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Chuck Butler’s: A Pfennig For Your Thoughts

 January 17, 2018  

* BOC meets today what will they do?

* Chinese rating agency lowers U.S. rating… 

Good Day… And a Wonderful Wednesday to you! Well, my wishes that my stomach problems would leave me once our guests arrived yesterday, came true! Well, they went away for the day and evening, which was fine with me. Our Blues won in overtime in Toronto last night, so, it was a good day all-around! England Dan and John Ford Coley greet me this morning with their song: Nights Are Forever…  Those two guys sure had some great mustaches… 

Well, as i left you yesterday, the European session was taking some profits on the currencies that had been well bid throughout the night to that point. When the U.S. market opened, the profit taking stopped and the currencies rallied once again, only to see the profit takers come back at the end of the day.  the overnight markets haven’t seen much movement, and so we start the day with the currencies and metals off their lofty levels of yesterday, but not by much, so don’t panic!

The Bank of Canada (BOC) will meet today, and it was once through in the markets that the BOC would follow the Fed’s rate hike, with one of their own at this meeting. But recent data has caused some hedging of those rate hike thoughts, and now the so-called experts are saying that the BOC will not hike rates, but talk hawkishly today…  Hmmm… I’m going to go out on a limb here, no worries, a big fat limb to hold me, and say that the BOC will go ahead and hike rates today. 

The only thing in my mind that could stop BOC Gov. Poloz from hiking rates is the fact that the loonie has moved past 80-cents in recent trading… And Poloz does not like a strong loonie! Of course it’s all relative, as I wouldn’t consider a 80-cent loonie to be strong… Back in the day when the loonie was at parity to the dollar, was a period when I would have considered the loonie to be strong! 

But given the fact, that just a year ago, the loonie was fighting to get back to 72-cents, today’s 80-cent figure looks pretty good, and to Poloz, it looks too strong.  And a rate hike could very well push the loonie even higher, and so… That’s the bugaboo for Poloz today as the BOC meets. 

The euro saw choppy trading yesterday, when at time it appeared ready to move forward to 1.23, and other times when it appeared it would lose the 1.22 handle, and finally settling in around 1.2230.. I read a piece this morning that had economists increasing their calls for a stronger euro and price of Oil this year.  A Trader at JP Morgan made the call that the euro would be 1.24 by year-end… 

Hmmm… that sure appears to me to be a safe call considering the euro traded near 1.23 on Monday, and there’s still 11+ months to this year!  I would have been more impressed if he had said the euro would be 1.30 by year-end…  But he didn’t, and so we go along with the thoughts that the strong dollar trend is over, and a new weak dollar trend is forming and where the euro ends up only the Shadow Knows!  

Back in June I was ahead of the crowd with the euro, as it was trading at 1.09, and said that the sentiment had changed toward the dollar/ euro, and the euro was ready to break out on the upside…  I always love it when the markets catch-up with what I’ve been saying for months… 

Well, the U.S.  Gov’t. is getting close to a shut-down again… I don’t see it happening, instead I see either a deal is closed or they kick the can down the road further, and extend the talks… Remember the last time they extended the deadline and I said, it make me laugh because what makes them think they can get a deal done in two weeks, when they’ve had all year to get it done? 

Gold closed down $1.60 yesterday to end the day at $1,338…  In the early trading this morning, Gold is down  a couple of bucks.  I’m a very impatient man when it comes to the price of Gold.. I truly expect to see it moving higher on a daily basis, given every thing that’s going on in the world these days, including negative interest rates in Sweden, Switzerland, Japan and the Eurozone, and the U.S. with negative “real interest rates”, which I’ve explained before, but here goes again… “real interest rates” are the net of the current Fed Funds rate minus inflation… And when doing that, the U.S. rates are negative. 

But that’s not what is happening with Gold’s price right now… It’s not to say that it couldn’t happen in the future.  And if you’re like me, you’re just too impatient to wait for that to happen! HA! 

Well, I  told you yesterday that the U.S. Data Cupboard would have two of my fave real economic data prints today… Industrial Production (IP) and Capacity Utilization (CAPU) both will print with their December results today. Throughout 2017, these two data pieces were just atrocious, and so I think that with everything else that was moving along nicely in December with all the deficit spending, that these two will show better results for December…  

Oh, and did you hear that a ratings agency in China lowered the credit rating of the U.S. from A- to BBB+?  Ok, they aren’t Moodys or S&P or Fitch, but at least someone out there sees what I see regarding the debt and now tax cuts coming… 

To recap…  A choppy day of trading for both the currencies and metals left them all lower in value than they were yesterday morning, as we start today. Chuck thinks that for the most part the selling has been profit taking, which should end today, if that’s correct.  The Bank of Canada meets today to discuss rates, and while the markets have abandoned their call for a rate hike today, Chuck keeps the pedal to the metal on the rates hikes in Canada.  

For What it’s Worth…  well this article came to me curtesy of longtime reader Bob and it’s an article on Zerohedge.com about the coming collapse of the dollar, and can be found here: https://www.zerohedge.com/news/2018-01-15/dollar-collapsing 

Or, here’s your snippet: actually there is no snippet, because the article is all chopped up with some great graphs in between, so you’ll have to click the link to see what’s going on with the dollar…  

Currencies today 1/17/18… American Style: A$ .7981, kiwi .7271, C$ .8033, euro 1.2242, sterling 1.3785, Swiss $ 1.0387, … European Style: rand 12.3060, krone 7.8691, SEK 8.0437, forint 252.48, zloty 3.4087, koruna 20.7883, RUB 56.40, yen 110.74, sing 1.3229, HKD 7.8192, INR 63.85, China 6.4370, peso 18.77, BRL 3.2196, Dollar Index 90.61, Oil $63.57, 10yr 2.55%, Silver $17.21, Platinum $1,003.60, Palladium $1,110.65, and Gold… $1,336.40   

That’s it for today…  A little shorter than normal, but chock-full-o-information, eh?  A friend of mine back in frigid and snowy St. Louis sent me a cartoon yesterday that had me laughing out loud… It was a man all bundled up with snow shovel in hand, telling his wife… “I’m going back out to shovel 24 inches of global warming”… HAHAHAHAHA!  Had a blast with our guests, Gary and Diane yesterday and last night… Their visit is a short one, as they leave this afternoon… UGH!  We love visitors to our winter home! Maple Leaf Gardens, is where our Blues won their game last night, good for them! I’m going to go to Roger Dean Stadium today and pick up my spring training tickets. I always get excited to receive them! Alrighty then, the Guess Who takes us to the finish line today with their song: Undun..  Now, got out and make this a Wonderful Wednesday! And don’t forget to be Good To Yourself! 

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

January 16, 2018

* Currencies go on a rampage VS the dollar!

* The price of Oil continues to steadily rise…  

Good Day… And a Tom Terrific Tuesday to you! And welcome back from the 3-day Holiday weekend, that is if you were able to enjoy it. I know that there are some that don’t get to celebrate 3-day Holiday weekends, and that’s just how it is…  I’ve been down the past two days, with a stomach problem that is just plain awful. I’m not eating just to help save myself from problems and even then I still have problems! UGH!  Oh well, hopefully it gets out of my system today in time for our good friends, Gary and Dianne, who are coming for a short visit. The O’ Jays greet me this morning with their song: Love Train…   

The currencies sure have taken off for flight since last week, and without the U.S. and the PPT (plunge protection team) around to save the dollar, the currencies kept taking liberties with the dollar. The euro is trading in the 1.22 handle, and the Aussie dollar (A$) is knocking on the door to 80-cents! As I look at the currency screen I don’t see one currency with that hasn’t gained VS the dollar in the past few days.  So, it appeared at first,  that the overseas markets weren’t afraid of the Big Bad Wolf (U.S. traders) and kept the pressure on the dollar all night long. I should know, because here I am in the middle of the night, checking currency prices! UGH!

But… Sooner or later love is gonna get ya. No Wait! Sooner or later some profit taking was bound to come along, and in the European session, that’s were we found it.  At first glance last night the euro was 1.2280, and now it’s trading around 1.2225…  Still with a 1.22 handle, but not as lofty as it was entering the overnight sessions. 

Gold isn’t sitting this dance out either! The shiny metal has moved, albeit slowly, but moved up against the dollar in the past couple trading sessions, and is trading above $1,330 this morning. What on earth is causing all this dollar weakness, I hear you asking? Well, I’ve laid this all out before, but let me go through it again for any new readers to class…

You see, tax cuts, lead to unknowns. And traders don’t like “unknowns”… The BIG unknown here with the tax cuts is just how much it will help the U.S. economy… Some believe that it’s the medicine that will cure the economy’s inability to grow 3% on a an annual basis. And some, like me, believe that it’s too much show and not enough go! So, until the proof of a stronger economy is in the pudding, I think we’ll continue to see the dollar in the woodshed on a more frequent basis… Notice I didn’t say, daily basis?

