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Chuck Butler’s: A Pfennig For Your Thoughts  

 January 3, 2018  

* Currencies can’t hold onto gains… 

* But Gold rallies! 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts     

January 2, 2018  

* Going back to 2001… 

* Palladium is star performer for 2017!

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

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

Chuck Butler‏ 
@ChuckOButlerJr

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts

December 27, 2017

* All Three Anti-dollar assets rally!

* Kicking the can down the road again… 

* Tax Bill is ready to put in place… 

Good Day…  And a Wonderful Wednesday to you! I hope your Christmas celebration was grand, mine was! And yesterday was Kathy’s birthday. We were celebrated out, and spent a quiet night at home. Alex has been here with us for the weekend, for now, it’s nice that he’s here. Gerry & the Pacemakers greet me this morning with their 60’s hit song: Ferry Cross the Mersey… I used to sing that song to Alex when he was a baby to help him fall asleep…  That was 22 years ago, and the song was old then! HA!

Well, remember when we came back from the Thanksgiving holiday and I talked about how nice it was that the NY traders were out for a few days, as the currencies and meals rallied in their absence?  Well, so far this week, this is a rinse and repeat of those days after Thanksgiving.

The currencies, led by the Big Dog euro, have all gotten off the porch to chase the dollar down the street. Yesterday, the first day back from the Christmas holiday, saw widespread dollar selling. The euro is knock, knock, knocking on heaven’s door, no wait! The euro is knocking on the 1.19 handle this morning, and Gold found a way to carve out an $8.50 gain yesterday…

Friday, last week, I sent out a tweet, regarding the lawmakers once again, kicking the can down the road. They still don’t have a budget, and they are still playing around with a possible government shutdown. I told you when they “extended” the negotiations the last time for two weeks, that it was ridiculous to think that these guys and gals could come up with a budget in two week’s time, given they had all year up to that time to do it!

And, they didn’t! So, now we’re looking at the deadline being in two weeks… But what says that the negotiations will be finished by then? I just shake my head and wonder what it will take to bring the two sides together to make a budget? It’s a sad, sad state of affairs, if you ask me!

And this morning I came across an article on the Bloomberg that was titled: Subprime Auto Defaults Are Soaring…  Not that these Subprime Auto loans are any near the size of the problem with the subprime Home Loans back in 2007, when that meltdown began.

But yet, Consumer Confidence is soaring higher and higher with every new print… Man, this reminds me of 2000 all over again… The stock market led by the Tech stocks, was soaring, but there were all these problems going on that should have affected the stock market, but it didn’t, and Consumer Confidence was soaring back then like it is now…  And then we drove our Chevy to the levee but the levee was dry… And all the King’s horses and all the King’s Men couldn’t put the stock market back together again until all the excesses were cleaned out…

Can you imagine h9w nasty this correction will be given how high the stock market has run? OUCH! Now that’s going to leave a mark!  But a lot of pundits are waking around with egg on their faces right now, because they’ve been calling for this correction in the stock market for months now and it just hasn’t come to fruition…  I’m not putting any timeline on this thought, instead, I’m just saying that it will be nasty when it happens…

I’m already on the hook for saying that I thought the Fed’s rate hikes were over, and by now they would be talking about the reversal of their previous rate hikes… I still think it’s coming… sort of like the old 3 Dog Night song. Eli’s coming…  And as usual I’m out in front on this call, and my timing is ahead of the crowd…  I wouldn’t be a good comedian, because my timing has shown that it needs a lot of work!

The price of Oil hasn’t taken any passes on all this dollar selling, and has moved to the $49 handle. Last week’s supplies numbers were lower than expected, and that got the price of Oil moving in the right direction, and the momentum is moving in Oil’s favor right now…

So, all the anti-dollar assets, Gold, euros, Oil, are kicking some dollar tail this morning, and taking names later. It’s been awhile since I could talk about all three anti-dollar assets moving against the dollar at the same time.  As I said above, Gold carved out an $8.50 gain yesterday, and is looking ready to move past $1,300 to end the year…

I gave my grandkids some Silver coins for Christmas… Of course the coins didn’t match their legos and American Dolls, but one day… maybe when they’re going off to college, and need some dough, they’ll ask their parents for those coins, and find out that the present from me all those years ago, was something special…

Last week I was reading an article from Ted Butler (no relation that I know of) the Silver Guru, and he was talking about how JP Morgan got into the short paper trades in Silver… They inherited the business from Bear Stearns, when they bought the failing company back in 2007… Ted Butler’s thought was that the agreement to take on the short paper trades was a 10-year deal that would be expiring soon. And guess who probably has the largest holdings of physical Silver?  That’s right, JP Morgan…  Do, you see the reason they not only took over the short paper trades in Silver business but enhanced it?   Ah, said the blind man as he spit into the wind, “it’s all coming back to me now”…

Of course that’s Ted Butler’s opinion, of which I agree with wholeheartedly…  What do you think?

Well, the Tax Reform Bill did get sent to the President who signed it before Christmas.. I was shocked that it got done that quickly or so it seemed.  I’ve dived deep into the tax bill, and I just don’t see it turning around the economy like it’s billed to be… And it certainly isn’t revenue/ spending neutral like it was supposed to be. $1.8 Trillion and probably more once they get going, will be added to the National Debt in the coming years…  So, much for it being neutral, eh?  

So, it’s all finished, signed, sealed, delivered it’s yours…  Happy Days are here again, the… no wait! Let’s see what this does for us first, eh?  

There’s not much in the Data Cupboard this week for us to look forward to seeing. We will see the Consumer Confidence for the first two weeks of this month today, but besides that, it’s all non-market moving data, which is a good thing, because I’m convinced that the major players in NYC are still away, and we don’t need any wild swings going into the end of the year.  

We will see book squaring, and positions close outs going into the end of the year, but those shouldn’t cause too much volatility. So, it’s all about the currencies, Gold and Oil this week as far as I can tell, as the major players are still opening presents and filling their stomachs with pumpkin pie. 

And with that thought, it’s a good week to end early for me… Tomorrow morning is an infusion morning, so no Pfennig Tomorrow or Friday…  But check your Tweets, for you never know when I’m going to send out a Tweet! 

To recap… The U.S. lawmakers had to kick the can down the road again on Friday, as they avoided a Gov’t shutdown, but still couldn’t agree on a budget. This got the currencies and metals moving and yesterday they really took a pound of flesh from the dollar, and Chuck thinks this will be the theme for the week. All three anti-dollar assets, Gold, Oil and currencies are moving against the dollar for the first time in a while..   

For What It’s Worth… Longtime dear reader Bob, sent me this since I’ve been talking about China’s moves against the dollar for a long time he thought it played nicely in the sandbox with my previous thoughts… It’s about China’s petrol-renminbi move and can be found here: http://www.informationclearinghouse.info/48497.htm   

Or, here’s your snippet: “Petrodollars have dominated the global energy markets for more than 40 years. But now, China is looking to change that by replacing the word dollars for yuan.

