Author: admin

Chuck Butler’s: A Pfennig For Your Thoughts 

December 20, 2017 

* Currencies & metals trade in tight ranges

* krona is best performer overnight!

* A special treat awaits you in the letter today… 

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

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

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

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

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

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

On the night before Christmas

As I sat in my chair

I was thinking of memories of this past year.

Changes were many

That opened new doors.

Should I step through them

Or should I ignore?

One story was ending

Leaving some true friends behind.

They’d carry on working

The work I’d defined.

The future was pending

Oh what should I do?

My readers would miss me

And I sat in a stew.

Along came some sisters

That were quite the gurus.

Financial advisors

For many, not few.

I considered my options

And now was my time.

To semi-retire

And write things on my mind.

My schedule is flexible

The Adens are great.

The currencies are slow

Not quick on the take.

The children are older

All grown and a blast.

My wife is as beautiful

As she was in the past.

I love my music

My guitar and my songs.

BBQ cookouts

Are where I belong.

I’m as feisty as ever

And I feel mentally strong.

My readers and friends

Keep me moving along.

So as I sit here

And reflect on this year.

I know that I’m blessed

And I’ll keep my good cheer. 

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

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

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

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts    

December 19, 2017  

* Currencies make small moves… 

* S. African rand soars on election results…

* More problems for Toys “R” Us

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck again… Uh Oh…   

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

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

Chuck Butler

 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

December 18, 2017  

* Was Yellen holding something back?

* Kiwi begins to rally

* A possible volatile week?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

December 13, 2017 

* What will Yellen say today? 

* Dollar backs off for a day… 

* Chuck wants to be a reporter? 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

December 12, 2017  

* Dollar resumes its rally…

* An Engineered takedown?

* A short-n-sweet Pfennig today… 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

Chuck Butler’s: A Pfennig For Your Thoughts 

December 11, 2017

* A Big week for Central Banks

* Dollar rally takes a breather

* All by myself… again… 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

 

Chuck Butler’s A Pfennig For Your Thoughts 

December 8, 2017 

* Dollar continues to be a bully… 

* A two week extension is in place

* To keep the government from a shut down!

Good Day… And a Happy Friday to one and all! Looky here! 5 consecutive days writing the Pfennig! YAHOO!  I was seriously considering the other day of retiring because I’ve been so hit and miss as I recover from my surgery, and the ongoing fight with an infectious disease. But then I realized that I had received no complaints, so if we continue on like this for awhile, and it’s Ok with you, then I put those retirement plans on hold…  Besides, what would I do if I didn’t have this platform to give my opinion!  I have a T-shirt that says, “Everyone is entitled to hear my opinion” HA!  The great Al Stewart greets me this morning with his song: Song On The Radio…   

The dollar continues to push the currency appreciation envelope, and its move is not just concentrated against the currencies. Gold & Silver are getting sold VS dollars too.  Suddenly, traders and market participants are using the  pending rate hike by the Fed, and the passage of the Senate version of the Tax Reform Bill as the reason for all this dollar buying…  

We’ve become Comfortably Numb with the noise from N. Korea, the general public doesn’t know about the U.S. pushing the envelope with ventures into China’s territorial waters, or the military exercises that usually precede a war, that are going on in S. Korea… To the general public it’s all seashells and balloons right now, the stock market is still strong, Bitcoin is $16,000, and they believe the Fed when they say that everything is hunky dory! 

But, I’m not the general public, and neither are you, since you read this letter, and know about these things and others that are weighing on the general outlook of our society / economy/ dollar. 

Speaking of Bitcoin, I really stirred up the hornet’s nest the other day when I reminded everyone of who uses Bitcoin… I have to admit the rise in the digital currency is quite impressive, but what’s behind it? Just investors getting into it and driving the price higher by the minute, sort of like the Dot Com bust, of years ago… At least when the Dot Com  collapsed, holders of the stocks that had soared on nothing behind them,  still had their stocks, they weren’t worth a damn, but they had them nonetheless…  I’m just saying…  

A lot of longtime readers are thinking that maybe I do need to retire, because I’ve never thrown myself in front of a bus like I have with Bitcoin… No worries, I’m not really in front of the bus, I’m just on the sidewalk throwing mud at the passing bus… 