Well, a trend may be your friend, but a trend is not a ONE-WAY street, there’s always volatility in the trend, so please, when the volatility shows its ugly head, don’t panic and think the trend is over…

Currency trends are long sweeping moves, as witnessed by the last two trends… The weak dollar trend that went from 2002 to 2011, and the strong dollar trend that went from 2011 to 2017…

So, did you hear that Germany’s Bundesbank announced that they were going to begin accumulating Chinese renminbi as part of their currency reserves? That was the BIG new yesterday, but really shouldn’t be a surprise, as the markets led us on to believe it was… Remember in 2016 when the IMF added renminbi to their reserve currencies that make up Special Drawing Rights (SDR’s) I told you then that Central Banks around the world that owned SDR’s, would have to buy renminbi per the IMF’s allocation ratio, but that they didn’t have to do it right then and there? Well, this is the Bundesbank doing their part.

Speaking of China… Last week, the Peoples Bank of China (PBOC) announced that they had changed the regime that was used to price the renminbi on a daily basis.  The banks that help in the “fixing” of the renminbi were told to “adjust their use of the counter-cyclical factor in such a way that it didn’t have any impact on the mechanism.  OK, Ok, let me explain what that means… China has taken back some of the control of the fixing…   period.   But what about China moving to an eventual float of the currency?   

Ahhh, grasshopper, that’s still in the plans.. As I see it, and I could be wrong, the Chinese want to get all their ducks in a row with the renminbi, and having control of it will be the answer. Once everything is calmed down, and the renminbi is moving along without outside interference, the PBOC will spring a surprise on the markets with an announcement of a dirty float!  

All currencies now a days are traded with a dirty float, which means that they are valued by the markets, but… the Central Bank can buy or sell the currency to direct it in the direction it wants.  That’s a dirty float. 

The price of Oil has climbed over the $64 handle since we last talked on Friday, and I just read a blurb that said that Hedge Fund managers were increasing their bets for a higher priced Oil. Hmmm… I certainly don’t like those guys getting their hands in the cookie jar, so hopefully their “interest” is not strong at this time!  

With the price of Oil steadily moving higher, and the euro trading with a bid these days, the Norwegian krone is looking strong again, as it finally shed the 8 handle. The rest of the Petrol Currencies aren’t looking shabby either… The Russian ruble has moved toward 53, the Canadian loonie is above 80-cents, and the Brazilian real is stronger. Shoot Rudy, even the Mexican peso moved below 19 for the first time in a month of Sundays! 

And let’s not look past the pound sterling that is trading with a 1.36 handle this morning!  The Big Dog euro has left the porch! Sort of like, “Elvis has left the building”…  Speaking of Elvis, on Sunday it was the 44th anniversary of his world-wide TV special from Hawaii… He was, “Elvis” that night… I’ll always remember watching it with my mom… 

Ok, back to work…  The U.S. Data Cupboard today just has the Empire Index, which is a pulse of the manufacturing in the NY region, and is not a market mover. Tomorrow’s Data Cupboard has two of my fave economic prints. Industrial Production and Capacity Utilization will print for December, and that should get things rolling! 

To recap… The dollar has taken a ride on the slippery slope and only some profit taking in the overnight session last night has given the dollar bugs something to cheer about. The Dollar Index is trading with a 90 handle, which should tell you just how far the dollar has fallen in the past couple of trading sessions. Gold has moved higher, and the price of Oil is steadily moving upward. China changed the way they price the renminbi last week, and Chuck thinks it just a precursor to a dirty float.   

For What It’s Worth… At first glance I didn’t think much of this article, but then it began to get to me, and say, “Chuck, this is just another example of how the Gov’t’s of the world manipulate the markets” So, it’s about how 9 Canadian banks are being accused of manipulating interest rates… And it can be found here: https://www.reuters.com/article/us-canada-rigging/lawsuit-in-u-s-accuses-nine-banks-of-rigging-canadian-rate-benchmark-idUSKBN1F42IN    

Or, here’s your snippet: “A cluster of big banks has been named in a new lawsuit alleging manipulation of a key benchmark lending rate in Canada, opening up a new front in a global scandal that has led to billions of dollars in fines and penalties.

The plaintiff, the Fire and Police Pension Association of Colorado, is accusing nine banks of colluding over a period of about seven years in the manipulation of the Canadian Dealer Offered Rate (CDOR), in order to boost profits for their derivatives trading businesses.

CDOR, a benchmark created by the Canadian Bankers’ Association, is supposed to reflect the cost of borrowing Canadian dollars in North America, according to the lawsuit, which was filed last Friday in the southern district of New York.

Instead, the suit claims, the banks conspired to “suppress” CDOR by making artificially low submissions that did not reflect the actual rates at which they were lending.

On “hundreds” of days during the period in question, the suit adds, the banks’ submissions were identical, suggesting a pattern of collusion through electronic message platforms, phones, and e-mails.” 

Chuck again… I’ll say it again here… With all the scandals of manipulation that have been exposed in recent years, how is it so difficult to grasp the idea that Gold is being manipulated?   Think about that for a minute and it will sink in…    

Currencies today 1/16/18… American Style: A$ .7950, kiwi .7277, C$ .8045, euro 1.2235, sterling 1.3760, Swiss $1.0372, … European Style: rand 12.25, krone 7.8715, SEK 8.0288, forint 252.29, zloty 3.4111, koruna 20.8527, RUB 56.43, yen 110.70, sing 1.3230, HKD 7.8232, INR 64.02, China 6.4369, peso 18.75, BRL 3.2045, Dollar Index 90.65, Oil $64.07, 10-year 2.54%, Silver $17.15, Platinum $992.99, Palladium $1,119.76, and Gold… $1,336.60 

That’s it for today… I had a mathematical error last week… I was thinking at the time that is was still 2017, and said that son Andrew was 35, when he’s actually 36… UGH! I don’t like it when I make errors with math! Well, how’s your NFL team doing in the playoffs? The Jacksonville Jaguars are still in the hunt, but they have to play New England next, and I know I’m going to tick off quite a few people with this thought, but here goes any way… The Jags will have to play two teams, the Patriots and the referees… I’m just saying…  And with that I had better get this out the door, before I say anything else about the Patriots…  Triumph takes us to the finish line today with their song: Fight The Good Fight…  Please attempt to make this a Tom Terrific Tuesday and Be Good To Yourself!  

Chuck Butler

 

Chuck Butler’s: A Pfennig For Your Thoughts 

January 12, 2018

* German coalition Gov’t is close!

* Big Dog euro leads the charge today! 

* Gold soars in the early morning trading!  

Good Day… And a Happy Friday to one and all!  Well, as Gomer Pyle used to say, Surprise, Surprise, Surprise! I know, I know, I told you no Pfennig today, due to infusion Confusion, but, there was no Infusion yesterday, so here I am! The infusion center down here didn’t have enough time to clear everything with the insurance, etc. for the infusions to switch down here, so I’ll be called back next week sometime. Seals & Crofts greet me this morning with their song: Summer Breeze..  

So… Don’t look now, actually I don’t care if you take a sneak peek, but the trapdoor was sprung under the dollar yesterday afternoon, and this can be witnessed in two ways… First, the euro has hit a 4-year high of 1.2120, and second, the Dollar Index has fallen from 92.42 yesterday morning at this time to 91.39 this morning. It’s not often that we see a full figure move in the Dollar Index in a trading session, but yesterday, was that day…

The dollar selling began slowly and quietly yesterday but when it was announced that German was every so close to forming a coalition gov’t, all hell broke loose for the dollar, and it began to fall through the trap door. It will be interesting to see if all that dollar selling yesterday and throughout the night continues once the NYC traders arrive at their desks this morning. 

So, the Big Dog euro is once again off the porch, where it likes to lay around in the shade all day, and it’s chasing the dollar down the street. Longtime Pfennig readers know that when the Big Dog gets off the porch, the rest of the little dogs/ currencies, can begin to chase the dollar down the street too, and often these little dogs outrun the Big Dog. But this morning it’s all about the Big Dog, euro. 

Remember when the German election results revealed that a coalition gov’t would have to be formed, and the euro got the stuffing knocked out of it?  Because… Traders don’t like “unknowns” and that was a HUGE unknown… Well, it only makes sense that now that it appears that there will be a coalition gov’t, the “unknown” is being taken out, and the euro is free to move about the country!  And the euro is trading at a 4-year high…

Back in 2014, though the euro was trading downward, so the 1.2120 figure was on the way down, this time it’s on the way upward! So, when do you figure European Central Bank (ECB) President, Mario Draghi, throws the euro under the bus, as he’s been apt to do every time the Big Dog, euro, gets off the porch. Eurozone economic data has been good and strong latterly, which helps the euro once it gets going like it’s doing now, and I believe that Draghi, is one of those Central Bankers that strong currency hurts economic growth… 

A strong currency does combat rising inflation, and Draghi won’t like the strong euro for that reason, utmost. 

The Norwegian krone is seeing the euro rise and that helps the krone to also rise.  I know I said the other day that it appeared that the krone was stuck in the mud at 8.08, but at that time, traders were trading with an “opposites day” mentality, and the euro couldn’t find a bid…  But not any longer! There’s a strong bid for euros this morning, and the krone is right alongside the single unit. 

