And with that, Junior Walker and the All Stars take us to the finish line today with their song: What Does It Take?  I hope you have a Marvelous Monday, welcome to Rocktober, and remember to Be Good To Yourself!

Chuck Butler

 

September 27, 2018 

* Currencies back off on Fed rate hike

* RBNZ leaves OCR unchanged… 

Good Day… And a Tub Thumpin’ Thursday to you! Well, my memo to my beloved Cardinals… Pack up the bats boys, it’s all over but the crying… I did something different for me last night… I came home to hear Alex playing his guitar, and for some reason, I decided to join him. Picked up my guitar for the first time in a couple of years, and played a little bit… This will be short-n-sweet today folks, I promise! The Rolling Stones greet me this morning with their song: Dead Flowers… 

Well there were no surprises at the Fed’s FOMC Meeting yesterday, the Fed heads raised the Fed Funds Rate 25 Basis Points (1/4%) bringing the rate to 2.25%. Fed Chairman, Jerome Powell, didn’t make any dovish comments, and instead talked about the Fed remaining on the dot path, or so they think!, which would mean another rate hike in December, and then more next year.  It was as rehearsed a press conference as there could be, and it all looked very sterile and robotic…  I just don’t see how they are going to be able to connect all the dots next year… 

The currencies, led by the Big Dog, euro, lost a little ground, but nothing to get to panicked about, the euro, for instance, is still trading above 1.17, with most of the euro’s downward move from 1.1765 yesterday is the reporting of a major problem with Italy’s budget… There go those crazy third cousins causing problems again! 

The Reserve Bank of New Zealand  (RBNZ) left their Official Cash Rate (OCR) unchanged at their meeting last night… The OCR remains at 1.75%, and inflation at 1.50%… So, at least they don’t have real negative rates, like we have here in the U.S. but… 1.75% for the tiny island nation, isn’t going to get anyone too excited to buy the currency… UGH!   

The RBNZ said in their communique that as long as inflation remained below 2%, the OCR would remain unchanged through next year… Wait! They said what? Yeah, they said that…  I shake my head in disgust with myself for thinking that the RBNZ was ready to hike rates… The June GDP was better than expected, and the trend there is good… But apparently not good enough for the RBNZ… 🙁

Gold lost $6.70 in trading yesterday, and the price of Oil bumped higher by 10-cents… President Trump was at the UN yesterday, and by all accounts he ticked off quite a few people, refused a meeting with Canadian PM Trudeau, and then had to hear from the Ford CEO who claims that the steel tariffs have caused Ford to lose $1 Billion so far… 

We finally get some real economic data from the U.S. Data Cupboard today in the form of Durable and Capital Goods Orders… These two data pieces can be very volatile, but give a good picture of what went on in the month they are reporting from… The recent prints have been negative… But there’s a good chance that the August print will be a positive one… 

To recap… The Fed did hike rates yesterday, and stated that they remain on their dot path, which would mean another rate hike in December  and then more next year… The currencies backed off a bit, but most of the euro’s downward move came from a problem being reported with the budget in Italy.  And the RBNZ left rates unchanged and said that they would remain unchanged through 2019… Chuck is beside himself on this one folks… 

For What It’s Worth… I struggled with this one this morning folks… but finally decided that it was FWIW worthy… It’s about how the IRS continues to target conservatives, and can be found here: https://www.zerohedge.com/news/2018-09-25/i-dont-give-shit-if-its-crime-fourth-veritas-video-reveals-irs-still-targeting

Or, here’s the snippet: “James O’Keefe just dropped the fourth installment in his series exposing the corruption and bias in the ‘deep state’. This report features two Internal Revenue Service (IRS) officials who candidly discuss the IRS’s unfair treatment of conservative non-profit groups.

In a separate meeting, attorney Semasek discloses to Project Veritas multiple times that “mistakes were made,” during the 2013 scandal when conservative non-profits were targeted when applying for tax-exempt status.
SEMASEK: “… you know what, for what it’s worth, on the record, I know people in Tax Exempt Government Entities. All that stuff we saw in the news, yeah mistakes were made”
Attorney Semasek, who worked for the IRS during the 2013 scandal, continued:
SEMASEK: “… The law requires that an organization can’t be political, it can’t be partisan to be tax exempt… Those employees in Cincinnati Ohio started to separate them and put them in a pile. And it turns out that they were like the Tea Party group of people. And I think they did, like Lois Lerner and maybe some of her employees were more liberal leaning or Democrats so I don’t know if they disallowed them, but they required them to produce more documentation to try to prove that they weren’t partisan.”

He repeated that mistakes were made:
SEMASEK: “… and that was bad. I think, from what people tell me, that really know about, there were mistakes made, but the problem with what happened… And again, there were mistakes made, and I think probably some people that were advised against conservative groups did make some mistakes.”

Chuck Again…  I guess I had better be careful calling out the IRS, eh? 

Currencies today 9/27/18… American Style: A$ .7228, kiwi .6642, C$ .7657, euro 1.1710, sterling 1.3128, Swiss $1.0296, European Style: rand 14.1025, krone 8.1222, SEK 8.8243, forint 276.40, zloty 3.6515, koruna 21.9616, RUB 65.83, yen 112.82, sing 1.3648, HKD 7.8155, INR 72.46, China 6.8731, peso 18.91, BRL 4.0580, Dollar Index 94.50, Oil $72.22, 10-year 23.05%, Silver $14.41, Platinum $826.21, Palladium $1,082.00, and Gold… $1,193.91

That’s it for today… Strange day yesterday, the Fed hikes rates, and the 10-year Treasury’s yield drops 3 Basis Points… I know, short term rates VS 10-year rates, but still I would have thought it would move differently… I’m just saying… Tried out a new place in town last night, but I doubt seriously it would replace my usual Friday night place! Emerson Lake and Palmer (ELP) take us to the finish line today with their song: Still You Turn Me On… And with that, it’s time to go… I sure hope you can make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

September 26, 2018

* Currencies remain in dullsville…

* Europe finalizes their new payments system… 

Good day… And a Wonderful Wednesday to you! All the hope for a good series VS the team in front of the Cardinals has come crashing down all around us! UGH! It appears that the hard charge the Cardinals put on in August, and early September, is going to turn out to be for naught… But being the eternal optimist with this stuff, there are still games to be played, by all parties involved, so we’ll see…  Alvin Lee and Ten Years After greet me this morning with their song: Choo Choo Mama… 

Another day yesterday, and another day of tight trading ranges… The euro has been trading around 1.1765 for 3 straight days, and all the other currencies fall in behind with little to no movement coming in ahead of the Fed’s FOMC meeting today. 

Early this afternoon we’ll see the color of the Fed heads rate hike, and their outlook going forward… I really thought, earlier this year, that by now the Fed would be rethinking this rate hike cycle they’ve been in since 2015.  And I expect the dollar to reverse some of the losses it has taken on in the past week… There’s always that chance that the rate hike doesn’t lead to dollar strength, if the rate hike was already priced in by the markets. 

Gold can’t seem to shake the $1,200 level, which is fine with me, given the rate hikes and all that… Besides it sure does give investors looking to diversify with metals a cheaper price to buy, eh?  

The price of Oil has really moved higher ever since President Trump called for cheaper Oil prices…  And with the price of Oil trading in the $72 handle, the Petrol Currencies, led by the Russian ruble are at least getting a little love from traders. The ruble though, has pushed downward to below the 66 handle, and that looks pretty good to me.  The direction, that is…  Remember the ruble is a European Priced currency, so as the trading level of the ruble goes down, it’s really rallying, because it would take less of the currency to make a dollar. 

Since the currencies are in dullsville, I’ve been wanting to get this off my chest, so here goes… 

Yesterday, I told you that the negotiations on the Trade Talks between the U.S. and China had been ditched… And then I received word that China says that they can withstand the tariffs that have been placed on their exports by increasing domestic consumption, investment and business sentiment in order to protect the economy from the impact of U.S. tariffs.

