Author: admin

May 30, 2018  

* Currencies rebound in the overnight markets!    

* Fundamentals point to ruble appreciation? 

Good Day… And a Wonderful Wednesday to you! Today is the day all Cardinals baseball fans have been waiting for. The Day Alex Reyes takes the ball and starts a game for the Cardinals. And Major League Baseball is in the doghouse with me, for this will be one of those games that’s only shown on Facebook… Wait, What?  I guess it’s back to listening to the game on the radio!   Kansas greets me this morning with their song: Hold On…  And we start a new day…   

Well,  the dollar still had a tight grip on the euro and the other currencies, as even the Aussie dollar (A$) dipped below 75-cents yesterday, which I thought to myself yesterday that I should have never talked about how the A$ was hanging onto the 75-cent handle… I jinxed the A$… sorry…   But in reality it wasn’t fair to the other currencies to not get mixed up with U.S. dollar strength!  HA! I know, I sounded like a millennial there, with their “it’s not fair” whining…  

When Alex was a young boy, he really had a problem with the “it’s not fair” stuff, until one day I sat him down, and told him that while he might not actually get this until he was older, but that “life isn’t fair”.. .and then asked him, “do you think it was fair for me to get cancer?” It hit him like a palette of bricks, and I don’t think I ever heard me say that again!  

Sorry about that, I started typing and before I knew it I was going into stuff you probably don’t give two hoots about!  

I had good intentions to go from what happened yesterday to what’s going on in the overnight markets, so this looks to be as good a place as any!  There’s been some healing in the currencies in the overnight markets, and the euro has climbed back to the 1.16 handle, and the A$ is back above 75-cents! 

I think this trading is a result of traders feeling that they had gone too far, too fast… 

I do want to point out something that caught my eye yesterday, and that is the yield on the 10-year Treasury, which last week was above 3%… But this week, the yield has fallen back below 3%, to 2.87%… Folks, being from a bond trading desk in my early formative years, I would say that this is the bond guys saying that they don’t believe the Fed’s stated path for interest rates this year… (2 more rate hikes that is)  I was taught many years ago to watch what the bond market is doing, because that’s the key indicator of what’s ahead for the economy and interest rates… 

I get asked a lot by readers and people I talk to that want to know what currencies I like right now…

I usually start with the Chinese renminbi… and right behind the renminbi is the Russian ruble… You must remember though, I’m a fundamentals guy, and when I like a country’s fundamentals, I like their currency… 

And yesterday, dear longtime reader, Bob, sent me a note that quoted the IMF Chief, Christine Lagarde talking about Russia… let’s listen in… “Russia has put in place an admirable macroeconomic framework-saving for a rainy day, letting the exchange rate float, introducing inflation targeting, and shoring up the banking system. As a result, it was able to weather tough times well, and today it has virtually no fiscal deficit, a solid current account balance, and very little debt.”

Sounds like a recipe for good currency appreciation doesn’t it? And even though they have brought down their extremely high interest rates, those rates still remain at a positive differential to most currencies of the world. And I can’t discuss how well Russia is doing without giving kudos to the Central Bank of Russia (CBR) Gov. Elvira Nabiullina, for my money, she’s the best Central Banker out there right now… Longtime readers know that I have no extra love for Central Bankers these days, as for the most part, they have gone to the dark side… But Ms. Nabiullina is the exception to the rule, and for her work, the ruble should be appreciating… Patience is a virtue right? All good things come to those who wait, right? Well, my patience is growing thin waiting for the ruble to appreciate, and return to the levels it traded around before the conflict with Ukraine began. So, come ruble traders, investors, and potential investors, get up off your duffs and get to buying some rubles while they’re cheap!

Well, this morning in the Eurozone, their latest reading on consumer inflation (CPI) will print, and most economists think it will bump higher to 1.9%, which would be very close to the European Central Bank’s (ECB) target rate of 2.0%, and if the ECB sees the momentum for CPI to be going higher, then it would certainly signal to the ECB that they need to begin their much awaited dismantling of Stimulus… 

And in Italy, they will hold a bond auction for Italian Gov’t bonds… the slaughtering that Italian bonds had taken in recent days, was held at bay yesterday, and there was some healing, so this auction this morning is a litmus test for this debt… and the euro as an extension. 

Elsewhere around the world the Bank of Canada (BOC) meets this morning to discuss rates. There isn’t one soul out there that thinks the BOC will hike rates at this meeting, but what will be looked for are any indications that rate could be going higher in future meetings…  The Canadian dollar/ loonie saw some selling on Monday, but was back to being bought in the overnight markets… I’ve always liked the loonie, because they have “something” that other countries want, which should keep the loonie well bid… 

The loonie has been quite resilient in the face of two dark clouds overhead, with one being the NAFTA negotiations, which by all reports aren’t going well, and the other being the Gov. of the BOC, Poloz… I’ve gone through, my fears of what he’s up to many times in the past, so I won’t go through it again, just smile and move along with me here to the next thing going on today…  HA!  

Gold was able to add a whopping $1.20 to its price yesterday, after nearly 300,000 contracts were traded in the metal…  I was reading some reports yesterday about Gold, and how the supply is down, and the demand is up for physical Gold from Russia, China, Turkey, Iran, and so on…  And it’s this scenario that I point to for all the naysayers to Gold price manipulation, as my question for them to explain how that might happen, given the supply and demand situation..   

The U.S. Data Cupboard yesterday saw Consumer Confidence jump even higher this month from 125 to 128… Crazy, I know, but what are you going to do about it? Nothing, absolutely nothing, say it again!  Today’s Cupboard has the second reading of first QTR GDP… The first print gave us a 2.3% growth rate… the only way I see this number changing is it goining downward…  

It’s also ADP Employment Report day, which means that this Friday will be a Jobs Jamboree Friday!  Recall that we’ve seen two consecutive months of disappointing jobs reports… And if you were to take out the BLS’s hedonic adjustment from last month’s total, it would have been negative!  Right now the so-called experts think the total jobs created in May will be 198,000…  Again, less than the previous month’s total…   

To recap… The death grip the dollar has had on the currencies and metals has been loosened in the overnight markets, with the euro and A$ recovering some lost ground. Gold gained a whopping $1.20 yesterday… Chuck talks about the Russian ruble, and their great Central Bank Gov. And gives us his thoughts on why the yield on the 10-year Treasury bond has fallen in recent trading days…      

For What It’s Worth… I sure hope everyone reads this today, and they say, after reading it, that Chuck sure has been telling us all this, but we were looking through the Fed’s rose colored glasses and believing the hype they were spreading about the strong economy.. We feel badly that we didn’t believe Chuck! This article is about how the economy is sinking folks… and can be found here: http://www.stltoday.com/business/local/the-alarming-statistics-that-show-the-u-s-economy-isn/article_140475b7-864e-52a5-a68b-7a78eb17e9e3.html#utm_source=stltoday.com&utm_campaign=BusinessNewsletter&utm_medium=email&utm_content=A12874506A3B5805DDED6C95AF30D7173DF7C77A

Or, here’s your snippet:”
In the past week, two reports – a new Federal Reserve survey of more than 12,200 Americans about their finances and a new United Way report on financial hardship – reveal just how unstable life remains for a large number of people. Here’s a rundown of the key findings:
– Forty percent of American adults don’t have enough savings to cover a $400 emergency expense such as an unexpected medical bill, car problem or home repair.
– Forty-three percent of households can’t afford the basics to live, meaning they aren’t earning enough to cover the combined costs of housing, food, child care, health care, transportation and a cellphone, according to the United Way study. Researchers looked at the data by county to adjust for lower costs in some parts of the country.
– More than a quarter of adults skipped necessary medical care last year because they couldn’t afford it.
– Twenty-two percent of adults aren’t able to pay all of their bills every month.”

Chuck again… nothing new here to me, how about you?  

Currencies today 5/30/18… American Style: A$ .7550, kiwi .6975, C$ .7702, euro 1.1635, sterling 1.3280, Swiss $1.0099, … European Style: rand 12.5535, krone 8.21, SEK 8.84, forint 274.32, zloty 3.7028, koruna 22.1935, RUB 62.58, yen 108.90, sing 1.34, HKD 7.8460, INR 67.38, China 6.4129, peso 19.70, BRL 3.7324, Dollar Index 94.33, Oil $66.80, 10-year 2.87%, Silver $16.39, Platinum $904.89, Palladium $980.73, and Gold… $1,301.50   

That’s it for today…  The rain from the tropical storm Alberto, that hit the gulf region this past weekend, has made its way to St. Louis… That’s OK, nothing planned outside for me anyway! In every life a little rain must fall… right? Cardinals find their bats again last night in time for a win… And now it’s the Alex Reyes debut… I sure hope he can deal with the hype surrounding him, and pitch a good game. Matthew Sweet takes us to the finish line today with his song: Evangeline… Years ago, Chris Gaffney and Chuck took a foreign bond trader from AG Edwards to a concert by Matthew Sweet… How long ago was that, Chuck? Probably 20 years ago!  OK, let’s head out the door, and I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!   

Chuck Butler

 

May 29, 2018  

* euro falls through the trap door 

* Oil drops on Saudi/ Russian agreement

 

Good Day… And a Tom Terrific Tuesday to you! What a great holiday weekend for yours truly! And I topped it off last night with dinner at the newest BBQ spot in the area! Sunday, we celebrated Braden’s 7th Birthday, and a good time was had by all! I spent a lot of time outside this past weekend, working on the patio, getting it ready for the B-day celebration, and I’ve found that I have to do things in spurts now… Take a breather under the umbrella, and then get back at it…  Oh well, I get the jobs done, it just takes me longer! I don’t want anyone to think that I didn’t stop and think about what the weekend was all about…  Edwin Starr greets me this morning with his song: Twenty Five Miles…   

Well, I’m minus another tooth, but… it came out without any problems during or after, so I had that going for me! The poor euro had another tooth extracted from it on Friday, and no longer trades with a 1.17 handle.. no wait… i5 no longer trades with a 1.16 handle either! …  The Italian election has really taken the bat out of the hands of the euro, And even with the Italian President doing his bit to bring everyone together, and stop the “leave the euro talk” the markets aren’t buying it… 

Many, years ago now, I used to call the countries of Spain, Italy, Portugal, and Greece… Club Med…  They were always doing something to throw their respective legacy currencies under a bus… And unfortunately, some things never change, eh?  Italy may have the 3rd largest economy in the Eurozone, but the have the 2nd largest debt, falling in behind Greece! 

The Big Dog is being chained to the porch, no more chasing the dollar down the street, for now that is…  And where is European Central Bank (ECB)  President, Mario Draghi, during this drop in the euro? He of the famous line, ” the ECB is prepared to do whatever it takes to preserve the euro” I guess not this time, eh, Mario?  Central Bankers, what good are they if they can’t, at least, attempt to calm markets in times like this?  I remember the “whatever it takes” speech by Draghi, and how the markets reacted to it, hanging a bid on the euro, and driving the price upward for a day or two.. 