And how about that move in Gold this morning?  With the dollar getting sold like funnel cakes at a state fair, Gold began to move higher mid afternoon, after spending the morning in a choppy trading session. Gold initially lost the $8 gain it had in the early morning trading, only to come back and close up $5.60 on the day to $1.321.90…  But this morning in the early trading Gold is up $10 to begin the day at $1,332.60. This is the highest level in Gold since last September, when it appeared then that Gold was heading to $1,400, as many forecasters had said it would by year-end, 2017…  

But, that’ when the “boys in the band” stepped in and engineered a takedown of the Gold price. I’m not saying that the “boys in the band” couldn’t step in again, I’m just saying that Gold’s move is strong, and appears to be without an shackles attached to it this morning. The Jefferson Starship is playing on the IPod right now, and it’s my fave song by them. Miracles, which seems to be what we need for the “boys in the band” to stay away from this move by Gold…   

I was sent a link to an article by longtime reader, Bob, yesterday, that talked about Russian President, Putin, talking glowingly about how the Russian economy is growing. GDP had just printed a 1.9% gain, which I don’t think I need to remind you, but will anyway, is held down by the economic sanctions that the U.S. and European Union has placed on Russia…  Russian consumer inflation printed yesterday and year on year the December inflation only grew 2.5%!  That’s a HUGE improvement for the Russian economy. And once again I point your attention to the Central Bank of Russia Gov. Elvira Nabiullina, as the shepherd of the Russian economy, and what a great job she has done steering it around all the pit holes that the sanctions, and a lower Oil price could have caused. 

Back in the 90’s there were two Central Bankers that I lauded all the time for their work in steering their respective economies to higher ground… Germany’s Hans Tietmeyer, and the Reserve Bank of New Zealand’s Don Brash…  Elvira Nabiullina is the new version of these former stalwart Central Bankers.  

Well, the U.S. Data Cupboard finally gets restocked this morning, and we get to see the color of the December Retail Sales…  I expect nothing more than a good positive number from this data print, as we were in the Christmas and other holidays spending period… If we can’t mustard a positive Retail Sales in December, then we should pack up the bags and go home! 

So, it looks like a good strong Retail Sales print could wrap a tourniquet around the bleeding by the dollar to end the week, which would be fine with me, given that the dollar’s lasting effect would only last one day. Remember, when the markets come back next Tuesday here in the U.S., they will have long forgotten about a good strong December Retail Sales print.  

To recap…  The trapdoor was sprung underneath the dollar yesterday afternoon, after it was announced that Germany was ever so close to forming that coalition gov’t that cost the euro quite a bit of real estate back when the elections took place. So, the Big Dog euro is back to getting off the porch to chase the dollar down the street. Gold had a choppy day of trading yesterday, but is up a solid $10 in the euro morning trading today.

  For What It’s Worth…  In a “sign of the times” this article comes to us courtesy of USA Today, regarding the closing of many Sam’s Clubs, and can be found here:  https://www.usatoday.com/story/money/2018/01/11/sams-club-closing-dozens-stores-reports-say/1024986001/  

Or, here’s your snippet: “Sam’s Club, the membership warehouse owned by retail giant Walmart, is shutting down or converting 63 stores.

The company attributed the decision to the need to better fulfill online orders, less population growth than expected in some markets and too many competing locations.

The Sam’s Club closures were confirmed the same day Walmart said it would lift the hourly minimum wage in the U.S. to $11 and give out bonuses of up to $1,000.

Of the Sam’s Club locations, about 50 will be going out of business for good. Roughly 10 of those locations are closing their doors as of Thursday, while the remainder will be shuttered over the next three to four weeks.

About 10 to 12 of the stores are slated to be closed temporarily as the retailer converts them to regional distributional centers to help fulfill online purchases. Workers previously employed at those sites are not guaranteed one of the new positions.”  

Chuck again…  it’s one thing when the high-end stores close, but when an outlet like Sam’s Club closes doors, it’s quite telling folks…  

Currencies today 1/12/18… American Style: A$ .78807., kiwi .7260, C$ .7992, euro 1.2127, sterling 1.3616, Swiss $1.0305, … European Style: rand 12.3894, krone 7.97, SEK 8.1050, forint 254.29, zloty 3.4374, koruna 21.0352, RUB 56.80, yen 111.03, sing 1.3273, HKD 7.8229, INR 63.55, China 6.5024, peso 19.20, BRL 3.2237, Dollar Index 91.39, Oil $63.46, 10yr 2.55%, Silver $17.15, Platinum $997.04, Palladium $1,089.92, and Gold… $1,332.60    

That’s it for today… Again, I went through this yesterday, but since I’m here writing today… Happy Birthday to my son, Andrew!  This is a 30day Holiday Weekend, so I hope you get to have a day-off on Monday! It was absolutely beautiful here yesterday, I knew the clouds and rain wouldn’t be around too long! Daughter Dawn sent us a short video of granddaughter, Delaney Grace in her latest performance on stage in the local theater production of Mary Poppins… She’s so darn cute! Love her to pieces! Kathy was up early this morning and already brought me a cup of coffee! YAHOO! Now I’ll head out to the deck that overlooks the beach and ocean and watch the sun rise over the ocean with my coffee, and my phone playing some classical music to start the day…  Since it’s a 3-day holiday weekend, there’ll be no Pfennig on Monday. Consider this one a “bonus Pfennig”! Now go out and make this a Fantastico Friday! And it appears that today is a good day to make it a good day!  Be Good To Yourself!   Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

January 11, 2018  

* The Bond Gurus send out a warning!

* Eurozone prints strong data again! 

Good Day… And a Tub Thumpin’ Thursday to you! If I were back in St. Louis, I wouldn’t be writing this morning, I would be preparing for my visit with the oncologist and my infusion. My appt. with the oncologist here, isn’t until this afternoon, so here i am!  But, tomorrow will be an infusion confusion day for sure, since I’ll be receiving my infusion so late in the day. So, no Pfennig tomorrow, infusion confusion Friday… Got it? Good! The Guess Who greest me this morning with their song: These Eyes…  (be your humming or singing the words to that one now!)  

The trading mentality that was brought upon the currencies and metals after last week’s disappointing jobs report, remains in place, but really, we just have some drifting by the currencies and metals. This is getting old in my opinion… No data anywhere, to speak of, and no conviction to move the currencies one way or the other. 

The euro found a way to have a mini-rally yesterday and close back in on 1.20, but then the rug was pulled on the single unit, and it came back and stayed well below 1.20 through the night and the morning sessions.

Yesterday mid-morning I sent out a Tweet that said: Hey Twitter followers, did you see where a Chinese official announced that the Chinese would consider either slowing down or halting U.S. Treasury purchases? Now, that’s a scary thought for the dollar, eh?

For those of you on Twitter that haven’t added me as someone you follow, what are you waiting for? HA! But seriously, you should check it out, as you’ll get these little tid-bits before I write about them in the Pfennig the next day! #ChuckOButlerjr  

But…  Those words by the Chinese official didn’t move the dollar one iota…  Those words didn’t even move the U.S. Treasury market, as the 10-year Treasury saw a mini-rally with its yield moving from 2.59% yesterday morning to 2.54% this morning.  What gives with that? the former Bond King, but still a bond guru, Bill Gross, issued a statement saying that the Treaury’s  25 year long bull market has come to an end…  And the new Bond King, Jeffrey Gundlach basically said the same thing, saying that, “The moment of truth has arrived for [the] secular bond bull market! [Bonds] need to start rallying effective immediately or obituaries need to be written.”  

So, there you have it two bond guys that should know the end of a bull market when they see one, are calling for an end, and Treasuries rally… I told you on Monday that traders were trading with an “opposites day” approach. Thinking further about their words, leads me to think that these two guys head HUGE Bond Funds, so if they want to make their comments come to fruition, they certainly have the ability to make that happen… 

OK, enough on bonds…  Longtime readers know that I have a background in bond trading, so bonds get my attention very easily!  Well, the price of Oil continues to ratchet higher each day, and this morning the price of Oil is knocking on the door of a $64 handle…  Commodities, as a whole, continue to move higher as an indication that inflation is going to be a problem in the future. 

Gold was up $8 in the early morning trading yesterday, and added to that figure as the morning went along… And then voila! “The boys in the band” saw to it that the $1,328 figure that Gold had reached, was cut back, and on the day Gold only gained $3.70 to end the day at $1,316.30… The shiny metal is once again up today in the early morning trading another $3, but as we’ve seen time and time again, the early morning trading no longer is an indication of how the day will go for Gold… 

Once again today, the euro saw a strong piece of real economic data print, and it couldn’t gather any steam from the print.  Eurozone Nov. Industrial Production rose 1.0%  VS an expectation of 0.8%, so not only did the data print beat expectations, it was strong… But did it help the euro?  We’ve been through that already this morning. UGH!   