Alrighty then, let’s see… Gold has never been worthless, and you don’t need electricity to own Gold.. I’m just saying… But what you do need right now is the intestinal fortitude to buy Gold…  I don’t believe it’s a falling knife, but it has suffered through its worst trading week since last May, and it hasn’t been this cheap since July…   

I told you, I told you, I double, double told you! Late yesterday afternoon it was announced that lawmakers had agreed to extend the deadline for a budget 2 more weeks. I laughed when I heard the news as if these chuckleheads could iron out a budget in the next two weeks when they previously had 6 months to do it! And it didn’t take a rocket scientist to figure out what was going to happen here, because when a country bumpkin like me can see it coming, then it’s not that difficult! 

So, we had two Central Bank meetings this week (in Canada and Australia) and both disappointed the markets with not only their leaving rates unchanged but their comments about not hiking rates that came afterward.  I was really disappointed in both of these Central Banks, and the selling of their currencies since the respective meetings has been warranted, given what was said… 

That leads us to next week when the Fed will meet… It will be Janet Yellen’s last meeting (I think) as Chair person of the Fed, and while I’m still saying there will be no rate hike, especially now since we’ll have not budget in place and a government shutdown is still a possibility, the markets are all in for a rate hike next week.   

The European Union (EU) and the U.K. seems to have broken through on the hang ups with the divorce proceedings, and that news has the pound performing as the best currency move overnight…  there are still talks going on about who gets the kids, and the lake house, but at this point the talks are going much smoother than previously. 

Well, I almost made it through the letter without talking about the Jobs Jamboree which will take place today…  I told you yesterday that the ADP Employment report showed that 190,000 jobs were created in November, and the so-called experts have forecast the BLS report today will show 200,000 jobs created…  I still can’t believe last month’s 260,000 number the BLS threw at us…  But the markets did, and that’s all that matters, right? 

Oh, don’t get me started talking about right and wrong when it comes to the BLS and their hedonic adjustments! I’ll just move along here rather than get myself all worked up and then Kathy will have to deal with me, and she’s had it with me right now anyway…  OOPS I’m not supposed to talk about her in the Pfennig, per her demands, so those of you who are friends of hers please don’t mention this!   

To recap…  The dollar continues to push the currency appreciation envelope and its all about the Fed and its rate hikes, and the possibility of a Tax Reform passage before year-end..  There are no qualms or concerns about the possibility of a Gov’t shutdown, so everyone is all-in on buying dollars today… And it’s not just the dollar rallying VS the currencies, Gold & Silver are getting whacked again too! 

For What It’s Worth…  This is important news folks, so please stay with me on this one… This is an article about the CFPB (Customer Financial Protection Board) or as I call them The thieves from Washington D.C.  And this article spells out just how crooked they are, and it can be found here: http://www.zerohedge.com/news/2017-12-06/cfpb-reportedly-funneled-billions-secret-democrat-slush-fund-consultant-claims   

Or, here’s your snippet: “A consultant who worked with the highly politicized Consumer Financial Protection Bureau (CFPB) claims the organization funneled a large portion of over $5 billion in collected penalties to “community organizers aligned with Democrats” as part of a giant slush fund, the Post reports. 

[The CFPB] Funneled a large portion of the more than $5 billion in penalties collected from defendants to community organizers aligned with Democrats — “a slush fund by another name,” said a consultant who worked with CFPB on its Civil Penalty Fund and requested anonymity.”

Chuck again… And there’s more… One of these days I’m going to tell you what they did to us at my former place of business, it was akin to highway robbery… It’s probably good to put some time between then and when I write about it, so stay tuned for that…  

Currencies today 12/8/17… American Style: A$ .7511, kiwi .6843, C$ .7782, euro 1.1736, sterling 1.3448, Swiss $1.0027, … European Style: rand 13.6180, krone 8.3217, SEK 8.50, forint 267.91, zloty 3.58, koruna 21.7625, RUB 59.17, yen 113.52, sing 1.3534, HKD 7.8068, INR 64.40, China 6.6153, peso 18.92, BRL 3.2631, Dollar Index 94.02, Oil $57.43, 10yr 2.39%, Silver $15.82, Platinum $892.76, Palladium $1,016.00, and Gold… $1,248.20    