Now, longtime readers may recall me telling them years ago that China was going to insulate themselves from another financial crisis in the U.S. by increasing domestic demand… They talked about increasing domestic demand, but then the world began to rebound and Chinese exports were once again leading the Chinese economy… Now fast forward to now, and look what China’s talking about again? Increasing domestic demand… Well, maybe this time they’ll take this challenge seriously, because they sure didn’t previously!

The thing that I think about all the time, is something my dad used to tell me when I was a young man… he would tell me that China is a sleeping bear, and we as a country had better not ever wake the sleeping bear up… All these tariffs might be the thing that wakes up the sleeping bear… Think about that for a minute, what country has the second largest economy, with a very large population? That’s right, it’s China… And IF China wants to seriously increase domestic demand, then watch out, because they certainly have the population to achieve that feat!

An economy the size of China’s with their export prowess, and a strong domestic demand economy, could rule the world! I mean that, I truly do, folks… And it looks like we could be waking up the sleeping bear…

OK… got that off my chest and I feel much better! The New Zealand dollar / kiwi, moved positively yesterday (small moves) on the news that New Zealand Business Sentiment had improved last month. The Business Sentiment is still negative, but the improvement of the index was very noticeable and so kiwi was allowed to move a bit stronger. 

While we’re talking about New Zealand and the kiwi, it would be a good thing to tell you that the Reserve Bank of New Zealand (RBNZ) will be meeting tonight, (tomorrow for them).  Late last year, the RBNZ was hinting about a rate hike coming by this summer… I jumped on that “hint” and told you dear readers that it was good thing to buy ahead of a rate hike… 

Well, things didn’t quite work out like I thought the RBNZ was hinting at, but the RBNZ could save face with me, if they hiked rates tonight…  Unfortunately, that’s not going to happen, and once again we’ll be looking for any new hints in the statement following the no rate move announcement. UGH!

It appears that Europe has finalized their development of a payment system that would be outside of the dollar and the U.S.’s control.  So, as I’ve previously talked about, now Europe has a payment system, and Russia / China have their payment system.. Mark you journals for this will be the cause of the dollar losing its reserve currency status…  It’s not going to happen overnight! But as these payment systems begin to be used, and used more, the reliance of countries on dollars will be removed… I’m just saying… 

The U.S. Data Cupboard yesterday had the Case/ Shiller Home Price Index for July, and it showed that home prices had slipped for a second consecutive month…  I’m not sure what to think about that, other than if this is a trend, it’s not going to be a good thing…  But two months of data isn’t exactly an etched in stone trend… So, we’ll have to keep an eye on this data next month… 

The Fed’s FOMC Meeting takes place today, and that is the only thing listed on the Data Cupboard’s roster on this Wonderful Wednesday! 

To recap… The currencies are in dullsville, Gold can’t get past $1,200, and the price of Oil is still rising. Chuck gives us his thoughts on waking the sleeping bear, and Europe has finalized the development of an alternative payments system to SWIFT… 

For What It’s Worth… OK, since the markets focus today will be on the Fed’s FOMC Meeting, I thought this piece that the MarketWatch people sent me is FWIW worthy, especially on rate hike day here in the U.S. and the article can be found here: https://www.marketwatch.com/story/a-first-ever-fed-september-interest-rate-hike-could-set-stocks-reeling-wednesday-2018-09-25?mod=MW_section_top_stories

Or, here’s your snippet: “With the Federal Reserve all but certain to raise interest rates on Wednesday, investors may need to brace for sudden, unexpected market volatility as stocks have been underperforming on Fed Days in recent months.

Data published by Bespoke Investment Group Tuesday indicate that stocks, on average, fell 0.13% on the last 10 times the central bank held its policy meetings.

Adding to potential trouble, George Goncalves, head of U.S. rates strategy at Nomura, notes that a Wednesday rate hike would mark the first time that the Fed has tightened in September, a month in which the stock market historically has not performed well.”

Chuck again… At some point interest paid on money market account and band deposit accounts will be competition for the stock market. It’s difficult to call at what rate that would come into play, but it’s getting close, I can feel it… 

Currencies today 9/26/18: American Style: A$ .7258, kiwi .6656, C$ .7720, euro 1.1762, sterling 1.3153, Swiss $1.0340,     European Style: rand 14.2843, krone 8.1155, SEK 8.8222, forint 275.20, zloty 3.6427, koruna 21.7574,  RUB 65.78, yen 112.90, sing 1.3652, HKD 7.8121, INR 72.51, China 6.8647, peso 18.97, BRL 4.0952, Dollar Index 94.21, Oil $72.12, 10-year 3.08%, Silver $14.47, Platinum $827.11, Palladium $1,064.50, and Gold… $1,198.74

That’s it for today… I had a great lunch yesterday with good friend Duane, as we visited a new lunch place for us… Then sat outside to watch the baseball game with good friend Mike, but we only lasted 5 innings… My oncologist wasn’t none too happy with me yesterday, when I told her about my recent nasty fall… She wanted to wrap me in bubble wrap!  I guess she likes me? And why wouldn’t she? Everybody likes Chuck! HAHAHAHAHAHA! Stevie Ray Vaughn takes us to the finish line today with his song: The Sky Is Crying…   I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

 

 

September 25, 2018

*Currencies back off their highs from last week… 

* Gold is kept on a short leash… 

Good day… And a Tom Terrific Tuesday to you! I have an early morning appt. with my St. Louis oncologist this morning, so this will be a shorter than usual Pfennig today. With that said, my beloved Cardinals started their last three games at home against the team that’s in front of them in the standings… I would like to say that I was able to stay up to watch the entire game, but that would be a lie… I went to bed with the game tied 4-4…  I dropped my wife off at the airport yesterday morning at 4:25 am, so I have an excuse! And I see that the Cardinals lost the game… Uh-Oh! Ok, The Guess Who greet me this morning with their song: No Time…

Well, the currency moves from last week didn’t exactly continue through yesterday, and if anything we saw a bit of selling… I told you that I didn’t think the currency rally would last through Wednesday’s FOMC rate hike but I didn’t think it would end on Monday! UGH! There’s really not much in the way of economic data this week here or abroad, so the FOMC Meeting has the spotlight… What will Fed Chairman Jerome Powell say afterward? Will he revert to his somewhat dovish words of about 3 weeks ago? Or will he say the Fed needs to go onward and upward? I’m thinking that he might be feeling the heat of the weaker economic data, and will want to give himself some wiggle room going forward with rates…

The Trade War digs in its heels as the U.S. and China agree to halt talks on Trade negotiation… I feel sad about this, as I really thought that talks would be the way to get this done without throwing the two largest economies under a bus! But when one of the negotiators doesn’t really have their heart into the negotiations, well… It’s needless to say that things just don’t get worked out when that happens, right?   And I hear you asking, so, was it the U.S. or China that didn’t have their heart into negotiations?  Come on, really? This is a layup… it’s the U.S. folks, sad to say… 

OK… So, European Central Bank (ECB) President, Mario Draghi, said in a speech yesterday that “he sees a “relatively vigorous” pickup in underlying inflation”… And that, my friends, is the first sign, albeit hidden from the masses, but not me, of the ECB’s intention to begin to raise rates before next summer…  But then this morning, Peter Praet, a member of the ECB’s board, played down Draghi’s remarks with a comment of his own… 

Longtime readers will recall me talking about how traders don’t like it when Central Bank members don’t sing from the same song sheet, right? Well, this is what the euro has had to face, along with the pressure the dollar and the Fed rate hikes has added to the euro. I was reading about how there are so many short positions with euros, that a short squeeze could happen at any time… And then I thought to myself, well, we saw a big jump in the euro late last week, and that didn’t trigger a short squeeze, so I doubt the euro can hang its hat on that thought, as a way to get back to at least 1.20… 

Gold traded in a wash, rinse, repeat cycle yesterday, as it would climb to $1,200 and then get beaten back below the figure, only to see it rise up again, only to be beaten back down… This morning, the shiny metal is back to $1,200… But for how long? Well, probably, just as long as it takes for the boys in the band to get their instruments tuned…  