Yesterday, the Petrol Currencies weren’t going along with the rise in the price of Oil, except the Canadian dollar/ loonie. Today, things have flip-flopped, as the Petrol Currencies led by the Russian ruble are on the rally tracks, but the loonie is getting sold…  I’m telling you this now, so you can listen to me later… This trading mentality that is so prevalent in the markets right now, is for the birds! I can’t wait for it to end, and go away, it doesn’t have to go away mad, just has to go away! 

The U.S. Data Cupboard still doesn’t have much to look at. UGH! Yesterday, I stepped up to my soapbox and railed on about consumer debt accumulation. Then later in the day, I received a tweet from my fave economist, Danielle DiMartino Booth, who said, “U.S. Households May Rue the Binge of 2017—Americans will soon find out they have been living beyond their means.”

I was glad to see that she was talking about the same thing I was!  As you know, besides this writing that I do, for the Pfennig and the Dow Theory Letters, I’m basically retired, and I find that nothing has changed for me, other than the flow of income in… I’ve always been someone that likes to spend money, but doesn’t… I save up for things I want, and when I have saved enough, I go and buy what I wanted…  It’s too bad that consumers, for the most part, don’t work their finances that way, eh?  Oh well, they’ll all learn one day…  

To recap… It was another day of opposites trading in the currencies and metals. the euro tried to mount a rally, only to see it collapse, and the same with Gold. Bong Gurus, Gross and Gundlach, both issued statements that warned investors that the bond market’s 25 year bull run has come to an end. And Treasuries rallied! see? opposites! 

For What it’s Worth… Fed member, Kashkari, was talking to CNBC yesterday, and I have the video for you…  He sounds a lot like me regarding interest rate hikes, and the video can be found here: https://www.cnbc.com/2018/01/10/minneapolis-fed-proposes-massive-regulation-change-for-big-banks.html  

Or, here’s your snippet: “The Minneapolis Federal Reserve proposed a set of sweeping new regulations Wednesday aimed at reducing the risk big banks pose to the economy.

At the core of the recommendations are higher capital requirements for the nation’s largest financial institutions as well as a reduction in burdens for smaller regional and community banks. The proposals also take aim at so-called shadow banks — nonbank lenders — which are targeted for sharp taxes on the bigger firms.

In total, the proposal offers a contrast with the current regulatory aims of the White House, which is seeking to reduce many of the banking rules imposed by the Dodd-Frank reforms, adopted in the wake of the 2008 financial crisis. Incoming Fed Chairman Jerome Powell also has indicated that a lighter touch is likely for regulations.”   

Chuck Again… watch the video, please… I think you’ll see what I mean about him sounding like me…    

Currencies today 1/11/18…  American Style: A$ .7875, kiwi .7227, C$ .7963, euro 1.1947, sterling 1.3495, Swiss $1.0217, … European Style: rand 12.44, krone 8.06, SEK 8.1880, forint 258.52, zloty 3.4956, koruna 21.3680, RUB 56.93, yen 111.62, sing 1.3330, HKD 7.8222, INR 63.57, China 6.5118, peso 19.29, BRL 3.3411, Dollar Index 92.42, Oil $63.96, 10-year 2.54%, Silver $17.03, Platinum $977.46, Palladium $ 1,079.98, and Gold… $1,319.80

That’s it for today…  I just remembered that Monday is a holiday, so no Pfennig until next Tuesday… Tomorrow is son Andrew’s Birthday, Happy 35th Birthday Andrew… The day you were born, we had snow storm that dropped 9 inches of snow , but I had gotten your mother to the hospital before the snowfall began, so no dicey stories there! 3 weeks later we would have the most snowfall at one time that I had ever seen, 24 inches, that shut down the city for 3 days!  1982…  The Cardinals also won the World Series later in 1982, and on my writing desk back home, I have a picture of me holding Andrew at the World Series parade… I got to see my beloved Missouri Tigers on TV last night beat Georgia in Basketball.. That was a hoot for me, down here! Nazareth takes us to the finish line today with their song: Holiday…  And with that it’s time to go! I hope you have a Tub Thumpin’ Thursday, and Be Good To Yourself! 

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

January 10, 2018 

* Currencies drift on Tuesday…

* Chuck gets on his soapbox today! 

Good day… And a Wonderful Wednesday to you… My travel day yesterday went along like clockwork, which was a welcome thing in m book. That’s not high on anyone’s list of fun days, when your travel is disrupted, delayed, cancelled, and all the other things that CAN go wrong, does! But, like I said, it all went just fine. YAHOO! It was a bad night for St. louis sports, as both our Blues and SLU Billikens lost their games. UGH! I’ve got some stepping up on the soapbox to do today, so get ready for that… The band Missouri greets me this morning with their song: Moven’ On…  

Well, when i left you Monday traders were having an opposite day with the currencies and metals, after the very disappointing job report for November printed on Friday. And that trading mentality remained in the currencies and metal yesterday, as the euro slipped further down in the 1.19 handle, and Gold lost $7.10 on the day. 

The price of Oil was the only anti-dollar asset to gain yesterday, and this morning Oil trades with a $63 handle… Seems there was what was called a “monster draw” of Oil supplies last week, and that has given the Oil traders a reason to believe that Oil can return to $70… That may take some time to achieve, but from the looks of things that could very well happen, eventually. 

The Petrol Currencies didn’t exactly celebrate the price of Oil’s move to $63 yesterday, and for the most part they lost ground, with the Canadian dollar / loonie remaining well bid above 80-cents!  The Russian ruble saw a dip blow $57 on Monday, but has traded back above that figure as there had to be some profit taking going on. 

The Norwegian krone continue to trade with a double edged sword. With one side tied to the price of Oil, and the other side tied to the performance of the euro.  And since yesterday saw one side go up and the other go down, the krone just can’t get any traction, and seems to be stuck in the mud around 8.08. 

The Aussie dollar (A$) and its kissin’ cousin across the Tasman, kiwi, have been very stealth-like with their moves higher VS the green/peachback  It was under the cover of darkness that kiwi moved past the 72-cents figure, and the A$ looks like it want to take out 79-cents… So, I’m hoping these two can remain stealth-like, and the short paper traders don’t catch on to what they are doing! 

Alrighty then, I’ve been champing on the bit this morning waiting to get up on my soapbox, and it appears that now is as good a time as any… So, give me a minute here to get up on the soapbox and test the microphone…  Testing 1,2…   OK, here we go!  

Well, I told you Monday that the Consumer Credit (read debt) for Nov. was printing and while it should be a doozy, I thought it would be just a precursor to what I expected to be a blow out month of December deficit spending… November’s headline went like this: Consumer Borrowing Grows At Its Fastest pace in 16 years! The total was $28 Trillion, or an increase of 8.8% annually! According to MarketWatch: Credit-card borrowing powered the increase. Revolving credit, which is mostly made up of credit-card loans, accelerated to an annual rate of 13.3% in November, the fastest pace since last December and well above the 9.9% gain in October. Nonrevolving credit, which covers loans for education and cars, rose at an annual rate of 7.2% in November, the fastest pace since October 2016 and above the 5.3% rate in October. The data excludes mortgage debt.

OMG! We can’t be that hmmm… my grandkids go ape on me whenever I use the word “stupid”, But hey! I got it from watching the Charlie Brown movies! So, I won’t use “stupid”, or any of the other descriptors we “used to use” to say someone wasn’t very smart…

I’m writing this week’s DTL letter and have some very scary data in there. It’s about household net worth VS income… Take this with the debt numbers we just saw from November, and well, something’s gonna explode! In the early years of the great band Chicago, they sang a song titled: It Better End Soon My Friend… That song was about what they felt was social injustice (back in the 70’s, and today’s millennials thought they were the first to protest this!) Oh, well, I’m going to borrow that song title, and use it to describe this accumulation of debt that U.S. consumers are going through right now… It had better end soon, my friend.

I’ll stepdown now, and give someone else an opportunity to dispute my thoughts on the accumulation of debt…  I welcome that! 

Well, we arrived here yesterday and it was a rainy day, which from the weathercast it will continue to be rainy for the next two days… Oh, well, the temps are warm and the sun will eventually come out again, it’s not like I’m only here for a couple of days and have to leave! 

I told you above that Gold lost $7.10 yesterday to close around $1,313… But not to fret! Gold has recovered that lost ground in the early morning trading today, gaining $8 to 1,321 and change! The short Gold paper traders had their fun with Gold yesterday, but once again the shiny metal proves that you can’t keep a good metal down!  Palladium has climbed back over the $1,100 figure, as it maintains its position on the pole as the start performer in the metals for the past year. 

Palladium has supply problems, the same with Silver, but Silver can’t get on the rally tracks like Palladium, because of all the short positions that have been taken in Silver.  Ed Steer always puts the charts for number of days of production to meet the short positions’ total in his Saturday letter, and this past week shows the following: 188 days of Silver production is needed to cover the short positions…  This is just ridiculous to me! 