Nations, of course, have tried this before since the system was set up by former US Secretary of State Henry Kissinger in tandem with the House of Saud back in 1974

Vast populations across the Middle East and Northern Africa quickly felt the consequences when Iraq’s Saddam Hussein decided to sell oil in euros. Then there was Libya’s Muammar Gaddafi’s pan-African gold dinar blueprint, which failed to create a splash in an oil barrel.

Fast forward 25 years and China is making a move to break the United States petrodollar stranglehold. The plan is to set up oil-futures trading in the yuan, which will be fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets. ”  

Chuck again… nothing new to regular Pfennig Readers, but a good recap of what’s going on… 

Currencies today 12/27/17… American Style: A$ .7770, kiwi .7075, C$ .7917, euro 1.1894, sterling 1.3410, Swiss $1.0111, … European Style: rand 12.4303, krone 8.2926, SEK 8.2993, forint 261.41, zloty 3.5221, koruna 21.7173, RUB 57.82, yen 113.23, sing 1.3394, HKD 7.8146, INR 63.98, China 6.5448, peso 19.78, BRL 3.3248, Dollar Index 93.04, Oil $59.45, 10-year 2.47%, Silver $16.66, Platinum $922.75, Palladium $1,057.90, and Gold… $1,289.10  

That’s it for today, this week, and this year! Yes, when I come back next week it will be 2018! I’m getting around much better these days and the pain has, not gone away, but has weakened… YAHOO!  I heard from some longtime friends over the weekend.. Ed, and Jack, and Lauren, and Suzanne, and I can’t forget about Kathy G! Now, please be careful this weekend going out and about… Kathy’s dad used to call New Year’s Eve, “amateur’s night”…  And let’s all think a lot about how to make 2018, a better year…  I’m so ready for 2017 to end, I had some major steps backward with my health in 2017, and 2018 had better be better or I’ll not be here next year at this time! I’m just saying…  Steely Dan takes us to the finish line today with their song: Aja…  from my fave Steely Dan album of the same name…  I hope you have a Wonderful Wednesday, and fun filled New Year’s Eve, and Be Good To Yourself!  

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

December 25, 2017   

Good Day… And Merry Christmas, or a Happy holiday for those of you who don’t celebrate Christmas…  Here’s the annual Christmas letter, it’s not as long as usual, as I don’t have colleagues to acknowledge any longer…  So, enjoy, and may the light of faith and the warmth of heart be your gifts this year… 

T’was the morning of Christmas Eve
And as usual I had something up my sleeve
It would be another Christmas letter
Longtime readers know there’s nothing better!
The year has brought many changes for me
And for the first time in 44 years…
I no longer have a “job to go to each day.
But that’s OK, I found another way
To get the Pfennig to you, and say Hurray!
Two dear friends, Pam and Mary Anne are their names
Came to the rescue , and no longer are there games
Played with the Pfennig before it goes out
And for that I have to give a BIG SHOUT!
My health took a step backward this year
But with all the dear readers / friends prayers
I give a big Cheer!
My little buddy, Alex, who used to sit on my lap
And help me write, is now working toward a doctorate
All I can do is clap…
Oldest son Andrew has made a name for himself coaching his sports
Water polo and swimming, now that’s quite an art!
Darling daughter Dawn is just as darling as ever
I still recall her and I dancing at her wedding to
The way you look tonight!
I have 3 grandkids and I adore them all
But Delaney Grace has my heart, all wrapped up in ball.
Braden and Everett are 6 months apart, but are real fun
When they get together, they are terror under the sun!
So, I miss my colleagues and would call them out by name each year
But now I’ll just skip over that part, before it brings a tear.
Each year, in this letter, I hope and pray
For calmer heads to figure out this
Growing Debt, that some still say
Makes no difference, but I say no way!
Mr good friend, the Great Mogambo Guru says
We’re all freakin’ doomed, and I say we had better
Do something before the debt goes Boom, Boom!
But, it’s Christmas, and it’s time to be nice
So, with that I’ll say…
Merry Christmas to all and to all A Good Night!

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

December 20, 2017 

* Currencies & metals trade in tight ranges

* krona is best performer overnight!

* A special treat awaits you in the letter today… 

Good Day… And a Wonderful Wednesday to you! Tomorrow I start my traditional winter vacation, albeit a shortened version of it, as I plan to be back, writing again next Wednesday. It’s Christmas time and no one wants to be working, I can tell you that from years of being in an office, before I had the seniority to take vacation at this time of year. This is going to be a short-n-sweet Pfennig today too, as I’m busy as a bee today with appointments, etc.  So, since it’s going to be a short one, I had better get to the meat of the letter, eh? Jimmy Cliff greets me this morning with his song: Hello Sunshine… Which is exactly what I would like to see today, instead of these steel gray skies…   

The action in the currencies and metals are allowing me to print a short-n-sweet letter today, as there’s just nothing going on, and the movements are so small it’s as if they are playing a part in the new movie: Downsizing…  The Big mover overnight is the Swedish krona, as krona traders and investors took the notice by the Riksbank (Sweden’s Central Bank) that they were ending their bond buying that began 3 years ago, as an indication that they needed to buy krona. And buy it they did! 

But, I think calmer heads will enter the picture soon, and some profit taking  will begin, as the Riksbank didn’t exactly go “all-in” on ending their bond buying program, saying that they would reinvest maturities all next year, and probably into 2019…  So, just like we did here in the U.S. for a couple of years, when we did a bond buying ending-lite…  

Trading ranges in the other currencies are very tight… Yesterday, for instance the euro was 1.1820, and today it’s 1.1845, and the same can be said for the metals, as Gold lost a whopping 60-cents, and Silver lost 1-cent! And then the Dollar Index yesterday was 93.58, and this morning it’s 93.44…  And to take one day further back, on our Marvelous Monday the Dollar Index was 93.69…   I told you on Monday that this week could yield some volatility with the senior traders heading home for some homemade pumpkin pie, but that volatility just hasn’t materialized, but we still have 3 trading days, including today, this week, so don’t write off that scenario just yet…   

And besides, I’ll be “gone” Thursday and Friday this week, and as they used to say on the trading desk, “When Chuck is away, the currencies rally”..   Longtime readers know that I like to send out a Christmas poem on Christmas Eve, so look for that in your mailbox this Sunday… I’ve working on the poem this year, and I have to say that it gets more difficult every year to come up with something different…  I had a dear reader send me her own version of a Christmas poem mimicking T’was The Night Before Christmas last year that was just AWESOME!   And she already sent me this year’s effort, which is just as good as last year’s…  She’s allowed me to share it with you all, so that’s how I’m going to finish the Pfennig today… 

I was putting together my weekly letter for the Dow Theory Letters that goes out on Thursdays, yesterday, and tried like hell to keep the letter from getting down and dirty, given what’s going on, and that it’s Christmas time…  And I’m going to do that here too… No beating on the twits and dolts that keep spending money we don’t have. Or anything else like that… in fact, I think I’ll go to my dear reader’s Christmas poem right now, and then sign off for the week…  here you go, I hope you enjoy it like I did! 