That’s it for today…  As I look out the window to the wooded area behind our house, I see nothing but bare trees, and that depresses me… I’ve got one month before I head south for the winter, and it’s a good thing that Christmas and all the fun around it is coming, otherwise this cold weather and bare trees would have me down in the dumps! And we can’t have that, now can we? HA! The Army/ Navy football game is all that’s on tomorrow, UGH! Our Blues were in funk, but seems to have come out of it with a shutout of the Dallas Stars last night, following up on their victory in Montreal earlier this week, so Let’s Go Blues! It’s Friday, and I miss my Friday visits to my local watering hole, to be with friends… UGH! But, I’ve got to get stronger before that can happen again! Paul McCartney, and Wings take us to the finish line today with their song: Let ‘EM In…  So, I can’t do anything to get us to a Fantastico Friday, but you can, so go do it!  And Be Good To Yourself!  

Chuck

Chuck Butler’s: A Pfennig For Your Thoughts   

December 7, 2017   

* Dollar buying continues… 

* BOC leaves rates unchanged… 

* Chuck explains dollar buying.. 

 

Good Day… And A Tub Thumpin’ Thursday to you! The Pfennig won the coin toss today, much to my chagrin, as I was looking forward to catching a few more zzz’s this morning… But here I am, and I’m ready to rock you like a hurricane! Not! I took a step backward yesterday, as Tuesday was a pain free day, and I got cocky and thought I could ditch my walker and go back to my cane yesterday.. Bad thought! I guess I need to be more patient…  Stevie Wonder greets me this morning with his song: I Wish… which is from my fave album by Stevie Wonder… Songs in the key of life..  

The buying of the dollar which began on our Tom Terrific Tuesday, continued throughout yesterday and overnight, with the Dollar Index rising from 93.11 a couple of days ago to 93.77 this morning. Or, you could very easily see that the dollar has the conn right now, by looking at the euro, which has fallen from near 1.20 last week to 1.1780 this morning… 

So… what’s all this dollar buying about I hear you asking? Well, I think it’s investors getting in ahead of the final Tax Bill is approved, for in that Tax Bill is a provision much like the one that we had to suffer through in 2005, where U.S. Companies doing business overseas will be able to repatriate earnings held in the overseas country back to the U.S. at a reduced tax rate… 

From what I’ve read, the numbers go like this: The President’s numbers have the total holdings overseas at $4 Trillion. It is estimated that 70% of that total is already held in dollars, which leaves 30% or $1.2 Trillion that’s held in a foreign currency, that could be converted to dollars and returned to the U.S.  That would be a HUGE positive move for the dollar, folks… But it would be a one and one deal… I suspect that the majority of the conversions would take place in the first quarter of 2018.  

But that’s a HUGE number to get converted, so that’s what I think is happening right now… Investors that see this coming are getting in ahead of the deal…  Of course the Senate Tax plan still has to be reconciled with the House Tax plan, and be on the President’s desk by year-end…  We are approaching the Christmas break, and that could very well be a roadblock for the approval before year-end…  

Before we get to Christmas though, we have to get through the passage of a Budget here in the U.S. Tomorrow is the deadline that was put in place when the lawmakers couldn’t agree on anything a couple of months ago, except to extend the talks to 12/8/2017, which happens to be tomorrow! 

I fully expect the lawmakers to pass another extension tomorrow to keep the Gov’t from shutting down, which is nothing more than kicking the can down the road, folks…  Like the GEICO commercials.. Kicking the can down the road, it’s what we do… 

Alrighty then, I’m going to move along here, because I could feel my blood pressure rising while talking about our lawmakers inability to pass a budget…  

The Bank of Canada (BOC) met yesterday, and left rates unchanged, but sent the loonie downward with their comments following the rate announcement. Seems the BOC is worried about rising inflation, but with no rate hike to combat that worry, the markets immediately believed the BOC will be behind when inflation begins to take off… And that meant the selling of the loonie, which lost nearly 1 full cent yesterday. 

