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Rocktober 31, 2017  

* Eurozone data is mixed…

*  U.S Consumer Spending soars!

 * But is it a one and done event? 

 

Good day… And a Tom Terrific Tuesday to you! It’s Halloween! And it’s cold outside! And that means most little kids, the ones I really want to see, will have their costumes covered up with coats. UGH! Tradition has me sitting on the front porch to give out candy the Trick-or-Treaters, but the last couple of years have seen the number of Trick-or-Treaters dwindle, and so I doubt I’ll sit outside tonight…  Our kids used to bring the grandkids here to Trick-or Treat, but they have their own neighborhoods now, and so life goes on…  Am I a bit melancholy today? You bet I am!   Jack Johnson greets me this morning with his song: Posters…   

There wasn’t much movement in the currencies and metals yesterday. the U.S. Data was interesting (more on that later) but failed to give the dollar any fuel to strengthen, and so we sit here this morning trading in about the same clothes as we traded in yesterday.  Stocks even failed to make a 1% intraday move, for the first time in a month of Sundays! Gold added a couple of bucks, and that left the price Oil to carry the flag for rallying assets…   

The price of Oil traded through the $53 handle in the past 24 hours to trade this morning with a $54 handle! That’s a $2 move in the past couple of trading sessions! I told you yesterday that it appeared to be a case of traders taking the Saudi’s seriously, regarding their announcement late last week to cut Oil production even further, and that thought is still prevalent in the markets this morning.

Earlier this morning we saw some data print in the Eurozone…  Eurozone 3rd QTR GDP was 2.5%..  And CPI for September was 1.1%…  So the Eurozone is seeing economic growth across the board, but inflation is lagging still…  And so this data wasn’t able to light a fire under the euro this morning. 

Last week, somehow this slipped past me, so better to report it later than never, right?  Russia’s 3rd QTR GDP was 2.4% beating the expectations for 1.9% and bettered the previous quarter’s 2.3% print…  The Central Bank of Russia (CBR) met on Friday, and kept rates unchanged, and so, if you take these two things and add in the jump in the Oil price, then you have a Russian ruble that’s on the rally tracks!  OK, settle down Chuck, the positive move in rubles is very small, so put down the vuvuzela horn and cowbell, Chuck…  Awe, Shoot Rudy, I wanted to party!     

Speaking of cowbells, there used to be a group of parents at the water polo games for the team my son, Andrew, coaches, that would ring their cowbells whenever the my son’s team scored a goal… I found the noise they created to be obnoxious, and couldn’t wait for their kids to graduate! I hear that the state of Missouri has banned any kind of noise maker other than people’s voices and hand clapping at high school games.  Too late to have saved my ears from all that cowbell ringing!  

OK, getting back to work here  I see that the 10-year Treasury’s yield, which last week hit 2.45%, has been slipping lower again and this morning is trading at 2.37%.. Remember when I told you that the 2.45% had moved higher too fast, and I expected to see this come back down? Of course with all the supply that’s going to be hitting the bond market, from the Fed no longer buying Treasuries, and the Treasury Dept. having to issue more debt, one would think that the yield on the 10-year will be heading higher again… 

But that’s only if you don’t believe my scenario that by yearend and into next year, the Fed will be announcing another round of QE/ bond buying…  That’s my story and I’m sticking to it!  You might be wanting to ask me how I can be saying something like that, when the U.S. economy, is strong, as witnessed by the 3rd QTR GDP of 3%?  Because it’s all done with smoke and mirrors folks.. If GDP doesn’t add up to what you want to see, you just add a few items to the calculation and see what that does to the final number, and so on…   I’m not buying the strong and robust economy, and neither should you! But like the horse that you lead to water, I can’t make it drink, and I can’t make you think like me, I can only present you with the facts…  

Have you ever noticed how when Fed Chair, Janet Yellen, talks about how the economy is strong and robust, that she never gives us any details as to how she came to that decision?  I’m sure there are details that prove that to the Fed, right? Details? Come on they’re here somewhere! I saw them yesterday by the copy machine.. No, I saw them over by the candy bar dispenser… Oh, they’ve got to be here somewhere!  We’ve got to produce them, because there’s this country bumpkin in St. Louis, that wants to see them.    

Oh, stop it, Chuck! Move onto something else quick, before you lose your dear reader!   The price of Gold saw some choppy trading yesterday, but by the end of the day, the shiny metal has gained $2.80, to close at $1,276.00…  The early morning trading is pretty flat this morning, so we’ll have to wait-n-see how “the boys in the band” feel about the level for Gold & Silver this morning.   So, did you read about the apparent fake Gold 1 oz. bar that was discovered in Canada?  This whole story seems fishy to me, but here’s the link to the story should you want to read it, and decide for yourself…  http://www.zerohedge.com/news/2017-10-30/could-be-huge-gold-bar-certified-royal-canadian-mint-exposed-fake     

My friend, and former colleague, the metals guru, Tim Smith , sent me that link yesterday, and I responded to him that I hope that the two guys that supposedly discovered the fake Gold bar, are given the Gestapo interrogation because they seem to be prime suspects to me…  Hey! I’m that kind of person, always looking around the corner, or under the hood for the real story!   

The U.S. Data Cupboard saw a strong Personal Spending print for September yesterday… But I’m sure hoping the markets and the Fed realize that this was a one and done deal for spending in that it contained all the hurricane relief spending… Personal Income was up 0.4%, which was fine… And Personal Spending was up 1.0%, which if it were for “real” (and I know it’s for real, I mean spending that will continue) then you would see the Personal Consumption Expenditures rising at a fast pace… But that didn’t happen! The PCE was up just 0.1% and remains well below the Fed’s 2% target at 1.6%… And the Core PCE (minus food and gas) is only 1.3%… Retailers couldn’t raise prices during the Hurricane relief, because that just wouldn’t have the right thing to do… So, all this spending and no inflation increase? Crazy, eh? 

I read this morning that the U.S. economy hasn’t seen a month of consumer spending like this since the “Cash for Clunkers” deal… Remember that boondoggle to get consumers spending? it lasted a month… that’s it! And so too, I expect this September Spending print to last just one month…  

I was also reading this morning on the Bloomberg website an article about how local governments are stepping in to help save retail malls in order to preserve tax revenue they received from the mall. I find this to be a really dumb idea… But then I thought Cash for Clunkers was dumb too…  The government, whether it be the national or local or state, just doesn’t see the forest for the trees…  I’m just saying…   

To recap…  It was a day of plugging holes and repairing cracks in the foundations yesterday, as the dollar backed off after putting in its best week of 2017 last week. The currencies and metals hardly moved, Gold added $2.80, but that’s it… The price of Oil continued to climb higher after the Saudi’s announced they would cut Oil production further, and Russian interest rates remained unchanged on Friday, giving the ruble something to gain on.  

For What It’s Worth… I had quite a few FWIW articles to choose from this past weekend, as dear reader Bob, sent me quite a few (Thanks!)  And I found this one to be the best, given that it talks about Germany and Russia getting together, thus turning another ally of the U.S. into a Russian friend..  And you can find the article here: http://www.informationclearinghouse.info/48100.htm  

Or, here’s your snippet: “The visit to Moscow this week by German President Frank-Walter Steinmeier heralds a growing rapprochement between the two countries. That’s not just good news for bilateral business ties. It is key to unlocking the dangerous East-West crisis.

“I‘m convinced we need to resist the alienation that has grown up between our countries in recent years,” said Steinmeier at the talks with Russian President Vladimir Putin. The two leaders held wide-ranging discussions beyond narrow bilateral interests. Both reportedly exchanged views on “pressing global issues” including Syria, Ukraine, North Korea and Iran.

Putin said of his meeting with Steinmeier: “I want to voice hope that your visit will help us to make a contribution to developing our bilateral relations and strengthening our interstate ties.” The German president’s role as head of state is largely ceremonial. Formally, he doesn’t have political power, which rests with the country’s chancellor, Angela Merkel. Nevertheless, the symbolism of Steinmeier’s visit to Moscow carries enormous significance.

This week was the first visit to Russia by a German president since 2010. Steinmeier’s predecessor, Joachim Gauck who was in office from 2012 until this year, was renowned for having a “frosty” view of Russia. Under Steinmeier the relationship is not just thawing, it is warming rapidly.” 

Chuck again…  I can hear Putin saying under his breath, “can you do something about the Eurozone’s economic sanctions on us?”  With Germany being the largest economy in the Eurozone, one would think that their opinion weighs heavily on the decisions of the Eurozone, eh? but one never knows…   only the Shadow knows!  

Currencies today 10/31/17… American Style: A$ .7670, kiwi .6845, C$ .7787, euro 1.1632, sterling 1.3207, Swiss $ .9984, … European Style:   rand 14.1040, krone 8.1741, SEK 8.3717, forint 267.62, zloty 3.6518, koruna 22.0495, RUB 57.90, yen 113.25, sing 1.3615, HKD 7.80, INR 64.80, China 6.6488, peso 19.24, BRL 3.2530, Dollar Index 94.63, Oil $54.12, 10-year 2.37%, Silver $16.88, Platinum $919.32, Palladium $974.08, and Gold… $1,276.50   

That’s it for today… Boo! Did I scare you? HA!  OK, so tomorrow I’ll have some Halloween jokes for you… I still remember the one my oldest son, Andrew told when he was a kid… What do you do with  the Elephant with three balls? You walk him and pitch to the giraffe!   Had you going there, for a second didn’t I?  How about our Blues? They beat the LA Kings last night, in a battle of the two of the three best teams so far this year! I watched the whole game, and came away with new respect for Jake Allen the goalie..  We no longer have a little one to dress up for Halloween, so the day is just like any other day it seems…  Hopefully the little kids can cheer me up tonight!  And with that, Eddie Floyd takes us to the finish line today with his song: Knock On Wood..  I recall playing that song in the “Soul Wonders Revue” band I played in, with our shiny gold pants and gold shirts doing the dance steps while we played..  May, that was a long time ago!  And with that, I hope you have a Tom Terrific Tuesday, and great all Hallow’s eve..   Be Good To Yourself! (but don’t eat too much of the Halloween candy!)  

Rocktober 30, 2017  

 * 3rd QTR U.S. GDP hits 3%? 

* Huge data week with FOMC on Wednesday!

* Short positions in metals continue to be HUGE! 

 

Good day…  And a Marvelous Monday to you! I’m not “feeling it” right now, but who knows how that will go by the end of the letter! The “Big Chill” came over the St. Louis area this past weekend, and when we came home last night after eating out, you could smell the fires that had been built in fireplaces in the neighborhood…  Our Blues are on a winning streak, and my beloved Missouri Tigers have won two in a row! WOW! (of course they weren’t playing SEC teams)…  Rod Stewart greets me this morning with his song: Every Picture Tells A Story…  And Ain’t that the truth! 

The dollar had a fair day on Friday, after the first print of 3rd QTR GDP showed that the economy grew at a 3% clip…  I’m telling you right here, right now, that 3%  was only achieved using smoke and mirrors! But that’s what the Gov’t tells us, and the markets used that print as an excuse to buy dollars. 