There’s something else that’s going on that scares the bejeebers out of me…  I’ll call it the great unwinding of safe havens…  Gold, euros, yen, and Treasuries have all been on the selling blocks lately, and it all looks to me as if the markets and the participants have all gone all-in on removing safe havens…   And if that’s the case, then we’re in for something that could be very ugly… 

It’s not good when everyone moves to one side of the ship, right? it’s not good when everyone wants a pet rock, right? And so on… And it’s not a good thing when everyone is buying dollars, and selling the contra currencies and assets that act as a governor, if you will.  And that’s what’s happening… right here, right now…  I’m just saying… 

I just used a term that I’m sure most youngsters have no idea what I’m talking about… a governor…   Well, that’s too bad, but… you always have Google to explain it to you! And since Google, Facebook, and Amazon are out to rule the world, you’ll be in good hands…   Of course I’m smiling like the Cheshire Cat, and chuckling to myself, here, alone in the dark basement with only my desk light to illuminate the area, where I’m writing… 

I told you yesterday that the data in the U.S. and abroad would be skimpy this week, with the FOMC rate hike in the spotlight… But we will see the color of New Zealand’s Trade Balance for August today… Since New Zealand is an island nation, and they depend on imports for just about everything that isn’t sheep, lumber and dairy related, which means their Trade Balance is usually a deficit… The key with New Zealand is that their exports balance out the imports as best they can… We’ll get a snapshot today of whether the key was turned… 

So, did you celebrate the Queen’s birthday yesterday? HA!  Hey! Did you hear that N. Korea’s Kim, has requested a meeting with President Trump? I sure hope it’s to get to signing an agreement to denuclearize, and not just leave with a handshake… 

A handshake used to mean something in business… Bank loans were gotten with just a handshake, cars were purchased, and mergers were agreed upon with just a handshake… But those days have been long gone for some time now, and that’s what got my goat when the last meeting between these two ended with a handshake to denuclearize N. Korea… Get it in writing, or wear a wire for goodness sakes!

The U.S. Data Cupboard has the Case/Shiller Home Price Index for July to view today… Last month, we saw home prices slip in June… So, this report is important in that it would confirm or deny a trend…  

In the errors and corrections section… Well, I wrote a BIG mistake yesterday… I said Russia had imported tonnes of Gold last month, when I meant they had imported 1 million ounces… UGH! Oh well, can’t win ‘em all, right? I do my best, to be accurate, folks… 

To recap… The currencies rally last week ended on Monday, but the downward moves were muted. Everyone has their eyes on tomorrow’s FOMC announcement and press conference. Chuck is seeing an unwinding of safe havens, is this a good thing? Chuck thinks not! And Draghi sees an uptick in inflation, is that his way of greasing the tracks for an earlier than next summer rate hike? Chuck thinks so… 

For What It’s Worth…  This is an interesting piece as it compares network news to professional wrestling… Ah, the days of wrestling at the Chase is in my memory bank… But this writer, gets to the heart of what’s wrong with major media these days, and it can be found here: https://internationalman.com/articles/professional-wrestling-and-the-media/

Or, here’s your snippet: “As a boy, I was quite non-violent, but I confess to having been fascinated with professional wrestling. For one hour, every Saturday morning, I’d watch Yukon Eric, Haystack Calhoun and Killer Kowalski attack each other in the ring in what was called, “professional wrestling.”

Of course, even as a boy, it was evident that it was a sham. Some wrestlers played the role of angry bullies; others were practically cartoon characters. The threats each made to the other before the match, the silly outfits, the absurd holds and body slams – it was clearly phony.
But, as adults, we’ve matured and are no longer so easily taken in.

Today, as responsible adults, we turn off wrestling and watch network news.

Some reporters play the role of angry bullies (Bill O’Reilly, Sean Hannity, etc.); others are practically cartoon characters (Greg Gutfeld, Rachel Maddow, etc.). And, like wrestling, it’s so compelling – watching liberals and conservatives trying to out-shout each other on the stage. Clearly, this is not objective, sober news-reporting, but it’s most certainly producing the desired effect – to get those who are gullible enough to tune in every night to receive the latest updates on a ceaseless rehash of recent events.

In recent years, the average viewer has begun to admit that this is largely a stage show; that conservative networks present a dramatically-skewed conservative slant, whilst liberal networks present a dramatically-skewed liberal slant. This practice has become so extreme that, if the viewer can force himself to flip back and forth from one station to the other, the same news event actually appears to be two different occurrences, the reporting is so divergent.”

Chuck Again… I believe I saw a Rick Flair imitator on TV news the other night! HA!

Currencies today 9/25/18… American Style: A$ .7247, kiwi .6646, C$ .7720, euro 1.1765, sterling 1.3148, Swiss $1.03.53, European Style: rand 14.3672, krone 8.1315, SEK 8.7911, forint 275.13, zloty 3.6458, koruna 21.7715, RUB  66.06, yen 112.87, sing 1.3655, HKD 7.8094,  INR 72.62,  China 6.8549, peso 18.98, BRL 4.0627, Dollar Index 94.17, Oil $72.42, 10-year 3.11%, Silver $14.31, Platinum $832.30, Palladium $1,060.82, and Gold… $1,200.30

That’s it for today… Well, in the end, the Pfennig wasn’t shorter than usual after all! How about that? My fat fingers must have been flying all over the keyboard this morning trying to keep up with the thoughts coming out of my head! HA! My beloved Cardinals have their backs against the wall now, will they come out fighting? I sure hope so! Have you ever been in a brawl, with your back against the wall? I have, and the only way out is to come out fighting… Hello, McFly? Are you listening? Sugar Ray takes us to the finish line today with their song: Every Morning…  And with that, let’s get to making this a Tom Terrific Tuesday! And remember to Be Good To Yourself!

Chuck Butler

September 24, 2018

Good Day… And a Marvelous Monday to you! Well, I finally came home to stay, at least for a couple of weeks! I had a fabulous time last week, as we visited good friends that live in the Hamptons… And then on Friday, some of my former colleagues visited me at my local watering hole… It was great to see Tim, Ty, Chris, Dane, and Danielle again! My beloved Cardinals swept the Giants this past weekend. There are only 6 more games left in the regular season. UGH!  This baseball season went way too fast for me, as it seems to me that it was just a month or so ago, I was attending Spring Training Games! Seals & Crofts greet me this morning with their song: Diamond Girl.. 

Once again the old saying on the trading desk about “Chuck’s away, the currencies rally” was in play last week, as the euro climbed steadily to tend the week trading well into the 1.17 handle. The economic data here in the U.S. continues to be weaker by the print… And the dollar has seen some major selling in the past week because of that weaker data, and… The news that China has deep sixed the Trade Talks, because of the continued rhetoric of more tariffs… 

But the dollar selling could very well come to halt this week, as the Fed’s FOMC will meet on Wednesday, and announce another 25 Basis Points rate hike to bring the Fed Funds rate to 2.00%…  I can remember the dollar getting pounded the last time rates were this low, but at that time they were heading downward, and not upward like they are now. 

I was recently interviewed by good friend, Dennis Miller, for his letter: Miller On The Money… and he asked me if I thought the criticism of the rate hikes by the President would make the Fed think twice about hiking rates going forward, and I responded that I didn’t think so… I said that Fed Chairman Jerome Powell would probably be more inclined to hike rates now, to show the markets that the Fed is independent and not influenced by the White House…  

So, with that in mind… The Fed will hike rates on Wednesday, that, I’m pretty darn sure of…  But will that be the end of the rate hikes? Well, when the economic data shows weaker and weaker prints, the Fed heads will have a difficult time proving they need to hike rates further…  I was perusing Twitter and one of my fave economists, David Rosenberg, had this to say…

” The US consumer is so strong that in the past 3 months sporting goods and hobby store sales are -13.6% SAAR; dept stores are -6.9%; autos are -4% SAAR; clothing and accessories are -2.2%; and both building materials & furniture sales are flat. Imagine what a recession looks like!” – David Rosenberg

In the Eurozone this morning, September Business Climate as measured by the think tank IFO printed and was pretty much bang on last month’s print, and beat the expectations for this month!   A good showing, for the Eurozone. Later today, European Central Bank (ECB) President Mario Draghi will give a speech, and the hopes are that he will have gone back and sharpened his pencil a bit on the timeline he gave for the a rate hike a couple of weeks ago. 