The Aussie dollar (A$) and kiwi were also on the selling blocks yesterday, as traders are looking at their positive rate situation to the dollar, and seeing it narrow, as these two currencies’ respective Central Banks are in now hurry to hike rates, and that will leave their positive rate advantage to the dollar at risk… 

The price of Oil has really drifted downward this week, after a report showed that U.S. gasoline supplies were more than ample. And with the price of Oil slipping, the Petrol Currencies get sold in sympathy to the falling Oil price. Our friends (NOT!) at OPEC continue to adhere to their self-induced reduced production levels, but all that does is give the U.S. shale producers the thought that they could rule the world… And their production goes sky high…  The OPEC members truly thought that by now their production cuts would yield an Oil price of more than $60… Instead they are dealing with a slipping Oil price of $56 and change..  

But the slippage in the price of Oil is peanuts compared to the slippage in the price of Gold lately… The shiny metal lost another $3 in trading yesterday, which wasn’t that bad, but has lost over $9 in the early morning trading today… UGH! Somewhere, probably in Russia and China, they are not so upset with this drop in the price of Gold, due to their continued buying of the shiny metal… 

Is all this selling in Gold just a move ahead of the price reset that James Rickards talks about?  I sure hope so!    

The U.S. Data Cupboard had the ADP Employment Report for November yesterday, and it disappointed the markets… The expectations for the data was that it would show 235,000 jobs created in November, but instead it only showed 190,000…  So, like I explained previously, this ADP report is supposed to give us an indication of what the BLS comes up with tomorrow…  

The BLS report is as useless as the G in Lasagna, to me… For I am aware of a few of the games the BLS plays with the report, and it just makes me sick to my stomach to think that the markets still put their faith in the BLS and trade accordingly… UGH!    I had better stop there before I get all revved up about the BLS.. Come on Chuck, move along… OK… I was this close to ripping them apart at the seams, but I’ll save that for another day…  

To recap …  The dollar has the conn, and it appears to Chuck that these dollar buyers are getting in ahead of the passage of the Tax Bill for in the Bill there’s a repatriation piece that allows U.S. Corporations doing business overseas to repatriate their earnings at a reduced tax rate, and it could mean tons of currency conversions to dollars, folks… UGH! The BOC left rates unchanged and then opened mouth and inserted foot, and it cost the loonie a full cent in value…  

For What It’s Worth… Yesterday I told you about how U.K. PM May was in trouble regarding her views on BREXIT, and to my delight zerohedge.com had an article explaining it better, so that’s what I have for you today and it can be found here:http://www.zerohedge.com/news/2017-12-06/pound-tumbles-amid-brexit-chaos-headline-havoc  

Or, here’s your snippet: “Cable traders are suffering through a news overload this morning, with the optimism and euphoria which sent the pound to two month highs as recently as 2 days ago fading fast on speculation whether U.K. P.M. Theresa May will be able to engineer a Brexit breakthrough in time. And following overnight speculation that her cabinet may revolt, and what one desk dubbed “headline havoc” this morning in which DUP sources saying that there will be no deal this week, it’s looking increasingly in jeopardy.

Overnight The Telegraph and Bloomberg reported that Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, “a split that threatens to undermine her chances of breaking the deadlock in negotiations.” Foreign Secretary Boris Johnson and Environment Secretary Michael Gove “will lead a Cabinet revolt against Theresa May over fears she is forcing a soft Brexit” the Telegraph reported. While this is hardly the first time we’ve heard this sort of speculation, considering the closeness to the EU Council Summit next Thursday/Friday, the clock is ticking for May to come up with a solution.

That may be tricky because with just days to go until a deadline to get talks back on track and the pound sliding for a second day, May is struggling to get the Northern Irish party that props up her government to sign up to her Brexit strategy. Wednesday had been tipped as the day May could head back to Brussels to resume talks that suffered an embarrassing breakdown on Monday. Explaining the tension, DB’s Oliver Harvey believes the question of a December breakthrough is now in doubt after the DUP rejected the proposed compromise over Northern Ireland’s status after Brexit, and so scuppering talks. He notes that the failure of the UK to reach agreement is problematic for four reasons. 1) the DUP appears to have drawn a red line over continued regulatory alignment between Northern Ireland the Republic. 2) proposed regulatory alignment between Northern Ireland and the Republic has emboldened leaders of other devolved administrators, most notably in Scotland. 3) the rejection of the deal has emboldened some hard Brexiteers within the Conservative Party, and 4) time is now tight.” 