But along the way on Friday, the dollar buying stopped, and as the news wires described it…  The dollar pared its gains for the week Friday afternoon.   However, the dollar still posted its 2nd best week of the year, last week…   It sure seems as though just when the dollar was ready to drop through psychological figures against a handful of currencies and metals that “all this stuff” came along to save it…   Let’s count the “stuff” that’s happened to reverse the dollar’s direction of a few weeks ago…    

First, we had all the saber rattling between the U.S. and N. Korea, which has quietly moved to the back burner, but to pick up where the saber rattling left off, we had Political uncertainty from both Germany and New Zealand on the same weekend, where new coalition governments had to be formed.  Then the vote in Catalonia started the state down the road of independence from Spain, and Spain doesn’t want that to happen. Everyday there’s something going on here that cuts off a slice of the euro’s value..  

And I’m not finished! Then we had the U.S. President announce his tax reform plan, that now has a chance to live given the fact that Congress finally passed a budget bill. And then on top of all those things was the announcement that the President was close to naming a new Fed Chairman to replace Janet Yellen, when her tem expires in February 2018. And the person rumored to be named Fed Chairman was John Taylor, a hawk. That got the markets thinking of additional rate hikes and bought more dollars!    

So, let’s see…  As I said above the saber rattling is sitting on a back burner right now, New Zealand has dealt with their political uncertainty, and has formed a coalition government. Catalonia is Catalonia, in the end there will be a diplomatic conclusion here…  The Tax reform is still up in the air, and now the new rumor has shifted and the new Fed Chairman could be former Fed member, Jerome Powell…  And don’t forget the dark horse here, is Kevin Warsh…  Both Powell and Warsh would be better fits for President Trump, as the President is all about cheap money..  

So, what I’m saying here is that this run for the dollar might be getting near an end…  And soon we’ll be returning to the underlying weak dollar trend, which even writing that right now, seems a little strange, given the strength of the dollar right now.  

And the U.S. Data could very well play the part of deciding which way the dollar goes this week…   The Fed meets this week on Wednesday, and will keep things unchanged, but I expect Janet Yellen to give it the old “strong and robust” description to the U.S. economy once again..  And while the House may be ready to announce the tax reform that is supposed to remake the U.S. economy, the Treasury will be issuing more debt to make up for the lack of participation from the Fed (recall the Fed us unloading Treasuries not buying new ones!)  

Of course the markets will focus on the Tax reform, and not the fact that more debt is being issued… Don’t get me wrong here, I love a tax break when I can get one, but this tax reform is not about me, you and the guy down the street that hold a garage sale every Saturday…  It’s about Corporate tax reform…  

As long as we’re on the subject of economic data, we might as well take a peek at the U.S. Data Cupboard this week, which is going to be hot and heavy all week long, starting with two of my fave data prints today, Personal Income and Spending…  And ending Friday with the Rocktober Jobs Jamboree… And with the Fed meeting in the middle of the week, we have other reports sprinkled in and that makes for a hot and heavy week of data this week!   

One of my fave economists/ analysts; Danielle DiMartino Booth, tweeted a note the other day that “Some Americans are already showing signs of maxing out on debt…Household debt — in aggregate — is above levels last seen just before the economic calamity”    I’ll have more on this in the FWIW section today…  So, be sure to stick around for that!   

The price of Oil has pushed through to the $53 handle since Friday, as Oil traders take Saudi Arabia at its word that they cut production of Oil even further… However, the Petrol Currencies haven’t been able to rally alongside the price of Oil, as the dollar surge has been too much to overcome… 

Gold finally found a bid on Friday, and gained $7 on the day to close the week at $1,273.20, which was down on the week. UGH!  The weekly chart that Ed Steer posts in his Saturday letter (www.edsteergoldandsilver.com) didn’t show any changes in the short positions that are greater in total than the amount of metals that are above ground…  For those of you keeping score at home today, for Silver, the number of days of production it would take just to match the short positions in the metal remains at 210… For Gold it’s 95… 

I continue to find this to be allowed to go on is preposterous.. And one day, something will break, and when it does…. wink, wink…  I’m hoping that the recent ruling against a HSBC FX trader for rigging the price of a currency, would give whatever number of investigative journalists out there a thought to look into metals…   But it is what it is, for now that is…

Before I head to the Big Finish today, I wanted to talk about something that I’m highlighting in my next Dow Theory Letters article… and that is this changing of the horses in the middle of the stream that the U.S. is apparently doing, regarding pointing the blame finger at Iran for 9/11, and taking it away from Saudi Arabia…  If you’re interested in my take on this and how it plays into the dollar’s value, you should go to www.dowtheoryletters.com and sign up (it costs, but just read my thoughts on something every week is worth the price of admission! HA!)

To recap… The U.S. 3rd QTR GDP printed Friday at 3% and that pushed the dollar further until Friday afternoon came along and then the dollar pared its gains, and has lost a little ground since.. Chuck goes through the list of things that suddenly appeared to help the dollar from going on a long ride on the slippery slope, and how they could all be coming to and end soon, which would put the dollar back on the underlying weak trend…  Gold gained $7 on Friday..  

For What it’s Worth… Ok, the Danielle DiMartino Book tweet on Friday got me following a link to an article on Household debt, and that article can be found here:http://www.businessinsider.com/us-consumer-debt-is-a-problem-for-the-poor-2017-10     

Or, here’s your snippet: “Rising US household net worth and lower debt levels relative to income mask sharp underlying inequalities.

“Balance sheets have become more fragile for the lower part of the income distribution,” Deutsche Bank says.

All parts of the income distribution have seen their net-worth-to-income ratio decrease — except for the wealthiest 10%.

How can the following two things be true at the same time?

Household debt — in aggregate — is above levels last seen just before the economic calamity that hit America a decade ago.

Everything is fine.

That’s a line you’ll hear from Wall Street economists, who are noticing the high debt but also telling their clients it won’t hurt.”  

Chuck again…  Some measures of income growth have slowed; the saving rate has fallen to near record-low-levels; and consumer debt continues to rise… I don’t see how this all works out favorably, do you?   

Currencies today 10/30/ 17… American Style: A$ .7677, kiwi .6855, C$ .7793, euro 1.1632, sterling 1.3157, Swiss $.9980, … European Style:   rand 14.1117, krone 8.1508, SEK 8.3457, forint 266.83, zloty 3.6450, koruna 22.0471, RUB 58.02, yen 113.60, sing 1.3633, HKD 7.7997, INR 64.88,  China 6.6503, peso 19.12, BRL 3.2444, Dollar Index 94.67, Oil $53.84, 10yr 2.40%, Silver $16.76, Platinum $920.04, Palladium $968.88, and Gold… $1,272.30    

That’s it for today…  WOW! How about that World Series Game last night? 13-12 in 10 innings!  The Astros won and lead the series 3-2, as they head back to L.A. I watched my beloved Mizzou Tigers win at U-Conn Saturday evening… All by myself!  The Tigers come home to play Florida this coming Saturday. And how about those Blues?  they really played a good game Saturday night, and are off to one of their best starts of all time!  Danielle, Dane, and Chris all stopped by my local watering hole on Friday to say hi! it was good to see them all…  I sat in the cold on Saturday and Sunday at the grandkids’ soccer games… And it was cold Saturday!  I leave for a mini-visit to S. Florida this Friday, to get away from the cold and November…  And with that it’s time to go…  The Beatles take us to the finish line today with their song: Let It Be…   I hope you have a Marvelous Monday, and Be Good To Yourself!

 

Rocktober 27, 2017   

* ECB sounds dovish, and euro gets whacked!

* Strange bedfellow gain on dollar.. francs & renminbi!

* John Mauldin sounding like Chuck?

 

Good day… And a Happy Friday to one and all!  this darn cough is driving me batty! It even wakes me up! UGH!  It’s just a cough, nothing else. I don’t feel bad, etc.  Oh well.. So be it!   No baseball last night, no Blues hockey, so I sat down and started reading, James Rickards new book: The Big Drop..  If you buy it, you’ll want to secure all the sharp objects around you before you begin reading…  Steely Dan greets me this morning with their song off the Aja album: Black Cow…   

Well, I told you yesterday that if the European Central Bank (ECB) satisfied the markets desire to see monetary stimulus end in the Eurozone, the euro would rally, and if the ECB disappointed the markets, the euro would suffer…   So, it was the latter of the two that took place yesterday with the European Central Bank announcing that they have halved its asset purchase stimulus program, to €30bn per month, for another nine months. But the ECB also left little doubt that it intends to keep buying bonds for even longer than announced today, in an attempt to get inflation…. 

I’m questioning whether the ECB wants to see the euro stronger at this point.. I’m guessing they don’t, otherwise they wouldn’t be throwing it under the bus every time the bus makes stops at the Frankfurt stop. I’m not a fan of this Central Bank stimulus stuff, never have been, and never will be, and now the ECB is holding back rate hikes in Norway and Sweden…  Whatever happened to Draghi’s “I’ll do whatever it takes to defend the euro” status?    Central Bankers… I shake my head in disgust at them, I truly do!    In fact, they tick me off so much, that I go yell at the walls whenever I read something they’ve done that equates to utter madness!   

Well, there was no need for the Bank of England (BOE) to throw pound sterling under the bus yesterday…  A very weak Retail Sales print did that for them!  Yesterday, I told you about how the 3rd QTR GDP beat the estimates, and sterling traders were dancing in the streets, but then along came reality… And this time reality bites!  This is just another nail in Mark Carney’s (BOE Gov.) rate hike coffin..   Rate hike in the U.K… My, ask me no more questions, I’ll tell you no more lies…  

So, with the euro getting sold like funnel cakes at a state fair yesterday, the rest of the currencies were being sprinkled with powdered sugar too, and Gold got whacked again. All-in-all it was an ugly day for the non-dollar assets.  And the overnight markets haven’t been any different with regards to the selling of the currencies and metals. 

There were two currencies that booked gains in the last 24 hours, and the two are strange bedfellows… Swiss francs and Chinese renminbi…  I’ve explained this franc / euro cross thing before so I won’t get into it again, but that’s what is pushing francs this morning, and I have no idea what’s on the Peoples Bank of China (PBOC) with this appreciation of the fixing overnight, after weeks of marking the renminbi down every night, they pick the night where every other currency is getting sold, and decide to reverse their course… 

I was beginning to think that the Chinese wouldn’t have to go through with a huge devaluation if they kept up the mark downs every night! 

The poor euro, every time it appears that the currency is getting ready for prime time again, it gets pulled back into the green room.  Now it has to contend with traders who aren’t so happy with the ECB’s tapering, and let’s not forget that the Catalonia things is hanging over the euro like the Sword of Damocles. I sure hope that the Catalonia and Spain diplomats can salvage a working relationship, and this doesn’t turn into a civil war… 

Considering the fact that it wasn’t that long ago that sentiment toward the dollar was sinking faster than the NFL’s TV ratings, and all things looked like the dollar was heading for a permanent stay in the woodshed…  One would have to think that this dollar buying is a temporary thing, and soon we’ll return to the underlying trend that was established earlier this year.  And if that’s so… then these are some real bargain basement prices to enter or add to currency positions… 

I was going through my emails yesterday (boy, do they sure mount up when I step away from them for a few hours!) and I came across the Outside The Box email from longtime friend, John Mauldin.. I’ve always laughed out loud when readers send me a link to a Mauldin article.. He’s a friend, I read his stuff! But they tend to forget and send me them any way…

But I read something in the intro that John wrote that caught m eye… You see, John is an optimist, and you have to get up pretty early to sneak the sun past the rooster, and you don’t always see John writing like Chuck! So, I’ll share this little piece with you from his letter yesterday, and then tell me if he’s not turning Chuck, yes, I really think so! Here’s John! (I bet he doesn’t like Johnny!)