On the night before Christmas

As I sat in my chair

I was thinking of memories of this past year.

Changes were many

That opened new doors.

Should I step through them

Or should I ignore?

One story was ending

Leaving some true friends behind.

They’d carry on working

The work I’d defined.

The future was pending

Oh what should I do?

My readers would miss me

And I sat in a stew.

Along came some sisters

That were quite the gurus.

Financial advisors

For many, not few.

I considered my options

And now was my time.

To semi-retire

And write things on my mind.

My schedule is flexible

The Adens are great.

The currencies are slow

Not quick on the take.

The children are older

All grown and a blast.

My wife is as beautiful

As she was in the past.

I love my music

My guitar and my songs.

BBQ cookouts

Are where I belong.

I’m as feisty as ever

And I feel mentally strong.

My readers and friends

Keep me moving along.

So as I sit here

And reflect on this year.

I know that I’m blessed

And I’ll keep my good cheer. 

To Recap… The currencies and metals are in very tight trading ranges and the volatility that I told you might come to fruition this week, is nowhere to be seen. Sweden’s Riksbank announced a semi-end to their bond buying program and the krona soared.  Gold lost 60-cents on the day, but is up $4 in the early trading today, and Chuck gave us his kinder, gentler self for the Christmas week today…    There will be no FWIW today, as the dear reader’s poem will act as the FWIW for today! 

Currencies today 12/20/17… American Style: A$ .7679, kiwi .6980, C$ .7785, euro 1.1845, sterling 1.3410, Swiss $ 1.0124, … European Style: rand 12.6705, krone 8.3272, SEK 8.3635, forint 263.90, zloty 3.5480, koruna 21.6725, RUB 58.66, yen 113.23, sing 1.3455, HKD 7.8242, INR 63.94, China 6.6068, peso 19.24, BRL 3.2914, Dollar Index 93.44, Oil $57.78, 10-year 2.48%, Silver $16.25, Platinum $919.98, Palladium $1,035.38, and Gold… $1,268.50    

That’s it for today… and this week… I hope you have a blessed Christmas, and hope that you’re not offended by me using the Merry Christmas saying instead of Happy Holidays…  My beloved Missouri Tigers eked out a win last night in basketball.. And Kathy came home last night, after being gone for 10 days… And the house is all lit up again! YAHOO! I’m listening to Pandora’s smooth Jazz Christmas station, and their playing a guitar solo version of It Came Upon A Midnight Clear… I wish I would have learned to play guitar like that! Oh well, too late to teach an old dog new tricks, right?  So, Merry Christmas to everyone, I hope you get to spend time with family and friends, and that the spirit of the season fills you up… Now go out and make this a Wonderful Wednesday, and Be Good To Yourself!  

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts    

December 19, 2017  

* Currencies make small moves… 

* S. African rand soars on election results…

* More problems for Toys “R” Us

Good Day…  And a Tom Terrific Tuesday to you!  Well, I’m back to being later this morning, sorry… But when I can get sleep without alarms going off to tell it’s time for another antibiotic infusion, I take the opportunity and run with it! HA! That’s funny sight, me running!  In the great Eagles song, Desperado, they sing about how the sky won’t snow and the sun won’t shine… That describes the past two days around here, to a T! If the sky is going to look like this it might as well snow! Of course I say that now, because I’m stuck at home and don’t have to go out in it!  Seals and Crofts greet me this morning with their song: Summer Breeze…  Now doesn’t that sound good right about now?  

The potential wild swings in the currencies and metals this week, didn’t exactly get off to a strong start yesterday, as there just wasn’t much conviction to move either of these two assets.  Gold did gain $6 and change on the day, but $6 of that was in the early morning trading, so the rest of day only yielded some pocket change…  

The dollar wasn’t able to gain any ground on the day, and the euro climbed back above the 1.18 handle..  The euro alternative currencies like the Hungarian forint, Polish zloty, and Czech koruna all had strong moves on the day, and to me that’s always an indicator of a run on the dollar, but… these thee, that I coined the phrase and called them “Euro-Wannabes” about 15 years ago, need to add to those gains for their moves to be considered serious..  

Aussie and kiwi held their gains from the past couple of trading sessions throughout the overnight market sessions, and look to add to those previous attained gains. Remember what I kept telling you months ago about how the Reserve Bank of New Zealand (RBNZ) had indicated that they would begin to hike rates in 2018, but the markets weren’t paying attention, and it gave us  investors an opportunity to buy “ahead of the markets”, which wasn’t something that we got to do very often… 

Kiwi has seen a recent bout of selling, because of the narrowing rate advantage VS the green/peachback, but if the RBNZ is actually going to begin to hike rates in 2018, and we’re now within a fortnight of turning the calendar to 2018, the focus shifts to kiwi…  

I was all prepared to talk about the positive move in the S. African rand yesterday, and then got to the end of the letter, and well, forgot it! UGH! I was prepared to tell you about how the rand had rallied nicely ahead of the general election for a new leader of the ruling party. Seems traders and investors were bullish that their candidate, Cyril Ramaphosa, would win the election VS the current leader’s wife.  I don’t have to tell you that this was really going out on a limb, as the polls showed the election to be quite close.  But you have to give those taking positions in rands credit for being so bold… Some might say, That’s stupid Charlie Brown…  But they made a call and put their money behind it… I’ll give them credit for that!  

And…  It paid of for them, as Ramaphosa won the election and is now sitting pretty to be the next President of S. Africa… And the rand continued to book gains on the news.  I’ve never been a fan of the rand, as it is quite volatile. But when it’s good, it’s good, and when it’s bad, it’s bad.. I used to say that I wouldn’t touch rands with your ten foot pole! But like I said, when it’s good, it’s good…  In this case though, I would be careful, as these rallied on political gains usually don’t have legs to go very long in the race…   

Take the Indian rupee… Remember when the hoopla was all about how the rupee was going to soar on the election of Modi? But eventually, that all settled down. I did notice yesterday that the rupee had finally moved below the 64 handle… Hmmm…   

In other currencies…  I wonder what Swiss National Bank (SNB) President, Jordan, is thinking with this recent move higher in the Swiss franc?  The SNB met last week and kept everything, negative rates, and all, in place. And yesterday, Jordan reminded the markets that the SNB has no plans to remove any of the stimulus that’s in place right now.  I think that the markets have developed a deaf ear with regards to what Jordan has to say…  And that’s a bad thing for a Central Bank…    I’m just saying…  

Well, I told you above about how Gold gained $6 and change yesterday above, but forgot to tell you that the shiny metal is flat to down a few shekels in the early morning trading today…  I wonder what James Rickards is thinking right now, after his call for a Gold price reset by year end…  Hmmm…  We’re running out of days, right?   