I’ll bet a dollar to a Krispy Kreme that the ECB is not a bunch of happy campers right now, with another headache being caused by a member of the Club Med countries, this time Italy…  I can hear some of them singing, nobody knows the trouble I’ve seen, nobody knows the sorrow, why on earth did we ever agree to let Club Med in to our Union, I wish we could go back and start all over again…  I do believe I can hear them singing!

Talk about the bottom falling out of an asset’s price…  Have you seen the price drop in Oil? Last week, the price of Oil was sailing on clear and smooth waters, and the price was inching higher and higher… And then came a summit with Saudi Arabia and Russia… And all hell broke loose! You see, the Saudis and Russians agreed to delay an end of their production cuts, which on its own would have boosted the price of Oil, but wait, there’s more! These two countries then issued a memo that said other members of OPEC could begin to boost production now, if the high price of Oil was hurting their exports…  Wait! What?   

Oh, you heard me sweetheart… The OPEC Oil producers received an Get Of Jail Free Card! And with that thought filtering through the markets, traders began to mark down the price of Oil because of the fear of over supply once again.    I was listening to my iPod outside the other day, and the great song: Spinning Wheel by Blood Sweat and Tears came on… What goes up, must come down… and that got me thinking of the price of Oil… 

Well, Gold lost $4 in trading yesterday, with the U.S. on Holiday, there was very little in the way of trading going on, and the contracts traded were less than 75,00 And last Friday’s trading in the shiny metal netted a loss of less than $3 bucks…  But the price of Gold is above $1,300 this morning, proving so far, that last week’s dip below $1,300 proved to be an excellent buying opportunity… But my guess is we’ll se more opportunities, because the trading in the anti-dollar assets, seems to be very strange right now, as if an invisible hand is guiding them… 

I don’t like what’s going on right now, for none of it seems to be of the cloth that drives asset prices, it seems to be an invisible hand pushing the buttons right now. This is when I say to batten down the hatches, and only come out to look for bargain basement prices… For as quickly as the currency and metals and Oil rallies changed direction, they can change direction again, and head back up without any notice!  

There is one currency though that, so far that is, attempts to defy the gravitational pull of the other currencies, and that is the Aussie dollar (A$)…  The A$ is holding onto the 75-cent handle as if its life depended on it! The A$’s kissin cousin across the Tasman, kiwi, isn’t so defiant but it does receive protection as it trades in the shadow of its larger cousin… 

I truly thought that by now the Reserve Bank of New Zealand (RBNZ) would be beating the drum for higher rates in New Zealand… But nary a word from the RBNZ these days about anything, much less interest rate direction! Maybe the RBNZ is waiting for the Reserve Bank of Australia (RBA) to hike first… Hmmm… I certainly hope not… That’s not the bold Central bank that used to be run by Don Brash!  Brash would not have felt that waiting for the RBA was the thing to do, if moving interest rates were in the best interest of New Zealand!   One of these days, I’ll tell you a story about Don Brash the former Gov. of the RBNZ, but not today, I’m running late!    

Well, in my sophomoric style… I told you so! This past week, The Bank of England’s (BOE) Gov. Mark Carney, admitted to a crowd that the rate hike, previously mentioned, will be delayed, because of the problems with BREXIT negotiations.  Pound sterling got Whacked! and rightly so, for those traders that ran the price of sterling upward thinking that Carney was going to hike rates, should have their trader card revoked!  

The U.S. Data Cupboard on Friday had some more bad news for the U.S. economy… Durable Goods Orders for April fell -1.7%…  Capital Goods Orders rose 1.0% but the previous month was revised downward at -0.9%, which means the last two months are a wash!  Just chalk these two up as two more pieces of proof that the U.S. economy is not strong, so take that Fed Heads!    

Speaking of Fed Heads, St. Louis Fed President, James Bullard is scheduled to speak today… Bullard is always good for a quote or two, so I’ll be following that today…    

And to add to all this madness going on, today we’ll see the latest Consumer Confidence report…  I shake my head in disbelief and disgust that Consumers don’t see what’s going on here… 

To recap… the currencies are getting whacked, the price of Oil is getting whacked and Gold is getting sold daily.. What the hell is going on here? The U.S. economy proves over and over again that it’s not the strong economy that the Fed Heads keep telling us about, but the dollar remains in the driver’s seat… (great song BTW!)    

For What It’s Worth…  There I was reading my local newspaper, drinking my coffee one morning last week, and this article came jumping out of the pages to smack me in the face!  This is about the Wells Fargo CEO talking about how things are going to change after all the scandals at his bank this past year, and can be found here: http://www.stltoday.com/business/columns/david-nicklaus/wells-fargo-ceo-emphasizes-honesty-in-wake-of-scandals/article_c9a05cda-49db-57de-8a03-014c51aeb9be.html#utm_source=stltoday.com&utm_campaign=BusinessNewsletter&utm_medium=email&utm_content=A12874506A3B5805DDED6C95AF30D7173DF7C77A    

Or, here’s your snippet: “Wells Fargo admitted in 2016 that its employees, driven by aggressive sales quotas, had opened 2 million unauthorized accounts for customers. It was fined $185 million and then other problems surfaced, including auto-loan borrowers who paid for unnecessary insurance and mortgage customers who were charged excessive fees.
After those abuses resulted in a $1 billion fine, a new scandal surfaced this month over altered business-customer documents.

Weary customers might think the giant bank has an endless stream of improprieties waiting to bubble up. Sloan maintains that, counterintuitively, the latest disclosure shows that his reforms are working.

“We’re encouraging team members, if they see something they’re uncomfortable with, to raise their hands,” he said, and employees in the business-banking unit did just that.”    

Chuck Again…  Well, that’s all fine a good, until there’s another scandal, eh? And can I remind you that no one went to jail for these improprieties…

Currencies today 5/29/18… American Style: A$ .7518, kiwi .6920, C$ .7672, euro 1.1548, sterling 1.3240, Swiss $.9973, … European Style: rand 12.66, krone 8.2875, SEK 8.9396, forint 277.27, zloty 3.7364, koruna 22.4065, RUB 62.26, yen 108.90, sing 1.3470, HKD 7.8463, INR 67.85, China 6.39, peso 19.72, BRL 3.6813, Dollar Index 94.84, Oil $66.87, 10-year 2.86%, Silver $16.43, Platinum $905.54, Palladium $980.28, and Gold… $1,307.28   

That’s it for today… Sorry for the tardiness, I ate something last night that didn’t agree with me in the middle of the night… UGH! it sure tasted good, so I’m not sure what the problem was, but I spent a few hours in the middle of the night awake… UGH!  My beloved Cardinals can’t deal with prosperity… After a good weekend in Pittsburgh, they laid an egg yesterday in Milwaukee! the Stanley Cup Finals began last night, it’s difficult for me to fathom that an expansion team could win the Cup… My Blues have been here for 51 years and are no closer to winning a Cup than I am to running a marathon!  AC/DC takes us to the finish line today with their song: Hells Bells… My high school biology teacher used to say that… “hells bells”…  And with that thought, it’s time to go! I hope you have a Tom Terrific Tuesday, and Be Good To Yourself!    

Chuck Butler

May 23, 2018   

* Currencies for the most part give back Monday’s gains

* Geopolitical problems arise again…

 

Good Day… And a Wonderful Wednesday to you! One and done! Yesterday was a One and Done Day for more than one thing… UGH! Another good night’s sleep last night, I’m of the opinion, that my recent problems have dissipated, for now that is, and things are looking up… Of course, I will find out more this morning, when I visit my oncologist. And then next month when my bi-annual set of scans are taken. That nasty cold I had is gone too! Man, I may just sign up for the next marathon! NOT! HA! Now, if we could get the markets healed, that is the markets I care about!  The Guess Who greets me this morning with their song: No Time… 

Well, our first One and Done yesterday is in the currencies, which for the most part gave back their gains from Monday. Geopolitical pressures entered into the markets again, as President Trump told reporters that the summit with N. Korea planned for June in Singapore, may not happen. The Turkish lira plunged and that led the Emerging Markets currencies down the slippery slope. There were a couple of currencies that added to their Monday gains, and they were members of the Petrol Currencies Club. 

Yes, the Russian ruble, and Brazilian real bucked the tide yesterday, and rallied, even with the price of Oil slipping back below $72 on the day. I think the huge gains in the commodities on Monday, spilled over to these two currencies. Gold’s consecutive days of gains, albeit very small ones, ended, with a drop of $1.70, but, the shiny metal is up big in the early morning trading today, and has climbed back to trade above the $1,300 figure. 

I read a report yesterday, where James Rickards, was saying that Gold is getting ready for a Big Breakout to the upside… And then I received a note from the GATA folks who printed a report from someone that believes the messages calling for Gold to rise to new heights is hurting GATA’s attempt to expose the price manipulators. Hmmm…  Well, unless the folks, like me, are pointing people to possible gains, how else would they find out? 

Of course, I have to emphasize the word, “possible” because no one, including yours truly, knows for sure that an asset is going to gain, or lose for that matter!  For Instance, remember late last year, when I told you that James Rickards was calling for a HUGE “price reset” for Gold?  That was supposed to have happened at the start of the new year. Well, we’re almost to June… But all Gold holders would have been happy campers for sure, had the “price reset” occurred… Sometimes it takes a major prod to get investors to move, and if this got investors to buy some Gold, then that was a good thing, in my opinion! 

Our next One and Done came in the stocks… I won’t spend a lot of time here, but geopolitical unknowns are not good for stocks folks…  The next One and Done is a work in progress, as the yield in the 10-year Treasury dropped from 3.08% to 3.01%..  I don’t think this buying of Treasuries is going to last long, so this is will turn out to be another one and done! 

So… How about that rally in the Russian ruble?  The RT recently had this to say, that makes abundant sense to me.. “Western media would have you believe that Russia is an underdeveloped nation with a wretched standard of living. They advance the perception that it is a country that has never recovered from the collapse of the Soviet Union.

They would also want you to believe that Russia is suffering under the heavy burden of Western imposed sanctions that have brought Russia to her knees as a result of isolation, which couldn’t be further from reality.. ” 

Well, that’s all fine and good, but the ruble is still very weak considering where it was trading before the conflict with Ukraine erupted. Which if you’re someone that likes to buy when everyone else is selling, this seems to be the place you would want to start!  Especially if you believe the price of Oil is going to continue to inch higher…   

The next one and done came from the Commodities, which on Monday looked like they were ready to run a marathon, but apparently it was only a sprint. And the main commodity currency, the Aussie dollar (A$) got pushed downward, thus wiping out its Monday’s gains. 

Speaking of wiping out Monday’s gains, the biggest wipe out came in the euro, which saw the problems in Italy worsen, as Italian bonds are getting whacked and now trade at a huge premium VS a German Gov’t Bond…  Remember back in 2011, when the problems with Greece were first being exposed, and I said then that Greece had an economy the size of Kentucky’s…  But writing off Italy’s problems won’t be as easy, as Italy is the 3rd largest economy of the Eurozone… And their debt is HUGE! 