“I know that Trump is going to be appointing a new Fed chair and Fed governors, but I have to tell you, there is simply not enough money to make me want to sit around that table and be responsible for cleaning up the mess that the present denizens have created. I think the FOMC is going to find itself in a situation where they have no good choices, and probably not even merely difficult ones. But they will be forced, or at least feel like they are forced, to “do something”; and that something is going to once again take the form of lower rates and more quantitative easing –and maybe even a few little innovations like negative rates and asking Trump and Congress for permission to shift out of their normal “We can only buy government-backed assets” mode. Much as the Bank of Japan, the ECB, and the Swiss National Bank have done.” –John Mauldin

See? I told you! That sounds like what I’ve been saying for months now, and I would bet a Krispy Kreme to a dollar that he’s been thinking it too for months now, but he just didn’t want to say it.. Well, he did! And Oh! I can’t let you go here without giving you his website link in case you want to sign up for one of his letters… you can find John, here: www.mauldineconomics.com   

On a side bar…  I found my thrill… On Blueberry Hill.. Ain’t that a shame… and more great songs from long ago are left behind with the passing of the great Fats Domino on Wednesday… All of our early rock-n-rollers are getting up there in age, and while some seem to be quite fit and still performing, the age and health factors have seem to crept on to the others…   

I think about this quite a bit… What if I had been successful in my efforts to be a rock star in the early 70’s?  Would I still be performing today? I would have to think I would be, given my drive to do something each day.  My pal, Preston, who was the drummer with the traveling band I played in, just recently retired, after a stellar career with various local bands, and tour with Uriah Heep!    OK, sorry for that detour off the road of investments, economies, and dolts..  back to our regularly scheduled programming now.   

Gold got whacked and knocked down by $11 yesterday, as 362,000 contracts were traded..  In those 362,000 contracts traded yesterday do you think there were a few short Gold paper trades? Just a few, right? I shake my head in disgust over this shorting that continues to be a thorn in my side.  

Ed Steer had an article in his letter this morning (www.edsteergoldandsilver.com) that highlighted an article in the Wall Street Journal (WSJ) on August 10, where 4 GATA members were interviewed about the Gold price suppression…  And in the article the writer wants to know why the WSJ didn’t follow up with any investigation into the claims by the GATA members…  Well, I know, but, oh well, I’ll say it… There are no such things as investigative journalists any longer. They take the short cut and get their story out there..   Oh well, the story is out there on his website if you don’t get his letter…   

The U.S. Trade Balance (Deficit) printed for September yesterday. I told you yesterday morning that I expected the deficit to be around $64 Billion, which was greater than the expectations ($63.5 Billion) because the dollar had gotten stronger in the month of September. Well, that’s exactly what happened with the data printing at a deficit of $64.1 Billion…  

Traders and such just don’t seem to care about the Trade Deficit any longer, and that’s a shame. It really is, folks..   

Today’s Data Cupboard has a reading on 3rd QTR GDP here in the U.S. and it’s expected to have fallen from the 2nd QTR’s print of 3.1%, to 2.7% in the 3rd QTR..  I don’t see how the accountants shimmied the numbers to get 2.7%, but they’ll print it and the markets will swallow it, hook, line and sinker.. We’ll also see a report on Consumer Sentiment, which should be stronger than steel given the stock market’s Energizer Bunny act.  

For What It’s Worth…  I had a lot of candidates for the FWIW story of the day today, but chose this one, because it reminds me of my call many years ago, regarding the popping of the Bond Bubble…  I found this on zerohedge.com and can be found here:http://www.zerohedge.com/news/2017-10-26/ray-dalio-warns-significant-bond-market-risk   

Or, here’s your snippet: “Casting his vote in the ongoing debate of which is a bigger bubble, bonds or stocks, Bridgewater’s billionaire founder Ray Dalio, who has continued his whirlwind of media appearances in recent years, said that he sees a “significant amount of risk in the bond market” envisioning a growing risk to stability as the U.S. moves toward a bigger deficit and the Federal Reserve unwinds its balance sheet. He is, of course, referring to this projection by the CBO of the U.S. debt over the next 30 years which, sadly, remains quite unsustainable especially in a rising rate environment and in which central banks no longer monetize deficits (which is precisely why the Fed will promptly resume QE after a brief cool off period).

Addressing this, Dalio said that “tightenings become progressively more concerning because as you move along they’re more and more difficult to get perfect.” Speaking to Bloomberg radio, Dalio also warned that “as we’re progressing, we’re entering a period of greater risk in the nature of the market.”

Meanwhile, confirming what anyone who has seen the fund’s 13F knows, Dalio said that Bridgewater has been long equities, but didn’t provide more details on how the world’s biggest hedge fund is trading the market. He also said he doesn’t think the Fed can continue the pace at which it has begun to unwind its $4.5 trillion balance sheet. Dalio also said he expects the U.S. budget deficit to increase to 1.5% of GDP, growing the supply of debt at the same time the central bank is offloading bonds.”   

Chuck again… Oh, the calls we make… I still have this image in my head of a slide I used to use in my presentations to show that I too can be a dolt, and featured a guy sitting at his desk banging his head on the desktop… I would say, this is me, as I ask myself why did I make that call on bonds?  

Currencies today: 10/27/17… American Style: A$ .7640, kiwi .6642, C$ .7770, euro 1.1625, sterling 1.3087, Swiss $1.00, …   European Style:    rand 14.1961, krone 8.1729, SEK 8.3684, forint 267.58, zloty 3.6638, koruna 22.0562, RUB 57.71, yen 114, sing 1.3686, HKD 7.8035, INR 65.10, China 6.6365, peso 19.17, BRL 3.2507, Dollar Index 94.86, Oil $52.63, 10-year 2.45%, Silver $16.74, Platinum $919.06, Palladium $968.28, and Gold… $1,268.60    

That’s it for today…  What  long week! UGH! And I’m semi-retired! This should be a good sports weekend, with the World Series, and college football. I have to say that I’ve circled the Penn St / Ohio St game as a must watch game of the weekend. My beloved Mizzou Tigers will be in Connecticut on Saturday. And next week is Halloween!  And then my most hated month, November… UGH!  I hope to see some former work friends this afternoon, and I’m sure there are soccer games the grandkids will be playing in. So a busy weekend, which is a good thing for me.. And I hear we might get a dusting of snow! Crazy, eh?  OK.. Charlie Daniels Band takes us to the finish line today, with a song that’s always a big sing-along with at parties… Long Haired Country Boy…  Well, let’s try to make this a Fantastico Friday, and Be Good To Yourself.. And one more thing… it looks like a Great Day, to have a Great Day!   Bye~

 

Rocktober 26, 2017     

* Norges & Riksbank keep rates unchanged

* India gets caught red handed, intervening!

* Gold gains a whopping 90-cents on the day!

 

Good day… And a Tub Thumpin’ Thursday to you! Whew! what a World Series Game 2 last night! I tried to stay awake for the whole game, but folded like a lawn chair after the 10th inning, only to see that it was won by the Astros in the 11th, when I checked the score this morning. Home Runs were flying out of the park last night! Man, I’ve developed a real irritating cough, that is driving me crazy! Oh well, Chicago greets me this morning with their song: Old Days…   

Well today is the day the European Central Bank (ECB) meets and gives us the details of their plans to taper their bond purchasing program. The meeting is going on as I write.. When I first woke up this morning, I thought, that I should just go back to sleep and then get up to write the Pfennig after the ECB’s meeting. so I could talk about what they said..  And then I thought, nah… better to have the day to go through the ECB’s plans with a fine tooth comb, than to give a knee jerk reaction to it… So, here I am.. Aren’t you glad?  HA!  

Euro traders aren’t waiting for the ECB, as they are anticipating a good discussion after the ECB meeting, and have pushed the euro back above 1.18 this morning…  The euro and sterling are about the only currencies showing some life this morning though.  Sterling is getting some love after a better than expected 3rd QTR Preliminary GDP report showed a 0.4% gain for the quarter.  I know, I know, that’s not a figure that should excite Pee Wee Herman, but.. when you are comparting it to negative numbers that printed previously, then you see the reason for the giddiness of traders this morning.     

In my weekly letter this week for the Dow Theory Letters (www.dowtheoryletters.com)  I talk about something that hasn’t happened since 1991… And in researching things that happened in in 1991, I came across the news article that highlighted Pee Wee Herman’s downfall… that was a real shame, because my son Andrew and I loved Pee Wee Herman’s show. Andrew was just 9 at the time, and I wasn’t much older, HA!  That was 26 years ago folks! Crazy how time flies, eh?   And you don’t even have to be having fun for it to fly by!   

OK…  How about that BIG upward move by Gold yesterday? What? You didn’t see that? It was a whopping 90-cents! HA!  Gold has really been caught in all the rate hike rhetoric lately, and yesterday was no different, as the price gyrated up and down all day. There were 360,000 contracts traded yesterday!  That’s crazy folks!   But, it is what it is, and we are left to deal with the end result…  What on earth are the paper short Gold trades attempting to do?  Well, that’s a good question, as it just seems that they could be spending their time doing more productive things than keeping a lid on the price of Gold, right?  

In my humble opinion it’s Government directive  that has these paper trades keeping the pedal to the metal! And that’s all I’m going to say about that today…   There’s no Government directive to keep a lid on the price of Gold in Russia or China, as they keep backing up the truck to buy more physical Gold.. 

Speaking of China… Premier XI was confirmed as the leader for another 5 years, and the thing I think needs to be pointed out is that he did NOT name a successor to follow him… It’s traditional when a leader sees his next 5 years to be the end, for him to name a successor, but Xi didn’t do that, which is a signal to me that he plans on remaining in power for many years to come… 

That could be a good thing or bad thing… Right now I think it’s a good thing because he has tons of reforms he wants to implement, and having stable leadership is important.   

I haven’t talked about India or the rupee for some time, and thought that today would be as good a day as any…  I don’t know if you’ve been watching the rupee’s performances lately, but they’ve been in a very tight range, and watching this, I had a feeling that some intervention was going on.. And sure enough it was revealed last week by the U.S. Fed that they were watching the Reserve Bank of India’s (RBI) currency moves..  In other words, they are putting the RBI and India on notice that they could be named a currency manipulator should they keep up the blatant intervention..   So, the RBI is going to have to become a little more discreet about their intervention…  

The RBI and the Indian Gov’t is concerned that the rupee could get overvalued very quickly with their intervention, which involves selling rupee and buying dollars. I would have to call this blatant currency manipulation! So, go ahead Fed, put them down on the list, and maybe the RBI will stop this insanity…   

Elsewhere,  Norway’s Norges Bank left rates unchanged this morning, saying that, “New information does not provide a basis for changing the Bank’s assessment of growth in the Norwegian economy. The improvement in the labor market appears to be continuing. Inflation has been slightly lower than projected, while the … exchange rate is somewhat weaker than projected.”   I would have liked for the Norges Bank to sound a little more upbeat, but I guess until the price of Oil goes higher, if it does, they have to remain cautious..    