The ECB has already begun to narrow the bond buying program they’ve been offering for a few years now, and by all accounts this bond buying program will end by the year-end…  Bloomberg had some thoughts on this and I’ll let them take it from here: 

“Next week, lenders must repay €9 billion ($10.6 billion) outstanding from cheap loans the ECB doled out in 2014-2016, when the bloc was teetering on the edge of deflation. Next month, the central bank will cut its monthly bond-buying program by 15 billion euros, and stop altogether at year-end.

In a speech on Thursday, ECB Chief Economist Peter Praet presented a model that projects excess liquidity — the cash beyond banks’ immediate needs that is sloshing around the financial system — will peak at about 2 trillion euros around the end of this year and drop below 500 billion euros in 2022.”

I’m glad that the ECB believes that liquidity is not a problem in their union… because I do believe that it’s going to be a BIG problem for the U.S. soon…  But then that’s just me thinking outside the box… You know the box that everyone else is in, and thinking that everything is sunshine and lollipops, and that debt is never going to hurt us… 

If you follow the currencies in the currency roundup each day, you’ll probably do a double take on the Honk Kong Dollar (HKD) or honker as traders call it… I can confirm right here, right now, that it’s not a fat fingered typo!  It’s tru, it’s tru, I did see a putty tat! and… a 0.6 percent rise in Hong Kong’s dollar on Friday! 

Hong Kong’s  foreign-exchange market suddenly came to life on Friday, propelling the local dollar to its biggest gain in 15 years. In a city that keeps its currency on one of the world’s tightest leashes, swings greater than 0.4 percent have only happened three times since Hong Kong widened its trading band in 2005.

So, what gives with this sudden move in the honker? Apparently there are quite a few theories behind the move… But the one that I’m thinking is the most feasible is that China is going to issue debt in Honkers… Which would mean to buy the bond, the buyer would have to convert whatever currency they own to honkers, and since bonds deal with much larger sizes that stocks, this could be HUGE for the honker! 

Gold didn’t have as good a day as the currencies did on Friday last week, and ended up losing more than $8 on the day… The shiny metal is flat in the early morning trading today, so that’s a good sign… I think! HA!  I read of the weekend that Russia imported more than 1 million tonnes of Gold in the last month… Amazing what they are doing with their Gold accumulation, isn’t it? 

And the price of Oil which was beginning to rise again when I left for my mini-vacation last week, continued to rise as the week went along… And then President Trump tweeted that Oil prices should be lower, and Oil traders immediately pushed the price of Oil higher!   And with this new $71 

September 17, 2018  

* Currencies trade sideways… 

* Who’s buying all those Treasuries being issued?

 

Good Day… And a Marvelous Monday to you! Well, I had a nasty fall on Saturday night, in a restaurant, I took out a couple’s table, and ended up beaten and battered on the floor! It was not a pretty sight, and certainly not full of grace! It’s no fun being partially handicapped, and there are times I forget that I am, and when I do… Well, I end up on the floor! OUCH! That’s going to leave a mark! What in the world happened to my beloved Cardinals this past weekend? 10 days ago they went to LA and swept the Dodgers, then the Dodgers came to St. Louis, and nearly returned the favor! UGH! But my Missouri Tigers won on the road at Purdue, so that was fun to watch Saturday night, as I tended to my wounds… Steely Dan greets me this morning with their song: Peg…

For those of you who follow me on Twitter (I have to say that I don’t tweet very much) read on Thursday afternoon, well, shoot, why don’t I just copy and paste what I said? Here you go! ECB’s Draghi says that current negative deposit rates will remain until at least next summer… The markets didn’t punish the euro though, as at least there’s something to look forward to now…

And so it was for the currencies on Friday too… The euro traded in the same clothes as Thursday, and nobody seemed to want to deal with the rot on the vine that was exposed when the U.S. Data Cupboard took front and center.

I’ve told you over and over again that this dance is gonna be a drag, no wait! What I’ve told you is that the 3rd QTR data just keeps printing weaker and showing cracks in the economy’s foundation… On Friday, it was Retail Sales, for August, and they were supposed to have gained 0.3% but only mustered a 0.1% gain… So much for that blowout 0.7% gain in July, right? I told you it was goosed up by back to school spending…

We also saw Industrial Production was bang on expectations of 0.4% growth, and Capacity Utilization didn’t meet expectations of 78.2%… But… But… But… Consumer Sentiment increased to 100.2 from 96.8 in July.. WOW! The Sheeple are gathering steam… They’re all following the leader to their demise… I’m just saying…

Gold on the other hand did not have a “do nothing” Friday, as it was sold to the tune of $7.80, to close, once again, back below $1,200, at $1,193. The shiny metal is up $2.50 in the early morning trade today though, as once again the Gold Bugs attempt to pull Gold off the canvas and back into its corner to get revived.  

In reviewing what I was reading this past weekend, I noticed a theme… More and more economists, and observers are getting scared about what’s going on here, and abroad.  The usual suspects that call for this stuff, like Peter Schiff, and James Rickards, were front and center, and then there were the others with their thoughts on how this is going to get really ugly, folks… 2008 on steroids, like scenarios…  That’s scary stuff…  I have a sample of this stuff in the FWIW section today… And in my latest Dow Theory letters piece, I dive into all the derivatives.. Talk about some scary! 

Among the best articles I read this past weekend was something that Ed Steer printed, that was a reprint of the great James Grant article… We’re not privy to a lot of what James Grant says, because, well, his letter is a “paid subscriber letter”… So, when stuff is out there for free, I take advantage of it… And in this quote, James Grant is talking about how the Treasury is going to have to issue tons of Treasuries this year… let’s listen in now on something I pulled from: www.edsteergoldandsilver.com   

“This year… the government will issue… the most government securities as a percentage of GDP since the end of World War II. So the supply of government securities in relation to national production is the highest since the mid 1940s. Although this country is under arms in some degree, but it’s not waging a world war, so this is a very different fiscal picture than what we have been used to.”  

Chuck again… yes, I’ve been talking about this for months now… The debt is exploding above $1 Trillion per year again, which means more and more Treasuries need to be sold to finance the debt, but… the major players, like China, Japan, Russia and others have been backing away from the Treasury auction window… So, that leaves us with the question… All this issuance, but who’s doing the buying of these Treasuries?… 

When a country has a problem with financing its debt, it has a couple of choices… It can allow a general depreciation of its currency to allow the bonds to become cheaper to buy… Or, it can aggressively raise rates, and get the bond boys to go along, to make the bonds more attractive…  Or, heaven forbid, the country implements an austerity plan to reduce debt, and debt issuance…  yeah, pigs will fly before that happens here in this country folks…   I know, I’ve gone through these options several times through the years, but it’s always good, especially right now, with the U.S. debt exploding higher, to remind everyone the problems that go along with attempting to figure out how to repay the debt… 

So… getting back to the ECB and Eurozone, and Mario Draghi for a moment before we head to the Big Finish…  I’m not sure what to make of his speech last week… While he sounded a bit hawkish, his comments were laced with dovish remarks, and traders got what they wanted, in a sense, that is, as Draghi, told them that rates wouldn’t be hiked until next summer… Traders have a definitive time period in their collective minds now, and that’s usually a good thing… 

But the thing that I’ve found through the years, and brother have I been doing this for very long time, is that traders grow tired of waiting for a move, and then all the good that was gathered up is thrown to the curb, and things get messy again… So, it will be up to Draghi, to remind the markets over and over again that there is a rate hike coming… And then do NOT pull a Mark Carney, and disappoint next summer! 