The U.S. Data Cupboard is full of housing data early this week, but there’s something else I want to talk about here with regards to data and the economy, and that is that, Bloomberg reports that Toys “R” Us is considering closing at least 100 U.S. stores – and as many as 200 – in the face of weak holiday sales. According to Bloomberg’s sources, the store closures are coming after a sharp contraction in sales which declined 15% this Christmas-shopping season from a year earlier.  OMG!  Remember when Toys “R” Us filed Chapter 11 in September, and they told the markets that once they restructured their debt that everything would be kosher? Well, I guess not…  And during the Christmas shopping season?  

To recap…  The dollar is drifting, and some of the currencies are taking advantage of that drifting in the dollar.  The S. African rand is soaring after the markets’ choice of candidates won the election to lead the ruling party. The euro has climbed back above 1.18, and Chuck points out the moves in the euro Wannabes…  Gold gained $6 and change yesterday, and Toys “R” Us appears to be having some major problems!  

For What It’s Worth…  I found this on Ed Steer’s letter today, and thought it to be FWIW worthy. It’s about Bitcoin, so it should grab your attention…  And the article was put out by the good folks at GATA, so there’s no link to it, but I’ve got the gist of the article here:   

And here’s your snippet: “Bitcoin.com is one of the world’s largest bitcoin sites, having grown its profile thanks to the insane price surge of the cryptocurrency this year. But its co-founder and CTO, Emil Oldenburg, a Swedish native, is extremely skeptical of bitcoin’s future.

“I would say an investment in bitcoin is right now the riskiest investment you can make. There’s an extremely high risk,” he says in an interview with Swedish tech site Breakit.

“I have in fact sold all my bitcoins recently and switched to bitcoin cash,” says Oldenburg, referring to the problems with bitcoin’s high transaction costs and lead times.

“The old bitcoin network is as good as unusable.”

While buying, selling or trading in bitcoins is not an issue today, according to Oldenburg, the problems surface when bitcoin transactions are recorded on the blockchain, the digital ledger that records each transaction.

The problem centres on the limited amount of transactions per second you can make in the bitcoin network, which in turn depends on the formation of the memory “block size” that store the transactions. This, according to Oldenburg, makes for a very illiquid and unusable cryptocurrency.” 

Chuck again… Uh Oh…   

Currencies today: 12/19/17… American Style: A$ .7671, kiwi .7006, C$ .7773, euro 1.1820, sterling 1.3351, Swiss $1.0142, … European Style: rand 12.7239, krone 8.36, SEK 8.4235, forint 264.82, zloty 3.5490, koruna 21.70, RUB 58.66, yen 112.75, sing 1.3468, HKD 7.8184, INR 63.93, China 6.6128, peso 19.06, BRL 3.2909, Dollar Index 93.58, Oil $57.52, 10-year 2.42%, Silver $16.19, Platinum $915.10, Palladium $1,022.28, and Gold… $1,264.50

That’s it for today…  Well, I believe that Kathy is coming home tonight… Please don’t tell her I talked about her! So, to Jen and Christine, I made it, I survived by myself, and you didn’t think I would be able to! I even had added problems to deal with these past 10 days, but here I am!  I have been beating my head against the wall trying to think of a good present for Kathy, and I’ve got nothing! She’s one of those people that if she wants something she buys it… She doesn’t wait for birthdays, etc.   Speaking of birthdays, her birthday is the day after Christmas… Our first Christmas together, I made the mistake of buying her a present and saying, Merry Christmas and Happy Birthday.. She informed me that was not acceptable, and I’ve been good about that every since…  That was Christmas 1972… WOW! OK, The Cure takes us to the finish line today with their song: Pictures of You… And with that, it’s time to go… I hope you have a Tom Terrific Tuesday and Be Good To Yourself! 

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

December 18, 2017  

* Was Yellen holding something back?

* Kiwi begins to rally

* A possible volatile week?

Good Day… And a Marvelous Monday to you! Well, a lot has happened since I last talked to you (last Wednesday)… I had a return of the pain this past weekend, which was a wake up call to me, to slow down… It’s been 4 weeks on the antibiotics and I would have thought by now, they would have wiped out the infection, but I guess not! Christmas is in the single digits of days away now. The month sure has flown by, which is a good thing, given that it gets me closer to my winter vacation, and… my annual trek to S. Florida for the winter…    The great Dionne Warwick greets me this morning with her song: Walk On By…   

Well, the Fed did hike rates last Wednesday… The Fed Funds rate is now a whopping 1.5%!  I had a dear reader send me a note the other day, asking me if the Fed was just hiking rates so they had rates to cut when the recession hits…  This is a thought that my longtime friend John Mauldin first talked about when the Fed began hiking rates two years ago…  This whole idea of having arrows in one’s quiver for a rainy day, is just weird to me, and reminds me that the Fed Funds rate is just a rate that is arrived at because the Fed Clique says so.. It’s a willy nilly rate, that would be far better arrived at if this rate setting ability was stripped from the Fed and given to the markets…  

Janet Yellen’s press conference following the rate announcement last week, was a non-event…  She did indicate that 3 more rate hikes are on the docket for 2018, but failed to mention that she will not be at the helm in 2018 past February, and therefore there are questions about those 3 rate hikes in 2018…The Fed could very well ignore another inflation shortfall in 2018 and keep  the projection of three rate hikes.  As long as they can continue to explain inflation weakness as temporary and continue the rhetoric that they see an inflation “down the road”.  

I really don’t think that will end up being the Fed’s concern in 2018, the lack of inflation, that is… Wage inflation is about to go hog wild in my humble opinion, which could be wrong of course, but it’s what I’m seeing and hearing…  

So, the dollar should have taken off for higher ground on Wednesday after the rate hike, right? Well, not if you were paying attention in class last Wednesday when I said that the rate hike had all been priced in, and the only thing that would give the dollar some love is a hawkish press conference, and that really didn’t happen, as Janet Yellen  sounded as if she was “holding back” her thoughts… 

The dollar, got sold on Wednesday afternoon and into Thursday, but by Friday the selling had dissipated, and we were back to range trading in the currencies. The euro found its way to the 1.18 handle again, only to lose in profit taking on Friday, and a negative reaction to the European Central Bank’s (ECB) meeting on Thursday morning, when ECB President, Mario Draghi, told the markets that while the ECB may be unwinding its balance sheet, it reserves the right to stop the unwinding and begin adding to the balance sheet again, should the economy stumble. 