And Sweden’s Riksbank also left rates unchanged this morning, and told reporters that they did not plan on hiking rates until mid-2018…   So, I guess we should just ignore all Riksbank meetings until then, eh?  Oh, by the way, I don’t think the world’s financial system is going to allow them to hike rates in mid-2018, because in my opinion, it will be a real mess by then! 

The U.S. Data Cupboard had some very strong economic data reports yesterday, with Durable and Capital Good Orders both beating expectations, and New Home Sales soaring much higher then the expectations.. I tweeted a note yesterday evening the same thing I said yesterday in the Pfennig and that is that like I always say, one swallow doesn’t make a summer and one strong econ. print doesn’t make a trend.. 

Today, we’ll see the color of the Sept. Trade Deficit, which should have widened during the month, as the dollar rebounded in September..  Look for the deficit to be around $64 Billion up from August’s $62.9 Billion. 

To recap…  It’s all about the ECB today, and what they tell us about their plans to taper their bond buying program.. If the markets like it, the euro will rally… If the ECB disappoint them the euro will get sold..  I’ll have all the details tomorrow.. Both the Norges Bank and Riksbank left rates unchanged this morning, as expected, but Chuck would have liked to have seen more optimism from the Norges Bank, and for the Riksbank to clam up!  Gold gained a whopping 90-cents yesterday… How about that? 

For What It’s Worth…  I came across an article by Caroline Baum last night, and stopped me in my tracks! Longtime reads might recall me quoting Caroline Baum over and over again back in the day, as she made so much sense, but then she disappeared..  But there she was last night, and so I picked her article as the FWIW story today. It’s about how the Fed needs to stop using their antiquated models and listen more to what the markets are telling them… And it can be found here: http://www.marketwatch.com/story/the-fed-ignores-the-most-relevant-evidence-2017-10-26    

Or, here’s your snippet: “Perhaps you have heard that the Phillips Curve, a model that purports to describe the inverse relationship between unemployment and inflation, is — take your pick — dead, dying or dormant. In other words, it isn’t working.

The 1970s witnessed a period of “stagflation:” high unemployment and high inflation. The 1990s featured a peaceful coexistence of low unemployment and low inflation, a condition that persists to this day, much to the consternation of the Federal Reserve.

Maybe it’s time to look elsewhere for “forward guidance”: not the verbal kind, by which the Fed aims to align expectations with its prescribed path for the federal funds rate; but the kind that provides useful, real-time information on the stance of monetary policy and its implications for the business cycle.

Travel with me back to the period between 1986 and 1990, when Manuel Johnson was Federal Reserve vice chairman. He and his chief economist, Robert Keleher, introduced the board to the idea that auction-market indicators could be useful guides in the conduct of monetary policy.” 

Chuck again…  This article plays well with my call many years ago that the economy would be better if the Fed didn’t set rates, but instead the markets set the interest rates..  All the bond folks at a former place of employment didn’t agree with me, but I didn’t care I said it any way! 

Currencies today 10/26/17… American Style: A$ .7715, kiwi .6880, C$ .7815, euro 1.1815, sterling 1.3225, Swiss $.99, … European Style: Rand 14.19, krone 8.04, SEK 8.2330, forint 263.05, koruna 21.6667, RUB 57.62, yen 113.61, sing 1.36, HKD 7.8011, INR 65.83, China 6.6503, peso 19.02, BRL 3.2403, Dollar Index 93.69, Oil $52.26, 10-year 2.42%, Silver $17.01, Platinum $924.06, Palladium $970.89, and Gold… $1,279.70   

That’s it for today..  Another day in the books, as it didn’t seem like I would be able to answer the bell today, but did, and here we are at the finish line! Our Blues held on for a win last night. I was flipping the channels back and forth between the hockey game and baseball game… I know hockey just started and it’s a Loooooonnnnggggg season, and baseball is in the Championship round, but I love the Blues, and can’t just turn my back on them!   I had a great lunch with my good friend, Ellie Williams yesterday. She too is a cancer survivor, so we understand each other very well!  Kansas takes us to the finish line this morning with their song: Song For America.. And with that it’s time to go and send you on your way with hopes that you have a Tub Thumpin’ Thursday!  Be Good To Yourself!

Rocktober 25, 2017    

* Talk, talk, talk, about rate hikes… 

* BOC meets today… 

* A$ & kiwi’s rate advantage to narrow?

 

Good Day… And a Wonderful Wednesday to you! Game 1 of the World Series is in the books, and it was a pitcher’s duel, with the Dodgers coming out on top. That’s they way baseball should be played, as the game lasted 2 hours and 28 minutes..  Back in the day, the Great Bob Gibson pitched effectively, as throughout his career, the average length of time of games he started was only 2 hours 1 minute! The Turtles greet me this morning with their song: It Ain’t Me Babe..  

I don’t know if I can stand much more of all this rhetoric going around about how the Fed is ready to hike rates again in December, due to the strong and robust economy… The newswires are full of them, and the cable news, not that I watch much of that, have one analyst after another talking about rate hikes…  

And… Well, currency traders can’t escape all that rhetoric, and begin to believe it themselves, and soon they find themselves buying dollars And that’s what’s happened in the past 24 hours.. Yesterday, there was a calm before the storm, and now the storm is over the currencies and metals. Time to hunker down, or look to buy bargains… 

The euro is not part of the currency selling, right now, as traders are still intrigued with what the European Central Bank (ECB) will talk about tomorrow, with regards to their promise to discuss the tapering of their bond buying program. However, should the ECB break their promise, the euro will be taken to the woodshed immediately, not passing Go, and certainly not collecting $200!   

The Bank of Canada (BOC) meets today, and while I don’t expect the BOC to hike rates at this meeting, I do expect them to talk about the prospects of another rate hike by year-end.  If they do that, then the Canadian dollar/ loonie could get back on the rally tracks and win back some of the ground it has recently given back. I read this morning that the Big Banks of: Royal Bank of Canada (RBC), Scotia Bank, TD, and Bank of Montreal (BMO), are all calling for a loonie rally into year-end.  So, I’ve got some weight behind my thoughts this morning, eh?  

Aussie dollars (A$) and their kissin’ cousin across the Tasman, kiwi, have really been sold in recent days, as the rhetoric about a U.S. rate hike heats up… These two currencies have enjoyed a nice rate differential to the U.S. dollar for some time now, and IF the Fed does hike rates in December it would narrow that positive rate differential for the A$ and kiwi…  So, one would think that IF Chuck’s scenario for interest rates in the U.S. come to pass, then the selling in these two currencies would be reversed very quickly…  So, there’s your challenge for the time being…  I’m just saying…  

What IF I’m right? And I have no other thought than to think I am right, but what IF I am right, and the Fed doesn’t hike rates in December, and begins to discuss a reversal of their previous rate hikes?  Then all this negativity towards the currencies and metals would also be reversed, thus making the prices today and in coming days, bargain basement prices… And if I’m wrong…  Well, I guess we do have to talk about that, because, I’ve been wrong before, or ended up being right, but much later down the road, which is the same as being wrong. 

And I do see a scenario where Fed Chair, Janet Yellen, sees this meeting as her last opportunity to… wait, a minute Chuck, you don’t want to go down that road this morning, do you?  I guess not… Thanks for saving me, because I almost said things like, no wait! You almost slipped up again, you dolt!  Come on now, move along…   

And China is preparing to sell $2 Billion of dollar denominated bonds, in an effort to gain more status in the credit markets.. I’m not sure I know why they decided to denominate the bonds in dollars, instead of renminbi, except to make them more acceptable by institutions that have bylaws that forbid them from buying foreign denominated bonds. 

Gold got sold again yesterday, this time to the tune of $5.70 and closed yesterday at $1,275.30…  And the shiny metal is down another $3 in the early morning trading today…   And the other precious metals of Silver, Platinum and Palladium, are also getting sold, along with Gold.  Yesterday’s trading in Gold saw 255,000 contracts traded… So the activity in the shiny metal remains strong…  The most recent COT (commitment of Traders) report shows that speculators in Gold are long, and that commercial players are remaining short…  Hmmm…   The way I see it, is that we need for the two players here (speculators and commercial players) to switch positions…    Oh well, it’s a thought any way… 

The U.S. Data Cupboard finally gets to show off some real economic data today when it will print September readings of Durable and Capital Goods Orders… These two pieces of economic data have not been really strong in some time, but if the forecasters are correct, that will change with this month’s print.  Of course, as I always say, one swallow doesn’t make a summer, and one good data print doesn’t make a trend, but that won’t stop the markets from pointing to the data as their proof that they are right about the economy.. UGH!   

The Data Cupboard will also have the New Home Sales data for September today.. I’m not a “housing expert” , but would have to think that with what’s going on right now, that home sales should begin to slide…  

To recap…  All the rate hike rhetoric is driving Chuck crazy, and has the dollar swinging its mighty hammer again this morning. A$ and kiwi are getting sold more than the other currencies because the markets think the positive rate differential that these two have held VS the dollar for so long will narrow. Gold got sold again, and is getting sold this morning too. UGH!  And Chuck talk about what will happen if he’s right about rate hikes…   

For What It’s Worth… Well, longtime readers, Bob, was at it again yesterday, and sent me a link to this article that was very enlightening… It’s about Citi and Merrill’s derivative businesses in 2008 and now.. And it can be found here: http://wallstreetonparade.com/2017/10/two-of-the-biggest-bailed-out-derivative-banks-citi-and-merrill-get-fined-for-breaking-derivatives-rules/

Or, here’s your snippet: “Over the past month, with little media attention, both Citigroup and Merrill Lynch have received fines from regulatory bodies for failure to properly report their trading in derivatives – an opaque trading arena that played a significant role in bringing down both firms during the financial crisis. As reported by the Government Accountability Office (GAO) in 2011, Citigroup received $2.5 trillion in cumulative, secret low cost loans from the Federal Reserve during the 2007-2010 financial crisis while Merrill received $1.9 trillion. These loans, many at almost zero interest rates, were made without the authorization or awareness of Congress. (See GAO chart below.) The loans to the two firms were on top of the publicly disclosed and Congress-approved TARP bailout funds.

Significant portions of the money loaned to Citigroup and Merrill Lynch were authorized by the Federal Reserve to be funneled to the broker-dealer subsidiaries of the firms in London – where it found its way into pursuits that remain undisclosed to this day.”  

Chuck again…  the snippet doesn’t really tell the story in this article, so make sure you 1. sit down, 2. put away the sharp objects, and 3. click on the link above for “the rest of the story”…  

Currencies today 10/25/17… American Style: A$ .7703, kiwi .6885, C$ .7880, euro 1.1770, sterling 1.3220, Swiss $.9920, … European Style:   rand 13.7376, krone 8.0115, SEK 8.2218, forint 263.60, zloty 3.5923, koruna 21.7261, RUB 57.52, yen 114.16, sing 1.3627, HKD 7.8045, INR 66.07, China 6.6631, peso 19.21, BRL 3.2412, Dollar Index 93.87, Oil $52.32, 10-year 2.45%, Silver $16.86, Platinum $915.49, Palladium $960.73, and Gold… $1,273.43   

That’s it for today…  the warm weather has gone! It’s downright chill-city out there this morning! I made our airline reservations for my January trek to S. Florida yesterday. I have to wait until January 9th this year to head south.. UGH!  Our Blues get back on the ice tonight, with a home game (they’ve been on the road so much to start the year!). Let’s Go Blues!  Little Braden stayed with us last Friday night, and I kidded him when he got here, saying, “you’re here again? You might as well move in with us”, and he said… “OK!”  I laughed out loud!  I’m meeting one of my dear friends at lunch today, I can’t wait to see her!  The late, great George Harrison takes us to the finish line today with his song: What Is Life..  And with that I’ll send you on your way to having a Wonderful Wednesday, and remember to Be Good To Yourself! 