The new anti-euro Gov’t needs to sit down and be talked to by the leaders of the Eurozone, and tell them that leaving the euro is impossible, and therefore they need to quiet down the leave the euro rhetoric, and the demands that the ECB write off loans made to Italy…  Otherwise this is going to go down a rabbit hole that no one wants to go down… I’m just saying…   

The Swiss franc dropped below parity to the dollar… We first saw this drop a week or so ago, but the franc quickly move back above parity, but to see this drop below parity again, gives me the thought that this is the general direction for the franc…  

Back in 2011, when investors were running away from the euro as if it were Godzilla trashing the streets, they ran mostly to the Norwegian krone, and some to the Swiss franc. But soon investors realized something that I had been telling them for years, that the franc is so closely tied to the euro…  

And then back to Gold for a minute.. In Ed Steer’s letter today he highlighted an article that I took this quote from… You can find Ed Stter’s letter at www.edsteergoldsilver.com .I highlight this because it was just yesterday that I was talking about how China’s Gold reserves totals are much greater than the World Gold Council quotes them to be.  Let’s listen in here… “Perhaps more interesting however in terms of global gold trade was the export of 16.1 tonnes (24.6%) direct to mainland China (and only 0.5 tonnes to Hong Kong). As we have often pointed out the known gold exports to mainland China (mostly from Hong Kong and Switzerland) tend to be comfortably in excess of the figures assessed by the major precious metals consultancies as Chinese consumption, and the high UK export figure, although well below the amounts from Switzerland and Hong Kong, serves to emphasize this point.”   

Well, the U.S. Data Cupboard is still pretty much emptied out, but this afternoon, the Fed’s last Meeting Minutes will print, and like I said yesterday it will be chock-full-o-the-same-nonsense…  I’m just saying…  Around the world though, it’s what I like to call PMI Day… As the PMI reports for April will print for a lot of countries today.. These are the Markit PMI’s, which I’ve explained are different from the Gov’t PMI’s. PMI is the short version of a manufacturing index report..  It will be interesting to see if manufacturing around the world is still expanding… 

To recap…  Well, the currencies just couldn’t stand the prosperity, neither could the stocks, commodities including Gold and Oil! The good news though is that Gold is up nicely in the early morning trading today, as geopolitical problems have come back into focus for the markets. The Trump / Kim summit in Singapore is “iffy” right now…   Chuck calls Tuesday a One and Done Day…   

For What It’s Worth…  I want to thank dear reader Bob for sending this to me. It’s an article about how decarbonization or an energy transition, is just folly, and can be found here: http://business.financialpost.com/commodities/energy/what-decarbonization-the-world-will-soon-be-burning-100-million-barrels-of-oil-per-day   

Or, here’s your snippet: “One hundred million. It’s a number that drowns comprehension; it’s more jelly beans than can fit in an average-sized swimming pool.

Within a year, world oil consumption will top 100 million barrels of oil per day. Over the same time period, close to 100 million new piston-firing vehicles will be bought by petroleum-thirsty customers.

I hate to say it, but any notion of an imminent “energy transition” or “decarbonization” is folly.

In fact, the percentage of fossil fuels in the world’s energy mix — coal, oil and natural gas — is still lingering well above 80 per cent, a figure that has changed little in 30 years. That remains so, despite being challenged by serious environmental policies, financial pressures, viable alternative systems, public awareness and social activism.

It’s true that wind and solar are being deployed quickly, in fact, at an exponential rate. But impressive as it all is, renewable energy installations are far too slow to catch the still-hardy appetite for fossil fuel consumption.”   

Chuck Again…  I liked the article because it tells it like it is, and should be good fodder for Commodity traders… wink, wink…  

Currencies today 5/23/18… American Style: A$ .7543, kiwi .6910, C$ .7758, euro 1.1727, sterling 1.3358, Swiss $ .9908, … European Style: rand 12.61, krone 8.1140, SEK 8.7695, forint 272.92, zloty 3.6882, koruna 21.9715, RUB 61.33, yen 109.79, sing 1.3443, HKD 7.8499, INR 68.44, China 6.3686, peso 19.90, BRL 3.6610, Dollar Index 93.83, Oil $71.79, 10-year 3.01%, Silver $16.56, Platinum $907.84, Palladium $988.10, and Gold… $1,301.60  

That’s it for today…  Today is Braden Charles Butler’s Birthday! Happy Birthday buddy! Braden turns 7 today… Wow! Where do these years go? Oh well, I sure hope your day is Grand today! I have a busy morning, with a visit to the oncologist and then off to the ball game! Another One and Done came in the Cardinals game last night, who saw their 1 day of good pitching and hitting go missing! Well, there’s someone  walking around upstairs this morning, I’m not alone any longer! 🙂  Maroon 5 take us to the finish line today with their song: This Love…   I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!  

Chuck Butler

May 22, 2018  

* Dollar rally hits a roadblock 

* Oil rises to a $72 handle! 

 

Good Day…  And a Tom Terrific Tuesday to you! One more day alone… Actually, while I miss Kathy, I’m getting quite used to be alone here. Do we have a new Bo Hart in St. Louis? HA!  Young Tyler O’Neil is taking the city and baseball by storm! We can only hope that he doesn’t flame out like Bo Hart did oh, so many years ago! As a baseball fan, I understand that it can get really exciting when a young player comes up and makes a Big Splash, but you have to back off the excitement just a bit, and see if his Big Splash can be sustained. The Allan Parson’s Project greets me this morning with their song: Time…   “Who knows when we shall meet again…  If ever…
But time Keeps flowing like a river (on and on)… To the sea

I quoted the lyrics to that song, because they make abundant sense to me, given all the former colleagues and friends that I no longer see or even hear from.  But time does keep flowing on and on..  

Well, the dollar rally ran into a road block yesterday, and the currencies were allowed to book some small gains. The Best performer of the day was the Aussie dollar (A$) which received some love after traders watched commodities rebound on the day.  For any of you who are new readers, the A$ is considered a “commodity currency” as it relies on shipments of raw materials to not only China but other countries in the South Pacific.

In 2003, I created what we called the Commodity Currency Basket CD, and it included the A$, kiwi, South African rand, and Canadian dollars/ loonies. And from 2003, through 2010, Commodities kicked tails and took names later, and those currencies booked some of the best performances VS the dollar. 

With inflation inching higher and higher, it’s time for Commodities to make a comeback, as they are the anti-inflation assets. And if Commodities make a sustained comeback, then the commodity currencies will follow, because as countries buy commodities, they have to buy the currency of the country that’s selling them the commodity…  Well, in a roundabout way that is, since commodities are priced in dollars… But here’s were things for the dollar could get ugly… 

You see, we keep hearing about how the Oil producing countries outside of the U.S. are becoming more willing to accept the purchaser’s currency for their Oil and not dollars… More and more this is becoming something to be concerned about for dollar holders, and if then this spreads further, and spills over to the rest of the commodities, then “Houston, we have a problem”, will be heard by dollar holders. 

But like I said above, we need for this commodity rally to become sustained and not a false dawn.  The euro has climbed back above 1.18 this morning, and all the rest of the currencies fall in behind the Big Dog. And when I say “the rest of the currencies” I mean the whole enchilada of currencies, all of them! I can’t find one currency that is weaker this morning than it was yesterday morning. So, we have that going for us today… 

The price of Oil has climbed higher yet again, and trades with a $72 handle today.. of course I use the West Texas Intermediate (WTI) price, the Brent Crude price is above $80!   Either price is an indication to me that commodities are telling us something… And we should all know what tha is, right? (I just told you above! HA!) 

I was doing some reading last night while Cardinals pitcher Miles Mikolas pitched a 4-hit complete game shutout VS the Royals, and I came across an article about Stagflation… In my Dow Theory Letters (www.dowtheoryletters.com) piece a couple of weeks ago, I talked about how I was getting the feeling that we’re about to revisit the 70’s, and come to think of that, I may have already talked about this in the Pfennig too! But I just wanted to point out that in the FWIW section today is a very smart man talking about the chance of Stagflation here in the U.S. and that it would not be a very good thing for the dollar…  So, you won’t want to miss that this morning… 

With every year that I defy the odds, and add another number to my age, I become eligible to receive Social Security. You know all that money that was taxed from my wages and deposited into an account that would just wait for me to begin to withdraw the funds in my retirement…  (Boy wouldn’t that be the great IF that was really the process?) But do you know what really ticks me off royally? The fact that once I begin to receive those payments from my Social Security fictional account, they get taxed again! Wait! What? Well, not everyone’s Soc. Security payments are taxed, but most are… 

In yesterday’s Daily Reckoning: www.dailyreckoning.com, their guy, Nilus Mattive, was talking about Social Security, and how in 1983 the lawmakers chose  $32,000 as the point where you begin to get your Soc. Sec. payments taxed… Let’s listen in: It is now 34 years later and they haven’t been adjusted. And as you know, $32,000 a year isn’t all that much money these days. So what was initially designed to target a small segment of the population now blankets a large swath.

The lack of inflation adjustment is the primary reason more and more retirees are getting snagged every year.”   Nilus Mattive for the Daily Reckoning…    

Well, I know I’m not telling a lot of you anything new, but for those that are nearing the age of retirement and will begin to receive their payments, maybe I shed some light on this for them.   OK, getting back to the markets… 

Gold recovered the dip it saw in the early morning trading on Monday (recall it was down $7), and ended the day up a whopping 30-cents! Whoa, there Nellie! We don’t want to get this Gold price too high! HA! Gold’s price activity yesterday saw it drop a couple more bucks to down $9, before turning around. I don’t know if this had anything to do with the turnaround in Gold’s price, but if I were a Gold trader, it sure would have… 

What I’m talking about is a report in the www.bullionstar.com website that stated that Demand for physical Gold is still strong as China, Russia, Turkey, Switzerland, and others are busy adding to their reserves with physical Gold.  In fact, I read in Ed Steer’s letter last week that Russia added a huge amount of physical Gold last month… The numbers get all mangled and forgotten about so I don’t want to get into that, just know that the amount they added is bigger than a breadbox!   

The U.S. Data Cupboard continues today with no offerings, and quite frankly, this is one of those weeks when the markets will be searching and digging deep to find a data print to trade off of, because there just isn’t much, not only here, but abroad too!  The Biggest deal of the week comes tomorrow (Wednesday) when the Fed’s last Meeting Minutes print… And even that seems to me to be a non-event, given the Fed didn’t hike rates, and probably won’t until June.  The Minutes will probably contain the usual blabber about how the economy is strong, employment is strong, and so on…  I’m thinking of Pink Floyd’s Us and them song, that goes, It’s a battle of words and most of them are lies…  I’m just saying…  

To Recap… The dollar’s rally hit a roadblock yesterday, and the currencies have continued to rally throughout the overnight markets. Overbought, seems to be the compelling reason for the dollar’s drop yesterday… Commodities rallied yesterday, propping up the A$ to be the best performing currency overnight. Chuck talks about inflation and commodities in today’s letter, you won’t want to miss that! 

For What It’s Worth…  Peter Bookvar is someone that I follow, and when he talks I listen, sort of like that old E.F. Hutton commercial! Well, he’s talking about stagflation, and that makes me feel all warm and fuzzy inside, because I talked about stagflation a couple of weeks ago! You can find his words here: https://www.zerohedge.com/news/2018-05-17/mauldin-liquidity-crisis-biblical-proportions-upon-us  

Let me set this up for you… I found this in Ed Steer’s letter last week (5/18)and he pulled it from John Mauldin’s letter, so this is John Mauldin talking at the beginning of this snippet: “Last week, I mentioned an insightful comment my friend Peter Boockvar-CIO of Bleakley Advisory Group-made at dinner in New York: “We now have credit cycles instead of economic cycles.”

