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Chuck Butler’s: A Pfennig For Your Thoughts

July 18, 2017

* Dollar gets sold like…

* The strong dollar trend…

* Is over…  are you ready?

 

Good day… And a Tom Terrific Tuesday to you! Are you ready for this? I know, I have to tell you what “this” is, right? Well, I’ve been talking about it for a couple of months now, come on, you know it, it’s on the tip of your tongue, right? Of course I’ll tell you, but you’ll have to wait a minute, because first Al Stewart greeted me this morning with his song: The Year of the Cat…  And I love Al Stewart’s music, so it comes first! HA!

Well, I turned on the laptop this morning, and went to the currencies, and saw what I’ve been talking about for a couple of months now… The end of the strong dollar trend!  The Big Dog euro is trading well into the 1.15 handle, and the Aussie dollar (A$) has its sights set on 80-cents! Oh, and the Dollar Index has fallen below 95 to 94.65 this morning. And the A$ has not been this strong since May 2015! And then it was going in the opposite direction! And no one out there in newsletter land is talking about an end to the strong dollar trend, but little old me…  Like I said a couple of weeks ago, they call me: Lone Wolf…  (I know you were thinking more like they call me Looney Tunes!) 

So, what has catapulted the Big Dog, euro well into the 1.15 handle? That’s simple… The selling of dollars. Always, always I tell you, be yourself, no wait! I always tell you that the euro is the offset currency to the dollar, so dollar weakness will be seen in euro strength. What was I thinking, tailing off into Mr. Wizard? But, I see it now… My mind was thinking that the dollar is like Tooter Turtle, and in trouble once again, and looking for help from Mr. Wizard… I know, my mind is a strange place to live… 

So, why were dollars being sold? Because they were supposed to be, given the outlook for the U.S. economy… But that’s just me being plain and simple with my answers… The pundits out there will tell you that the dollar got sold when two more Republican lawmakers decided to not go along with everyone else regarding the Health Care re-write. That decision pretty much deep-sixed the vote on the re-write, because if you don’t have the votes to pass something, don’t bring it to a vote!  

I’m on the other side of the fence on this thought, because the dollar has been getting sold in bits and pieces for 6 months now. Sure it has seen a day or two of rallies, but if you look at the euro 6 months ago, it was 1.0630…  And this is where I get up on my soapbox and begin to talk about Trends… 

You see trends are long sweeping moves in asset classes, like currencies, and they begin for a fundamental reason, and don’t end until they do… Trends are the reason, in this case, that currencies move stronger VS the dollar, and all the other stu, ff that goes on, like technical, and jocular attempts to move currencies, are just things that happen inside the Trend.  A Trend is NOT a One-Way Street, as there can be volatility inside the Trend…  The current strong dollar trend began with the discovery of Europe’s debt problems in 2011, and looks to be on its last legs…

There have been 4 completed Trends and one near completion since Gold was removed from backing the dollar by Richard Nixon in 1971… Remember that? it was supposed to only be a “temporary move”, and here we are 46 years later, and we’re still dealing with his “temporary move”…   Ok, I’m getting away from the discussion of Trends here, but you get my point… A Trend is a powerful thing for asset, either way, good or bad… 

And one of the things that points to the this being the end of the strong dollar trend is that all the currencies are on the rally tracks, and we also have Gold with multiple days on the rally tracks. I told you yesterday that the currencies each have their own “stories” as to why they are on the rally tracks, but those just explain what’s happening inside the Trend, which in my opinion is now a weak dollar trend.  There… I said it! And it began 6 months ago… 

Currencies like the Norwegian krone that play follow the leader, are really moving stronger, not being affected by the small drop in the price of Oil in the past 24 hours.  And now that Big Dog euro, has established its place as the leader, the currencies will all be singing: We’re following the leader, the leader, the leader, We’re following the leader, wherever he may go! 

The price of Gold gained $5.30 yesterday to close at $1,233.70, and at last check this morning it was up another $2.30 in the early morning trading.