The Hunt brothers were prosecuted for attempting to corner the Silver Market back in the 70’s… So, why aren’t these bullion banks that have all these short positions not be prosecuted?  Well, according to the Silver guru, Ted Butler (no relation that I know of), he believes that immunity from the law was given to JP Morgan back in 2007 for buying Bear Stearns, who used to have a fledging short silver business…  Ted Butler believes it was a 10-year deal, which would mean that it’s now up, and what did I tell you on Monday that the COT showed last week? That the short positions had dropped… Hmm…  Maybe, just maybe, because you never know for sure, Ted Butler is on to something?   

The U.S. Data Cupboard is basically empty today, so unless something crazy happens, we’re stuck with what’s going on right now to continue the rest of the day.   

 For What It’s Worth…  longtime reader, Bob, sent me this link yesterday and I immediately thought it to be FWIW worth, after reading it! it’s about how the Fed deals with foreign intelligence, and can be found on Reuters, here: https://www.reuters.com/article/us-fed-accounts-intelligence-specialrepo/special-report-how-the-federal-reserve-serves-u-s-foreign-intelligence-idUSKBN19H198   

Or, here’s your snippet:”The Federal Reserve’s little-known role housing the assets of other central banks comes with a unique benefit to the United States: It serves as a source of foreign intelligence for Washington. Senior officials from the U.S. Treasury and other government departments have turned to these otherwise confidential accounts several times a year to analyze the asset holdings of the central banks of Russia, China, Iraq, Turkey, Yemen, Libya and others, according to more than a dozen current and former senior Fed and Treasury officials. The U.S. central bank keeps a tight lid on information contained in these accounts. But according to the officials interviewed by Reuters, U.S. authorities regularly use a “need to know” confidentiality exception in the Fed’s service contracts with foreign central banks. Some 250 foreign central banks and governments keep $3.3 trillion of their assets at the Federal Reserve Bank of New York, about half of the world’s official dollar reserves, using a service advertised in a 2015 slide presentation as “safe and confidential.” Other major central banks and some commercial banks offer similar services. But only the Fed offers direct access to U.S. debt markets and to the world’s reserve currency, the dollar. In all, the people interviewed by Reuters identified seven instances in the last 15 years in which the accounts gave U.S. authorities insights into the actions of foreign counterparts or market movements, at times leading to a specific U.S. response.”  

Chuck Again… And you thought our Fed was only concerned with inflation, employment and asset valuation!   Notice I slipped that asset valuation in there? Pretty coy of me, eh?  

Currencies today 1/10/18… American Style: A$ .7860, kiwi .7225, C$ .8042, euro 1.1987, sterling 1.3537, Swiss $ 1.0223, … European Style: rand 12.4927, krone 8.0880, SEK 8.1924, forint 258.51, zloty 3.4840, koruna 21.3226, RUB 57.01, yen 111.34, sing 1.3320, HKD 7.8229, INR 63.51, China 6.5167, peso 19.27, BRL 3.2415, Dollar Index 92.32, Oil $63.40, 10yr 2.59%, Silver $17.10, Platinum $966.57, Palladium $1,101.02, and Gold… $1,321.70

That’s it for today… no sunrise to watch today, as it’s blocked by the cloudy skies… UGH!  Oh well, it’s days like this that make you appreciate the sunny days that will come! I heard from our little Christine the other day, and she informed me that January was her second most disliked month, following November. I thought, Yeah, I used to be with you on that, but no any longer! It’s nice when my former colleagues contact me, for I spent many hours by their side through the years, and to just walk away, was difficult for me… So, keep those cards and letters coming!  Marcy Playground takes us to the finish line today with their song: Sex and Candy…  Threw that one at you from left field, eh?  You never know what’s going to come up on my shuffle play list!  And with that, it’s time to go! I hope you have a Wonderful Wednesday, and Be Good To Yourself! 

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts  

  January 8, 2017

* It’s an Opposites Day!

* Eurozone prints strong data!  

Good Day… And a Marvelous Monday to you ! Well, I know right from the start today that this will be late… not as late as Friday’s letter, which ran into technical difficulties, but late, as I did something this morning that I’m not proud of… I hit “snooze” when the alarm went off…  That’s not something I hope begins to happen on a regular basis!  The frigid cold finally lost its grip on us yesterday, and we saw temps above freezing for the first time in a fortnight.  All my bags are packed, I’m ready to go, I’m standing here outside your door, already I’m so lonesome I could cry…  Yeah, I head south tomorrow, so no Pfennig tomorrow, and I’ll pick it up from S. Florida on Wednesday morning.. Eric Burdon & the Animals greet me this morning with their song, that’s very apropos for me… We Gotta Get Out of This Place..   

Well, what can I say? the markets played a game of “opposites day” on Friday and in the overnight markets last night… What am I talking about? Well, Friday saw the Jobs Jamboree disappoint BIG TIME, with only 148,000 jobs created in December, when 290,00 was expected.. That, in the old days of trading on fundamentals, would have sent the dollar to the woodshed for the day and more until something brought it back out. But that’s not what happened… Instead we saw the dollar rally on Friday, and through the overnight markets last night…  UGH!  

The BLS jobs report was very disappointing on Friday, and on top of that the BLS kind of came clean on their birth/ death model as they actually subtracted jobs in December to the turn of 38,000…  Recall on Friday, I was proposing a scenario that had the BLS coming completely clean and wiping out a large portion of the jobs they had added for no apparent reason during 2017.  The BLS did surprise me with a negative number of jobs for the month, but only 38,000?  In Rocktober they added 216,000 jobs!  So, to just take away 38,000 was like removing a bucket of sand from a beach…  Or me losing 10 lbs.. nobody notices! 

If I were a BIG TIME trader on Wall Street, I would have seen the disappointing number and the fact that the BLS “kind of admitted” that they were overanxious with their additions each month, as a sign that the dollar needed to get sold…  But that’s not what happened! 

What is going on here? SERENITY NOW! I’m dead serious here folks! Oh! But wait, Chuck! Don’t forget that there are “powers that be” out there lurking in the dark, ready to defend the dollar whenever it appears that its headed for a the woodshed.   Oh, silly me! Of course that’s what has happened, because there’s no other explanation for this market reaction…

Someday, this will al come crashing down on the dollar and those “players that lurk in the dark” Until then, we have to deal with them, and the dollar that refuses to go directly to jail, without passing Go, and without collecting $200!  And that brings us to this morning, where the euro has lost the 1.20 handle, and Gold lost $3.20 on Friday and is down another couple of bucks in the early morning trading today. 

This is a far cry from where we began last week, with the currencies, metals and Oil all chasing the dollar down the street. But it is what it is, and I can’t do anything about it, so I’ll leave that stress for someone else to feel!  

The Eurozone printed some encouraging data this morning, which should be underpinning the euro right now, but as I said above the markets are playing a game of opposites…  November Eurozone Retail Sales beat the expectations as they rose 1.5% vs 1.3% expected, this from the Rocktober print. The Year-on-year Retail Sales were strong too with a 2.8% increase VS 2.2% expected.  In addition, Business Climate as measured by a German think tank also beat expectations on the upside.  So, as you can see, the euro should be basking in the warmth provided by the sun’s rays shining on it this morning…  

We’ll have to wait until Thursday for any additional economic data from the Eurozone, so it’s on its own until then.  Speaking of Thursday, we’ll see the Aussie Retail Sales for November (I know, these reports seem so old and stale at this point, eh? ) The data prints for Australia in recent weeks have been good and bad, and the Aussie dollar (A$) needs a good strong Retail Sales report to help it continue its current rally. 

The GATA folks were kind enough to send me a note on Saturday highlighting another weak COT weekly report. COT stands for Commitment of Traders, and is used to get the pulse of how traders feel about an asset. In this case we’re talking about Silver…  And they got it from my longtime friend, Ed Steer!  Ed wrote the piece for his newsletter on Saturday, so I received it twice!   The COT report showed the number of short positions in Silver dropped last week… Not by the total it should drop, but it dropped nonetheless, and that’s a good thing in my book! 

Sentiment has replaced the combing through of the COT reports each week, but they’re still useful.  For, if this dropping of short positions in Silver continued week after week, one would get the warm and fuzzy that they should be long Silver…   Of, course, in my humble country bumpkin opinion, everyone should be long Silver!  

Speaking of being a country bumpkin I got back to my roots last night… I was going through the cable channels and came across the old TV show, Hee Haw! My mind immediately flipped to Saturday nights in my parents home, where at the kitchen table they watched Hee Haw! So, I kept it on the channel for a couple of minutes, in their honor…  

At our old house in S. St. Louis, life revolved around the kitchen table.  Our house was small, and the “dining room” was actually a bedroom! 7 kids, a couple of adopted one in addition, in a 2-family flat… So, the kitchen table was the only place we could gather…  

And meanwhile, back at the ranch, the dollar continues to gain VS the currencies this morning!  I would look at this as a potential opportunity to buy the dips.. 