That one sentence provoked numerous phone calls and e-mails, all seeking elaboration. What did Peter mean by that statement?

In an old-style economic cycle, recessions triggered bear markets. Economic contraction slowed consumer spending, corporate earnings fell, and stock prices dropped. That’s not how it works when the credit cycle is in control.

Lower asset prices aren’t the result of a recession. They cause the recession. That’s because access to credit drives consumer spending and business investment.

Take it away and they decline. Recession follows.”  

Chuck again… I haven’t talked about John Mauldin for some time, but I was looking for a picture in my phone last week, and I came across this picture of John and Chuck in Vancouver… I guess that since I don’t travel to conferences any longer, our paths will never touch again… That’s too bad, because I always enjoyed our talks..   

Currencies today 5/22/18… American Style: A$ .7592, kiwi .6947, C$ .7830, euro 1.1818, sterling 1.3460, Swiss $1.0045, … European Style: rand 12.5665, krone 8.0323, SEK 8.6460, forint 268.65, zloty 3.6234, koruna 21.7665, RUB 62.02, yen 110.95, sing 1.3376, HKD 7.8490, INR 68.09, China 6.3833, peso 19.78, BRL 3.7156, Dollar Index 93.35, Oil $72.51, 10yr 3.08%, Silver $16.61, Platinum $908, Palladium $1,003, and Gold… $1,294.10 

That’s it for today… I actually got a good night’s sleep last night… YAHOO! Maybe that means I won’t need an afternoon nap today! OK, here’s the schedule on the Pfennig for this week… No Pfennig on Thursday, as I’ll be in a dentist’s chair early Thursday morning! That’ll make this coming Holiday weekend even longer for yours truly!  Memorial Day! already! WOW! Time keeps flowing like a river to the sea… And since school will be out soon, and it will be summertime, I have the perfect song to take us to the finish line today… It’s Billy Stewart, with his song: Summertime… Now that one will get your heart pumping! I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself!  

Chuck Butler

May 21, 2018  

* Dollar rally continues..    

* Italian elections throw the euro under a bus! 

Good Day… And a Marvelous Monday to you! Another Monday morning, and I’m still by myself…  But that’s OK, because as I told my good friend Duane, who invited me to eat at his house last night, I don’t have a problem with all the times Kathy goes away. Think about what she’s had to deal with, with not only me, but her dad a few years ago for the last 11 years!  But she’ll be home tonight (I think!) and things will get back to normal around here…  Our Pool gets opened up today, that’s a sign that spring has finally begun around here! Kansas greets me this morning with their song: The Wall. In the 70’s I was a HUGE fan of band Kansas… 

In an example of how quickly things can change, the euro’s gains in the past few months have disappeared… And we can blame that all on a couple of things that have happened in the past month… 1st, we had the short squeeze that happened, and the short positions on the dollar got reversed, and then we had the European Central Bank (ECB) sit on their hands when it came time for them to announce an end to their stimulus, and finally this past weekend we had the election in Italy, where the anti-euro parties won, and will rule Italy for the next few years…    

This election results shouldn’t have come as a surprise to the markets, for the anti-euro parties were leading in the polls for the last couple of months… I wrote and already sent my Dow Theory Letters piece for this week this past weekend once I heard about the election results… In it I tell people that the euro’s 13% gains since the start of 2017, are going to be subjected to some selling with these election results, and that it’s time to batten down the hatches, and to look for bargain basement prices to add to positions the next few months…    

Did you hear about some of the new Italian governing party’s requests to the ECB? They want the ECB to write off over $200 Billion of loans that the ECB has made to Italy…   You know, this all takes me back 20 something years, when Italy was always a basket case when it came to politics and prudent governing of their economy… Remember Silvio Berlusconi?   It was one government scam, scandal, or mess every time the Italians held another election…    I used to wonder, who wrote the book of love, no wait, I would wonder how in the world did Italy meet the Maastricht Treaty requirements of joining the euro?   

But they did, and just like the Eurozone had to deal with the pulling back of the curtains on the Greek Debt 7 years ago, now they’ll have to deal with this rogue Gov’t in Italy… 

OK, I’ve got to move along here before I say something that ticks off half my readers!  But there’s more…  Over the weekend, the U.S. and China had some negotiations and China has begun to buy more U.S. stuff, which should ease the tensions of a Trade War with China… But then to follow up that that news came this news: officials said Mr. Trump told German Chancellor Angela Merkel in April that Germany should drop support for Nord Stream 2, an offshore pipeline that would bring gas directly from Russia via the Baltic Sea. This would be in exchange for the U.S. starting talks with the European Union on a new trade deal.  Uh-oh… now a trade war could begin with the European Union?  YIKES!  

But before everyone thinks that something is going awry with the President, I saw a CNN (yes, I said CNN, which makes this poll even more enlightening) Poll this weekend, that showed 57% approval rating for the President and his move to make American Great Again…   Can you believe CNN aired that?   I’m not here to talk about politics, but when the American people think that starting trade wars with our allies, is good for America, I have to point it out! 

And now…  I’m switching gears to Argentina… Have you been checking out their latest debacle? i had a dear reader ask me last week , if I would talk about Argentina…  Well, I’m just not that close or familiar with what’s going on there, other than what the major media will tell us.. So.. I sent a note off to my good friend, and former boss, Frank Trotter, who spends some time there each year to give us some thoughts on what’s going on..  And as soon as he responds I’ll give you the skinny from my “man on the street”!    

All this current dollar strength is really interesting to me, given the dollar’s fundamentals sure haven’t been in play here as the reason for the dollar to rally… It’s all about sentiment these days folks… But, in my humble opinion, this dollar strength is not going to last forever… or at least 6 months… which could seem like forever for a non-dollar investor! Sooner or later, love is gonna get ya, no… wait! Man, you’re feeling a little spirited this morning, Chuck!  

But… what I’m attempting to say here is that sooner or later the dollar’s fundamentals will be focused on again, like there were from Jan. 2017 until this month, and things like Debts in both the national account and the Trade Balance account will come back into play. But, until that happens, dollar strength will prevail, so find a price you’ve been longing to buy a currency or metal at, and do some Blue Light Special buying… 

That’s the beauty of a dollar rally, as the currencies get cheaper, you are able to buy more of them with your dollars than you could before! 

Everything I read these days is about the demand of physical Gold by the Central Banks around the world minus the U.S. According to the World Gold Council (WGC) Russia has surpassed China as the number 2 holder of Gold in the world… That sounds impressive for Russia, and it is, but I take issue with the WGC’s reporting of the Gold totals in China… I do believe they are way off, and under reported, but when China doesn’t really give anyone the true information of their Gold holdings these things happen… 

The thing that really drives home the point here that I’m trying to get at is the fact that physical demand for Gold is up, and supply is down, and getting harder to find, which should mean the price of Gold is soaring, but that’s not what’s happening, but in time this will all change for the better in Gold & Silver… 

Gold as able to gain a whopping $1.70 on Friday, but is down more than $7 in the early morning trading today. OK, boys in the band, you can stop playing now, Gold buyers are itching around the collar to buy more Gold but want to wait until your finished whacking the shiny metal…  Remember a couple of weeks ago, when I posted a quote by Gold Charts-R-Us guru, Omar Ayles, who said that Gold could drop to $1,278 before turning around… Well, we’re almost there with Gold trading this morning at $1,283…   

The U.S. Data Cupboard had the Leading Indicators data print for April last Thursday, and they were flat to the previous month at 0.4%… I always find this data to be funny… in that it’s called the Leading Economic Indicators but it’s a month behind…  after you stop laughing, you’ll want to know that the Data Cupboard today and tomorrow is empty…  So, we’re going to hear a lot about how the U.S. and China has kissed and made up, for now that is, and how the rift between the U.S. and the European Union is getting hot and heavy… Oh boy, where do I sign up for more of this? I just can’t get enough! NOT!  

To recap…  The dollar rally continues, but Chuck is seeing an end, but it might be as much as 6 months out… UGH!  The Italian elections have thrown the euro under the bus, and a Trade War with the European Union may be in the cards, while the Trade War with China has seen the combatants kiss and make up, for now…  Gold continues to fall in price, there’s got to be a stopping point here somewhere, so we can back up the truck and buy some more Gold!    

For What It’s Worth…  Since I talked about increased debt levels here in the U.S. eventually coming back into focus, this article plays nicely in the sandbox with that thought, and can be found here: https://www.newyorkfed.org/microeconomics/hhdc.html  

Or, here’s your snippet: “The CMD’s (Center for Microeconomic Data) Quarterly Report on Household Debt and Credit reveals that total household debt reached a new peak in the first quarter of 2018, rising $63 billion to reach $13.21 trillion. Balances climbed 0.6 percent on mortgages, 0.7 percent on auto loans, and 2.1 percent on student loans this past quarter, while they declined by 2.3 percent on credit cards.

Aggregate household debt balances increased in the first quarter of 2018, for the fifteenth consecutive quarter, and are now $526 billion higher than the previous (2008:Q3) peak of $12.68 trillion. As of March 31, 2018, total household indebtedness was $13.21 trillion, a $63 billion (0.5 percent) increase from the fourth quarter of 2017. Overall household debt is now 18.5 percent above the 2013:Q2 trough.

Mortgage balances, the largest component of household debt, increased somewhat during the first quarter. Mortgage balances shown on consumer credit reports on March 31 stood at $8.94 trillion, an increase of $57 billion from the fourth quarter of 2017.” 

Chuck again… I know, there will be those that say with a greater population that these debt levels aren’t that bad… I say,  hogwash! 

Currencies today 5/21/18… American Style: A$ .7526, kiwi .6898, C$ .7770, euro 1.1747, sterling 1.34, Swiss $ 1.00, … European Style: rand 12.83, krone 8.1038, SEK 8.75, forint 271.50, zloty 3.6630, koruna 21.8365, RUB 62.33, yen 111.35, sing 1.3450, HKD 7.8495, INR 68.18, China 6.3775, peso 19.96, BRL 3.7355, Dollar Index 93.86, Oil $71.45, 10-year 3.07%, Silver $16.35, Platinum $879.90, Palladium $974.21, and Gold… $1,283.70  

That’s it for today… After a rainy morning yesterday, the sun came out and it was an absolutely beautiful day. Some of my good friends came over to watch the Cardinals game outside with me, so that was fun. Friday night I got to see some of my former colleagues at a Happy Hour. Thanks to Michelle, my latte’ buddy, for getting that together! There were some former colleagues “missing”…  I guess I’ve become out of sight, out of mind for them…  Well, I survived another period of time alone, once again!  Day game VS the Royals on Wednesday, and I’m going! YAHOO! 3 doctor appts this week.. UGH! But afterward I’ll be set free to move about the country! HA!  Poco takes us to the finish line today with their song: You Better Think Twice…  About 20 years ago, I would listen to Poco’s music all day long… Hmmm…    So, how about we go out and make this a Marvelous Monday, and remember to Be Good To Yourself!  