That gave mixed messages to the markets and euro traders, and traders don’t like mixed messages, and brought the euro back below 1.18, where it trades this morning.  I guess Draghi had to say what he had to say, to be fair and balanced, but there comes a time that one has to make a stand… When will that come for Draghi?  I don’t know the answer to that, but when it does happen, that’s when the euro will once again establish its ability to gain VS the dollar.   Again, that’s my opinion, and I could be wrong…   

The New Zealand dollar / kiwi is the star performer of the past couple of trading sessions, as the currency has risen above the 70-cents handle.  The Aussie dollar (A$) couldn’t gain any traction from the Reserve Bank of Australia’s (RBA) meeting last week, but kiwi sure has found some terra firma…  As we close in on 2018, traders are reminded that this is the year that the Reserve Bank of New Zealand (RBNZ) targeted for their first rate hikes in a few years… 

Gold’s two-day rally came to a halt on Friday, as the shiny metal lost a whopping $2 and change… Gold is up over $4 in early trading this morning, but the “boys in the band” haven’t arrived at their desks yet today…  Historically (since I’ve followed the currencies and metals) this week before Christmas can prove to be quite volatile, as the senior traders have all headed to their homes in Tennessee for some homemade pumpkin pie! HA!  So, be aware of that…   

The U.S. Data Cupboard was busy last week, with PPI, the stupid CPI, Industrial Production and so on… The indication I got from the data last week was that the economy is still muddling through… For instance, Industrial Production last month was only 0.2%, when it was projected to be 0.4%… Capacity Utilization showed no gains and PPI (wholesale inflation) was much stronger at 0.4% for the month…  Wholesale Inflation feeds into consumer inflation folks… So, it’s coming… can you feel it? 

This week’s Data Cupboard will also be busy, with the first part of the week printing Housing data, and the end of the week, when no one will be around in the markets, and I’ll be on my winter vacation, we’ll see a piece of real economic data when Nov. Durable Goods and Capital Goods orders print…  

To recap…  The Fed did hike rates last week, but the dollar received no love for the move, as the rate hike was already priced in. Janet Yellen’s press conference was a non-event, which Chuck thought was strange, and that she appeared to be holding back her thoughts…  Gold’s two-day rally ended on Friday, but it has picked it back up in the early morning trading today, and kiwi is the star performer of the past few trading sessions… 

For What It’s Worth…  I’ve talked about this consumer indebtedness until I’m blue in the face and that’s not a good look for me! But when CBS News picks up on it, then the mainstream media is beginning to take notice… So, this article can be found here: https://www.cbsnews.com/news/the-united-states-of-indebted-america/  

Or, here’s your snippet:”By many measures, the American economy is booming. Yet that’s not always translating into stronger financial health for a large share of US consumers.

One-third of Americans are weighed down by overdue debt, meaning their outstanding payments are in arrears and have been handed off to debt collectors, according to new research from The Urban Institute. That’s not a healthy situation for households because overdue debt can lower one’s credit score, making it harder to finance purchases such as a home or car while also making it more expensive to borrow money. 

The problem is worse in some regions of the country, especially those where health insurance coverage is sparser, incomes are lower and the share of nonwhite households is higher, according to the Urban Institute’s data. Almost one in five households have medical debt in collections, a sign of how many Americans struggle with the cost of health care, including those insurance. 

That’s not only a personal challenge but a community issue because those indebted households may struggle to pay their property taxes or rent on time.”   

Chuck again…  Yes, as I’ve been saying, for months now, the U.S. consumer is in debt up to their eyeballs, and they just keep taking on more… Ugh! 

Currencies today 12/18/17… American Style: A$ .7662, kiwi .7006, C$ .7767, euro 1.1791, sterling 1.3360, Swiss $ 1.0120, … European Style: rand 12.8495, krone 8.3557, SEK 8.4522, forint 265.93, zloty 3.5685, koruna 21.79, RUB 58.80, yen 112.53, sing 1.3483, HKD 7.8168, INR 64.12, China 6.6097, peso 19.06, BRL 3.2934, Dollar Index 93.69, Oil $57.53, 10yr 2.38%, Silver $16.14, Platinum $900.60, Palladium $1,016.94, and Gold… $1,261.70   

That’s it for today… Yesterday was a former colleague and good friend’s birthday… Happy Birthday Jen!  And Ty Keough also celebrated a birthday this past weekend! Thursday night, good friend Mike Kettler brought me my dinner (gumbo, that was yummy!) and Saturday, oldest son, Andrew brought me lunch…  I ventured out for a short trip yesterday.. Very adventurous! HA!  Alrighty then… Tradition holds that I start my winter vacation on the 17th.. But since I’ve missed so much time recently, I decided to cut back on that time away, by starting my vacation on Thursday this week… So, you get me for two more days! HA!  Alrighty then I’ve got things to do this morning before the visiting nurse shows up… Ambrosia takes us to the finish line today with their song: How Much I Feel…  ( this song was popular when we lived in Des Moines, Iowa)  I hope you have a Marvelous Monday, and Be Good To Yourself!  

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

December 13, 2017 

* What will Yellen say today? 

* Dollar backs off for a day… 

* Chuck wants to be a reporter? 

Good Day… And a Wonderful Wednesday to you! Well, looky here! The Pfennig at the normal time! YAHOO! Well, close to normal time that is…  I figured that since this is the last Pfennig this week, that I had better get it out closer to normal time, to leave that thought on your mind as we go to the weekend.. HA!  Yes, tomorrow is an infusion day, and it’s scheduled quite early in the morning, so no Pfennig tomorrow or Friday, on infusion confusion day…  Tyrone Davis greets me this morning with his song: Can I Change My Mind…    

The Fed members will put away the board games today and get down to brass tacks regarding the rate hike that everyone and their brother expects this afternoon. I would think that the rate hike is already all price in, but what isn’t priced in is the press conference that outgoing Fed Chair, Janet Yellen will hold following the rate announcement…  

Man would I love to be a member of the press that got to cover the press conference, as I would be the only one brave enough to stand up and ask her, “Why did you think it was prudent to hike rates again when your inflation target hasn’t been met, and the country is in peril regarding the possibility of a government shutdown next week?”   I would then sit down and probably hear her say…  

“thank you for your questions, but we continue to see inflation rising and want to be ahead of the curve with these rate hikes. And the Fed can’t be held hostage by what the lawmakers do or don’t do, they’ve made life difficult for Fed members with their deficit spending, but have you ever heard us complain?”     And the markets would all give her a standing ovation, because, well, they are star struck with the Fed…  And I would just sit there shaking my head in disbelief of this scenario…     

OK,  let’s get back to reality here… The dollar has taken another breather, and the currencies were able to hold steady Eddie, albeit at lower levels yesterday, and through the overnight markets… And that’s the reason I believe the Fed rate hike is all priced in…    But if Yellen decides to go all hawkish in her last press conference as Fed Chair, and talk about multiple rate hikes in 2018, the dollar could very easily get back on the rally horse this afternoon…  

The European Central Bank (ECB) meets tomorrow, and I really think that soon the focus on Central Bank meetings is going to shift to the ECB meetings, for in 2018, there will be major moves in monetary policy coming from the ECB, as the Eurozone economy continues to improve for all parties and not just for Germany.  In the FWIW section today, I have a Bloomberg article about why the Big Banks are calling for another bad year for the dollar, based on this thought about the ECB and the Eurozone economy…  So, you won’t want to miss that!   