Chuck again… I know that was quite long for a “snippet” but I wanted to make sure you understand the problems that PM May is facing and apply that to how we should continue to steer clear of pound sterling…  

Currencies today 12/7/17… American Style: A$ .7520, kiwi .6833, C$ .7797, euro 1.1780, sterling 1.3345, Swiss $1.0073, … European Style: rand 13.5036, krone 8.2770, SEK 8.4453, forint 267.10, zloty 3.5746, koruna 21.7220, RUB 58.99, yen 112.75, sing 1.3506, HKD 7.8107, INR 64.50, China 6.6135, peso 18.92, BRL 3.2375, Dollar Index 93.77, Oil $56.11, 10-year 2.34%, Silver $15.84, Platinum $898.44, Palladium $1,000.44, and Gold… $1,257.00   

That’s it for today… It’s Pearl Harbor Day…  A couple of years ago, I took a trip to Hawaii, and visited the Pearl Harbor museum… I wish everyone could make that trip, for that’s a very “moving experience”…  So… today marks the 76th anniversary of the first “day in infamy” for the U.S.  I will be taking a minute to reflect on that day today, and I would hope you would too…  I’ll go back to being careful with my movements today, and store away that cockiness I had yesterday for sure! I told you the other day that I was visited by good friends, Rick and Laura, and today’s song that takes us to the finish line is one of Laura’s favorites songs… The Scorpions and their song: Still Loving You take us to the finish line today, and with that… I hope you have a Tub Thumpin’ Thursday, and Be Good To Yourself! 

Chuck Butler

 

Chuck Butler’s: A Pfennig For Your Thoughts 

December 6, 2017

* Dollar Gets Bought…

* RBA leaves rates unchanged

 Good Day… And A Wonderful Wednesday to you! The Pfennig lost the coin toss this morning, so that’s the reason this is later than usual…  As I said last Wednesday.. Better late than never, right?  Things are still not back to normal around here for me, and so the Pfennig suffers. Hopefully, things begin to normalize for me…  Bob Seger and his Silver Bullet Band greets me this morning with their song: Turn The Page, which is exactly what I would like to do with this period of my life!   

Well, we finally saw some movement in the currencies yesterday and overnight, with the dollar getting bought, and the currencies slipping. Again, the move isn’t great shakes, but it still is noticeable, so therefore it registers on the Richter Scale.. HA!  

There’s an article on the Bloomberg this morning that’s talking about how the dollar will see more selling in 2018, even with the Fed in rate hike mode. The article points out that the dollar has seen its worse year in the last decade in 2017, and the analysts writing the article believe that the impetus toward a lower dollar in 2018, will come from a revival of global growth, and rate hikes that challenge the Fed’s rate hikes all over the globe…  

This article falls in line with the one I told you about on Monday from UBS that talked about how they saw a global tightening of credit in 2018..   So, remember earlier this year when I would talk about how I was seeing signs of a revival of global growth, and called it the “Global Growth Tent Revival”?  Once again I was ahead of the crowd on this call, but did anyone listen to me? I doubt it…  So, listen to me now and hear me later, this Global Growth thing has potential, and that’s it…  

There are plenty of athletes that have “potential” but very few of them “make it”…  So, while I agree with the article that the dollar will find it a tough row to hoe in 2018, I’m thinking it will have more with the Fed losing whatever credibility they have left, when they have to reverse their moves this year…  That’s my story and I’m sticking to it!   

Things in the U.K. aren’t so rosy these days.. Seems PM May, is backing into a corner on her views regarding BREXIT, and the leaders of the BREXIT move aren’t agreeing with her views… And then there was this latest poll in the U.K. that showed a majority of citizens still believe in BREXIT, but believe it will end badly…   

Well, so do I, so we have something in common, eh?  The pound was flying high as last week ended, but these new developments with the BREXIT negotiations have pulled the pound back down. 