Chuck Butler

May 17, 2018   

* Currencies’ attempt to come back is foiled!

* Peak Gold? 

Good Day… And a Tub Thumpin’ Thursday to you! What a beautiful day yesterday, and I got to be outside! I love to watch baseball games on my deck, and yesterday was just perfect for that! And my beloved Cardinals finally won! This will be a short-n-sweet edition to end the week, this morning… I’m plum out of things to talk about that move markets, and I doubt you want to hear me repeat myself over and over again… The Marshall Tucker Band greets me this morning with their song: Searching For A Rainbow…   

All the dollar buying this week either took a pause for the cause, or has ended all-together. That’s a tough call to make given that I was shown technical graphs last week that told me the dollar buying was over, and for one day (Friday) everything fell into line… But then came this week, and it was wrong…  So, we’ll just say, for now, that the dollar buying has taken a pause for the cause… 

The Dollar Index was much lower in the overnight market, but has recovered to get back to the same level it was trading at yesterday morning, which leads me to believe it will be another dollar day today. For the currencies attempted a coup overnight, but was beaten back, and the dollar rules another day…  

Gold fought, scratched and clawed and still couldn’t get out of the corner the dollar had it backed into yesterday, and when the dust cleared, Gold was down just 10-cents on the day. This morning though, Gold is down $3 in the early trading…  I came across this quote from the head of Goldcorp, in Ed Steer’s letter this morning… this guy is talking about “peak Gold” let’s listen in…  

“Ian Telfer, chairman of Goldcorp Inc., is the latest industry magnate to predict the world has reached “peak gold,” saying that from here on out, mine production will continue to decline because all the major deposits have been discovered.

“If I could give one sentence about the gold mining business … it’s that in my life, gold produced from mines has gone up pretty steadily for 40 years,” said Telfer. “Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down.”

“We’re right at peak gold here,” he added….   Chuck again… if that’s really the case, then why on earth is Gold being held back?  Oh, I actually know the reason, but didn’t want to get my blood pressure all riled up talking about the price manipulators again..  Oh,, and let’s not forget what’s going on in the world right now from peace on the Korean peninsula to Italian populists forming a government, and looming over it all are trade talks between the U.S. and China, and we can’t forget NAFTA negotiations, or the wars we are fighting, and the Gold price manipulators are so brazen, they say, “we don’t care about all these geopolitical and unknowns that usually drive the price of Gold higher, we’re here to keep that from happening.”   

Of course, I just made that up, but I swear I can here them saying that! HA! 

Yesterday, the Aussie dollar (A$) slipped below 75-cents, but that didn’t last too long, as Aussie employment printed last night and was much stronger than expected, and that got the ball rolling for the A$, which is back above 75-cents again this morning. 

The U.S. Treasury 10-year’s yield is rising quickly it seems, with a 3.10% level beside it today… Treasury yields are the highest they’ve been since 2014.. And this time they’re going in the opposite direction! UP!  I really don’t see how stocks can survive with bond yields going higher, but then that’s just me…    

The price of Oil has a $72 handle beside it today…   I read an article yesterday that talked about how the writer didn’t think that the summer driving season will do much to drive the price of gas higher… Hmmm… 

The U.S. Data Cupboard yesterday saw Industrial Production, led by mining, beat the expectations in April. But Capacity Utilization slipped lower, so it was as my dad used to say, “6 of one and half a dozen of the other”…  Today’s Cupboard has the Leading Indicators, and the Philly Index (manufacturing for that region)…  And while Leading Indicators should be viewed with more intensity, neither of these two will move the markets if they print wildly up or down.   

To recap…  The dollar buying took a pause for the cause yesterday, and overnight the currencies attempted a coup only to be beaten back by the dollar. Gold lost 10-cents yesterday but is down $3 in the early morning trading today, and Chuck prints a quote about “peak Gold”… Aussie employment beat the expectations, and the price of Oil is up to a $72 handle this morning! 

For What it’s Worth…  I saw this article this morning, and thought it to be very FWIW worthy… It’s an article about how much money does an American need to feel wealthy, and can be found here: https://www.bloomberg.com/news/articles/2018-05-15/how-much-money-do-you-need-to-be-wealthy-in-america   

Or, here’s your snippet: “Many Americans cite leading a stress-free life and having “peace of mind” as their personal definition of wealth. That doesn’t sound too money-centric on the face of it—until you consider that money, or specifically the lack of it, is a major source of stress.

Americans don’t like to admit that assets can buy happiness—just 11 percent of those surveyed for the second annual Modern Wealth Index from Charles Schwab chose “having lots of money” as their definition of wealth. But while most respondents selected more high-minded concepts as their keys to contentment, they weren’t afraid to put a number on what they needed to get there.

To be financially comfortable in America today requires an average of $1.4 million, up from $1.2 million a year ago, according to the survey. The net worth needed to be “wealthy”? That’s an average $2.4 million, the same as last year in the online survey of 1,000 Americans between age 21 and 75″

Chuck Again…  It’s about what you do with your money, folks… And that “net worth” thing is very important!  

Currencies today 5/17/18… American Style: A$ .7527, kiwi .6890, C$ .7824, euro 1.1790, sterling 1.3488, Swiss $1.0024, … European Style: rand 12.50, krone 8.0890, SEK 8.7220, forint 268.08, zloty 3.6340, koruna 21.6608, RUB 62.09, yen 110.65, sing 1.3422, HKD 7.8495, INR 67.71, China 6.37, peso 19.56, BRL 3.6647, Dollar Index 93.48, Oil $72.19, 10-year 3.10%, Silver $16.43, Platinum $887.73, Palladium $982.00, and Gold… $1.287.80

That’s it for today… I’ve talked about my writing desk and the pictures I have tacked up so I can see them as I write each day… I noticed a picture today that was new to the arrangement. Kathy snuck a picture of me, with long hair on the wall… I cringed when I saw it…  I sure was a lot “smaller” in size back in the day!  I’m going to hide that picture! Well, I think that I’m going to get together with some former colleagues tomorrow for Happy Hour, that should be fun seeing everyone again. I haven’t seen a lot of them since my “retirement party” last year. So, I’ve got that going for me this weekend… Johnny Rivers takes us to the finish line today with his song: Secret Agent Man… I hope you have a Tub Thumpin’ Thursday, and that your Friday tomorrow is Fantastico! But please, always remember to Be Good To Yourself!    

Chuck Butler

May 16, 2018    

* It’s all about the dollar again… 

* A$’s yield advantage is gone! 

Good Day… And a Wonderful Wednesday to you! Well, May is already one-half over. Time seems to fly by, and I have to really think a long time to figure out what I did to fill 16 hours yesterday… UGH!  My beloved Cardinals can’t hit the ball, and thus keep losing… They really didn’t hit in Spring Training, so I’m wondering what made Management think they would hit during the reg. season?  Day Game today in Minnesnowta…  I hope it’s nice an warm here to sit outside and watch the game…  Al Stewart greets me this morning with a perfect song to go with my initial thought about time slipping by this morning…  Al Stewart’s song: Time Passages…  

Well… The Big News this morning in the markets is that Gold got whacked badly yesterday… Gold finished the day down $22, and below the $1,300 figure. The total contracts traded were as Ed Steer put it, “past Jupiter”, with more than 400,000 contracts traded in Gold.  I had told you yesterday that Gold was down $9 in the early morning trading, and as I went to press, Gold was struggling to recover, but then the trap door sprung, and Gold went through it, along with its price… the price graph for the day is typical for these engineered takedowns, with a line drop that’s very pronounced and very evident, indicating that a flood of short Gold paper trades hit the floor… 

I shake my head in disgust that these engineered takedowns are allowed to go on…  but they are what they are, and I have no control over them. All I can do is write about them in hopes that one day a regulator or two gather up some intestinal fortitude and do something about it… Until then, we can hope for the supply of Gold to dwindle with all the Central Bank buying these days, but that will take a long time to come to pass, so, I guess the only other thing to do is to take advantage of these cheaper prices while you can.   

The euro’s success since the start of 2017, has come under fire, and it appears that traders are listening to the complaints of Eurozone Companies complaining about the euro’s stronger exchange rate, and blaming such on their inability to post higher profits in the 1st QTR of this year…  The euro had seen gains of 13% since the start of 2017, but has been seen on the slippery slope lately, with price handles falling daily. Today, for instance the 1.19 and 1.18 handles have been taken out, and the single unit trades with a 1.17 handle this morning. 

Not the kind of day I was expecting yesterday after U.S. Retail Sales printed a slower growth figure for April, just like I said it would. U.S. April Retail Sales grew at 0.3%, VS 0.6% in March… Recall I had pointed out that Easter was in March this year, and that’s why I figured April’s figure would not be as robust.  So much for that thought that was being bandied about on the Bloomberg, that the recent releases of Retail Sales had given the euro direction after printing… But that idea was thrown to the side of the road yesterday, and the euro just couldn’t find a bid…   

The European Central Bank (ECB) President, Mario Draghi, will be speaking today, and it will be interesting to see if he singles out the rise in the euro as the culprit behind the 1st QTR slowdown, or if he will throw the markets a bone with some hints of when bond buying is going to end.  I shake my head at these Central Bank leaders and their speeches… I think it would be far better to them to keep their collective heads down, and attempt to fly under the radar…    

The Aussie dollar (A$) is also getting whacked, as traders have taken the position that the Reserve Bank of Australia (RBA) isn’t going to hike rates any time soon, and with the U.S. Fed hiking rates, the spread between the A$ and U.S. dollar will widen…   I noticed something the other day that caught my eye, and I was taken aback that I hadn’t notice this before… But the positive yield spread in the 10 Gov’t. Bonds that Australia had held over the U.S. since 2000, is gone.. no more, and like Puff the Magic Dragon, Aussie 10-year Gov’t Bonds have cease their fearless roar… 

And to me, as an old bond trader, yield spread between countries is a Big Deal.. Well, it was back in the 90’s when I traded foreign bonds. And apparently it is still today, as the A$ is losing ground to the U.S. dollar, and while rate hikes in Australia may be evident they aren’t imminent with the RBA, and therefore the yield spread between the two countries will only grow wider, to the dollar’s advantage…  

That is IF the Fed is going to keep hiking rates, which Fed Chairman, Jerome Powell, seems hell bent and whiskey bound to do… The economy may has something to say about that though, and I’m still leaving the porch light on for a reversal at some point because the economy falters from the previous rate hikes.. 

With the Big Dog euro, and the A$ slip sliding their way down the slippery slope the rest of the currencies are all following their lead. The only currency that saw a rise, albeit a very small rise, yesterday was the Swiss franc… The rest of the currencies are taking on water and their bailing isn’t helping. The Dollar Index started the week at 92.34, and sits this morning at 93.48, more than 1 full figure rise in two days..  That’s moving at too quick of a pace in my opinion, and should see some profit taking soon… But will it be enough to turn the tide on this selling of the currencies and metals?   