Rocktober 24, 2017

 * The dollar stops swinging its hammer…

*  4 Central Bank meetings this week!

 * Russia says, “What sanctions?”         

 

Good day… And a Tom Terrific Tuesday to you! Another strange night for sleep for me, but that’s the norm these days, so I won’t bore you with the details every time it happens! Sometimes I turn on my laptop and look at what’s gone on overnight, and I sit here and wonder, why did I even wake up for this?  And today is one of those days, although there’s still a lot to talk about, we won’t be spending a ton of time on the currencies performance, because, well… it’s a non-event…  ELO greets me this morning with their song: Can’t Get It Out Of My Head…   

Hmmm that was me yesterday… I just couldn’t get the news that Janet Yellen had talked about how the Fed could be revisiting the moves it made during the Great Recession again, and how the markets just seemed to be not listening..  

I was so focused on the thought that Janet Yellen was greasing the tracks for rate cuts yesterday, that I completely forgot to talk about the Central Banks of Europe meeting this week… We’ll have Central Bank meetings with the ECB, Riksbank, and Norges Bank this week, and don’t forget that ECB President, Draghi, promised us that he would give the details of the ECB’s balance sheet unwind after this meeting… I don’t expect Sweden’s Riksbank, or Norway’s Norges Bank to do anything rash, but I do expect them to begin talks about when they see rate hikes happening.. In addition to the European Central Banks meeting this week, we’ll also see a Bank of Canada (BOC) meeting this week. Recall, that at their last meeting, the BOC hiked rates. I don’t expect them to go back to back, belly to belly, with another rate hike this month, but the BOC does need to keep the heat on the housing market of Toronto and Vancouver, so they don’t see their housing bubbles expand any larger!  

Yesterday I told you that the dollar was being bought because of two thoughts in the markets: Tax reform, and a new Fed Chairman being announced. Well, as the day went along, the dollar buying stopped, but there was little conviction to move currencies against the dollar. The reason for that was that the markets decided that tax reform could go on for some time before actually being implemented, and who knows when the President will name his new Fed Chairman. 

So, the markets are focused on the European Central Bank (ECB) meeting that will take place on Thursday. As I said above, this is the meeting that Draghi and company will give us some details of the ECB’s “tapering” of their bond purchase program. So, this is a Big Deal this week in the Eurozone… The euro has remained steady Eddie in the past 24 hours, and didn’t see any slippage when the Eurozone composite PMI as measured by the folks at Markit, slipped this month… The manufacturing side of the composite report saw a nice increase, while the services side saw the slippage. 

The one thing that I saw in the report was that job creation in manufacturing saw the biggest monthly increase in some time, and because of that data point, the euro was able to maintain its level VS the dollar this morning. 

The  economic data isn’t confined to the Eurozone this morning, as Russia saw their YOY GDP for Sept. beat the forecast and the previous month’s print. If you’re keeping score at home, there are the details…  Russian Sept GDP YOY grew at a 2.4% clip, beating the estimate which was 1.9% (I guess the so-called experts were still under the impression that the economic sanctions were slowing the Russian economy!)  And the previous month’s print was 2.3%, so the data is trending in the right direction!  Russia also announced this past weekend their latest Gold holdings, which we talked about yesterday…  I just can’t imagine how the price of Gold isn’t soaring right now, given the Russian physical Gold news… But, like I said yesterday… Beep, Beep, Beep…    

OK, Chuck, move along here…  There has to be more to talk about… Oh, yes there is! The GATA folks sent me this note that highlighted an article on Reuters… Check this out!  A U.S. jury on Monday found a former HSBC Holdings Plc(HSBA.L) , Mark Johnson, executive guilty of defrauding Cairn Energy Plc (CNE.L) in a $3.5 billion currency trade in 2011.   This is the first conviction in the global currency-rigging scandal that has seen banks pay more than $10 billion in penalties. Johnson’s London counterpart at HSBC, Stuart Scott, is still fighting extradition to the U.S.

The reason I highlight this is the thought that people, in the know, thought this to be impossible given the size of the currency market, but it did, and if it could happen here, who or what says it can’t be done in the metals too?  LIBOR was rigged, and finally exposed… Now this… I’m just saying…   

Longtime reader, and a great source of a lot of information that he sends my way, Bob, sent me a note about an article talking about what the writer feels is going to be a financial tsunami to hit the financial system, soon.  And I thought… Shoot Rudy, I’ve said that for a couple of years now, but put some big words in the article and you get more traction out of it! HA!  

The problem with saying things like that is you have to have some real conviction that what you’re saying has an excellent chance of happening, or else you’ll have egg on your face..  7 years ago, I stood on a stage in Orlando Fla, and told the audience that there was going to be a currency regime change and the dollar would lose its reserve currency status by the end of the decade…  I still believe this to be the case, and I know I stand alone on this thought, but I do believe the Chinese renminbi will be the new reserve currency. 

Having said that, I realize that a lot of changes still need to be made in China for this to happen.  But we still have 3 years, and… Chinese leader, Xi, was just approved to lead China going forward. This will give Xi, more power to implement the changes he has proposed. So, watch for China to open up more real soon.   And getting there, isn’t going to see a big devaluation of the renminbi get in the way…  

OK… Gold reversed the early morning losses yesterday and ended up $2 to $1,282 on the day yesterday. 265,000 contracts traded yesterday, not 300,000 but still a good number of contracts that I’m sure contained more than its fair share of short Gold paper trades..  Gold is down $2 in the early morning trading today, so maybe, just maybe it can reverse that and turn positive again today.   

Did you hear the news that Scotia Bank, which owns the ScotiaMocatta, the precious metals trading business, is putting that metals dealer up for sale? It’s rumored that Chinese interests are looking to buy the business…  So, why is this important?  Well, I look at it like this folks… Scotia Bank is one of the major bullion dealers with short positions in all the precious metals, and if they are getting out of the business, could this mean that “the boys in the band” will be losing a member? I think so..  I guess we’ll have to wait-n-see, but to me, this is HUGE news that should be positive for the metals!  

The U.S. Data Cupboard is still lacking any real economic data today, but tomorrow we get Durable and Capital Goods Orders so stay tuned for that… Same bat time, same bat channel!    I had to laugh there because that’s the ending I put on my weekly DTL letters… This week is a surprising fact about Australia…  and will only be found on the Dow Theory Letters website: www.dowtheoryletters.com   I have a lot of fun with those letters, I hope you find your way to subscribing to the DTL and joining me each week, as I talk about whatever fancies me that week! 

To recap… The dollar stopped swinging its mighty hammer yesterday morning, and the currencies have remained, for the most part, steady Eddie in the past 24 hours. Gold was able to carve out a $2 gain yesterday…  And there’s news that Scotia Bank is putting up for sale their metals dealing unit, called ScotiaMocatta…  There are 4 Central Bank meetings this week, with the  ECB the biggest on of all, followed by the Riksbank, Norges Bank and the Bank of Canada…  

For What It’s Worth….  Today’s FWIW is a section of the 5 Minute Forecast, and it’s about Social Security, and can be found here: www.agorafinancial.com   

Or, here’s your snippet: “As long as we have retirement on the brain, we see a headline this morning that affirms our long-standing outlook about “the awful way Social Security might be saved.”

That was the title of an article your editor posted at The Daily Reckoning 2½ years ago. Already we were noticing a twin phenomenon: Educated higher-earning Americans were working well past retirement age and continuing to contribute to the Social Security system… while poorer Americans who hadn’t graduated from high school were dying in growing numbers before they could ever collect a dime in benefits.

Along comes Bloomberg with a story with the headline “Americans Are Retiring Later, Dying Sooner and Sicker In-Between.”

“The U.S. age-adjusted mortality rate — a measure of the number of deaths per year — rose 1.2% from 2014 to 2015, according to the Society of Actuaries. That’s the first year-over-year increase since 2005, and only the second rise greater than 1% since 1980.””  

Chuck again, I had read that Bloomberg article yesterday and then when I saw it highlighted in the “5” I knew that it was FWIW worthy!   Great stuff Dave!   

Currencies today 10/24/17… American Style: A$ .7780, kiwi .6930, C$ .7898, euro 1.1755, sterling 1.3175, Swiss $ .9865, … European Style:  rand 13. 7217, krone 7.9907, SEK 8..2026, forint 262.35, zloty 3.6072, koruna 21.8046, RUB 57.47, yen 113.70, sing 1.3620, HKD 7.8046, INR 65.09, China 6.6358, peso 19.12, BRL 3.2054, Dollar Index 93.85, Oil $52.20, 10-year 2.39%, Silver $17.08, Platinum $925.50, Palladium $966.32, and Gold… $1,280.00   

That’s it for today…  Well, I got through this today… three times I took my hat off and threw it at my laptop… and two times I had to restart it… UGH! Yesterday brought news that my beloved Cardinals had hired our longtime coach that had been on leave to return. Jose Oquendo. In addition the always popular Willie McGee will also be  coach this next year. I sent an email to my baseball buddies and said, “watch how the infield defense gets better now that Oquendo is back”  I saw Willie McGee hit an inside the park home run at the old Busch Stadium years ago. I still believe he was parallel with the ground when he rounded second!  Ok, time to get going…  The Moody Blues take us to the finish line again today with their song: Ride My Seesaw…   I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself! 

Rocktober 23, 2017  

* Markets focus on tax reform and new Fed Chief 

* Dollar finds its mighty hammer again… 

* Abe wins re-election in Japan

 

Good day…  And a Marvelous Monday to you!  A later than usual start today for yours truly, as I just couldn’t answer the bell when it first went off this morning. But I eventually, pulled up the bootstraps and got going!  I was in hog heaven yesterday, as I watched the director’s cut of Woodstock, which features Alvin Lee and 10 Years After doing: I’m Going Home.  Alvin Lee was my fave guitar player back in the day, and we lost him way too early, when he checked into a French hospital for a normal procedure, and was gone… The Allman Brothers greet me this morning with their song: Revival…    

Well, did you miss me on Friday? My infusion confusion wasn’t so bad this time, and I was out of it by noon on Friday, so I had that going for me. The dollar has recovered its lost hammer, and is swinging it at every currency and metal this morning. I find this to be quite amazing given the latest speech by Fed Chair, Janet Yellen, who basically was greasing the tracks for the coming to fruition of my call that the Fed would be discussing a reversal of rate hikes by year-end…  

Yellen was talking and defending the Fed’s policies to bring back the economy from the Great Recession of 2007-08, and then she said, “Yellen said the Fed likely will have to turn to bond purchases again — even in a downturn that isn’t as bad as the 2007-2009 Great Recession, which was the worst since the 1930s.