So, we could very well see the euro bump along a bit higher in the near term, and then depending on what’s being said and done at the ECB, the euro will either make a strong move higher, or get sold… 

Of course, I’m just talking about “euro ” moves…   If the dollar bugs decide to look around at what’s going on in this country instead of being myopic with their view of interest rates, and the dollar begins to move downward, the offset currency to the dollar’s downward move would be the euro… And the euro could rise on that merit, and not a “euro” merit… I’m just saying… 

The U.S. Data Cupboard has a week to take a breather, with only some regional manufacturing indexes, like today’s Empire (NY region) print, and some housing data as we go through the week… So, as I look at it, it sure looks like a good week for me to take a mini-vacation… 

To recap… The ECB meeting last Thursday brought about a time-line that traders can put their arms around, and decided not to punish the euro for the ECB’s call that rates won’t be raised until next summer…  Debt is exploding higher here in the U.S. and James Grant chimes in with a comment about Treasury Issuance… And then Chuck goes all in on the euro’s prospects… 

For What It’s Worth…  Well, I pre-billed this is a an article about how the next problem for the U.S. will be worse than 2008… So, if you promise to put the sharp objects away first, you can find it here: https://news.sky.com/story/next-financial-crisis-has-begun-and-will-be-worse-than-2008-crash-economists-warn-11497433 

Or, here’s your snippet: “The beginnings of another financial crisis are already in motion – and it will be worse than the global meltdown of 2008.

That’s the opinion of one of the select band of economists who predicted the 2008 economic collapse, which started with the bankruptcy of Lehman Brothers bank a decade ago and ended up affecting every country in the world.

Ann Pettifor predicted that crisis in 2006, more than two years before it actually struck.

Now she thinks the global economy is in danger once more thanks to huge corporate debt, and the prospect of rising interest rates in the United States.” 

Chuck Again…  And all those derivatives… I know they are an unknown as far as the normal investor is concerned, but they were not the cause of the 2008 meltdown, but they were in the vicinity folks.. just be aware of that… 

Currencies today 9/17/18… American Style: A$ .7177, kiwi .6570, C$.7680, euro 1.1660, sterling 1.3098, Swiss $1.0364, European Style: rand 14.9887, krone 8.2126, SEK 8.9784, forint 278.58, zloty 3.6890, koruna 21.8467, RUB 68.07, yen 111.98, sing 1.3736, HKD 7.8475, INR 72.40, China 6.8675, peso 18.86, BRL 4.1704, Dollar Index 94.77, Oil $69.55, 10-year 3.00%, Silver $14.20, Platinum $789.21, Palladium $981.72, and Gold… $1,197.28

That’s it for today… Yeah, it was a nasty fall… I think I had a bit of a concussion, and a bad cut on my arm… My head and shoulder hit the table next to me and the couple sitting there had their drinks and stuff flying it was a mess! Now, when I go to the doc next week, and they ask me if I’ve fallen, I’ll have to tell them yes… The fall reminded me of when I took out the first row of pews at a church when little Everett was baptized! Good thing I have all this padding on me! HA!  Ok… I’m heading up east for a few days, and then finally back home…  The band Yes, takes us to the finish line today with their classic rock song: Roundabout…   I hope you have a Marvelous Monday and a Wonderful Week… Be Good To Yourself!

Chuck Butler

September 13, 2018  

* Currencies & metals rally on the day!

* Wholesale Inflation falls in August? 

Good Day… And a Tub Thumpin’ Thursday to you! Another day on the “wonder drug”, and my foot feels soooooo much better this morning. Now it just feels like a small pebble is in my shoe when I walk, and not the sharp object that was there the other day! Well, I guess I should have not said anything but my beloved Cardinals played just like I said they would yesterday…  Maybe I should book a flight to Vegas? HA!  Jackson Browne greets me this morning  with his song: For A Dancer…  A strong lyric in this song goes like this: In the end there is one dance you’ll do alone… 

Yesterday, saw the drifting toward higher levels for the currencies VS the dollar, turn to an all-out rally. This morning the European Central Bank (ECB) is meeting and they hold the key to any further gains of the euro and other currencies. But not all other currencies, for the Emerging Markets currencies are a horse of a different color, and have their own problems with the dollar that we’ve talked about before. No need to air the dirty laundry so to speak again… 

I have to say that, as you longtime dear Pfennig Readers know, I do a lot of reading each day, trying to not only learn more about trends, economics, etc. and one theme of articles that I’ve been seeing appear over and over again lately, is about  the dollar.  But wait! These aren’t your run-of-the-mill articles, these are large financial institutions research groups, Central Bankers, economists, and really a representative from each major group, all singing from the same song sheet, that “the dollar looks tired, and has run its course for strength”… 

Now, all I need is for the “tech guys” to chime in, for me to know I’m on the right path here, and that the dollar is looking shaky…  And if China and Russia have anything to do with it, and they will, trust me on this one folks, the dollar will cease being held in large amounts by Central Banks around the world to settle the terms of trade transactions…  And this will put many dollars up for sale, while the respective domestic currency of the Central Bank selling dollars will be bought. 

Yesterday, I came across this article from the GATA folks, and well, this plays well in the sandbox with the previous paragraph… Check this out…  

Jean-Claude Juncker has vowed to turn the euro into a global reserve currency that could rival the dollar as part of the European Union’s drive to reduce its financial dependence on the United States.

In his last “State of the Union” speech to members of the European Parliament in Strasbourg yesterday, the president of the European Commission said it was an “aberration” that the EU paid for more than 80 percent of its energy imports in U.S. dollars despite only 2 percent of imports coming from the U.S.

Most of the dollar-denominated imports are from Russia and the Gulf states.

“We will have to change that. The euro must become the active instrument of a new sovereign Europe,” said Mr. Juncker, whose five-year tenure as commission president is due to end next year.”  

Now, this statement would have gone a long way, like an Albert Pujols home run off Brad Lidge (is that ball still going?) if ECB President, Mario Draghi had said that this morning after the ECB meeting… It takes currency wonks like myself to find these gems out there, as it is… But if Draghi had said that, the euro would be running higher, most likely… 

Speaking of Draghi… The ECB is meeting while I write this morning and the rate decision will be made probably before this gets to you, but you can be sure it was a no-go on a rate hike, but that’s all a given as far as the markets are concerned, what they really want to see and hear, is the Draghi press conference that will follow, to see if he gives any clues about stimulus policies and their removal…  

Gold found a way to carve out an $8 gain yesterday, to close at $1,206… The shiny metal is down a buck today in the early morning trading, so that’s something that could wiped out in heart beat! Let’s hope so! 

Let’s see now… A quick review of the TOP Stories this morning has JP Morgan saying that the next financial crisis will arrive in 2020… And that we’ve never learned from the Lehman Brothers demise… The Crypto’s 80% plunge is worse than the dot-come crash… And that Jamie Dimon is now backing away from his braggadocio that he could beat Trump in an election…  But the most important headline is this:  Hurricane Florence to park above Carolina coast line and dump rain for days…  That’s horrific news, folks, and while I say weather people don’t know their rear end from a hole in the ground, I’m hoping their wrong again! 

There’s another headline story that says: It’s a Debt, Debt, Debt, Debt filled world after Lehman crash…   And brother, there aren’t truer words that have been spoken! And one of these days, I don’t know when, or where it will begin, but all this debt accumulation will come crashing down on anyone that didn’t believe it ever could come crashing down… There’s no other way for this to all end, folks… 

I don’t care to go down that rabbit hole on a Tub Thumpin’ Thursday, which has become my own version of a Fantastico Friday, but I did, and really feel badly for doing so… But it has to be said, and if I’ve been brave enough to call it out for so long, I may as well, go the distance, eh?