The price of Oil is the only anti-dollar asset that’s seeing some bids. But a report yesterday that U.S. stockpiles of Oil have risen, kind of took Oil traders by surprise, and Black Gold, Texas Tea, lost a little bit, but still holds a $71 handle, which is more than double what the price was a couple of years ago. 

And that gets me thinking about the Eurozone companies complaining about the strength of the euro… I  would think they would be more concerned with the rise in the price of Oil… The Eurozone doesn’t produce Oil, per say, and needs to import it which has become quite a bit more expensive in the last year! 

The U.S. Data Cupboard has a couple of pieces of real economic data for us today, as the April showings of Industrial Production and Capacity Utilization both print. These two data prints disappointed in April, when the March readings both showed drops from February. I don’t expect any great shakes here today, a tick upward or downward won’t move the markets or the dollar.  

To recap….  It’s all about the dollar again, after a couple of days of rebound in the currencies and metals, it’s all about the dollar again. Gold got whacked by $22 yesterday, with over 400,000 contracts traded in Gold, which is ridiculously large and probably contains a huge amount of short Gold Paper trades.  Draghi speaks today, will he throw the euro under the bus?  The positive yield spread in 10 year Gov’t bonds that Australia held VS the U.S since 2000 is gone, and the A$ is seeing the results of this.. 

For What It’s Worth…  Thanks to longtime reader Bob, for sending this to me, it’s about a referendum in Switzerland that will take place on June 10, to correct a wrong in banking and it can be found here: https://countercurrents.org/2018/05/15/switzerland-a-once-in-a-lifetime-chance-to-spreading-positive-banking-news-to-the-world/

Or, here’s your snippet: “It’s called “Vollgeld Initiative” – in German, meaning more or less “Referendum for Sovereign Money”. What is “Sovereign Money”? – Its money produced only by the Central Bank, by the “Sovereign”, the government, represented by its central bank. Money created in accordance with the needs of the economy, as contrasted to the profit and greed motives of the banking oligarchy – wat it is today; money creation at will, by private banking.

The people of Switzerland are called to vote on 10 June 2018 whether they want to stop the unlimited, unrestrained money-making by the Swiss private banking system, and to return to the “olden days”, when money was made and controlled only by the Central Bank; and this not just in Switzerland, but in most countries around the globe. Switzerland is one of the few sovereign countries within the OECD, and possibly worldwide, that has the Right of Referendum written into her Constitution. With 100,000 valid signatures anybody can raise a referendum to amend or abolish a law, or to create a new one. – This is a huge privilege to Right a Wrong.

Most Swiss and probably most westerners in general don’t even know that the loan or mortgage they get from their bank is no longer backed by the bank’s capital and deposits. How could they? Instead of being told the truth, they are being lied to, even by their own party and politicians. And that in the case of Switzerland, by nobody less than the CEO of the UBS, the largest Swiss bank. Just watch this short video (in German and Italian – 2 min) https://www.youtube.com/watch?v=5m5ifQV4aIg .

Lying is a felony, hence Mr. Sergio Ermotti, CEO of UBS, should be prosecuted. Unlikely to happen, though. What Mr. Ermotti in essence says in this interview is that loans are backed by deposits. This is directly contradicted by the Swiss National Bank and the German Bundesbank (Central Bank). They say that “today about 90% of all the money is accounting money, created by loans the banks make to enterprises and private citizens. Pretending that banks use deposits to make loans, is not true.” The latter part was specifically expressed by the German Bundesbank. – So, how come Mr. Ermotti, CEO of UBS, wouldn’t know that?  

Chuck Again…  I have always liked the way the Swiss do their referendums, talk about a government that the people run!   

Currencies today 5/16/18… American Style: A$ .7485, kiwi .6878, C$ .7775, euro 1.1778, sterling 1.3480, Swiss $1.0015, … European Style: rand 12.54, krone 8.1265, SEK 8.7545, forint 269.35, zloty 3.6455, koruna 21.6883, RUB 62.10, yen 110.15, sing 1.3427, HKD 7.85, INR 67.95, China 6.3611, peso 19.76, BRL 3.6405, Dollar Index 93.48, Oil $71.18, 10-year 3.07%, Silver $16.27, Platinum $894.75, Palladium $980.81, and Gold… $1,290.10

That’s it for today… Went to lunch with good friend Duane yesterday, to our fave place for burgers… At EverBank in our old office, we would order lunches from this place regularly… but then we moved further away from the place and so now I go there with Duane about once a month! That is except when I’m in Florida! In Florida I have a place for burgers, the Brass Ring Pub, and boy are they yummy!  I forgot to tell you how Grandparents Day at Braden’s school went the other day… It was fun… except, they gave me a chair to sit on. The problem was it was a chair that 1st graders sit on. Well, getting down to sit on it was ok, but getting back up, was let’s just say not a pretty sight! The late great, Dan Fogelberg takes us to the finish line today with his song: Next Time..  I used to play this song.. I hope you have a Wonderful Wednesday, and remember to  Be Good To Yourself ! 

Chuck Butler

 

May 15, 2018 

* Currencies can’t hold their gains from Friday    

* Gold is getting whacked this morning! 

Good Day… And a Tom Terrific Tuesday to you! Well, day 5 on my own, turned out to be a good one, as my good friend, Mike Kettler, invited me to have a drink and dinner with him…  It stormed like the dickens here while I ate my dinner, but that didn’t interfere with the good comradery… Thanks Mike! A tree was down on the road in front of our  establishment, but it was east of us, and we needed to go west to go home, so no biggie!  Pink Floyd greets me this morning with their 8 minute version of their song: Us and Them…    That song has words that I have hung my hat on…  “There’s a battle of words, and most of them are lies”..        

Well, I told you yesterday that the currencies’ rally wouldn’t be able to continue unless the U.S. said something or did something to rile the markets, and they didn’t, so the currencies, held steady Eddie for the day, with little slippage.  Today, we’ll be honored with much data, here and abroad so the dollar will be subjected to the data today, which, in my opinion won’t be helpful for a turnaround in the dollar…   

Before I go any further today, I have a correction that I need to come forward with…  

Last week, I printed an article from Blacklistednews.com, that they originally took from Forbes. A dear reader sent me a note letting me know that the article originally printed 7 years ago, and therefore was no longer correct. I sent him an apology immediately, for I did not catch that, and promised I would print a correction… The good folks at FX STREET.com also received the notice and they printed a correction that I think I’ll just reprint here… The original release incorrectly stated that Northwestern Mutual owns Russell Investments. The London Stock Exchange Group purchased Russell from Northwestern Mutual in 2014, and announced in 2015 the launch of ‘FTSE Russell’, which split out the index business from Russell’s advice, asset management and investment management offerings. TA Associates and Reverence Capital Partners acquired Russell Investments’ asset management business from the London Stock Exchange Group in 2016. Russell Investments and FTSE Russell are now separate entities.

I apologize to all readers for this error. I’ll be more careful in looking at the news articles I use in the FWIW section each day, going forward. Again, I can’t be held responsible if something in the article is incorrect, but I can be held responsible for printing it. That’s all from here, now let’s move along…  

Gold wasn’t able to find a bid yesterday, and it lost a couple of bucks on the day, and is down $9 today in the early morning trading. I just don’t get what’s going on with Gold these days, as one, including myself, would think that this is Gold’s time…  But, I guess the “boys in the band” are keeping that from happening…  

The Reserve Bank of Australia (RBA) printed their meeting minutes from their meeting two weeks ago… and in the minutes I read something that, well, I’ll reprint the piece I’m talking about and see if you come to the same conclusion…  here’s the RBA…  “In the current circumstances, members agreed that it was more likely that the next move in the cash rate would be up, rather than down. As progress in lowering unemployment and having inflation return to the midpoint of the target range was expected to be gradual, members also agreed that there was not a strong case for a near-term adjustment in monetary policy. Rather, members assessed that while this progress was unfolding, it would be appropriate to hold the cash rate steady and for the Reserve Bank to be a source of stability and confidence.”  – RBA Meeting Minutes.    

Well, I won’t beat around the bush here, my take on what was said is that the RBA is ready to hike rates, but want to be cautious and wait for now… The Aussie dollar (A$) traders didn’t see it that way and the A$ lost some ground during the day…  What the heck do A$ traders want? Do they need to be kicked in the rear and told, “the RBA is ready to hike rates”?  For if they do, line them up and I’ll go down the line kicking each of them in the rear!  Dolts all of them, and that’s all I’ll say about that!  

I told you yesterday that we would see some good economic data around the world today, and some of it has already printed and is there for the viewing… The Eurozone GDP for the 1st QTR printed and it grew 0.4% VS the previous quarter, and 2.5% year on year…  Hmmm… And they calculate their GDP without “adjustments”…  So, The Eurozone economy, as a whole, it outperforming the U.S., who just printed a 2.3% GDP… 

And what does the euro get for this good GDP performance? It get sold… Go figure…  Oh, and the Business Sentiment as measured by the think tank ZEW, saw their index number slip from 87.9 to 87.4, no biggie, but slippage nonetheless. If these pieces of data were chess pieces, I would think that GDP trumps ZEW…  I’m looking for Chinese Retail Sales, but haven’t been able to find it right now…   

Later this morning, well, for me that is, The U.S. Data Cupboard will have April’s Retail Sales. I told you yesterday that I was looking for a smaller number than the March report that saw 0.6% growth… I would think that April’s number will be half the March number…  I read a piece this morning about how the euro responds to U.S. Retail Sales..  Their thinking went something like this:  in the last five releases, the EUR/USD moved, on average, 34 pips in the 15 minutes after the data release and 67 pips in the following 4 hours, depending on whether Retail Sales grew or fell in the month.  So, taking that info, and the thought that I have about Retail Sales for April being 1/2 the number March’s report printed, one would surmise that the euro would rally today after the print, should it print the way I think it will…    

Getting back to Gold for a minute or two of reading time…  the GATA folks sent me an email yesterday outlining the words of James Rickards in his book: A New Case For Gold..  I read the book two years ago when it was originally printed, as it was a follow up of Ron Paul’s original book A Case For Gold…   And what the GATA folks were focusing on was Rickards’ explanation of how Gold Manipulation works…  I don’t have the time or space to print his 15 pages of explanation in the book, but I can give you two paragraphs that I think are very important…  Let’s listen in:  

“Rickards concedes that ordinary investors cannot beat central bank manipulation of the gold market in the short run but contends that central banks will fail in the long run. Eventually, he writes, citing examples from history, “the manipulators run out of physical gold or a change in inflation expectations leads to price surges even governments cannot control. There is an endgame. … Physical gold is also rapidly disappearing as more countries are buying it up. That puts a limit on the amount of paper gold transactions that can be implemented.”