One day after seeing the A$ and kiwi climb to the top of the performers’ list, the both got sold overnight. The A$ took the biggest hit, and the kiwi selling was more of a “sympathy trade”…  The Reserve Bank of Australia (RBA) met last night and left rates unchanged, which everyone expected, but then the RBA had this to say, that I’m sure had something to with the A$ selloff..  The RBA said that they were in no hurry to hike rates, which led the markets to think that their earlier thoughts of a rate hike in the 1st QTR of 2018, will have to be pushed back…   

You know, I’m still amazed at the dollar’s underwhelming reaction to the passage of the Tax Reform Bill last weekend… I mean wasn’t this tax bill supposed to be the cat’s meow for the reflation trade here in the U.S. ?  Or… was all that already priced in to the dollar?  It sure appears that way to me…  

So, I’m thinking that if the dollar can’t mount a huge rally on the news that the tax reform bill, then it really is in the stage of beginning to end the strong dollar trend…    I’ll stop there and let that last thought sink in a bit…   

OK,  I’m back! Gold got whacked again yesterday.. UGH! Just what the heck these sellers are thinking is a mystery, and while I don’t plan to attempt to get into their heads, I will say that I think they are all somewhat lost…  So, Gold lost $9.70 yesterday with 302,000 contracts traded…  Craziness here too folks..  Gold closed below its 200-day moving avg. yesterday according to Ed Steer, and began the day at $1,265.90 today…

The U.S. Data Cupboard yesterday had the Rocktober Trade Deficit and it printed worse than expected! The Trade Deficit widened to $48.7 Billion up from the September print of $44.9 Billion… That’s a HUGE swing folks, and while it signals heaps of imports, it also signals that the dollar was stronger in Rocktober than in September…  

Today’s Data Cupboard has the ADP Employment Report, which is supposed to give us an idea what the BLS Jobs Jamboree print will be on Friday..  Last week, my fave economist, Danielle Di Martino Booth, asked readers to send in their favorite employment indicator. She was looking for something not followed by everyone but was better than the BLS report…  I almost sent her my feelings on the ADP report… 

I’ve said many times that I think the country should ditch the BLS and use the ADP report as their “employment go to report”… ADP is the payroll system for almost every corporation or small business in this country, and if they show that 190,000 jobs were added in a month, they should be the ones who know!  

To recap…  The dollar got bought on Tuesday and overnight but the moves aren’t huge. U.K. PM May is hearing it from all sides on BREXIT, and the citizens of the U.K. think BREXIT will end up badly… This all weighs on the pound. The RBA left rates unchanged and sent the A$ downward with some comments about not seeing the need to hike rates for some time…  

For What It’s Worth… Well, this Friday is the deadline for a budget deal here in the U.S. Recall that the lawmakers kicked the can down the street a couple of months ago, to this Friday… And I read this morning, that there will be another bill to delay it another two weeks… This is more craziness folks… And I doubt the Fed will hike rates on the 13th, if there’s no budget deal in place, or the Gov’t is in shutdown mode…  You don’t have to take my thoughts on this as James Rickards weighed in with his thoughts in the Daily Reckoning (www.dailyreckoning.com) yesterday, and I have some of that for you here…  you can click on the link above for the full story… 

Or… here’s your snippet: “Will Republicans and Democrats agree on a budget, and avoid a government shutdown after midnight Friday?

I’d say the odds are 50/50. Actually, I put the odds of a shutdown at about 55%. There’s certainly enough substance here to be wary.

The government could shut down because of disagreements over defense spending, funding for Trump’s wall with Mexico, deportation of illegal immigrants brought to the U.S. as children (the “Dreamer Act” also referred to as “DACA”), funding for Planned Parenthood, funding for Obamacare (called “SCHIP”), disaster relief and more.

There’s not much middle ground between Democrats and Republicans on many of these hot button issues.” 