She said that’s because economic forces have driven short-term interest rates to unusually low levels. That means the Fed will have less room to cut rates to spur economic growth in a recession, leaving few alternatives but to buy bonds again.”    

Now, I look at this differently than the markets do, apparently…  I see this as Yellen greasing the tracks for this to happen, as she knows in here heart of hearts that this economy is going nowhere, and that when it comes time to begin to reverse the rate hikes, she’ll be able to say, “I told you this could happen months ago”…  

But the markets aren’t focusing on these words from Yellen…  Instead, the markets are focusing on the thought that President Trump looks like he will get his tax reform through, which would give tax breaks to Corporations, and thus, supposedly, revive the economy… My money is on the idea that these Corporations will take the savings and use to buy more of their stock… What say you?  

The other thing helping the dollar swing its mighty hammer this morning is the rumors that President Trump is about to name the new Fed Chairman, and it’s not Janet Yellen! And it’s not the old front runner, Kevin Warsh, but it looks like it will be John Taylor, a Stanford economist who is a hawk… Something that just doesn’t mesh with me folks…  Trump loves easy money, and low interest rates, but he’s nominating a known hawk to the Fed Chair..   Oh well, no need to dwell on this for hours, I’m just pointing out the drastic differences here that don’t seem to matter to the markets at this point…    

The U.S. Treasury 10-year’s yield is closing in on 2.40% (it’s at 2.38% this morning), and that has investors excited, about higher yields in the U.S.  I was talking with a friend the other day about this, and I explained that the bond yields and bond prices move in opposite directions, so as the bond yield rises, the bond price goes down. And bond yields were so low for so long that they really had only one place to go… and that’s up…  But let’s not get the idea that the 10-year’s yield is going to 4% or any other crazy idea like that, that’s circling the markets right now…  Remember, I told you that during the Presidential campaign last year, that Trump said that if interest rates went to 4% that we are in deep dookie… (he actually used different words that I didn’t think were appropriate for the Pfennig)…   

And why did he say that?  because of the costs to service the bonds, (pay interest on them) would rise to levels that would eat up all the tax revenues, and then there would be no money to pay for anything else…

Gold got whacked again on Friday by $9.70 and closed at $1,280 for the week..  With a whopping 300,000 contracts traded… I don’t care what anyone says, you can’t tell me that there were a ton of short Gold paper traders among those 300,000 trades…  The shiny metal is down another $3.50 in the early morning trading today.  Beep, Beep, Beep…   What’s that you’re asking? it’s the warning signals that a large truck makes when it’s backing up…  Get it? I knew you would! 

The Central Bank of Russia (CBR) get’s it… they added 1.1 million troy ounces of physical Gold to their reserves last month! That’s equal to 3.4 Tonnes, in just one month!     And on the other side of the coin, it would take 200 days of production in Silver to match the short positions that are out there, 110 days for Platinum, 100 days for Palladium and 90 days for Gold..  That’s just crazy folks… We’ve got Russia, China, India and other countries in the East, buying more physical Gold than is produced each year, and we also have more contracts that are shorting the metals than is above ground.. Something has to give here sooner or later…  

Well, the negotiations for the independence of Catalonia came to halt this past weekend, and that’s another thing weighing on the euro this morning.. The Spanish Constitution Court called for new elections for leadership of Catalonia… Now that’s not going to sit well with the Catalans, folks…  I sure hope this doesn’t turn into a U.S.-like civil war in Spain… The court didn’t say that the Catalans couldn’t have their own representatives in Gov’t, but they did say they couldn’t have the ones that are there now, that have called for the independence…   More to come on this, I’m sure!   

In Japan this past weekend, the Japanese re-elected Shinzo Abe as Prime Minister, in a vote of confidence over how the country is being run… It was also a vote for his monetary policies, which have been mainly been to stimulate the economy (which hasn’t worked, but who’s counting?)  and that thought sent the yen downward.     

The U.S. Data Cupboard the last two days last week, saw Home Sales print better than expected, and the Leading Economic Indicators go negative for September, by -0.2…   Folks, this data print, along with Capacity Utilization are about the only forward looking pieces of economic data that we see, and the Indicators for September aren’t telling us the economy is “strong and robust” like the Fed heads keep telling us! 

There’s not much in the Data cupboard for today and tomorrow, and then on Wednesday, we’ll see the color of the latest Durable Goods Orders and Capital Goods Orders. Two pieces of real economic data… But that’s on Wednesday, a lot can happen between now and then!    

For What It’s Worth… I’ve got a real treat for you today… My good friend, and Retirementor, Dennis Miller of www.milleronthemoney.com  wrote a great article last week on Student loans.. And you can check it out here: https://milleronthemoney.com/government-backed-student-loans-deal-devil/   

Or, here’s your snippet: “How’s this for a business proposition? I owe you $17,000. If you forgive my debt, I won’t use Uber or Lyft for my transportation needs. Or, how about I agree to give up texting and mobile messaging for a year in exchange for debt forgiveness? Doubt I’d get any takers.

I received an email about a recent survey, “Survey Reveals What Millennials Would Rather Deal With Than Paying Student Loans”. The sender suggested, “The insights would be a great fit with your audience.”
They questioned 500 millennials, age 18-34. At first, I thought it was a joke:
“We’ve … compiled some key findings:
A staggering 49.8% of all respondents said they would give up their right to vote in the next two presidential elections in order to have their debt forgiven Ride-sharing services like Uber or Lyft don’t seem to matter to millennials quite as much… According to the results,

43.6% were willing to give up these services forever in exchange for debt forgiveness

Interestingly, 42.4% of respondents would also give up traveling outside of the country for 5 years, while only 27.0% said they would be willing to move in with their parents for 5 years

Millennials seem to value texting more than the other options – only 13.2% reported being willing to give up texting and any mobile messaging equivalent for the next year in exchange for having their debt forgiven

Only 8.2% of respondents chose to select none of the above and said they would rather keep paying off their student debt”    

Chuck again, I sure hope you check out this article for some real insight into the student loan debacle and how those that took our those loans, signing a contract, feel about the obligation they made…   And while you’re on the website, you might as well sign up for his weekly letter! 

 Currencies today 10/23/17… American Style: A$ .7813, kiwi .6965, C$ .7915, euro 1.1745, sterling 1.3173, Swiss $.9876, … European Style: Rand 13.7175, krone 7.9960, SEK 8.2066, forint 262.32, zloty 3.5982, koruna 21.8398, RUB 57.45, yen 113.89, sing 1.3623, HKD 7.8031, INR 65.06, China 6.6219, peso 19, BRL 3.1911, Dollar Index 93.93, Oil $51.85, 10yr 2.38%, Silver $17.01, Platinum $917.82, Palladium $967.14, and Gold… $1,277.00  

That’s it for today…  I’m late, I’m late!  Oh well, that just means you had time to grab another cup of coffee! HA!  Most of our neighbor friends were all together Saturday night for the wedding of one of our neighbor’s son… And my Mizzou Tigers won on Saturday! OK, they didn’t play an SEC team, but they won! And the Mizzou Basketball team played an exhibition to benefit hurricane relief efforts, with old rival Kansas yesterday. The Mizzou Basketball team has the number 1 recruit this year, Michael Porter, Jr.  He’ll only be there one year, so they better make hay this year! Another Sunday and I didn’t watch any NFL football… I’m finding that I don’t need them, and I don’t miss them! The Moody Blues takes us to the finish line today with their song: When You’re A Free Man..  And with that, it’s time to go! I hope you have a Marvelous Monday! Be Good To Yourself! 

Rocktober 19, 2017  

* New Zealand gets new coalition gov’t!

* Dollar buying ends overnight 

* Is Gold ready for a turnaround? 

 

Good day… And a Tub Thumpin’ Thursday to you! Not for me, but for you! What a night for our Blues! The thumped the rival Blackhawks 5-2 last night, and I watched the whole game! I feel like someone took a bat and tenderized my body while I slept last night! UGH! I prefer to feel at the top of the game when I go in for an infusion, which isn’t going to happen today!  Don Henley greets me this morning with his song: The Last Worthless Evening…   

The dollar strength of the last two days has faded and the currencies are making a comeback as I write this morning.  the outlier is kiwi… From the title today, you know that kiwi got taken to the woodshed last night, but that doesn’t tell you why, and, well.. that’s what I’m going to do right here, right now! 

OK.. Recall a couple of weeks ago, when kiwi got whacked because the election there left uncertainty about what Party would be able to form a coalition government… That uncertainty has been taken care of, as it was announced last night that the Labor Party had formed a coalition government, and now we have a different uncertainty hanging over kiwi like the Sword of Damocles…  And so kiwi lost 1 whole cent overnight or 1.6%, for those of you keeping score at home!  

You see, the Labor Party is all about spending, and more spending, and they want to dictate to the Reserve Bank of New Zealand (RBNZ) how to calculate things…  this is not a good development for New Zealand folks, and threatens the path that New Zealand was on with regard to economic growth. But did the markets overact with selling kiwi?  Yes…  But as I was explaining to someone last night, the markets always either over buy or over sell… It’s what they do!  In the end, I would look for kiwi to recover some lost ground, starting today…   

The euro found some terra firma and has rallied back above the 1.18 figure…  I understand that this rally has been fueled by hedging trades ahead of next week’s European Central Bank (ECB) meeting…  Recall, that ECB President, Draghi, told us that he was prepared to give the details of the ECB’s unwinding of their balance sheet on the 10/24?  Well, that’s the day, and I’m sure the markets will hold Draghi’s feet to the fire on this one…    

Pound sterling has been on a roller coaster ride recently… Rallying on the Bank of England (BOE) news that a rate hike was in the future, and then selling off when the data doesn’t support that thought. We had more of that this morning when Sept. Retail Sales in the U.K.. only gained 1.2% when 2.1% growth was expected, and was the result of August’s print. 

Gold got sold some more yesterday to the tune of $4.30…  But… we may have a turnaround today, with Gold up $4.50 in the early morning trading!  In the 5 Minute Forecast (www.agorafinancial) , James Rickards was giving his thoughts on why Gold was ready to go on a long strong bull run, and he quoted Commodities expert, Jim Rogers…  Let’s listen in…  “Rogers makes the point that no commodity ever goes from a secular bottom to top without a 50% retracement along the way.
Gold bottomed at $255 per ounce in August 1999. From there, it turned decisively higher and rose 650% until it peaked near $1,900 in September 2011.

So gold rose $1,643 per ounce from August 1999 to September 2011.
A 50% retracement of that rally would take $821 per ounce off the price, putting gold at $1,077 when the retracement finished. That’s almost exactly where gold ended up on Nov. 27, 2015 ($1,058 per ounce).
This means the 50% retracement is behind us and gold is set for new all-time highs in the years ahead.” – James Rickards     

I agree with him, and have said that Gold was ready for a long bull run for sometime now…  And this period of Gold selling is only making it better for all the Gold buyers that want to buy at cheaper prices, but I wouldn’t procrastinate here… these cheaper levels might not be around too much longer! Of course that’s my opinion, and I could be wrong…  

With this being a “Pfennig-lite” today, it’s time to move on and finish this!  So… To recap…   New Zealand may have a new coalition gov’t. and that has sent kiwi to the woodshed overnight. Chuck believes it has been oversold, but we’ll have to wait-n-see.  The euro is on terra firma this morning as hedging ahead of the ECB’s meeting next week, has the single unit trading over the 1.18 figure again this morning.  