 Rickards advises investors: “It’s important to understand the dynamics behind gold pricing. You need to understand how the manipulation works, what the endgame is, and what the physical supply-demand picture looks like. Understanding these dynamics lets you see the endgame more clearly and supports the rationale for owning gold even when short-term price movements are adverse.” – James Rickards in his book: A New Case for Gold…   

Rickard’s book is available on Amazon, or whatever book outlet you use, and if you are a Gold investor, or even thinking about becoming one (what have you been waiting for?) I would strongly suggest picking up this book and reading it. Like I said I read it two years ago, and now I think I many go back and read it again, just to freshen up… 

The U.S. Data Cupboard will have some minor data prints today to go along with April Retail Sales.. Things like Business Inventories, the Home Builders’ Index, and the Empire State Index (manufacturing in the NY region)…  So, Retail Sales takes the Kewpie Doll today…   You know, I’ve focusing on the goings on in the U.S. so much that I’ve forgotten about some of the fringe currencies, like Indian rupees, and Brazilian real, which have seen better times, performance-wise.  The rise in the price of Oil to a $71 handle hasn’t helped the Petrol currencies any, and one has to wonder just what the heck is going on here? 

Oh, and here’s another thought…  the price of Oil has now more than doubled in the last couple of years and with the sanctions on Iran, Oil supply should be disrupted until OPEC gets their act together, which means the price of Oil could very well continue higher for now…  I bet the boys and girls at Ford Motor Co  aren’t clinking their champagne glasses together over this news of higher Oil prices… Just last month Ford announced that they were discontinuing a line of small calls and sedans, and would become a Truck and SUV dominated company…   Apparently only the Mustang and Focus will survive…

I’ve always had a love for the Mustang…  My first date with Kathy was in a Mustang…  Oh well, let’s move along here…  

To recap…  The currencies couldn’t hold their gains yesterday, and saw some slippage from Friday’s upward moves. Today we’ll see April Retail Sales in the U.S. and Chuck points out that the euro could have an opportunity to rally today… Gold is down $9 in the early morning trading today, and the price of Oil is back to $71 and change… The RBA minutes didn’t help the A$ and Chuck wants to know why?    

For What It’s Worth…  G. Edward Griffin… You may recall his name as the author of the great book: The Creature For Jekyll Island, which is about the formation of the Federal Reserve…  Well, he has a weekly letter he puts out and focuses on news articles that fit the description of FWIW to a T! So, here’s his piece on Illinois’s Gov’t raising the property taxes to fund the grossly underfunded Pensions in Illinois… And it can be found here: https://needtoknow.news/2018/05/illinois-proposes-plundering-homeowners-fix-pension-problem/    

Or, here’s your snippet: “Illinois has the highest property tax in the nation, with an average of 2.67%, and as high as 5% in some areas, yet the Federal Reserve Bank of Chicago proposed an additional 1% rate hike to cover the state’s underfunded pension problem. Any improvements to one’s property would increase the tax rate, a policy well designed to cause homes to fall into disrepair. The new tax would push down the price of homes, thus punishing current homeowners. Even so, the revenue would help only five state pensions, while 650 county and city pension funds remain to be ‘fixed. ”    

Chuck Again… The Creature from Jekyll Island is a book that’s about 1 1/2 inches chock with information about the Fed’s formation, and how the idea was shoved down the throats of citizens by President Woodrow Wilson…  Remember my rally cry from the days before the Pfennig had to be reviewed each day before being sent out?   It was: repeal 1913…   

Currencies today 5/15/18… American Style: A$ .7515, kiwi .6915, C$ .7803, euro 1.1920, sterling 1.3540, Swiss $1.007, … European Style: rand 12.4450, krone 8.0317, SEK 8.65, forint 265.75, zloty 3.5910, koruna 21.4165, RUB 61.76, yen 109.94, sing 1.3368, HKD 7.85, INR 67.95, China 6.3362, peso 19.68, BRL 3.6062, Dollar Index 92.73, Oil $71.36, 10-year 3.02%, (notice this is above 3%!) Silver $16.46, Platinum $905.86, Palladium $981.83, and Gold… $1,309.00    

That’s it for today…  I guess we’re in for a some stormy days in row, which is not unusual for us here this time of year. It does make scheduling things like baseball games, picnics, graduation parties, etc. challenging!  Speaking of graduation… Alex gets his 4 year degree this Friday, but it’s just a pause point, as he still has 2 more years to go to get his doctorate in Physical Therapy.  He supposed to be coming by today to cut the grass, but it might be too wet to cut… UGH!  Supertramp takes us to the finish line today with their song: Give A Little Bit…  I sure hope you can go out and make today a Tom Terrific Tuesday, and remember to Be Good To Yourself!  

Chuck Butler

May 14, 2018     

* Currencies turn around the dollar rally

* SDR’s in the news… 

Good day… And a Marvelous Monday to you!  I know I mentioned it last week, but I sure hope all Mothers had a wonderful Mother’s Day yesterday… I celebrated it with Dawn and her family and Andrew and his family, which meant Dawn and Rachel were the honorees… Kathy is with her mom and sister, so I’m hoping they had a great Mother’s Day too! Whenever it gets to Mother’s Day, I get all teared up. I miss my mom, she was my biggest fan, no matter what I chose to do… My mind always goes back to those days when I was young, and playing in a band, and having band practice in my basement, and my mom would always come down stairs and sit and listen to us. That meant so much to me then, and still today. When I sliced open my bicep when I was 10, she told not worry, that she would take care of it. I miss her…   Grand Funk Railroad greets me this morning with their song: Footstompin’ Music

Well, I didn’t mean to get sappy so early in the morning, but Rachel asked me yesterday my favorite memory of my mom.. .I tired to tell her the story I just told you, but couldn’t stop the tears from flowing in my eyes…  So, let’s get to stuff that I can be more macho about!  HA!   

Well, the currencies had a comeback day on Friday, and have continued that rally in the overnight markets last night. The dollar began to get sold right after it was reported that we now have two consecutive months of disappointing jobs reports, and furthermore, hourly wages still can’t seem to get up off the canvas they were knocked to a decade ago, even though the Gov’t tells us the Unemployment Rate is 3.9%, which is a crock of well, it’s just not the truth… I go through all the details of how the Gov’t gets to that number incorrectly in this week’s Dow Theory Letters… 

And I don’t want to get all in the face of the BLS, who reports the jobs numbers so early this morning, but…    The BLS said the total jobs created in April was 164,000…  The number of jobs the BLS added to the surveys though was 260,000!  So, in reality, if we’re only counting real people, with real jobs, the actual report for the month of April was NEGATIVE!  

The Bank of England (BOE) didn’t surprise anyone last week when they left rates unchanged, and BOE Gov. Mark Carney wasn’t as upbeat as he has been about a rate hike coming this time. I just don’t know what the markets are waiting for here…  When Mark Carney was the Gov. of the Bank of Canada (BOC) he went for years saying that he was ready to remove accommodation, (read make a rate hike) and never did…  Then he went to the BOE and started the same line of…  Well, let’s just say, he hasn’t come through with a rate hike yet…   

Regular readers of this letter know how I questioned the rally in sterling, with questions regarding BREXIT hanging over sterling like the Sword of Damocles, and when Carney began filling the markets with hope of a rate hike soon, I said… B.S.!  It’s not going to happen, and it hasn’t! 

Man, I was really blown away this past weekend when I received my latest letter from James Rickards… He of bold predictions and more…  He seems to think that come July 1 2018, the dollar is going to get rocked BIG TIME, by an announcement from the IMF…  Now I normally don’t get all that hyped up about these calls like this, but this time… I take this with more grains of salt, because he’s talking about SDR’s, and I’ve been a big proponent that the IMF was going to introduce SDR’s as an alternative to dollars in payments systems…   

Well, I’m not Chicken Little, and I won’t go out on a limb saying what he said is going to happen to the dollar, but…  It’s times like these that you get the feeling that maybe he’s right, and since SDR’s aren’t available to individuals at this time, the next best thing is Gold…   

And looky there, Gold finally got some love last week…  And while it did close down $3.30 on Friday, Thursday saw a nice rally in the shiny metal, the first one in over a week!  What a world, we live in, eh?  By that I ‘m talking about how Gold would seem to be on everyone’s agenda, as it rises almost daily given all that’s going on in the world, but it’s not on both accounts… I haven’t been to a cocktail party in a while, but the next one I go to, I’m going to ask the question… “Do you won Gold”? and see how many people honestly answer that question…  I’m betting a dollar to a Krispy Kreme that very few say “I do”…      

Have you been reading about all the turmoil  that the Iran sanctions have caused the rest of the world?  For instance, Germany does a ton of trade with the U.S. far more than any other country they trade with. But they also do somewhat smaller trades with Iran, and Germany didn’t like very much when the U.S. suggested that they should not be doing business with Iran…  But what are they going to do about it? complain a lot, is about it… Because as I said, Germany does a ton of business with the U.S. and I don’t think they want President Trump as a Trade enemy…   

One week, it’s all about a Trade War and the next week that talk fades and we’re on to something else… No wonder the price of Gold can’t seem to put together a multi-day rally, for no one can make up their minds! 

There’s not much data around the world today, but tomorrow, we’ll get Chinese Retail Sales, and Industrial Production, a Eurogroup meeting, and an Economic Sentiment report as measured by the think tank ZEW in Germany.  So, any add-on to the currency rally will have to come tomorrow, that is unless the U.S. does or says something to rile the markets again.     The euro has climbed back above the 1.19 figure, the Aussie dollar (A$) has pushed higher in the 75-cent handle, and in Asia, the Singapore dollar (S$) recovered some of their losses from last week’s trading. The Swiss franc is at parity to the dollar this morning…   

Last Friday, I was impressed with some readers who pointed out to me, that the Canadian dollar / loonie price was reported incorrectly! I apologize to all those that were knocked for a loop when they saw that I reported the loonie at 73-cents, when in fact it should have been 78-cents!   My bad…  fat fingers, the sun was in my eyes, I tripped on a rock, and heard somebody else call for the ball! 

I got a big kick out of seeing  my Dow Theory Letter from a couple of weeks ago regarding the euro, get tweeted and then retweeted…  Here’s an except from that letter… “In 2012, one of the last years that I still traveled to speak to audiences from Vancouver to Panama (the country not the city in Fl) I would tell people that these austerity programs would cause the Eurozone to slow down, and even go into a recession, but when they came out on the other side in 5 or 6 years, their balance sheets would look better, and the euro would recover…

Then last June, I wrote in this space that the sentiment toward the dollar and the euro was beginning to change, and that this would lead to a rebound in the euro. The euro at that time was trading around 1.09… At last check, the euro was 1.21, and has been as high as 1.25. The new weak dollar trend appears to be in place, as Hedge Funds, investors, traders, etc. are shorting the dollar. ”      

In last week ‘s DTL letter… I talked about Oil, and this week I’ll talk about the U.S. economy. I’m all over the place with topics that lead you to water… And that water is a diversified investment portfolio using currencies and metals..  

The U.S. Data Cupboard is empty today, nada, nil, zilch, nothing here to report, but tomorrow, we’ll see the color of April Retail Sales, which I’m betting a free undercoat (HA!) that April’s numbers will be less than March’s numbers… Remember Easter was early this year…      

To recap… The currencies made a comeback rally last throughout the day on Friday and in the overnight markets last night. They began this rally when the U.S. Jobs report was disappointing for a second consecutive month, with the avg. hourly earnings still on the canvas…  Gold had a good day on Thursday, but wasn’t allowed to participate with the currencies’ rally on Friday.  Chuck talks about something that James Rickards is telling his readers… Is he right?   Only time will tell, eh?  