The other three Central Banks that I told you on Monday would meet this week, the Bank of England (BOE), Norway’s Norges Bank, and the Bank of Japan (BOJ) will follow the ECB’s lead tomorrow and let everyone know that they too are remaining steady Eddie with their policies for now…  As I said on Monday the wild card here is the ECB, as ECB President Draghi could either go all RAMBO on us with hawkish talk about monetary policy, or he would be a real lamb, and talk about the need to keep things steady Eddie just a bit longer, which is what I think he’ll do…    

The antipodean currencies of Australia and New Zealand always seem to be able to carve out some small gains whenever the dollar backs off and yesterday was no different for the two. Makes you get all warm and fuzzy inside thinking about how these two could potentially take off for higher ground when the strong dollar trend finally gives up… 

I saw and article yesterday that Lola aka Goldman Sachs were really touting commodities…  That pretty much tells you that commodities will rally, given that whatever Lola wants, Lola gets, right?  Hey! I have no problems with this call by Lola, for I too believe that commodities are gearing up for a nice bull run in 2018, as inflation returns to the countries of the world…  Shoot Rudy! We might even see inflation rise in Japan in 2018! Now that would be something to see, right?  

Well, Gold didn’t lose ground yesterday, and the shiny metal  had that going for it… My friend, Ed Steer, continues to have website troubles, but for those of us who paid attention to my calls in the past and signed up with Ed Steer, you get his daily email and don’t need to go to the website!   Well, I very rarely quote Ed, so I thought for today’s discussion on Gold, his thoughts this morning would be great! So, here’s Ed! “Gold finished the Tuesday session in New York at $1,244.00 spot — and up $2.40 on the day. For the second day in a row we’ve had either a new intraday low set, or new low close for this move down — and net volume has been relatively quiet. That was the case again yesterday, as it checked in at something under 206,000 contracts.” – Ed Steer        

The U.S. Data Cupboard had the November PPI (wholesale inflation) which I told you yesterday that I thought we would see a rise in, and we did as Nov. PPI printed at 0.4%, the fastest monthly rise in a month of Sundays.  The Federal Budget / Deficit was greater than expected… What else is new?  And now we’re going to pass a tax bill that adds $1.8 Trillion to the national debt? When will all this madness stop? Oh, I know the answer, please call on me Mr. Kotter!  

Today’s Data Cupboard has the stupid CPI and of course the FOMC rate announcement this afternoon… I love it though, that the stupid CPI will print this morning, and show inflation below the Fed’s target rate, and then this afternoon the Fed will ignore that, and hike rates… 

To recap… It’s all about the Fed rate announcement this afternoon, and the press conference that will follow the rate announcement… What will Janet Yellen say?  The markets are waiting with anticipation like kids on Christmas Eve…   The dollar has taken a breather, and it will all depend on what Yellen says that decides whether the dollar gets back on the rally horse this afternoon, or not…   

For What It’s Worth… Well this was pre-billed above so with no further ado, here the article on Bloomberg regarding the dollar’s outlook for 2018… https://www.bloomberg.com/news/articles/2017-12-12/after-stunning-rout-traders-see-no-end-to-dollar-pain-in-2018  

Or, here’s your snippet: “For the almighty dollar, 2017 has been nothing short of abysmal, 2018 might be even worse.”

Chuck again… Sorry but the cut-n-paste feature won’t work with Bloomberg articles, so you have to click on the link above to read the article…  Crazy technology… Sometimes I wish things wouldn’t change…    

Currencies today 12/13/17… American Style: A$ .7567, kiwi .6946, C$ .7777, euro 1.1740, sterling 1.3357, Swiss $1.0082, … European Style: rand 13.6193, krone 8.36, SEK 8.4433, forint 267.65, zloty 3.59, koruna 21.8410, RUB 58.99, yen 113.30, sing 1.3525, HKD 7.8058, INR 64.41, China 6.6189, peso 19.17, BRL 3.3096, Dollar Index 94.03, Oil $57.45, 10yr 2.41%, Silver $15.72, Platinum $876.06, Palladium $1,011.13, and Gold… $1,243.30   

That’ it for today… and this week…  Friday will mark my sister, Terri’s, birthday… December 15th, used to be the day each year that my dad would bring home the Christmas Tree…  great memories! The injury bug has hit our Blues, and the names on the injured list are some of the best players we have, so it was not a surprise to see them lose last night…  The St. Louis U Billikens stopped their losing streak with a win VS Murray State in basketball last night…  Well… I’m halfway through the 6 weeks of this pain of antibiotics every 6 hours…  I told someone that it was like having a baby in the house again, getting up every 3-4 hours… UGH! But, like I said I’m halfway through, so I’ve got that going for me! No college football this weekend, I guess I’ll have to switch to college basketball…   The late, Great, Leon Russell takes us to the finish line today with his song: Back To The Island… Listen to that one, and you’ll fall in love with his music…  And with that, I hope you have Wonderful Wednesday, and Be Good To Yourself!   

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

December 12, 2017  

* Dollar resumes its rally…

* An Engineered takedown?

* A short-n-sweet Pfennig today… 

Good Day… And a Tom Terrific Tuesday to you! Another day, and another late edition of the Pfennig… UGH! I don’t know where the mornings go any longer… Instead  of me getting up and making my way to the writing desk and my laptop, I get up and begin the process of giving myself antibiotics through a PICC-line… Sound easy, and it is, but it’s time consuming, and before I know it, the morning is almost gone, and I haven’t gotten the Pfennig out yet! UGH!  Today marks the halfway mark of the 6 weeks that I’m scheduled to doing this, so I ask that you stay with me for 3 more weeks, and then things should be back to normal… Maybe…  ’cause you never know!   Robin Trower greets me today with his song: Bridge of Sighs…  

I don’t like doing this, but given the lack of news, and the tardiness of the Pfennig, this will be a short-n-sweet edition today.

Well… The board games have been taken off the shelves at the Eccles Building, and the Fed members are busing playing Sorry, Battleship, and Monopoly today. Longtime readers know that I’ve kidded about this for years, and it all started when in an interview, I was asked, what I thought the Fed members were talking about for two days?   I replied, that they must be playing board games, and I can hear one of them saying now, “by Joe, you’ve sunk my battleship”!  

So, today begins the two-day FOMC meeting, that will culminate in a rate hike tomorrow afternoon… I’ve put my tail between my legs on this one folks… I still think it would be the prudent thing to do, to bypass the rate hike now, and wait to see what the lawmakers do about a budget. But since when does the Fed do the prudent thing? 