The U.S. Data Cupboard is still searching for “real economic data”, and it won’t find it today with the stupid CPI printing for August, and the Core Inflation data printing…  Yesterday, PPI (wholesale inflation) fell in August by -0.1%…  That’s crazy!  I would have thought that if the Fed was right, and all the other economists that repeated what the Fed said, that by now, Businesses would be forced to raise prices from wage increases, and PPI would be showing us just that!  But NOOOOOOOO! It didn’t do anything close to that! It showed us that wholesale prices are falling!  Crazy… 

On a sidebar… Do you know the #1 song played on juke boxes through the years is?  That’s right… it’s Patsy Cline singing Willie Nelson’s song: Crazy…  (OK, young kids, juke boxes were music machines in bars and restaurants that you put money in and played music that you picked out from the selection they provided… In today’s world, that’s a thing called Touch Tones… Where you can connect to it with your smart phone, and play the songs you have on your phone through the Touch Tones system)

To recap… The daily drifting of the currencies and metals turned to an all out rally for the anti dollar asset classes… The ECB is meeting while I write this morning, but more important than the rate decision is the press conference following their no rate change decision! And Chuck is following a ton of stories about how the dollar is looking tired…  

For What It’s Worth… Well, for years on years I’ve stated that the BLS jobs report is nothing but a bunch of lies… filled with adjustments that alter the surveys that are used to guessimate the number of jobs created… Then they mix in their adjustments, and voila! They have a number to show the markets… I’ve long thought that these folks at the BLS were on the payroll of whatever administration that’s in charge… Well, here’s something that goes along with these calls that the BLS jobs report is B.S. and it can be found here: https://www.zerohedge.com/news/2018-09-09/employment-report-has-become-orwellian-extreme

Or, here’s your snippet: “The employment report is unquestionably the most manipulated economic report issued by the Government. The content of the the headline on which the mainstream media bases its broadcast and analysis of the report is entirely disconnected from the actual data contained in the report. The damning data that no one in the financial media or Wall Street seems to be able to find is at the top of the BLS’ report:

As you can see, the “civilian labor force”declined by 469,000 people in August from July. The number of “employed” dropped 423,000. The “not in labor force” increased by nearly 700,000.

With these facts in mind (“facts” at least as far as the BLS numbers contain any shards of credibility), how can the Government claim that 201,000 “jobs were created” in August? How can CNBC say the “economy created more jobs than expected?” Based on the numbers in the details of the BLS report, it looks like, between the decline in the number of people employed and the decline in those not counted as part of the labor force, the economy shed over 1 million jobs.

Titus remarked to me that, in terms of manipulating the data to make the headline report look positive, this is the worst report he’s ever scrutinized:
“In terms of people leaving the labor force, it sure looks like earlier data was was manipulated to hell and back and the BLS just couldn’t hide it any longer. The deltas are f***ing crazy.”

By the way, has anyone besides me noticed that the BLS calls this report the, “Employment Situation Report?” What does that even mean?

Chuck Again… Yes, there was a graph of numbers they were referring to, that you can see if you click the link above… It’s nice to know that it’s not just me calling out the BLS each month…

Currencies today 9/13/18… American Style: A$ .7193, kiwi .6555, C$ .7690, euro 1.1630, sterling 1.3065, Swiss $1.0316, European Style: rand 14.7612, krone 8.2388, SEK 8.9835, forint 279.56, zloty 3.7103,  koruna 21.9533, RUB 69.38, yen 111.55, sing 1.3715, HKD 7.8484, INR 71.72, China 6.8640, peso 18.97, BRL 4.1448, Dollar Index 94.89, Oil $69.38, 10-year 2.98%, Silver $14.26, Platinum $802.76, Palladium $979.10, and Gold $1,205.25

That’s it for today… and this week of course… And well, next week, I’m going on a mini-vacation, so I’ll write on Monday, and then I’m off to visit our good friends up east, Gus and Vivi!  Got it?  so a mini-vacation for me… But check your Twitter feeds, because you never know when I’ll tweet out something that’s on my mind! I saw the line of cars on the highways leading away from the N. Carolina coast on TV last night… Good luck to all of you, stay safe, for your life is more important than the possessions… And then finally, next weekend we’ll return home for a few days, to watch my darling granddaughter, Delaney Grace, in a play: The Wizard of Oz, which happens to be my all-time fave movie!  Steely Dan takes us to the finish line today with their song: Rikki Don’t Lose That Number…  And so, I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday tomorrow, and great weekend! And don’t forget to Be Good To Yourself!

Chuck Butler

September 12, 2018  

* Currencies drift again but this time higher!

* China releases their “official Gold Holdings”… Chuck calls B.S.! 

Good Day…. And a Wonderful Wednesday to you! I guess this is becoming the norm, the later in the morning Pfennig, that is… I’m finding that dealing with chemo, and waking up early just doesn’t mix well… The doctor came through for me yesterday, and my plantar fasciitis has backed off from the acute pain this morning, a couple more days and I think I’ll be ready to run a marathon! HAHAHAHAHAHA! As if! My beloved Cardinals saw their collective bats come alive last night, and won big. Unfortunately, their history shows that a big scoring game is usually followed by a shutout or something like that. UGH! Day game at Busch today, but I’m not there, sorry Duane!  Ambrosia greets me this morning with their song: How Much I Feel… 

Well, another day, another drifting in the currencies, and metals… Yesterday’s drifting though was a bit different than the recent drifts, in that the currencies leaned toward an uptick VS the dollar… The euro is trading in the same clothes as yesterday, and I don’t see much movement from the Big Dog, until we see the color of the ECB’s (European Central Bank) words after they meet tomorrow. 

The markets are holding their breath waiting for any words that would give them a clue as to when rates are going to rise in the Eurozone…  Unfortunately, I just don’t see the ECB and their President, Mario Draghi, saying anything that would help the euro… And basically he’ll have the data on his side this time, as the Trade War has begun to take a pound of flesh from Eurozone economic growth.  

I wrote in yesterday’s Pfennig that I blame the currencies sliding on the ECB’s unwillingness to begin the removal of their stimulus monetary policies, and I stick by that statement… For no little dogs (the other currencies) can run unless the Big Dog runs first… 

The Russian ruble has seen a major slide in recent weeks, as it has to deal with the 1. economic sanctions, 2. a drifting lower of the price of Oil, and 3. a route of the Emerging Markets currencies. But after sliding to a greater than 70 figure on Monday, Tuesday saw the ruble bounce back below 70, when the most recent data for Oil supplies showed a huge drop, and the price of Oil rebounded more than a buck on the day. 

Yesterday, the Russian Economic Development Minister Maksim Oreshkin, said in an interview that “that now is a good time to buy the undervalued ruble, and that, You know the famous quote from Warren Buffett: ‘Be fearful when others are greedy and greedy when others are fearful.’ When everything is good and everyone is bullish about something, it means, on the contrary, that this asset has little prospects.?”

What he’s saying here folks, is that much like my good friend Steve Sjuggerud like to do… buy something when every hates it…  I’m just saying, that it rings a bell…  

On a sidebar, if you’re ever around me again, ask me to tell you the joke about ringing a bell…

Well, it was reported yesterday for the 22nd consecutive month that China didn’t “officially” add any physical Gold to their “official holdings”… What! What? Is that right? Well, in my humble country bumpkin opinion (texters use IMHO, I use IMHCBO) I don’t see any way in hell that their “official” Gold reserves are just 1,842.6 tonnes… And China won’t reveal their true holdings until they think the time is right… When that will be is anybody’s guess, but remember that there is a pattern here…

 In China it is fashionable to hold back and then come out with both guns blazing, when it comes to announcing their Gold holdings… China reported zero increases in its gold reserve from late 2002 to April 2009 and then again from April 2009 until July 2015 and on each occasion then reported massive increases.   (I found that info on Ed Steer’s letter this morning: www.edsteergoldsilver.com) 

So, if the pattern repeats, then we won’t hear about China’s real Gold reserves until 2021 or later… UGH!   But if things go the way I believe them to be going, we won’t have to wait until 2021… wink, wink… 

Back here in the U.S. things are beginning to unravel for the economy… In jus the last week, we’ve seen a drop in household employment, a slide in full-time jobs, and a retreat in factory payrolls. There’s more but I don’t want to scare the bejeebers out of you… But there was one piece of data the other day that caught my eye…

Consumer Credit (read Debt), exploded higher in July to $16.6 Billion from the $9 Billion figure for June… That’s an annual growth rate of 5.1%. Economists had been expecting a $13.9 billion gain, and surprised most economists…   I think this will probably be a case of student loans growing by leaps and bounds, because, well, EVERYBODY has to go to college, right?  