For What It’s Worth… So, since I talked about what’s going on with Europe/ Germany and the U.S. regarding Iran… this article seemed to be very timely… and it can be found here: https://www.zerohedge.com/news/2018-05-10/merkel-europe-can-no-longer-rely-us-protect-it   

Or, here’s your snippet: “With Europe having failed to prevent Donald Trump from withdrawing from the Iran nuclear deal despite sending both Macron and Merkel to Washington in an attempt to persuade him, the tension between Europe and the U.S. has escalated, and on Thursday morning, Merkel said that Europe can no longer rely on U.S. “to protect it.”

“It’s no longer the case that the United States will simply just protect us. Rather, Europe needs to take its fate into its own hands, that’s the task of the future,” Chancellor Angela Merkel said on Thursday in a speech commending French President Emmanuel Macron at prize ceremony in Aachen, Germany.

Then again, this is Germany, the same nation which only has 4 fully-functioning Eurofighter jets in operation.

Merkel also says that “we will make progress” together with France on banking union and capital markets union, though “these are difficult discussions”, and commented that German differences with France “don’t separate us, rather they always bring us back together.”

Merkel’s view on the fraying relationship with the U.S. echoes the earlier statement of the President of the European Commission Jean-Claude Juncker, who said during a Thursday address that Washington “had lost vigor, and because of it, in the long term, influence,” suggesting that Europe should take over the U.S.’s role as global leader.”   

Chuck Again… Boy oh boy, this is going to get quite interesting folks, stay tuned!    

Currencies today 5/14/18… American Style: A$ .7550, kiwi .6971, C$ .7817, euro 1.9147, sterling 1.3535, Swiss $ 1.00, … European style: rand 12.2350, krone 7.9811, SEK 8.5720, forint 263.48, zloty 3.5630, koruna 21.2955, RUB 61.87, yen 109.45, sing 1.3353, HKD 7.8491, INR 67.23, China 6.3352, peso 19.41, BRL 3.6013, Dollar Index 92.34, Oil $70.65, 10-year 2.98% , Silver $16.67, Platinum $925.85, Palladium $999.00, and Gold… $1,319.80       

That’s it for today… Right out of the starters gates this morning I’m heading the grandson, Braden’s school  for grandparents day… I’m flying solo on this one, as Kathy usually attends these with me…  My beloved Cardinals hit one day, and not the next two, and then rinse and repeat… UGH!  I cooked for the “moms” that were here yesterday… It took me an hour to clean up my Big Green Egg, but it was worth it, as the chicken and pig cluckers I made were delicious!  I love my Big Green Egg, and love cooking on it…  It went from winter to summer here, spring was two days while I was out of town! But I love it! I got to spend the day outside! America takes us to the finish line today with their song: Sandman… I used to play that song on my guitar..  I hope you have a Marvelous Monday, and Be Good To Yourself!   

Chuck Butler

 

 

May 10, 2018    

* The dollar’s rally appears to be ending… 

* China’s depreciations hurting emerging markets… 

 

Good Day…  And a Tub Thumpin’ Thursday to you! I think I finally got control of the nasty cold I had, and shook it out of me! I still have an occasional cough, but nothing near what was going on earlier in this week! So Yahoo! By the time you see this in your email box this morning, I’ll be all by myself again for the next 11 days.  No biggie, I’m used to it by now. Hello Pizza Man, Pizza? HA!  There wasn’t much on the telly last night, so I sat down and began reading emails… I think about how we used to get in touch with people and how it’s done now, and I’m not sure it’s a better way, it’s faster, and more precise, but I miss memorizing important phone numbers, and talking to people on the phone…  Oh well… 

And I wonder just how many homes still have a land line for a phone line? I don’t have one, and most millennials don’t have one. I knew that if I kept looking I would find something in common with them! HA!   

The dollar rally that began last week with a short squeeze, and continued this week with panic selling, looks to be petering out and looky here, I’m not the only one that thinks that…    

Jeff Clark is someone I’ve known for quite a few years, as he used to be associated with the Casey Group. We would talk each year in Vancouver, and one year, he even video recorded an interview with me that can be found on line still. In fact, I’ve got a treat for you here’s the link to the interview that took place in 2012… Now, keep in mind that this was during the revealing of Greece’s problems and the rot on the euro’s vine that waa being exposed. For If that information was available at that time, I don’t believe I would have been so bearish on the dollar. Anyway… here’s the link: https://www.youtube.com/watch?v=_KXCiqYt4Cg

One thing I really noticed in watching it, is that my left eye is closed a lot while I talked. As you know I don’t have any sight on the left side, in fact, my eye was taken out in 2010… You may not have noticed anything different, but I did… Oh, and I’m also probably 50 lbs lighter now than I was then…

Alrighty now, getting back to Jeff Clark… he recently wrote on his blog that his charts indicate that the current dollar rally is about to end….. I would show you the chart, but… It won’t copy and paste to this blog… UGH! But i can give you the link to his website, so here it is: https://www.gold-eagle.com/authors/jeff-clark

Longtime readers know that I mainly use fundamentals as my criteria for buying currencies and metals, but there are times that I refer to the “chartists” like Jeff Clark, and my old colleague Sean Hyman…   

Now that’s music to a non-dollar investor’s ears to hear that the dollar rally is nearing an end…  

Well, well, well… what on God’s Green Earth have we here? By golly, it’s the Bank of England (BOE) meeting this morning, and the BOE Gov. Mark Carney, not fulfilling his promise to hike rates this year one more time. About a month ago, sterling was on a daily climb higher VS the dollar, as it was looking as if Carney would finally be able to pull a rabbit out of his hat. And I kept saying then, that there were too many questions with the BREXIT negotiations to be hiking rates, and besides, the economy isn’t THAT strong! And then a couple of weeks ago, the economic data reports began to show cracks in the rate hike foundation, and now, this morning, there’s no hope at all that rates will be hiked today, or next month, or the next month… And sterling has taken the hit on this turnaround…

Now, the BOE might talk a rate hike game today after announcing that they didn’t hike rates, but in reality, they don’t have a leg to stand on righ now… BREXIT is proving to be a real problem, and the economy isn’t on terra firma… And Mark Carney knows this in his heart of hearts, but I’m betting a shiny quarter that he comes out and says a “rate hike is coming” or something like that! And the sterling bulls will take whatever morsel Carney throws their way…    

Gold got back in the rally game yesterday with a $6 gain, but that came after the market closed! And the shiny metal has a $4 gain in the early morning trading today… One of the perks of subscribing to the Dow Theory Letters, is that I receive a weekly letter from Omar Ayales of Gold Charts R Us… Now, I’m going to give you a snippet of his letter, but if you want more, you’ll need to go www.dowtheoryletters.com and subscribe! Here’s Omar on Gold…

“Gold is holding up well in spite of the sharp dollar rise. The B decline is underway, and it’s telling us gold could possibly test the $1278 level, its 23-month MA, and still be in a solid uptrend rise.” Omar Ayales

Chuck again… I really like reading what Omar has to say each week about Gold, and I do believe you would too! He probably wouldn’t say it in so many words, but I will… If Gold moves under $1,300, you need to seriously consider scooping up more for your portfolio, I know I will!    

The Chinese renminbi has been on a downward path recently and that concerns me, for a number of reasons. But the main reason is that what we had last month was dollar down, renminbi stronger, and that’s the scenario the world would like to see more of, for it facilitates trade worldwide.  The Emerging markets are getting hammered with stronger dollar and higher interest rates in the U.S. and this weaker renminbi, for their competitiveness with exports into China aren’t working out for them… 

I think I know why China has been marking down the renminbi each night at the fixing, and that is to offset the tariffs on their exports to the U.S. I sure hope they don’t move the currency 20% lower though! And I doubt they will, they just want to take a chunk out of the tariffs bite… 

The U.S. Data Cupboard today will have the stupid CPI for April…  Yesterday, April’s PPI only showed a 0.1% increase, which was below the estimates of 0.3%… So, wholesale inflation took a hit in April, and now it’s the stupid CPI’s turn to print. Recall that in March CPI turned negative and was down -0.1%, so an uptick for April will offset March’s negative print, and that’s what I’m expecting, but who knows for sure what the BLS has on their minds?   

To recap…  Chuck may have lost a battle or two to the nasty cold, but he believes he’s won the war!  The dollar’s run appears to be ending today, as the currencies attempt to mount a rally VS the green/peachback.  Chuck goes back in time and gives you a link to a video interview he did in 2012…  And Gold seems to have stopped the bleeding today too.  

For What It’s Worth…  To end the week (for me that is) I have a very interesting piece today that Ed Steer highlighted in his letter this morning… This is about tunnels under a prison that were producing diamonds, and the whole set up, and you can find it all here: http://resourceclips.com/2018/05/08/inmates-caught-tunnelling-below-prison-were-miners-not-escapees/   

Or, here’s your snippet: “Illicit diamonds and metals, often from conflict sources, plague the Democratic Republic of Congo’s mineral-rich reputation. But in a new twist on illegal mining, authorities have discovered a covert diamond operation run by prisoners right underneath their prison. And while the country’s notorious conflict operations often use forced labour, this mine was popular enough with its workers to retain some of them after their sentences finished.

The mine was discovered under the Osio Prison in the country’s north, DRC radio Okapi reported. A raid found over 30 people, including a prison guard, working underground or toiling in their cells at mining-related tasks.

Some prisoners had refused to leave the institution after finishing their sentences. Non-prisoners built temporary homes nearby to join the operation.”   

Chuck Again…. This sounds like a plot in a movie doesn’t it? You can’t make this stuff up! I thought this was very interesting and different for you today…   

Currencies today 5/10/18… American Style: A$ .7488, kiwi .6930, C$ .74, euro 1.1885, sterling 1.3570, Swiss $1.0029, … European Style: rand 12.3830, krone 8.0492, SEK 8.6861, forint 264.36, zloty 35678, koruna 21.4630, RUB 63.22, yen 109.67, sing 1.34, HKD 7.8496, INR 67.26, China 6.3657, peso 19.40, BRL 3.5776, Dollar Index 92.91, Oil $71.51, 10yr 2.97%, Silver $16.64, Platinum $919.10, Palladium $982.20, and Gold… $1,317.30

That’s it for today…  I wonder what I’ll do all day today here, all by myself? Well, the first order of business is to go back to sleep, I didn’t sleep well last night, and I have some making up to do… My beloved Cardinals are in San Diego for the next 4 games, of which I’ll only see one on Sunday. Those games out there start way too late for me! The weather is warmer now, finally, and I spent some time outside yesterday soaking up some vitamin D! I traded emails with my former colleague, and friend, Jen, yesterday, man she was full of questions for me!  Jen sat to the right of me on the trading desk for a long time. So, we had some catching up to do! Foghat takes us to the finish line today with their iconic rock song: Slow Ride…  I recall when I was on the trading desk and Mike Meyer was too, and this song would come on, and we would immediately begin to talk about the Hardee’s commercial that featured this song… Ahh memories… OK, you’ve got to go out and make this a Tub Thumpin’ Thursday, and carry that over to a Fantastico Friday tomorrow!    And please remember to Be Good To Yourself!   

Chuck Butler