The “boys in the band” have used this market thinking that a rate hike is in the cards tomorrow, to pile on the short paper trades, so much that now real Gold and Silver investors are panicking and selling… Don’t do that! Do not panic! If you need to sell, then sell, but don’t panic!  This is just an engineered take down of Gold & Silver to test the managed money holders’ resolve…  Gold lost nearly $7 yesterday and is down another $7 today… 

But, here’s the thing that bugs me… yesterday’s low came in the after markets trading… The “boys in the band” are really getting brazen with their trading, folks, and just like the criminals that Elliot Ness used to chase on TV years ago, once they become cocky, they expose themselves, and get caught… We can only hope that someone with some intestinal fortitude, stands up and says, “This is a crock!” “And I’m not going to stand for it any longer!”   

Well,  yesterday I told you that I thought the dollar rally would resume again any day, after taking a two-day breather, and in the overnight markets that’s what happened, but the move isn’t really BIG at this point, but it sure feels like it’s going to burst out soon…  The Dollar Index  had moved over the 94 handle to 94.19 this morning, yesterday it was 93.88, and last week, it was in the low 93 handle before all this dollar buying began. 

And I really don’t have much more to say about that today… I could go on and on about how it’s really not a smart thing to do to hike rates when you want inflation to rise, but I’ve done that many times in the past, so I’ll just leave you with that thought once again today… 

And the Data Cupboard isn’t giving us any clues or ideas as to where the currencies should be trading. Yesterday’s Cupboard was bare, and today’s only has the Federal Budget, which we already know will be a deficit, and PPI (wholesale inflation), which I expect to be a little stronger than the average bear.  But other than that, there are no real economic data prints, as they data schedulers have cleared the deck for the Fed announcement tomorrow.   

To recap…  The dollar has the conn again this morning, and everyone is of the belief that the Fed will hike rates tomorrow afternoon… Chuck points out that it’s not the prudent thing to do right now, but has given up the ghost on his holding out on no rate hike… UGH!  Gold & Silver are seeing engineered takedowns, in Chuck’s opinion, so don’t panic!  

Before I head to the Big Finish today, I wanted to talk about this… I was very bummed out when my favorite Cardinals player that I got to see his entire career, Ted Simmons missed the Hall of Fame election by one vote! Ted and I worked together (in his offseason) back at Mark Twain Bank in 1981.. What a great guy! And at that point he had been traded to the Brewers by Whitey Herzog. I was never going to forgive Whitey for that move, but then he won the World Series in 1982, against the Brewers, and while not all was forgiven, some was… But if you ever want to compare Ted Simmons’ stats VS other catchers that are in the HOF, go ahead, and you’ll be amazed that this man is not in the HOF… It’s shame, and a black mark on the HOF committee! 

For What It’s Worth…  I haven’t really had the opportunity yet to really dive into the Tax Reform Bill, but my long time friend, Bill Bonner did, and here’s his take on it, which can be found here: https://bonnerandpartners.com/the-gop-tax-bill-is-a-deep-state-scam/  

Or, here’s your snippet: “But the broad brushstrokes are so obvious, they must be visible from outer space: It is a scam.

Its real effect will be to enable the transfer of trillions of dollars more from the productive economy to the zombies, cronies, and Deep State insiders… leaving slower real economic growth and leaving most people poorer.

Yes, some people will benefit in the short run. But most will suffer as the years pass… as the tax bill will add $1.8 trillion or more to U.S. debt.

Then, with lower tax revenues and rising expenses from 70 million retiring baby boomers, the country will go broke.
Could foreigners do that? Unh-unh… This is a Made in America disaster.” 

Chuck again… Thanks to Bill for doing some of my work for me! HA!  But $1.8 Trillion to our national debt? I told you that I would find that the Bill was not revenue/ debt neutral as it was billed to be!   

Currencies today 12/12/17… American Style: A$ .7550, kiwi .6928, C$ .7765, euro 1.1727, sterling 1.3318, Swiss $1.0078, … European Style: rand 13.7016, krone 8.3651, SEK 8.4418, forint 267.75, zloty 3.5917, koruna 21.8575, RUB 59.08, yen 113.65, sing 1.3534, HKD 7.8063, INR 64.50, China 6.6156, peso 19.18, BRL 3.2916, Dollar Index 94.19, Oil $57.69, 10-year 2.41%, Silver $15.69, Platinum $875.69, Palladium $1,008.88, and Gold… $1,008.88  

That’s it for today… Well, the doc says I’m doing great! took the stitches out, and sent me on my way! Thanks to darling daughter Dawn for taking me and then having to wait through the whole process… I’ve been given the green light to drive now, but getting in and out of a car is still a major ordeal for me, so for now, I think I’ll stay put… Alex stopped by last night to check on me… I’m so proud of him, he has really grown into a great  person. I now have three adult children who I can’t say enough good things about each of them…  I’m proud of all of them… OK, enough of the sappy stuff, Buddy Miles takes us to the finish line today with his redo of the Neil Young song: Down By The River…   Thanks for reading the Pfennig, even when it’s so late! I hope you have a Tom Terrific Tuesday, and Be Good To Yourself! 

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

December 11, 2017

* A Big week for Central Banks

* Dollar rally takes a breather

* All by myself… again… 

Good day… And A Marvelous Monday, to you! Well, this is quite late today, and I apologize for that… It’s a very busy morning for me, with the weekly nurse’s visit, physical rehab, and a follow up visit to the surgeon’s office. So, this is the first chance I’ve had to sit down and write… I’ll get my stitches out today, and I’ve been walking a bit with my cane this past weekend, so things are looking up! Kathy headed south on Saturday, so I’m all by myself.. again… No biggie… as I can do just about everything myself now…  The Atlanta Rhythm Section (ARS) greets me this morning with their song: So Into You…   

Well, once again all the dollar buying stopped on Friday, marking the second day last week that we had multiple days of a dollar rally, stopped, only to be picked up again a day or so later. So, if that pattern remains in place, look for more dollar buying by tomorrow…  This is Fed Week, and so there will be lots of gyrations back and forth with the dollar as the question of will she or won’t she hike rates with the country facing a possible shutdown will be bantered about.  