There’s not much in the U.S. Data Cupboard today… PPI (wholesale inflation will print for August and the Fed’s Beige Book will print, and that’s about it… Yesterday, I made a big deal out of the trio of Bernanke, Paulson and Geithner’s oped in the NY Times… Calling it the band getting back together… Well, after their reunion concert, they’re going on the road! Seriously! They’re taking their act on the road!  Can you believe that one? These guys seriously believe that they saved the world…  

When in reality, they helped usher in the mess that they then think they saved us from.. I’m just saying… I wouldn’t pay on iota of attention to what they have to say, other than to point out the problems with what they’re saying! 

There’s a big to-do that’s going to take place in this weekend… It’s called the Shanghai Cooperation Organization (“SCO”) summit that will take place in Qingdao.  Man would like to be a fly on the wall there!  You don’t think these Asian countries are going to get together and agree to something like… eliminating dollars from their reserves, do you?  I’m just thinking that given all the talk about this from Russia and China in recent months, that it makes sense that this is the direction Asia would go… 

To Recap… The currencies and metals found a way to drift higher yesterday, but in real terms there wasn’t much movement at all… Chuck believes traders are waiting to hear the color of the ECB’s talk tomorrow after their meeting… Chuck also believes they won’t hear anything worthwhile from the ECB… The price of Oil rebounded on depleted supplies data, and China once again reported no gains to their Gold holdings…  Chuck wonders when China’s pants will catch fire… 

For What It’s Worth…  I’ve talked about this cashless society for a couple of years now, and in that couple of years we’ve had Sweden go all-in on a cashless society, and more and more reports of cash not being accepted… My good friend and Spring Training buddy, Rick (the 80’s music guy!) sent me this yesterday, and then when I saw that MarketWatch also sent it, I was like, “Well, that’s a surefire sign that it needs to be a FWIW article!” And so, you can find it here: https://www.marketwatch.com/story/america-moves-closer-to-being-a-cashless-society-2018-09-11?mod=MW_section_top_stories

Chuck Again… Remember this… I warned you… many years in advance that your civil liberties were being taken away from you, so when it finally dawns on everyone, they can’t blame me for not telling them! And asking them… Got Gold?

Currencies today 9/12/18… American Style: A$ .7115, kiwi .6515, C$ .7660, euro 1.1581, sterling 1.2984, Swiss $1.0272, European Style: rand 15.1102, krone 8.3145, SEK 9.0414, forint 280.35, zloty 3.7195,  koruna 22.0721, RUB 69.96, yen 111.50, sing 1.3767, HKD 7.8490, INR 72.18, China 6.8663, peso 19.17, BRL 4.1199, Dollar Index 95.16, Oil $69.84, 10-year 2.96%, Silver $14.15, Platinum $788.92, Palladium $975.22, and Gold… $1,196.89

That’s it for today…  thank goodness for the MLB app, that I have on my TV, and can watch my beloved Cardinals games while down here at my home away from home. Or watch the games on my iPhone or iPad if away from my TV… When I was a young man, the only way I could see my team was if I went to Busch Stadium! Kids today, they have it so easy! HA! Well, I need to get this out the door, so… Kansas takes us to the finish line today with their song: Dust In The Wind…  (I have a good story about me singing that song in a town square in Cancun, if you ever want to hear about it!) I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

September 11, 2018  

* Currencies drift again… 

* Gold gets off on a bad foot this morning (like me!) 

Good Day… And a Tom Terrific Tuesday to you! Well, this is our day of observance of our 2nd “day of infamy” in the history of this country. I’ll always remember that day, with just about everyone in our office sitting around my desk, as I had a small TV sitting on my desk.  That was a horrible day, and one that I hope I never have to witness again…  Well, this is late today… My pain from the plantar faciitis has me hobbling around, and well, I made it from the bed to the chair, and then fell back asleep! Then it was so late, that I almost thought about ditching the letter for today… But then I was reading a piece on Zero Hedge.com  and thought I just had to comment about it… So, here we are…  Billy Joel greets me this morning with his song: The Stranger…  

Front and center this morning, this will be short and sweet, as I’m late and don’t want to take up your lunch hour instead of breakfast hour! UGH!  The Currencies have drifted a bit since yesterday, not really moving much at all, but the bias remains to move them downward VS the dollar. Gold didn’t move much either only losing 80-cents on the day.  But today is a different story for the shiny metal, as it is already down $6 on the day… 

I was putting together my latest DTL piece last night, and pretty much laid the blame for the currencies’ weakness on the European Central Bank (ECB)… You see, the ECB has lagged the Fed in removing their stimulus policies, and as long as the ECB drags their feet on this, the euro will not be able to gain significantly VS the dollar, and if the euro isn’t gaining significantly VS the dollar, the other currencies aren’t either!  

So, come on ECB throw me bone here, before I go to meet St. Peter! I’m serious about that folks! At this point, I’m failing to see when the ECB will begin to remove their stimulus policies… Call me crazy, shoot Rudy, I’ve been called nastier things, but at this point I’m thinking that the ECB will never get around to removing their stimulus policies! 

OK, we’re going in a different direction today, because of this article that I read on ZeroHedge.com yesterday, that was the great James Grant’s response to an oped that Bernanke, Paulson and Geithner wrote for the NY Times…  Yes, they “got the band back together” for a concert of sorts… And this is what they were talking about… 

“After sharing their self-exonerating analysis of the events of 2007-2009 and subsequent response (which one of the three did the fact checking?), Bernanke et al. argue for greater regulatory powers, or as they put it, “adequate firefighting tools,” to resolve future financial crises.

Blanket guarantees of bank debt by the Federal Deposit Insurance Corporation, the Fed’s emergency lending capabilities and the Treasury department’s guarantee of money market funds are among the mechanisms cited by the authors as necessary for crisis prevention and mitigation.”

Well, as you can imagine, the great James Grant, pulled no punches in his review of their article, and it can be found here if you care to read the whole thing… https://www.zerohedge.com/news/2018-09-10/james-grant-responds-bernanke-paulson-geithner-op-ed 

I’ll add my two cents to this discussion, by adding that nowhere in the article did it mention that Bernanke had been so wrong on the whole financial meltdown! Recall, when asked what his plans were to deal with a housing sector with falling prices, he responded: “Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.”

Yeah, there was no mention of that or any of the other (there are too many to quote them all) quotes he made that were wrong…   But I’ll stop here because my blood pressure is rising, I can feel it! 

To recap… The currencies and Gold drifted yesterday, but Gold is down $6 this morning, and the bias in the currencies remains a downward direction…  Chuck goes after the ECB for this currency weakness, and points out their dragging their feet toward moving their stimulus policies, and then the “band got back together” with Bernanke, Paulson and Geithner writing an oped in the NY Times… UGH!

No FWIW this morning, like they say when the replay a football game on TV, “due to time constraints, we move along in the game”

Currencies today 9/11/18… American Style: A$ .7095, kiwi .6507, C$ 76, euro 1.1585, sterling 1.2997, Swiss $1.0269, European Style: rand 15.1585, krone 8.3660, SEK 9.0688, forint 280.17, zloty 3.7173, koruna 22.1290, RUB 70.16, yen 111.40, sing 1.3777, HKD 7.8491, INR 72.73, China 6.8566, peso 19.35, BRL 4.0768, Dollar Index 95.31, Oil $67.57, 10-year 2.96%, Silver $14.05, Platinum $784.42, Palladium $970.22, and Gold… $1,189.91

That’s it for today… A nice rally from my beloved Cardinals got them a win last night… Not exactly a “good game” from the starting pitcher, left them in a hole, but they recovered… 19 games left, every game is important at this point… (but if they had only won more in April they wouldn’t have to win every game now!) And the games start so darn late on the East Coast! UGH! Well, things are moving along now upstairs, so at least something is getting done!  I’m going to attempt to see a doctor today, hopefully they have something that will move this pain along!  The late Great George Harrison takes us to the finish line today with his song: What Is Life…  I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!