Chuck again…  I don’t believe the lawmakers will allow the Gov’t to shut down, so look for that “extension” if you will, to save the day this Friday…  

Currencies today 12/6/17… American style: A$ .7585, kiwi .6899, C$ .79, euro 1.1804, sterling 1.3384, Swiss $1.0111, … European Style: rand 13.5260, krone 8.2605, SEK 8.4068, forint 266.41, zloty 3.5698, koruna 21.7142, RUB 58.69, yen 112.49, sing 1.3481, HKD 7.8126, INR 64.48, China 6.6140, peso 18.80, BRL 3.2385, Dollar Index 93.37, Oil $56.89, 10-year 2.33%, Silver $16.07, Platinum $907.14, Palladium $996.05, and Gold… $1,267.70  

That’s it for today…  Well, our Blues got back on the winning track last night in Montreal. They had gone into a funk, but looked much better last night. Winter weather has arrived here in the St. Louis area… I don’t like cold weather one iota, and longtime readers know that I head to S. Florida in January to get away from the cold. But then there’s always this cold weather in December that I despise! At least now that I’m somewhat retired, I don’t have to go out in it if I don’t want to! So I have that going for me, eh? Nilson takes us to the finish line today with his song: Without You…  And with that, out of the way, it’s time to go… I hope you have a Wonderful Wednesday, and Be Good To Yourself!  

Chuck

 

Chuck Butler’s: A Pfennig For Your Thoughts  Craziness

* Another day of little movement… 

* BOC and RBA to meet this week… 

* Wait till you read about this new craziness!

December 5, 2017  

Good Day… And a Tom Terrific Tuesday to you! I flipped a coin this morning after hooking myself up to my antibiotic… Heads, I go back to sleep, Tails I begin to write the Pfennig.. Well, I guess you’ve figured out that it came up Tails… I don’t mean to be so flippant about whether I write the letter or not, but I have an excuse… Doing these antibiotics through the PICC-line every 6 hours, is like having a baby in the house again, and I’m only getting about 4 hours of sleep at a time… UGH!  But you didn’t click on this email to hear about my problems, so I’ll get to work!  Derek and the Dominoes (Eric Clapton) greet me this morning with their classic rock song: Layla…   

Well, another day, another day of no currency movements, or whatever there is, it’s small… For instance, the Dollar Index yesterday morning was 93.15, this morning it’s 93.11… Whoa better pull back on the reins, that’s to much movement! NOT! The important thing is that the dollar’s rally last week has fizzled out… I guess the PPT has better things to do these days… HA! 

As I look at the landscape for the currencies, it appears to me that currency traders are waiting for “something big” to trade on.. The Aussie dollar (A$) and kiwi are the two best performers overnight, and their moves aren’t anything to get all lathered up about. But… they were positive, so they had that going for them! 

I had to laugh this morning when I was going through the process of obtaining the currency prices… On the Bloomberg site, they had two headline stories highlighted back to back, belly to belly.. One said something about how the pound sterling was rallying on the BREXIT talks, and the other one, right below the first one said something about how the pound can’t rally right now because of the BREXIT talks…  Hello? Is this the Editor’s desk? Good… I want to point out this point, counterpoint thing you’ve got going on this morning… It’s confusing to say the least! What? you don’t care? Ok, I’ll hang up now and go yell at the walls, thank you for taking my call!

Yesterday, I highlighted the craziness of the painting that garnered $127.5 Million… Well, this beats that craziness in the markets, check this out!

Did you hear the news (probably not) that a European corporation, Veolia has issued a 500 million 3-year EUR bond (maturity November 2020) with a negative yield of -0.026 %, which is a first for a BBB issuer, and if that’s not crazy enough for you, the bond was oversubscribed by 4:1! Are you kidding me?  In Grant William’s Things That Make You Go Hmmm…  he quoted the great analyst James Grant, who had this to say about this issue… “Said another way, three out of four investors who wished to lose money on a yield-to-maturity basis were left disappointed.” – James Grant  

WOW! Investors lined up to take negative yields for 3 years in a bond… I told you yesterday about the painting lunacy, well this item and the fact that it was oversubscribe 4:1, is worse, if you ask me! Negative yield has become acceptable by investors… That’s just crazy!   The Craziness is all around us folks…  Stocks that won’t quit moving higher, Bitcoin at $10,000 no, wait is it $11,000 now? Bonds at negative yields, painting that go from $10,000 in 2005 to $127.5 Million now, and the list goes on..  I feel like George Costanza’s dad… Serenity NOW! 

Another example of the craziness in the world today… A dear reader sent me a photo of a man in flood waters, and a CNN reporter asking him what he thought about Melania’s shoes…  Of course that was photo-shopped but I wouldn’t doubt it happening, do you? 