I was doing some reading yesterday when I received an email from the GATA people. I always stop to at least see what it is they have to say, and in doing so yesterday, I read a report from securities lawyer and markets analyst, Avery Goodman, who was telling everyone that in his recent Examination of the U.S. Commodity Futures Trading Commission’s reports, he explained how the bullion banks continue to close huge volumes of short positions in the monetary metals that they have been carrying for years. “If the bullion banks know what they’re doing, Goodman writes, this foretells a major rise in metal prices in coming months.” WOW! I wondered what was up with that $11 gain on Friday, and then yesterday Gold gaining momentum as the day went on…

Have the “boys in the band” decided to take their instruments and go home? Now, wouldn’t that just be a shot to the heart for the dollar, if Gold is allowed to run up? I guess at this point we can only hope the “boy in the band” have left the building, because I’m tired of their “songs”! wink, wink… 

Let me take you back to what I was telling you a couple of months ago now… And that is that the sentiment toward the dollar was changing, as traders were growing leery of the Fed’s claims that the economy would surge in the 2nd Half of this year, and that’s why the Fed rate hikes were warranted. As the sentiment continues to change from buying dollars to selling dollars, it will build momentum, and by the end of summer, things will look quite different…  Well, it appears that the timetable has moved up a bit, but who cares? If you listened to what I was telling you months ago, and bought euros when they were trading with a 1.06 handle, then you really don’t care that the timetable has move up! 

So, now I’m going to climb back up on my soapbox and give a speech, are you ready for this?  Fill up the coffee cup, because I’m loaded for bear this morning! 

Quite a few of you longtime readers were with me when the last Financial Crisis hit the U.S. in 2007… And all the time that Ben Bernanke, then Fed Chairman, kept saying that, well, let me let you see what he had to say before all Hell broke loose in the economy… Here are some quotes from Big Ben, before and in the early stages of the Financial Crisis…

When asked about a housing bubble Big Ben said, “Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So what I think is more likely is that house prices will slow, maybe stabilize: might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.” – July 2005

And then in Feb. 2007 as things were beginning to heat up Big Ben has this to say, “Our assessment is that there’s not much indication at this point that subprime mortgage issues have spread into the broader mortgage market, which still seems to be healthy. And the lending side of that still seems to be healthy.” – Feb. 2007

I could go on all day with these quotes, that indicated that the Fed Chairman, nor the Fed in general had any inkling of a coming disaster… And this wasn’t the first time this had happened… Shoot Rudy, you can go back to 1999, and hear Big Al Greenspan talk about how productivity was behind the stock market rise, and we all know what happened next, right? Or, you can go all the way back to right after the Great Depression, when Fed members and Senators, etc. were pounding their fists, and saying that all was well once again, only to have the economy fall right back into another recession a year or so later…

So, when Janet Yellen gets up in front of lawmakers last week, and says that the economy is doing fine, she expects stronger growth and inflation in the second half of the year, and that she truly believes that we, as a country, will never experience a Financial Crisis again, should you believe her? Or… should you run for the hills, because the past record of talking up the economy right before we have a major breakdown is right there before us… I don’t really hear people say this any longer, and I’m glad, but if there was a time and place for a Fed member to say it… “this time will be different”, now would be that time, you know, just to help them save face a little longer…

OK, I’ll get down now… I know that some of you like it when I get up on my soapbox and get all riled up… So, there you go! I hadn’t really done that since leaving my old employer, and it felt good to shake the dust off! My former colleague and longtime friend, soccer legend, Ty Keough, likes to call me: ChuckGambo..  in reference to the Great Mogambo Guru! And I love it when people think of me and the Great Mogambo Guru in the same way… 

To recap…  Well, it appears that from the look of things this morning that Chuck has decided to call it official… The end of the strong dollar trend, and the beginning of a new weak dollar trend… He believes it started 6 months ago, but has really gained momentum in the last couple of months. He explains Trends, and how powerful they can be. The Big Dog euro is trading well into the 1.15 handle this morning, the A$ has its sights set on 80-cents, and Gold has booked 3 consecutive days of gains!

Before I head to the Big Finish today… OK, I’m sure some of you noticed last week that I did some tweaking to the Pfennig each day, by making the font for the email larger, and with Bold type, so it would be easier read, and many of you sent me notes of thanks for doing that. But yesterday, I received a note asking me to un-bold the type… I laughed out loud, and said, “you can’t make everyone happy, Chuck!” Oh well, I’ll keep it as is, as it is easier to read on a mobile device than it was before.