There was an explosion this morning in Manhattan, I’m sure that this has everyone there on pins and needles, as it should, and their thoughts are not with the markets right now…  So, let’s keep that in mind, and hope that no one was harmed. There’s just too much killing in this country, and that’s all I’m going to say about that…   

There’s not much going on around the world, markets or data wise, as this week is all set up for the Fed’s FOMC Meeting that will start tomorrow, and end on Wednesday with a rate announcement at 1 PM CT…  Friday, saw the Jobs Jamboree print an increase of 228,000 jobs for November… You may recall me telling you the previous day that the ADP Employment Report said 190,000 jobs were created in November… So, where did the 38,000 more jobs come from that the BLS said were created?  Well, I guess you would have to ask them that question, as it wasn’t the Birth / Death Model for once. The BLS actually took 5,000 jobs away in November’s Birth / Death Model! Wonders never cease… At least that’s what my Mom used to tell me…   

240,000 new jobs were forecast, so the actual print didn’t meet expectations, but I don’t think that had much to do with the dollar rally fizzing out. The two things I look for in the BLS report is the Avg. Hourly Earnings, which saw a modest 0.2% increase, and the Avg. Weekly Hours, which didn’t see any movement at 34.5 hours per week… 

I’ve always told you dear reader that these were the two things we should focus on each month, and not the number of jobs, for those numbers can be hedonically adjusted to make things look good… or whatever…  These two items the hourly earnings and hour worked will give us clues to wage inflation, if it’s there or not, and from what I’ve seen in recent months, it’s just not there…  Of course inflation is everywhere else right now, as witnessed by the craziness I highlighted for you last week… If you missed class on those days, I suggest you check out the Pfennig website: www.dailypfennig.com where you can find past copies of the Pfennig…  

Well, I take that back what I said earlier about not much happening around the world, that may be the case today, but not for the rest of the week, as besides the Fed, there are four other Central Bank meeting this week…  The European Central Bank (ECB), Norway’s Norges Bank, the Swiss National Bank (SNB), and the Bank of England (BOE) all will meet this week…  To me, the most interesting meeting should come from the ECB, as we’re still waiting for details of their unwinding of their balance sheet, and to hear ECB President Draghi, talk about the need to keep rates at negative levels… UGH!  

But there won’t be any rate movements from these 4 Central Banks…  Everyone and their brother are expected the Fed to hike rates this week… That is everyone but me, but then I have hedged that by saying that IF Janet Yellen does hike rates this week, I think she will have done so, to poke the President just one more time…    I keep saying this but it just doesn’t get any traction with the media, ad no one listens to me any longer… But the Fed is hiking rates and hoping for inflation to rise at the same time… Those two things don’t mix, and the only thing the Fed is going to do is hike rates and cause the economy to go into recession…   

In the U.K. this week, they’ll see a ton of economic data, along with a BOE meeting. Add those to the ongoing BREXIT negotiations, and you could have quite the volatile week for the pound.  Please keep your arms and legs inside the car for the duration of the ride, thank you!  

In Norway, the Norwegian economy has the inflation that every other country would love to have, but having inflation isn’t the only thing weighing on the Norges Bank’s decision as to when to hike rates.. The price of Oil continues to wobble, and not like a weeble, because weebles wobble but they don’t fall down, and the price of Oil certain has shown it can fall downward! HA!  And don’t forget the fact that the krone needs the euro to be stronger to allow the krone to grab the euro’s coattails… 

I’ve already talked about the U.S. Data Cupboard from Friday with the Jobs Jamboree, but there was also the current print of the Consumer Sentiment Index, which was disappointing… The Consumer Sentiment Index, at 96.8 for preliminary December, remains elevated though continues to edge back from October’s expansion peak of 100.7… Hmmm…  Is this data telling us that Christmas retail sales isn’t going as forecast?  Maybe… 

Today’s Cupboard is basically empty, so nothing here to see, move along…  Bitcoin futures began trading today..  The craziness will now carry over to the futures market… 

And there wasn’t much movement in Gold on Friday, although there was quite a bit of trading activity. Gold gained $1.40 on the day, and is up 50-cents in early trading today… it was an ugly week for Gold last week, let’s hope that the ugliness is behind us for this week.. 

To recap…  the dollar rally that had been in place for two days ended on Friday, and we now await for it to pick up again… The Fed meets this week, and everyone expects a rate hike from the Fed even in the face of a possible Gov’t shutdown looming…  4 other Central Banks meet this week, but Chuck doesn’t expect anything from any of them, and he’s called everyone to watch out for a volatile week with the pound this week.    

For What It’s Worth… The news on the One Belt, One Road project for China has been sparse, so an update on what’s going on is what I was looking for, and found this: https://www.foreignpolicyjournal.com/2017/10/19/one-belt-one-road-china-globalization-and-the-international-oligarchy/  

Or, here’s your snippet:”Ironically, there are anti-globalists who see China, in its rivalry with the USA for geopolitical dominance, as a bulwark against globalization, to the extent of welcoming a “new Chinese century” as distinct from the “new American century” of the oddly named “neoconservatives”.[2] Some might also see China’s geopolitical expansion as a drawback for Zionism insofar as China aligns itself with Middle Eastern states antagonistic towards Israel, Syria being the primary target of Zionist anathema. Yet again, how seriously should one take China’s shadow-boxing with Israel, while conveniently insinuating itself into the Middle East, when Israel remains a primary supplier of weapons to China, including the latest U.S. technology, and have from the founding of both Israel and the People’s Republic maintained cordial relations regardless of China’s posturing in the Middle East?[3]

Globalization remains what it is whether its primary center is The City of London, New York, or Beijing. The investment bankers Goldman Sachs, Rothschild, Merrill Lynch, Chase, Citigroup, etc., do not owe prime loyalty to any super-power, nation or coalition of nations. Their forefathers were bankers to empires for centuries, then just as conscientiously helped to scuttle the very notion of “empire” when it became economically redundant.[4] If a China-led world economy offers better prospects for international investments than one led by the USA, rivalry over geopolitical interests in the South China Sea, or anywhere else, are not going to play anything other than a nuisance factor for global capital.”

Chuck again… A pretty long one, sorry, but wanted to capture the meat of the article…  

Currencies today 12/ 11/17… American Style: A$ .7528, kiwi .6915, C$ .7780, euro 1.1785, sterling 1.3365, Swiss $1.0088, … European Style: rand 13.6078, krone 8.3675, SEK 8.4887, forint 266.60, zloty 3.5673, koruna 21. 7220, RUB 59.09, yen 113.36, sing 1.3516, HKD 7.8065, INR 64.37, China 6.6187, peso 18.96, BRL 3.2899, Dollar Index 93.88, Oil $57.44, 10-year 2.37%, Silver $15.80, Platinum $885.52, Palladium $1,006.63, and Gold… $1,248.90  

That’s it for today… That was quite a thrilling Army/ Navy game on Saturday… the tradition of that whole thing is very impressive to me, and I make it a must see event each year… Our Blues have gotten out of their funk they were in, and are back to winning games again. Let’s Go Blues! Just 13 shopping days left folks.. this month is flying by, don’t you think? I hope the surgeon tells me I can drive again today, although I did cheat and drive Kathy down the road to get her car on Friday… It’s December, and it’s cold outside! BRRR…  Darling daughter Dawn will be by to pick me up and take me to the doctor today. Jerry and Everett stopped by to say hi yesterday, and Alex and friend stopped by last night…  Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Jenny Take A Ride…  And with that, it’s time to go, albeit very late!  I hope you have a Marvelous Monday, and Be Good To Yourself!  

Chuck Butler