Before I head to the Big Finish today…I was doing some reading yesterday, and I had my radio playing 60’s on 6 on Sirius XM, and the old song by Glen Campbell came on. The Wichita Lineman… And in that song is a phrase that could possibly be the most romantic phrase ever used in a song. I’ll let you be the judge… He says, “ And I need you more than want you… And I want you for all time”… That line always gets to me right in the heart… And there you go, I’m be teddy bear at heart…  

For What It’s Worth….  Last night I saw an article about Blue Apron cutting 6% of their work force, and then this morning I see where General Electric is cutting their workforce too… It’s starting to happen folks, the tell-tale signs of an economy about to come to a halt… Well, the GE article is here should you want to read about it: http://www.foxbusiness.com/features/2017/10/18/ges-new-chief-starts-making-cuts-starting-with-old-favorites.html  

Or,  here’s your snippet: “Next month, Mr. Flannery is expected to unveil the results of a strategic review that includes thousands of corporate-level job cuts and scaling back of GE’s global structure, people familiar with the matter said.

The new CEO is shutting down research centers in Shanghai, Munich and Rio de Janeiro, shifting some of their engineering work into individual business units, the people said. The retrenchment will leave GE, which spent more than $5 billion on research and development last year, with just two global research sites, located in Niskayuna, N.Y., and Bangalore, India.

Asked about the looming changes, the GE spokeswoman said: “The company will continue to have an intense focus on our global operations and customer base,” noting that the company gets 70% of its revenue from outside the U.S.

The company is expected to report quarterly results on Friday that include hefty restructuring charges related to the changes, according to analysts.”   

Chuck again… I read yesterday that former CEO of GE Immelt, used to have a spare (empty except for pilot of course) jet follow him when he would jet to a destination…  Now, that’s overkill, eh?   

Currencies today 10/19/17… American Style: A$ .7866, kiwi .7033, C$ .8025, euro 1.1825, sterling 1.3158, Swiss $ .9763, … European Style: rand 13.5110, krone 7.9471, SEK 8.1394, forint 260.84, zloty 3.58, koruna 21.7286, RUB 57.32, yen 112.56, sing 1.3568, HKD 7.8015, INR 65.02, China 6.6220, peso 18.79, BRL 3.1625, Dollar Index 93.19, Oil $51.29, 10yr 2.32%, Silver $17.08, Platinum $928.38, Palladium $962.25, and Gold… $1,287.25   

That’s it for today…  I’m getting psyched up for my visit to the oncologist today… She’s a great doctor, and always tries to remind me of how strong I am as a person, which is right before I head to the infusion center and reality comes back to me..  5 solo home runs, and the score was 3-2 in favor of the Cubs last night… I don’t know that I’ve ever seen a game with 5 solo home runs accounting for all the runs in the game! But I have now! I was really impressed with how our Blues played last night, and thought, man would it be great if they could bottle this and let it out for every game?  Yeah, and winter doesn’t follow fall! HA!  Oh well, The Blues have played 6 games so far, 74 more to go before the playoffs next spring!  The Alan Parsons Project takes us to the  finish line today with their song: I Wouldn’t Want To Be Like You…  And with that, it’s time to get out of your hair today, and send you out to makes this a Tub Thumpin’ Thursday!  And remember to Be Good To Yourself! 

Rocktober 18, 2017

* Gold gets taken below its 50 MDA

* Chuck want’s to know why?

* Chuck has idea for scandalous corporations.. 

 

Good Day… And a Wonderful Wednesday to you! I woke up this morning, and my mind immediately thought it was Thursday, and I needed to get going because I have an infusion appointment right out of the starters blocks on Thursday. Then I realized it was Wednesday, not Thursday, and I said, “Chuck you dolt, it’s only Wednesday”…  And so, I start my day… Makes me wonder what else I’ll “get wrong” today..  The Chi-Lites greet me this morning with their song: Oh, Girl…    

Front and Center this morning, “the boys in the band” have taken Gold below its 50-day moving avg. There were more than 300,000 contracts traded yesterday, and once there was some slippage in the early morning trading yesterday, “the boys in the band” (TBITB)  decided to pile on and point to the slippage in the currencies and the rise in the Dollar Index as their reason for all the short paper trades… And Gold is not faring well this morning with the early morning trading pushing Gold lower by $4.  

Yesterday’s damage to the shiny metal’s price was $9.70… What? have all the geopolitical tensions gone away? I don’t think so! And is the Fed really going to hike rates in December?  I don’t think so!  So, tell me, tell me true, what’s behind this assault on Gold all about Alfie? Well, I could give you my conspiracy theory answer, but if I did, you would probably think that I’ve lost it… So, I won’t, that is, unless you want me to….  Oh? You say, you want to hear it?  OK, hold onto your hats… And for those of you not into conspiracy theories, then skip ahead, go ahead, my feelings won’t get hurt!  

OK, for those of you who wanted the conspiracy theory it goes like this…  First of all, you must recall the “big price reset” thought that James Rickards has for Gold… And then think about all those short positions out thee in Gold. More than 90 days of production it would take to equal the short positions on the books..  So, what’s the only way the institutions behind all those short positions are going to make money?  That’s right, if the price of Gold continues to drop, but what happens to all those short positions if the “big price reset” happens tonight or tomorrow or next week? Those institutions take HUGE losses…  So, in my mind, these short Gold paper traders are rushing to push the price of Gold lower so they can close out their short positions, and get ready for the “big price reset”…  Sound corny? Well, it’s how I see things going on right now, right or wrong, it’s how I see it!     

Alrighty then, it’s OK, it’s safe now, you can come out and play again, I’m finished with that!  Well, as I mentioned briefly above, the Dollar Index saw some love yesterday, as the talk about a rate hike in December increased in volume… I just don’t see it happening like that folks… I don’t see the Fed hiking rates in December, and IF they would, it would be a last ditch effort by the outgoing Fed Chair, Janet Yellen, to everything she can to put 100 miles of desert between her and the zero interest rates policy that held court for quite a few years here…  And IF she did hike rates in December, which I still don’t believe she will, that rate hike would be quickly reversed at the next meeting. 

That’s my story, and I’m sticking to it! And I really dislike having to rinse and repeat myself so much on interest rates, but when the newswires are full to the brim with articles about the Fed hiking rates in December, I just get all worked up…  So, the dollar is in charge this morning, and is still feeling its oats as the strong dollar trend has basically ended, but no one told some dollar traders… HA!   Seriously though, when a currency trend ends, you’ll still have days when the asset on its way out, has good days… And don’t forget that a star burns the brightest right before it goes dark…   

I read an article last night about how far the Chinese and Russians had gone with convergence, and then I came across this bit of information from the Russiafeed.com site… “The trade turnover between Russia and China in the first eight months of 2017 grew by 35.2 percent and had exceeded $54 billion, the figures of Russia’s Federal Customs Service showed on Thursday.”  WOW!   It was also announced yesterday, that China has developed a payment system (PVP) for trade between the two countries, that will remove the need for any dollars to be involved…

These two countries are hell bent and whiskey bound to de-dollarize the world. See what happens when you tick off other counties? The can’t match our military strength, but they can go after the use of the dollar around the world, and that’s what they are doing…  Shoot Rudy, as long ago as 7 years ago, I was doing presentations and showing audiences a quote from the Chinese President, about how the dollar standard needed to be changed…  

I’ve said this before, but allow me to repeat it… The Chinese don’t say things that they don’t mean. And, if they do say something, you can bet your bottom dollar that they will do everything they can to achieve or meet that statement.  So, 7 years ago, the Chinese were telling the world, that the dollar standard needed to be changed, and no one was listening, except me, of course!  And people used to think I was crazy, and so on..  Well, who’s crazy now? 

And what’s the U.S. doing about it? The only thing I see that they are doing about it, is making things worse, with their debt build up, and the prospects for more debt to come.  On a side bar, I had to laugh out loud yesterday when reading the paper and seeing that Wells Fargo was going to have to pay $3.4 million to customers to settle a regulator’s claims that brokers recommended certain investment products they did not fully understand.   Really? $3.4 Million, that’s all?  OK, I’m going to get on my soapbox here so if that’s not your bag baby, then skip ahead…  

So, do you believe in your heart of hearts that the bank made more in fees than $3.4 million?  Then why on earth would they not have to give back all the fees they made when a court finds them guilty of wrongdoing? I can tell you that until an institution has to give back all its gains made in something that is ruled to be unlawful, or in bad ethics, etc. then this stuff will continue, and we’ll be reading about some other institution doing something to harm investors and depositors… 

Boy,  today started out slow, but the crescendo was building, and then BAM! Chuck shows his true colors about these so-called refunds for damages…    

The U.S. Data Cupboard was as expected yesterday, with Industrial Production turning around August’s negative print, and printing a 0.3% gain in September. Capacity Utilization ticked up to 76 from 75.8% nothing to write home about..  And now we sit and wait for additional real economic data to print… Until that day, we’ll see some Housing data today and Friday, and Leading Indicators, and that’s about it for data this week…  

Oh, one more thing on Gold before I go today… Apparently Lola (Goldman Sachs) likes Gold more than Bitcoin..  Lola issued a statement yesterday, and here it is… “Precious metals remain a relevant asset class in modern portfolios, despite their lack of yield,” analysts including Jeffrey Currie and Michael Hinds wrote. “They are neither a historic accident or a relic.” Looking at properties such as durability and intrinsic value, they are still relevant even with new materials discovered and new assets emerging, such as cryptocurrencies.”   

So, Lola likes Gold… Interesting isn’t it? I would say that this tells us that Lola is long Gold, and doesn’t like seeing investors swap out of Gold for Bitcoins..  But then If I said that, it would mean that I know something about Lola that everyone else doesn’t, and I don’t!  Just to make that clear!   

To recap…  The Dollar is in charge, but as Chuck reminds us, a star burns brightest before it goes dark…  Gold got whacked again yesterday, and taken below its 50 day moving avg. Chuck wants to know what has changed, with what’s going on around the world to cause this selloff of Gold? Lola likes Gold more than Bitcoin…  Tells you something doesn’t it?   

For What It’s Worth… This is interest in that it’s something that I’ve wanted to see for years, and now that it’s available the CIA doesn’t want POTUS to release it… I’m talking about the Kennedy assassination papers…  And it can be found here:  http://theduran.com/cia-urges-potus-trump-to-delay-release-of-3000-never-before-seen-documents-on-assassination-of-john-f-kennedy/     

Or, here’s your snippet: “More than 3,000 never-before-seen documents from the FBI, CIA, and Justice Department are set to be released, along with 30,000 that have only been partially released in the past. The document dump “will simply fuel a new generation of conspiracy theories,” write Philip Shenon and Larry J. Sabato.

Sabato is the director of the University of Virginia Center for Politics and author of “The Kennedy Half-Century” and Shenon is a former reporter for The New York Times and author of, “A Cruel and Shocking Act: The Secret History of the Kennedy Assassination.”

The CIA is urging President Donald Trump to delay disclosing some of the files for another 25 years according to friend and political adviser Roger Stone but the National Archives would not say whether any agencies have appealed the release of the documents.

According to The Gateway Pundit Roger Stone and Gerald Posner, two New York Times bestselling authors who are polar opposites about who killed JFK, have joined together to urge Donald Trump to release all the remaining classified files on Kennedy’s assassination.”  