For What It’s Worth…   Here’s another, “Mom, he’s doing it again” thought… This time we’re talking about card debt loans and delinquencies…It can be found on the Bloomberg here: https://www.bloomberg.com/news/articles/2017-07-17/new-u-s-subprime-boom-same-old-sins-auto-defaults-are-soaring

   Or, here’s your snippet: “It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud. Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017.

A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide.

Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis. But since the Great Recession, business has exploded. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion were, topping average pre-crisis levels, according to Wells Fargo & Co.

Few things capture this phenomenon like the partnership between Fiat Chrysler Automobiles NV and Banco Santander SA. Since 2013, as U.S. car sales soared, the two have built one of the industry’s most powerful subprime machines.

Details of that relationship, pieced together from court documents, regulatory filings and interviews with industry insiders, lay bare some of the excesses of today’s subprime auto boom. Wall Street has rewarded lax lending standards that let people get loans without anyone verifying incomes or job histories. For instance, Santander recently vetted incomes on fewer than one out of every 10 loans packaged into $1 billion of bonds, according to Moody’s Investors Service. The largest portion were for Chrysler vehicles.”  

Chuck again… OMG! Haven’t we seen all this stuff before? Well, I guess it’s a good thing that auto loans aren’t as big a slice of the pie as housing was, right?  Uh-Oh! I just remembered, that the average car loan now is more than $18,000, and the length is 66 months… My parents first home was $13,000 and a 30-year mortgage… I’m just saying… 

Currencies today, 7/18/17… American Style: A$ .7937, kiwi .7350, C$ .7927, euro 1.1552, sterling 1.3031, Swiss $ .9550, … European Style: rand 12.9485, krone 8.0977, SEK 8.2808, HUF 265.02, zloty 3.6377, koruna 22.5760, RUB 59.20, yen 112.16, sing 1.3669, HKD 7.8040, INR 64.28, China 6.7722, peso 17.57, BRL 3.1802, Dollar Index 94.65, 10yr 2.30%, Silver $16.10, Platinum $925.88, Palladium $866.15, and Gold… $1,236.00  

That’s it for today, I read in the paper yesterday that we’ll see temps above 100 the rest of the workweek… Times like this is when I was glad I worked inside… For when I was a young man I worked one summer in the heat of Oklahoma, building in-ground swimming pools, nothing like dealing with that every day! Yes, I worked outside doing manual labor during the day, and played my guitar with the band at night… I don’t have the energy now to do either! The grandkids, Delaney, Everett, and Braden all swim in the prelims early this morning, good luck to all of them! I tell them all the time, you’re not racing the person next to you, you’re only racing the time clock… they look at me like I’m from outer space! HA! Head East takes us to the finish line today with their song: Never Been Any Reason… And with that, it’s time… I hope you can go out and make this a Tom Terrific Tuesday! And.. Be Good To Yourself!

  Chuck Butler

 

 

 

 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts

July 17, 2017

* Another day of weak U.S. data!

* Gold gains $11.10!

* Jamie Dimon tells us his thoughts!

Good Day… And a Marvelous Monday to you! Another grand weekend here in the St. Louis area, but hot, hot, hot! But that’s OK, as long as the skies are blue, and the sun shines too! I was lucky enough to get to spend some time with two of my best pals yesterday, as Duane and Rick dropped by to say hi. Those are always good times when friends just stop by to say hi! Charlie Daniels Band greets me this morning with their song: The South’s Going To Do It Again… 

Well… We have a some things to discuss this morning, but the BIG THING I want to get out there, Front & Center this morning, is that next week starts my summer vacation, and while I don’t expect any entries for the Pfennig while I’m gone for 2 weeks,  there might be a re-run of a recent Pfennig for your reading enjoyment… I’ll remind you again on Friday, but you’ll have to do without me for two weeks. I can’t imagine how in the world you’ll get by! HA! 