Today’s U.S. Data Cupboard only has one print, and it’s Consumer Credit (read debt) for November, the pre-December buying bonanza that I think will really add to this number which showed $21 Trillion in Rocktober…   We won’t see “real economic data” here in the U.S. until Friday, when Retail Sales will print. PPI (wholesale inflation), which really shot higher in November will see if it can match that rise of 0.4% (I doubt it) And the stupid CPI (consumer inflation) will follow the next day. But like I said, no real data until Friday.   

To recap…  The Jobs report for December showed that only 148,000 jobs were created in the month, which was far below the 290,000 expected, but the dollar didn’t lose ground. Instead it has rallied since the jobs report, and has Chuck all frenzied!  The Eurozone printed some strong data reports this morning, but it hasn’t helped the euro, and Gold has lost some ground since Friday.  

For What It’s Worth… the link to this story was sent to me by dear reader Bernard, and I thank him for that… It’s an article on zerohedge.com that discusses Pakistan ditching the dollar, and can be found here:https://www.zerohedge.com/news/2018-01-04/pakistan-ditches-dollar-trade-china-retaliation-trump-twitter-meltdown  

Or, here’s your snippet…  “Less than a day after President Trump slammed Pakistan on Twitter for failure to combat terrorism, stating, “It’s not only Pakistan that we pay billions of dollars to for nothing, but also many other countries, and others,” and after it was revealed that the US will withhold $255 million in aid, Pakistan’s central bank announced it will be replacing the dollar with the yuan for bilateral trade and investment with China.

“SBP has already put in place the required regulatory framework which facilitates use of CNY in trade and investment transactions,” the State Bank of Pakistan (SBP) said in a press release late Tuesday, ensuring that imports, exports and financing transactions can be denominated in the Chinese currency.

“The SBP, in the capacity of the policy maker of financial and currency markets, has taken comprehensive policy related measures to ensure that imports, exports and financing transactions can be denominated in yuan,” Dawn news, Pakistan’s most widely read English-language daily, announced while quoting the SBP press release.”  

Chuck Again…  And we can thank China for making this available to countries… Longtime readers will recall me telling them about 7 years ago that the Chinese leaders were calling for an end to the “dollar standard”, and me saying that the Chinese don’t say things they don’t mean…  

Currencies today 1/8/18… American Style: A$ .7837, kiwi .7178, C$ .8047, euro 1.1970, sterling 1.3547, Swiss $1.0228, … European Style: rand 12.4263, krone 8.08, SEK 8.2058, forint 257.98, zloty 3.48, koruna, 21.3216, RUB 56.91, yen 112.92, sing 1.3320, HKD 7.8221, INR 63.42, China 6.4884, peso 19.26, BRL 3.2280, Dollar Index 93.30, Oil $ 61.70, 10yr 2.46%, Silver $17.19, Platinum $ 970.44, Palladium $1,093, and Gold… $1,321.60   

That’s it for today and tomorrow, talk to you again on Wednesday… Well, the PICC-line came out on Friday morning, and I have no more getting up in the middle of the night to administer antibiotics to myself. YAHOO! It was a bad day for our local teams on Saturday with the Blues, and Mizzou both losing, and  the day was saved when  the St. Louis U Billikens won their game.  We had a nice family lunch yesterday to celebrate oldest son, Andrew’s birthday which will be this Friday (we’ll be gone!). Everyone was there except Alex, who was in Arkansas this past weekend… I gave my little Delaney Grace an extra long hug yesterday when we said goodbye, as I won’t see her until March, when they come down for spring training games! She is so darling to me, and I love her to pieces!  And with that, the Little River Band takes us to the finish line today with their song: Lonesome Loser…  I hope you have a Marvelous Monday, and be Good To Yourself!   

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

January 5, 2018  

* Currencies hold their ground… for now.. 

* A Day of Reckoning for the BLS?

Good Day… And a Happy Friday to one and all! The end of a short week. I love short weeks! Not that I want to see time fly by, it’s just a matter of getting to Friday! Well, the infectious disease doc was good to me yesterday, and she set me free to move about the country! The PICC-line comes out this morning, and let the countdown to Tuesday morning’s departure for warmer weather begin! Radiohead greets me this morning with their song: Karma Police…  

The currencies held their ground yesterday, and much like Ralphie did they fought back against the big bad bully, dollar. They didn’t gain much, but they sure didn’t lose ground either, so it was a day off the calendar and one less day of the dollar’s role as the reserve currency of the world. Boy, I didn’t beat around any bushes there did I? I went straight for the jugular of the dollar!

Yeah, I did that on purpose, for I could have said that it was one less day of the strong dollar trend that keeps helplessly holding on to its former position as lead dog. Right now, the dollar, to me, reminds me of an old baseball pitcher that still believes he can throw the ball by the young stud hitters, but when he’s called on to do that, it gets ugly for him… And that’s why I decided to just go straight to the jugular this morning. 

Of course it would have helped my thoughts this morning if the currencies had remained well bid throughout the night, but nooooooooo! It appears to me that some profit taking took place, as the currencies have backed off their figures from last night, but the downward move was very small… 

So, it appears that we’ll end the first week of the new year with the currencies up and the dollar down. The price of Oil is also up for the week, as are the precious metals, led by Gold, which has found its way back to the $1,300 level this week. 

Today’s trading in these assets could bet a little dicey, as it is a Jobs Jamboree Friday here in the U.S. And if the ADP Employment Report is any indication of what the BLS has in store for us today when they print their version of a Jobs report, then we could very well see the dollar rebound to end the week.  The ADP Employment Report showed 250,000 jobs created in December. WOW Of course a lot of them were seasonal workers, but 190,000 was expected, and 250,000 printed, that’s quite an upswing, eh?

So you see why I said if the ADP report was any indication of what the BLS prints then we could see the dollar rally to end the week. We have the same expectations for the BLS report this morning… 195,000 jobs are expected to have been created in December. I would think that given all the hedonic adjustments the BLS made to the jobs totals in 2017, that they have to have a day of reckoning at some point, and starting the year with one seems to be the logical and right thing to do. Of course not implementing the hedonic adjustments in the first place would be the “right thing to do”

But what IF the BLS does have their day of reckoning today? That would mean the risk is to the dollar for the jobs report totals wouldn’t be near the expectations on the downside. Oh, what I’m I talking about here? The BLS is NOT going to admit their hedonic adjustments were wrong throughout the year, so just move long here, for these are not the droids you’re looking for!  

In the Eurozone this morning we saw the color of their wholesale and consumer inflation prints for December… PPI year on year was up 2.9% VS 2.4% expected. So, quite an upward swing, and that should filter through to CPI(consumer inflation) as we go along in 2018. Eurozone CPI in December for a year on year look was up 1.4%…  which is down from the previous print of 1.9%, but with PPI burning a whole in CPI’s pocket, I believe December will be written off as a “one off” month. 

I don’t think the European Central Bank (ECB) will be fooled by this downward move in CPI in December, and their plans to begin to dismantle their balance sheet are all not going to be jeopardized. Speaking of dismantling the ECB’s balance sheet.. With the beginning of the New Year, that dismantling has begun. Recall the ECB told us that it will start out small and build to a large crescendo. 

Like I said yesterday, we’ve never, in the history of the world, had two major Central Banks implementing balance sheet dismantling at the same time before… This is going to get interesting folks… Time to get out those journals that we’ve used in the past to record the happenings in the markets…  

Well, there’s not much going on in Asia, the saber rattling has calmed down, and the data flow has pretty much dried up, until Sunday, when China will print their latest reading of their reserves, which should have remained above $3.1 Trillion.  I say that it should remain there because as far as I can see, and have read, the outflows of capital have slowed tremendously, thus removing the need for the Peoples Bank of China (PBOC) to defend the renminbi by selling their reserves and buying renminbi. 

That scenario is what was going on for a lot of 2017, but like I said above, that scenario has dried up tremendously, thus removing the need to defend the renminbi. 

Coming back over to this side of the oceans, either from the Eurozone or China, I had to laugh out loud when I read an article title this morning on Bloomberg… It read:  “Mexico’s peso expected to make a Big comeback”… I laughed and said, “why, is Mexico going to aggressively hike rates to double digits? Otherwise I see nothing behind this comment”…    

Gold had a nice day yesterday gaining more than $9 on the day, the shiny metal is down $3.80 in the early morning trading this morning, so the old metal trading shuffle is still being danced… Like I said yesterday, I’ll sit this dance out and just let the traders have the dancefloor until a steady trading patter forms, which will probably look like a conga line, to which I’ll gladly join…   

The U.S. Data Cupboard has some additional prints today… The Trade Deficit will print, along with the Nov. Factory Orders, which should reverse the Rocktober negative print of -1.7%…  But the markets will be focusing on the jobs numbers… So get ready for that!   

To recap…  The Currencies held their ground yesterday, but has seen some weak selling in the overnight markets ahead of the Jobs Jamboree that will take place this morning.  The Eurozone printed some mixed inflation numbers with PPI shooting higher, and CPI dropping, which Chuck thinks will be a one and one for CPI dropping. Gold had a nice day gaining $9 but is down $3.80 in the early morning trading today. 