Chuck Butler

September 9, 2018  

* currencies and metals get sold on jobs data

* RBI stays out of the intervention game… 

Good Day… And a Marvelous Monday to you! As I was heading to bed last night, I had a thought cross my mind, it was a fleeting thought, and one that was very wrong! I thought for a moment that today was a holiday… Why on earth did that thought cross my mind? I guess I was still reliving the previous Labor Day Weekend festivities… I guess… My beloved Cardinals are sliding backwards again… UGH! And Little Feat greets me this morning  with their great song: Dixie Chicken. The live version, from the iconic rock album. Waiting For Columbus… 

Well, Friday was another day of dollar buying after the Jobs Jamboree showed that 201,000 jobs were created in August… A geeks like me that look under the hood found that 104,000 jobs were added by the BLS to the surveys, because, well… they can…  thus putting the actual “hard number of jobs created” at less than 100,000… thus the second QTR is off to a rip-roaring start (NOT!) when if comes to actual jobs created!   But don’t let all the euphoria of the BLS doctored jobs numbers blur your vision… The actual jobs created in the 2nd QTR is just 86,000… That’s it folks… 

But the markets are so conditioned to taking whatever garbage the BLS prints and running with it, and so, that’s what happened Friday, and carried over to the overnight markets last night. The dollar bugs are back out from the wall board and running all over the place, and Gold & Silver are being treated as persona non gratis…  There’s been little to no news in the overseas markets, so it’s all been about the dollar… And here’s where I’m going down the confused road, because besides the shenanigans the BLS plays with jobs numbers, I’m wondering why the dollar is being bought with President Trump calling for more tariffs… 

Yes, Trump is doing something that is akin to the poker game move of “going all in”…  The President is calling for an additional $247 Billion of tariffs on Chinese goods… Wait! What?  That’s it… He’s going “all-in” folks… which will not be good for China, but won’t be as equally good for the U.S. So, why do it? That’s the question I keep asking…  I’ve been surveyed dozens of times about “how the President is doing” and each time I ask the question… “Why the tariffs/ Trade War?”   

Ok… enough of that this morning! One could develop an ugly rash if they kept talking about tariffs and Trade Wars! And I certainly don’t want to do that!  Going back a few years, I was asked by a trader I did business with, what I thought would be the key to the next financial crisis here in the U.S. and I immediately answered, ” A Liquidity crunch”…  Well, despite all the warnings of such a thing, there’s been no liquidity crunch… yet!  But that doesn’t change my answer, in fact it’s write-ups by JPMorgan that have me thinking the Liquidity crunch” is still coming, it’s just taken longer than I first believed…  Here’s a quote from JPMorgan on all this… 

“Many people theorise what will cause the next financial crisis and what will it look like? JPMorgan’s global head of quantitative and derivatives strategy, Marko Kolanovic says the dominance of passive, quant, and ETF funds on shares at the moment will lead to what he calls the Great Liquidity Crisis. Here’s what he said just last week:
“What will the next crisis look like?
This year marks the 10th anniversary of the 2008 Global Financial Crisis (GFC) and also the 50th anniversary of the 1968 global protests. Currently, there are financial and social parallels to both of these events. Leading into the 2008 GFC, some financial institutions underwrote products with excessive leverage in real estate investments. The collapse of liquidity in these products impaired balance sheets, and governments backstopped the crisis. Soon enough governments themselves were propped by extraordinary monetary stimulus from central banks. Central banks purchased ~US$10 trillion of financial assets, mostly government obligations. This accommodation is now expected to reverse, starting meaningfully in 2019. Such outflows (or lack of new inflows) could lead to asset declines and liquidity disruptions, and potentially cause a financial crisis.”

Pretty interesting don’t you think? Something else that I’ve been following lately is the rot on the vine of the Indian rupee… The rupee is falling like a rock, kicked off a cliff, and the Reserve Bank of India (RBI) hasn’t stepped in to defend the currency. The RBI has a history of attempting to defend the currency with no real results, so maybe, just maybe the RBI has learned their lesson?  Central Bankers have thick skulls…  I’m just saying… 

Asia as a whole, has seen better times with their currencies and economies for sure, as the Trump tariffs begin to dig their spurs into these economies. I know that most people don’t think of India as part of Asia, but it is… The Chinese renminbi, which had been on a winning streak of nightly fixings, has seen that winning streak fade away, as the Chinese appear to be back on the “mark the renminbi down to offset the tariffs” kick, which they reported said, “We’re not doing to the renminbi what we’re said to be doing”…  I called B.S. on that back when it was said, and still do!

The data overseas is sporadic at best, but we did see the final revision to 2nd QTR GDP in Russia this morning, which came in at 1.3% growth, which was down from the 1st QTR print of 1.8%… When you factor in all the economic sanctions on the Russian economy, one has to think that this economy would be growing gang busters without the sanctions, right? But the sanctions are there, and that’s what’s holding this economy back…

Here in the U.S. the Data Cupboard will be sporadic at best this week too, with the stupid CPI the main attraction on Wednesday… Today, though we will see the Consumer Credit (read debt) for July, which I’m thinking will be alarming… But the markets don’t really pay attention to these data prints until its too late to do so…

To recap…  The currencies and metals have been getting sold since the Jobs Jamboree on Friday morning, which saw 201,000 so-called jobs created in August… Don’t worry, Chuck has the “real numbers”, and they aren’t as pretty as a peach…  The RBI has declined to intervene with the rupee falling without a net, which is not like what they normally do, so Chuck thinks that maybe they learned their lesson? And Chuck’s liquidity crunch scenario, is it coming to fruition?

For What It’s Worth…  I’ve talked about the short falls in Pensions since 2003, and it just continues to go deeper in the red with every passing year! And this article is all about the pension funding problems, and can be found here:  https://www.lewrockwell.com/2018/09/simon-black/the-pension-crisis-is-bigger-than-the-worlds-20-largest-economies/

Or, here’s your snippet: “As you probably know, pensions are giant pools of capital responsible for paying out retirement benefits to workers.
And right now many pension funds around the world simply don’t have enough assets to cover the retirement obligations they owe to millions of workers.

In the US alone, federal, state, and local governments, pensions are about $7 TRILLION short of the funding they need to pay out all the benefits they’ve promised.

(** And that doesn’t include another $49 trillion in unfunded Social Security obligations…)

America’s private pensions are in bad shape too — a total of around 1400 corporate pensions are a combined $553 billion in the hole. Plus, 25% of those funds are expected to go broke in the next decade. But the pension problem is much bigger than just what’s happening (though the US problems are SEVERE).

In 2015, the total worldwide gap in pension funding was $70 TRILLION according to the World Economic Forum. That is larger than the twenty largest economies in the world combined.”

Chuck Again…  Yes, that was in 2015, just imagine if you will, just how deep in the red these pensions are 3 years later?  I’m just saying… 

Currencies today 9/10/18… American Style: A$ .7122, kiwi .6540, C$ .7590, euro 1.1580, sterling 1.2945, Swiss $1.0245, European Style: rand 14.1355, krone 8.3815, SEK 9.0410, forint 280.17,  zloty 3.7215,  koruna 22.1448, RUB 69.73, yen 111.15, sing 1.2795, HKD 7.8495, INR 72.30, China 6.8428, peso 19.28, BRL 4.0616, Dollar Index 95.29, Oil $68.24, 10-year 2.94%, Silver $14.20, Platinum $784.10, Palladium $981.69, and Gold… $1,194.02

That’s it for today… I’ve had plantar fasciitis through the years flare up and then go away after a few days, and this past weekend it flared up again… UGH! Very painful to walk… Hopefully, this won’t last too much longer! I noticed this past weekend that the Kentucky football team beat Florida for the first time in 31 previous tries… Reminded me of the hex that Nebraska held on my beloved Missouri Tigers for about 25 years, but when it ended it ended badly for Nebraska… And too it will for Florida…  OK… the long awaited of Adam Wainwright pitching for the Cardinals ends tonight, I’ll be watching for sure!  And Montrose takes us to the finish line today with their song: Rock Candy…   I hope you have a Marvelous Monday, and be sure to Be Good To Yourself!

Chuck Butler