Chuck again…. I was 8 when Kennedy was assassinated, and I still remember that day like it happened yesterday, and for years I, of course, would have a different take on how it all happened, and who was behind it all, so I’m hoping these papers get released soon!  

Currencies today 10/18/17… American Style: A$ .7829, kiwi .7133, C$ .7985, euro 1.1750, sterling 1.3175, Swiss $ .9812, … European Style: rand 13.4910, krone 7.9525, SEK 8.1634, forint 262.33, zloty 3.60, koruna 21.8911, RUB 57.31, yen 112.70, sing 1.3580, HKD 7.8074, INR 65.12, China 6.6146, peso 18.79, BRL 3.1686, Dollar Index 93.67, Oil $52.10, 10-year 2.32%, Silver $16.98, Platinum $923.85, Palladium $979.73, and Gold… $1,282.30  

That’s it for today…  The Baseball games last night were good, and I say that even though the Yankees won their game! The ALCS is tied 2-2, and the NLCS is 3-0 in favor of the Dodgers.. Our Blues come back home after a 4 game road trip to play the rival Blackhawks tonight… Let’s Go Blues! This is the last “full to the brim” Pfennig of the week, as tomorrow’s will be a “lite” version, and then no Pfennig on Friday…  It’s Homecoming Week at Mizzou this week… We used to make a weekend out of Homecoming, but not any longer…  I was talking to a friend last week and he said, he hadn’t flown is Mizzou flag this year since they were so bad, and I said… I’ve flown mine every Saturday!  My team may be bad, but their my team…   Ok…  Steely Dan takes us to the finish line today with their song: My Old School… Is there gas in the car, yes there’s gas in the car…  Love it!    I hope you have a Wonderful Wednesday… And Be Good To Yourself! 

 

 

Rocktober 17, 2017   

* Dollar gets boost and takes off!

* NAFTA talks hurt loonies and pesos… 

* Gold gets taken to the woodshed!

 

Good day…And a Tom Terrific Tuesday to you! I could write a book and title it: Sleepless in St. Louis…  But, I won’t…  About 10 years ago, a representative of a book publishing company contacted me and wanted me to write a book about trading currencies. I wanted it to be more about my survival from cancer… We never agreed, and after about a year of asking me, she finally gave up…  The closest I ever got to writing a book, was writing the forward for a book! The Second edition of Addison Wiggin’s book: Demise of the Dollar…  Check it out on Amazon, it’s pretty cool… The late great George Harrison greets me this morning with a live version of his song: While My Guitar Gently Weeps, which was recorded at Madison Square Garden back in the day…    

Well, the currencies saw a choppy day yesterday. The euro traded up and through the 1.18 level, and then back below it, and then did a rinse and repeat. And the other currencies followed the Big Dog.  But then late in the day and throughout the overnight markets the dollar has been the focus of traders and here’s the skinny on why that is as I know it to be… 

Late yesterday afternoon, the President, met with John Taylor, an economist, for the Fed Chairman job, and is thought to have impressed the President, so much so, that the markets have already thrown the front runner for the job, Kevin Warsh, to the side of the road…  Taylor is thought to be much more hawkish than the present crew at the helm of the Fed.  

But there’s a problem here Houston..  A Hawk in Charge, when Trump is so dovish? That just doesn’t make any sense to me, given that Trump has the open roster of candidates to fill the job…   Oh well, whatever it will be, it will be, right?    Oh, and before I go on with the reasons for the dollar strength this morning, I just wanted to mention that current Fed Chair, Janet Yellen is going to meet with Trump on Thursday this week… 

I wonder what that’s all about? Is it to let her know that he’s going to name a new Fed Chairman soon and she should step down? Or is it to let her know that he’s not a fan of a rate hike at this point, and request that the rate hike be delayed?  Or something else? Man, to be a fly on the wall, eh?  

OK, back to the dollar strength. The other thing helping the dollar this morning is the news that U.S. and N. Korean diplomats will meet next week in Moscow, thus giving hope to the idea that a diplomatic resolution can be ironed out, without any bombs flying around… This news especially was bad for Gold, which has lost over $11 in the early morning trading today. 

So, just like that, we go from “all options are open” to “everything will be right on the night”?  Now, don’t get me wrong, I do prefer the latter scenario, but I just don’t see how we got there in what seems like the flicking of a light switch. It’s all a little surreal to me, and that has my spider sense going bananas this morning… 

And in other news overnight, reports are that the U.S. has come out in the NAFTA negotiations as the aggressors, and that has put the Canadian dollar/ loonie, and the Mexican peso on their back feet this morning…  I read about this scenario this morning, and it was like the proverbial V-8 head slap moment for me…  I had wondered the other day when the Mexican peso traded back above the 19 handle, what could be the cause of this move, but was too busy at the time to deal with the peso, which is not a fave currency of mine.  And then BAM, there it was right before me! NAFTA talks!   

Well, where were you 30 years ago? October 19, 1987, Black Monday…  That’s the storyline of my Dow Theory Letters (www.dowtheoryletters.com) article this week. I just put the finishing touches on it yesterday afternoon, and so, it’s still on my mind, and thus I’m talking about it now! HA!  But seriously, think about it, where were you when you heard the stock market was crashing? I know where I was, and it was in the trading office of the old Mark Twain Bank Brokerage, helping with order entry…  I just shake my head in disbelief at those out there that think that can’t happen again…   Hmmm…  

Of course we did see other stock market problems in 2001 and 2008, but not a one-day drop of 508 points, or 22.6%,  Which is still the largest one-day drop in Wall Street history…  Oh well, so much for that, but that’s really a relatively long time, folks, 3o years, or 3 decades…  

Things in Spain / Catalonia aren’t getting any better, as a Spanish judge ruled that two of the Catalonia leaders of the independence movement be put in jail on sedition charges. Did someone forget to tell the Spanish judge that the two entities are trying to negotiate an agreement right now, and doing something like this would damage those diplomatic negotiations?   

And back to Gold for a minute…  A couple of weeks ago, I wrote about the news that China was introducing an Oil future that would be tied to Gold. This was HUGE news as far as I was concerned… But now, Gold researcher, extraordinaire, Kook Jansen, is saying that there will no such thing… Let’s listen it to Koos as he explains his position on this… “China hasn’t announced anything but an oil-yuan futures contract. Gold has nothing to do with it.”   Koos Jansen then goes on to explain how you can purchase Gold on the Shanghai Gold Exchange (SGE) with renminbi/ yuan so Oil producers could just take the renminbi they just received for the sale of their Oil and buy Gold at the SGE with it…   

You may recall me telling you over a year ago, that that exact scenario is what the Russians were doing with the renminbi they were receiving from the sale of their Oil to China.   If Koos is correct, and I have no reason to believe he isn’t correct, then it’s still all good for renminbi, and bad for the dollar… It’s just as good for Gold..   

And speaking of China the news came out yesterday that China is interested in obtaining a 5% stake in Saudi Aramco Oil through a direct investment… Hmmm…  Remember when China was going to buy the California Oil company and the media went bonkers?  Yes, let’s go back to 2005… Chinese oil company Cnooc Ltd. withdrew its $18.5 billion takeover bid for California energy firm Unocal Corp., saying it would have increased its offer had the resistance not been so strong….   12 years ago folks…    

Today’s U.S. Data Cupboard has two pieces of real economic data for us to see today. Industrial Production (IP) and Capacity Utilization (CAPU) will print this morning for September…  IP could come out of the red when it prints today, but that’s not saying much, and CAPU should remain steady Eddie. The current Home Builders Index will print this morning too, but it will take a back seat to the two real pieces of economic data…  

To recap…  After a mostly choppy day of trading yesterday, the news that a new leader for the Fed Chairman job, who is considered to be a hawk, came out, and the dollar took off for higher ground. That news and the news that the U.S. is the aggressor in the new NAFTA talks, sent Gold to the woodshed, and the other metals followed. Koos Jansen says there’s no such thing as a Gold backed Oil future..  But it’s all the same for the dollar…   

For What It’s Worth…  This is an interesting read on Gold, and I thought it to be FWIW worthy, since Ed Steer highlighted it in his letter!  And it can be found here: http://tocqueville.com/tocqueville-gold-strategy-third-quarter-2017-investor-letter/  

Or, here’s your snippet:” Gold appears to have formed a solid base since bottoming at year-end 2015 at $1060.00/oz. Through 9/29/17, the metal’s price increased 11.10%, even after a sharp pullback from its early September 2017 high of $1355. As of September 30, 2017, the price stood at $1280.15, 20.75% above its low at year-end 2015.

In our view, gold and the precious-metals complex is in the early stages of a dynamic up cycle that will match or exceed the run from 2000 to 2011. Downside appears limited; the greatest challenge for investors will be to muster the necessary patience to hang on until the up-cycle becomes more assertive and evident.

Despite the four-year correction from $1,900/oz. to $1,060 at year-end 2015, gold has outperformed stocks and bonds since 2000, the dawn of radical monetary practices by the world’s central banks. We have shown the chart below in previous letters, and repeat it again here only to emphasize this under-recognized fact.

What we also know is that gold production is peaking out, and is likely to decline over the intermediate term even if gold prices rise substantially. Should investor demand reawaken, there is very little slack in supply to absorb it. The depletion of gold inventories in London and other Western vaults – a result of demand in Asia – is a finite process with measurable limits. There are many signs that those limits are being reached.

Finally, we know that the fiscal position of Western democracies is perilous and worsening. History teaches that resolution of fiscal impasses most often results in monetary debasement, which has invariably led to a rise in the nominal value and purchasing power of liquid assets that cannot be debased. Gold and silver constitute a short list of non-financial assets with monetary characteristics.”

Chuck again…  As I said above this is a good article/ read, and it goes on to talk about fundamentals and everything else a Gold buyer or holder should know…   

Currencies today 10/17/17… American Style: A$ .7855, kiwi .7183, C$ .7977, euro 1.1760, sterling 1.3255, Swiss $ .9773, … European Style: rand 13.3718, krone 7.9287, SEK 8.1412, forint 261.68, zloty 3.5983, koruna 21.9121, RUB 57.22, yen 112.15, sing 1.3560, HKD 7.8075, INR 64.94, China 6.5894, peso 19.05, BRL 3.1548, Dollar Index 93.45, Oil $52.16, 10year 2.31%, Silver $17.14, Platinum $930.77, Palladium $985.43, and Gold… $1,291.40    

That’s it for today…  Hmmm… Well, at least Baseball gets going again tonight! It’s been a long morning already for me… UGH! But I don’t have to go into an office, so I have that going for me! HA!  At one point on Saturday night, I actually thought my beloved Mizzou Tigers could hang with the #3 Georgia Bulldogs, as the game was tied 21-21… But then the trap door, that’s always there for my Tigers, sprung, and soon it was a blowout for Georgia… UGH!  And our Blues lost on Saturday night too. The only redeeming things, sports-wise, was that the Astros and Dodgers won their games that night! The Moody Blues take us to the finish line today with their song: Isn’t Life Strange, from the Seventh Sojourn album, one of my faves!  OK, I’ve gone on long enough today, it’s time to go! I hope you have a Tom Terrific Tuesday, and Be Good To Yourself!