For What It’s Worth…. I was sent a link to an article on Forbes.com yesterday that had quite a different take on the Retail Sales for Christmas.. I thought that this information was very FWIW worthy! And so, here’s a link to the article… it’s long, but it does get here eventually…https://nam04.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.forbes.com%2Fsites%2Fpamdanziger%2F2017%2F11%2F29%2Fthanksgiving-weekend-retail-results-in-shoppers-will-have-merry-christmas-retailers-get-coal%2F%2342ad79081835&data=02%7C01%7C%7Cc0446748b7dc4818b8fd08d553d364a8%7C84df9e7fe9f640afb435aaaaaaaaaaaa%7C1%7C0%7 C636507089755308525&sdata=28Eh%2BVXZ5K0%2FNBU7yT0AtrWRL7BuuMlHd%2FPDygXvt9I%3D&reserved=0 

First, let me set the snippet up… The article gets into how Retailers used huge discounts to sell their wares this year, and how those discounts will come back to hurt them, as they have tons of bond due in the next few years starting with this year, and their profit margins have been skimmed down… Will we see retailer defaults on bonds?    I apologize for no snippet, as the cut and past option isn’t working on the Forbes site this morning…

 Currencies today 1/5/18… American Style: A$ .7845, kiwi .7157, C$ .7996, euro 1.2053, sterling 1.3545, Swiss $1.0235, … European Style: rand 12.3683, krone 8.0787, SEK 8.1487, forint 256, zloty 3.4462, koruna 21.1945, RUB 57.05, yen 113.30, sing 1.3270, HKD 7.8203, INR 63.25, China 6.4966, peso 19.29, BRL 3.2331, Dollar Index 92.03, Oil $61.40, 10yr 2.46%, Silver $17.20, Platinum $963.57, Palladium $1,097.68, and gold… $1,317.86 

That’s it for today… I had grand plans to get this in your email box before the Jobs Jamboree started, but that didn’t happen! UGH! Our Blues made it two in a row with a win last night against Las Vegas, who for an expansion team has done quite well so far this year. No more getting up in the middle of the night to hook myself up to the antibiotics. YAHOO! Of course when you get right down to it, doing that was far better than dealing with the pain of the infection! My beloved Missouri Tigers host the Big Bad Florida Gators tomorrow, I won’t want to miss that basketball game! And the Beautiful voice of Dusty Springfield takes us to the finish line today with her song: Wishin’ and Hopin’..   And with that, let’s go make this a Fantastico Friday, and Be Good To Yourself!    Chuck Butler

 

Chuck Butler’s: A Pfennig For Your Thoughts   

January 4, 2018 

* Currencies fight back overnight!

* FOMC minutes say “go faster”

Good Day…  And a Tub Thumpin’ Thursday to you! I’ll hold off on the Tub Thumpin’ until I see the infectious disease doc this afternoon. If all goes well, then I’ll be Tub Thumpin’ into the night! My beloved Missouri Tigers got their SEC Conference Basketball schedule started on the right foot last night with a win in S. Carolina.. I forgot the game was on… UGH!  I was in 7th heaven though last night with the return to TV of the X Files… Before 24, there was the X Files show each Sunday that would hold my attention, imagination, and thinking for 1 hour… Last night didn’t miss a beat, after all these years being away…  The Killers greet me this morning with their song: Somebody Told Me…   

Another day, another day of the currencies losing some more ground that they had gained last week. It could have been the soaring ISM Index here in the U.S. but, in reality, shouldn’t that have been offset by the same kind of reports from the Eurozone and China? That’s logical which is how my mind works… And so it’s also logical that the powers that be, had seen to it that the dollar’s slide was halted… for now.

And Gold lost nearly $10 yesterday, after gaining more than $15 the day before. Two steps forward, one step back.. I guess that’s a dance that could be performed daily, but it’s not one that I would like to participate in. And it stopped Gold’s 8 day rally in its tracks… 8 days a week… it’s not enough to show Gold’s rally is for good! My apologies to the Beatles… 

But don’t panic! the overnight markets have brought us back to our Tom Terrific Tuesday’s levels, so in essence an overnight rally for the currencies has taken place. And the price of Oil moved to another handle in the past 24 hours, and now trades with a $61 handle.  But Gold is down in the early morning trading, $4.70… UGH!  This close… to having all three anti-dollar assets gaining against the dollar again. 

I was doing some reading yesterday, and came across some interesting data… Between the U.S. Fed and the European Central Bank (ECB) global bonds will be seeing a HUGE withdrawal of liquidity starting now, as both Central Banks begin to duel each other to see who can reduce their respective balance sheets the fastest…  The World’s economy has never been through something like this before, so how it reacts is a real unknown… 

There are those out there that think they know something that everyone else doesn’t know, but hear me now and listen to me later, they don’t know squat about what’s going to become of this dual Central Bank tapering…  They may end up having guessed correctly, but they sure didn’t know for certain that their guess would be right! 

The only thing I know is that buying bonds reduces yield, and selling bonds increases yield… These two Central Banks had been buying bonds for quite some time, which kept yields quite low on those bonds. But now the buying has stopped and in some cases selling will occur, that’s why I believe that ending the bond buying stimulus program, will see interest rates rise without the Fed doing the honors…  

The Fed’s FOMC Meeting Minutes from their last meeting printed yesterday afternoon, and the minutes revealed that a few Fed Heads were talking about increasing the rate at which they are hiking rates… In other words, more frequent rate hikes…  I saw that and thought to myself, well, the dollar fought back today, and now should have the ammo it needs to fight back even more in the overnight markets… But, when I turned on the screens this morning, that’s certainly not what happened, as I explained above!  

OK… I give you a year’s free subscription to the Pfennig if you can tell me without looking it up, which Asian currency outperformed the Asian currencies last year?  Spool up the Final Jeopardy music…  If you said the S. Korean won, then you are a winner, winner, Chicken dinner!  And that got me thinking… I few years ago, when I was still “something” I came up with an idea for a MarketSafe CD that included the emerging markets, and I purposely included S. Korean won, only to have to take it out because one of our affiliates thought that S. Korea was going to get bombed off the face of the earth. Fair point… but now I think about that decision to take it out…  oh well, hindsight is 20/20 vision, eh?   Not my worries any longer either!   

Gold saw 245,000 contracts traded in the shiny metal yesterday… I haven’t been reporting the # of contracts each day because, well… I believe the size of the totals were beginning to have that Comfortably Numb feeling with readers…  I was beginning to think that the paper Gold Traders were simply trying to outdo the previous day’s count each passing day.  Maybe, maybe I’m wrong… to go on singing, singing this song…  We’ll have to see, but just so you know, I see the numbers every morning, so if you really need them just ask… and you shall receive! 

The U.S. Data Cupboard will have the ADP Employment Report for us to see today, look for a number of around 190,000 jobs created in December…  Remember I’ve said this for a long time now… This ADP Report is what the markets should refer to instead of the stupid BLS jobs report…  ADP does the payroll for nearly every business in the U.S. So, if there’s layoffs, firings, and hirings, they should be the first to know!    

To recap…  The currencies had another day of selling yesterday, but the moves were small, but overnight the currencies have come back strongly…  The Fed’s FOMC Meeting Minutes revealed that some Fed Heads are wanting the Fed to go faster with rate hikes. That news sent Gold down for the day, and the early morning trading today.  The ADP Employment Report should hold the traders’ attention today, but will it?  

For What It’s Worth… I found this on Ed Steer’s letter this morning and he got it from Reuters. It’s about German Gold Buying and can be found hehttps://www.reuters.com/article/us-deutsche-boerse-gold/germans-invest-heavily-in-gold-in-2017-deutsche-boerse-says-idUSKBN1ES10A?rpc=401&re:     

Or, here’s your snippet: “Germans are investing heavily in gold, Deutsche Boerse said on Wednesday, with holdings of a gold-backed security it offers rising almost 50 percent in 2017.

Gold is seen as a safe haven for investors during times of uncertainty. Spot gold prices gained about 14 percent during 2017.

Deutsche Boerse said its Xetra-Gold notes, which are backed by physical gold, rose in demand to a record 175.04 tonnes of gold at the end of 2017, up from 117.59 tonnes at the end of 2016. The total amount of assets invested in Xetra-Gold are worth €6.1 billion ($7.3 billion), Deutsche Boerse said.

“The increase is due above all to the high demand from institutional investors,” said Michael Koenig, managing director of Deutsche Boerse Commodities GmbH. “However, an increasing number of asset managers, family offices and retail investors are becoming interested in gold as an asset class.”    