Well, the overseas news isn’t completely void of anything new… The Bank of Canada (BOC), and the Reserve Bank of Australia (RBA) are going to hold meeting this week… But that’s about all they are going to do, as I don’t expect any rate movements from  of the two… 

Gold still can’t find a bid anywhere, and wouldn’t you know it, yesterday I highlighted Palladium, and then the precious metal went about having the stuffing knocked out of it!  Well, I think I mentioned this last week, but the news is gaining more traction this week, and I’m talking about the BRICS (Brazil, Russia, India, China, S. Africa) mulling over whether or not to go at a Gold Trading payment system…  

Why wouldn’t they? They have to be getting tired of the West dominating the price of Gold with their paper trades…  The Shanghai Gold Exchange (SGE) was created as a physical Gold trading system only, so they have a base trading mechanism in my view…  I’m excited about this possibility, so I have to say that I hope that the BRICS do go about implementing a Gold payment system…   

Oh! And did you see/ hear what the former Fed Chairman, Alan Greenspan said about deficits and Gold? Well, first I need to remind everyone that Big Al was a Gold Bug long before he was the Fed Chairman, schooled by Ayn Rand… But as Fed Chairman he forgot all about his lessons about Gold, and started this whole mess we’re in…  Now skip ahead to now, and Big Al is back to being a Gold Bug, and was recently quoted as saying, ” Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.”

The U.S. Data Cupboard yesterday, had the Rocktober Factory Orders, which printed negative at -0.1%…  I told you that it would probably be a weak report, and there you go! it was exactly that!  Today’s Data Cupboard, has the Rocktober Trade Deficit… Well, in Rocktober, the dollar was fighting back and since it had gained ground, I’m going to say that the Trade Deficit will show it by widening in the month…

Look for the deficit to widen to over $47 Billion, up from the previous month’s (when the dollar was getting sold) $43.6 Billion…  

To recap…  Another day of no movements in the currencies… Well there were some movements but they were small and barely noticeable.. The BOC and RBA meet this week, and Chuck thinks that’s all they are going to do, with no rate movements expected. Chuck also points out some real craziness in the markets… And Gold still can’t find a bid… 

For What It’s Worth… This article is from the Russian Times (RT) and I found it in Ed Steer’s email this morning. Ed has been having some website problems so I forgo the link to his site today. This article is about how Russia and China are moving toward the goal of removing the dollar from their trading… and it can be found here: https://www.rt.com/business/411877-russia-china-bonds-dollar/  

Or, here’s your snippet: “The Moscow stock exchange will soon issue nearly $1 billion-worth of yuan-denominated bonds. It could become the start of a new financial system not based on the US dollar, analysts say.

Russia will issue the 6 billion yuan (about $900 million) bonds with a five-year maturity in December or January. The Central Bank says it is testing the water for future investments.”  

Chuck again…  Hey! we brought this on ourselves, with all the deficit spending through the years, bringing the value of the dollar lower, and giving holders of the dollar a reason to want to remove it from their reserves…  

Currencies today 12/6/17… American Style: A$ .7645, kiwi .6898, C$ .7911, euro 1.1867, sterling 1.3417, Swiss $1.0159, … European Style: rand 13.4888, krone 8.2985, SEK 8.4091, forint 264.59, zloty 3.5424, koruna 21.6216, RUB 58.83, yen 112.50, sing 1.3459, HKD 7.8127, INR 64.40, China 6.6199, peso 18.61, BRL 3.2513, Dollar Index 93.11, Oil $57.17, 10-year 2.38%, Silver $16.32, Platinum $922.26, Palladium $996.36, and Gold… $1,278.40  

That’s it for today…  Last evening I had a visit from former neighbors and good friends, Rick and Laura, and then another neighbor left a plate of homemade donuts at the door for me, saying that she had heard I was having stomach problems again and thought the donuts might help! WOW! Thank you Lynn! What a sweetheart!  I had a doctor appt. yesterday. This doc is always amazed that I keep a smile on my face through everything…  I assured him that there were days when I didn’t smile… He calls me the Energizer Bunny, because I just keep going and going…  And with that… The Michael Stanley band takes us to the finish line today with their song; Rosewood Bitters…  I hope you have a Tom Terrific Tuesday, and be Good To Yourself!

Chuck