Chuck Again… The Asians are doing it, the Indian people are doing it, the Russians are doing it, the Germans are doing it, but we are not doing it, and that is buying Gold as an store of wealth…  

Currencies today 1/4/18… American Style: A$ .7841, kiwi .7124, C$ .7985, euro 1.2065, sterling 1.3555, Swiss $1.0256, … European Style: rand 12.2929, krone 8.0856, SEK 8.1307, forint 255.78, zloty 3.4425, koruna 21.1180, RUB 57.36, yen 112.65, sing 1.3289, HKD 7.8176, INR 63.27, China 6.5001, peso 19.29, BRL 3.2508, Dollar Index 91.40, Oil $61.82, 10yr 2.47%, Silver $17.17, Platinum $953.30, Palladium $1,103.93, and Gold… $1,313.80

That’s  it for today… Longtime readers know how often I talk about the teachings my dad left me. Today was his birthday. We had a “thaw” yesterday as the temps rose to 24 degrees! But it’s back to the single digits today… UGH! Way to get the conference season started coach Martin, now keep those Tigers winning! 5 more days until I head south! It’s almost like waiting for Christmas again for me! I had a longtime friend send me a link to a YOU TUBE and it was former U.S. national soccer team player, Corbi Jones talking about how wrong it is to give kids trophies for participating…  He was preaching the choir! I’ve said that for years!   I think I’ll post the link to the website tomorrow…  Until then we have The Babys taking us to the finish line today with their song: Midnight Rendezvous…   I hope you are able to get out and do some Tub Thumpin’ today, and remember… Be Good To Yourself…  

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts  

 January 3, 2018  

* Currencies can’t hold onto gains… 

* But Gold rallies! 

Good Day… And a Wonderful Wednesday to you! I know, I know… This is very late today, and I apologize for that. No excuses, for they never won a ballgame for anyone! At least that’s what the old football coach used to tell us all the time! Well, I was wrong about the end of my antibiotics yesterday, the doc says to stay on them until she see’s me tomorrow. I said… UGH! OK…  You know these doctors, they love to collect those office fees! She’s been receiving the blood work reports every week for 6 weeks now, there’s nothing that she can’t figure out about my infection from seeing me in person, than she can from the reports! But, I’m a sheeple and just fall in line…  The Great Rev. Al Green greets me this morning with his song: Love And Happiness…  

 I left you yesterday wondering what the traders in NYC would think about the currencies and metals performances while they were gone, and if they would do something about them, or let them be… Well, it was neither! The currencies saw some slippage from their lofty levels of last Friday, but the moves were slight. And the metals led by Gold, did much better, gaining about $15 on the day. So we start today with the overnight markets having taken the currencies down a bit more, but the euro is still above the 1.20 handle, to give you some idea as to the amount of selling there has been.

And Gold is up another buck-or-two this morning… I read that Gold imports to India increased 67% in 2017… That’s amazing don’t you think? That there was that much buying going on in just India, and Gold struggled to carve out a 7% increase in 2017… Once again this illustrates that the old supply and demand isn’t in play because of the paper short Gold trades, that have nothing to do with physical trading at all!  One day, these paper traders will get theirs… And when they do, I’ll laugh out loud at their losses! No wait, I need to be a better person that that! I guess I’ll say I’m sorry for their losses and move along…  

Well as far as data from around the world, there just isn’t much this week… We did see that manufacturing indexes in both the Eurozone and China did better in December, which will eventually be another nail in the dollar’s coffin, as these countries around the world begin to normalize their monetary policies this year, and sentiment toward their respective currencies changes, the dollar will be getting sold. 

I just sent off my weekly letter for the Dow Theory Letters  that can be found on www.dowtheoryletters.com (but you have to pay for it!), and in the letter I talk about forecasts… And I bet longtime Pfennig Readers can easily figure out what one of my forecasts for 2018 is…  Pool up the Final Jeopardy music…  And the answer is… A weak dollar…   

I know, I know I sound like a broken record at times…  But my dad taught me at a very early age… Stick to what you know and you’ll always sound confident when you talk about it…  I always found that message from my dad as very useful as I began my speaking career…  Ahhh, my speaking career, that sure seems like eons ago!  At the peak of my speaking engagements, I spoke 35 times in 2006… 2007 I was well on my way to breaking that record number, but then I was diagnosed with cancer, and well, for those of you keeping score at home… My speaking career took a huge hit, and I was only able to do about 10 a year, then 5, then 1 and then none…  

My fave places to visit when speaking included: Vancouver, San Francisco, San Diego, and Orlando…  Ahem… Chuck… don’t you think you should get back to the task at hand here now?  Yes, I’m sorry, for going off on that tangent… UGH!  

Well, besides the fact that there’s just not a lot going on overseas to talk about, I still need to find things to talk about that might move a market… 

You know, I did see a HUGE positive move in the Chinese renminbi overnight that will either be held steady Eddie or corrected by the People’s Bank of China (PBOC) But the move was good to see!  And when the renminbi is getting marks of appreciation, that’s good for the Singapore dollar (sing$)  As I’ve explained many times in the past, but not recently for new readers… These two currencies tend to move in tandem for they are in competition for exports, and can’t let their currencies get too far out of whack from the other currency.  And the sing$ is off to one of its best starts in 2018…  

Gold sure had a good day yesterday, and I do believe the weakness of the dollar and Bitcoin are playing into Gold’s rally, which is 8 days long now…  There were a ton of reports prior to this rally in Gold that talked about how the rise in Bitcoin was hurting the price of Gold. So, see what I did there? I just turned the tables, for if a rising Bitcoin was hurting Gold, a falling Bitcoin would help Gold…   But in reality, it’s probably more about the falling dollar against most commodities right now.  Copper is shining brightly, Oil is bubbling, and so on…  

The U.S. Data Cupboard has already printed the December ISM Index (manufacturing index that everyone else calls their PMI) and it was quite strong! the Dec. ISM Index was 59.7 VS 58.2 in November…  This is good news for the economy, which doesn’t get a lot of these happy face stickers…    

To recap…  The lofty levels of the currencies from Friday failed to hold yesterday and in the overnight markets last night, but the selling has been held in check and the euro still maintains a 1.20 handle. Gold bucked the move in the currencies and gained about $15 on the day…  Manufacturing indexes around the world are all moving higher, as the Eurozone, China and the U.S. all printed strong reports this morning.  

For What It’s Worth….  Well you can always count on the former administration to take shots at the current administration’s moves, and this is a case of it, as former Treasury Sec. Jack Lew talks to Bloomberg and discusses the tax cuts…   And can be found here: https://www.bloomberg.com/news/articles/2018-01-02/former-treasury-secretary-lew-says-tax-cuts-leaving-u-s-broke 

Or, here’s your snippet:”Former U.S. Treasury Secretary Jacob J. Lew said the Trump administration’s decision to add a significant amount of debt through last year’s tax legislation is leaving the country broke.

“It’s a ticking time bomb in terms of the debt,” Lew said in a Bloomberg Radio interview with Tom Keene and Jonathan Ferro. “You cannot run a fiscal policy by spending trillions of dollars you don’t have at a time that the economy is doing well.”

Having chosen to make tax policy without including Democrats in any of the conversation, now the administration probably can’t rally Republicans in Congress to do the basic business of government, such as making sure the country doesn’t default on debt and children don’t get thrown off health insurance, he said.”  

Chuck Again… Not that the doubling of the debt during the previous administrations terms should get in the way of his bashing the tax cuts… I’m just saying…   

Currencies today 1/3/18… American Style: A$ .7840, kiwi .7098, C$ .7984, euro 1.230, sterling 1.3555, Swiss $ 1.0242, … European Style: rand 12.3440, krone 8.1046, SEK 8.1679, forint 256.95, zloty 3.4590, koruna 21.2239, RUB 57.45, yen 112.23, sing 1.3287, HKD 7.8166, INR 63.34, China 6.4961, peso 19.36, BRL 3.2855, Dollar Index 92.05, Oil $60.90, 10-year 2.44%, Silver $17.21, Platinum $954.03, Palladium $1,091.85, and Gold… $1,317.80

That’s it for today… Again sorry so late… Until I’m off these antibiotics for good, my timing is all thrown off…  Ahhh, next Wednesday I’ll wake up with the ocean tide the sun coming up over the water, and warmer weather… I went out shortly yesterday, and it’s just too darn cold for me! Oldest son Andrew took his son Braden to his first hockey game last night, I wonder if they made it all the way to the end, which our Blues won 3-2 in Overtime.  Chris Gaffney was a longtime season ticket holder of Blues games and he would take his son to the game and at the end of the 2nd period he would tell him the game was over and they would go home, that is until his son figured it out!  OK… George Harrison takes us to the finish line today with his song:  What Is Life…     And with that, I hope you have a Wonderful Wednesday, and Be Good To Yourself!  

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts     

January 2, 2018  

* Going back to 2001… 

* Palladium is star performer for 2017!

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

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

Chuck Butler‏ 
@ChuckOButlerJr

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

For What It’s Worth…. Well, just because we turned the calendar page on 2017, doesn’t mean that all the risks that were out there went away… And so in my reading this weekend I came across this article on MarketWatch, that goes through those risks… I thought, oh well, we might as well ghttps://www.marketwatch.com/story/what-should-investors-worry-about-in-2018-heres-a-big-fat-list-of-risk-factors-2017-12-28?link=MW_popularet them out there for everyone to see! And you can find the article here:  

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

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

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

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

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

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

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

Chuck Butler