The other BIG NEWS this morning is that China reported some very good data this past weekend, and that has given the currencies an extra boost to start the week. China’s 2nd QTR GDP printed 6.9%, better than expected at 6.8%… Industrial Production for June beat the estimates with a 7.6% growth print VS last year. Expectations for IP were for 6.5% growth. And to round out the data prints from China, their June Retail Sales grew 11% VS a year ago. The 11% print beat the estimates, which were 10.6%… 

There was strong domestic demand, and with the first QTR’s GDP print also at 6.9%, it does appear that even with all the bad stuff going on in the Chinese economy, that it will have enough momentum to beat their annual estimate for 2017, which is 6.5%…  The Chinese renminbi, in case you haven’t been following it in the currency roundup, has been allowed to appreciate quite often in recent weeks, and with these data prints, the renminbi moved stronger VS the dollar again. 

Well, last Friday was a “data day” here in the U.S. and I told you last week before the data prints began coming in, that I didn’t expect the dollar to get any buying from those reports, as they’ll be weak, negative, or just plain miss the expectation. And… it didn’t! In fact, the data prints were so weak last week, that by Friday afternoon, when the color of CPI (consumer inflation) and Retail Sales were known, the Dollar Index was trading at a level last seen last Rocktober… One data print after another shows the rot on the economy’s vine, and yet the Fed Heads continue to say we’re going to see stronger growth in the second half, along with inflation… Ahem, let me clear my voice here… Yes, you’re on the air with Chuck, what’s on your mind? Thank you for taking my call, I’m a longtime listener, first time caller… I wanted to point out Janet Yellen did mention that inflation was slowing the other day, just wanted you to recall that… thank you I’ll hang up and listen to your response on the radio.. Ahem… Thank you for your call and comment… Yes, she did express concern that inflation isn’t growing and she claims that the Fed Heads can’t figure it out… You mean to tell me that with the thousands of economists they have at the Eccles Building and in each of the district home offices, that they can’t figure this one out? I can… and I’m just a country bumpkin, but I did learn a lot of my economics from the great Hyman Minsky!

So, here it is… I didn’t want to front run an interview print that will be coming soon with good friend, Dennis Miller, the Retirementor, But,,, what in the world do you expect inflation to do, when you’re hiking rates? Don’t you hike rates to cool down an economy and tamp inflation? Why, yes Chuck, that’s what you do! Seems like a layup to me… If you hike rates, inflation comes down… So, don’t go hiking rates when you’re  looking for inflation to get stronger! I shake my head in disbelief that I’m the only one in this conversation with the Fed that can figure that one out!

Oh, and by the way, CPI was flat as a Pancake (Head East), and therefore the year-on-year inflation growth is just 1.6%…

And the Butler Household Index (BHI) was bang on again, as Retail Sales disappointed with a negative -0.2% print…

And Industrial production was both fair and bad at the same time… The June prince was up 0.4% which was fair, but it was all driven by more Oil drilling… And the bad was the manufacturing component of the index, which was down again in June, and marks several months now where this component is down…

In fact, my friend, and publishing guru, Bill Bonner, had this to say about employment gains here in the U.S. “What interests us are the influences that have reduced the labor participation rate for working-age men from 76% in 1990 to only 69% today.

That represents about 6 million men who would otherwise be contributing to growth and output. Instead of adding valuable goods and services, they are consuming them.

Altogether, there are said to be about 102 million working-age people without jobs. Since there are only about 200 million working-age people, that means that more than 1 out of 2 is unemployed.
What’s worse, more and more of those who do have jobs work in “low-productivity” fields – such as government, leisure, education, and health.” – Bill Bonner from Bill Bonner’s Diary 7/14/17

OK… that was a long winded run through the gauntlet of U.S. economic data, eh?  let’s move on to something else. Like I mentioned above, the currencies are getting an extra boost from the Chinese data this morning, after the US. data prints on Friday started the currencies on their way to the rally tracks. The Big dog, euro, has been the leader of these gains VS the dollar for the currencies, but the Global Growth currencies like the Aussie dollar (A$), which I’ve always maintained was the Proxy for Global Growth, are really pushing the currency appreciation envelope across the table this morning. 

All the currencies have their own story as to why they are rallying… The Singapore dollar (S$) is rallying because it keeps pace with the Chinese renminbi. The Norwegian krone is rallying because not only did the price of Oil retain its $46 handle through the weekend, but the euro is rallying, and that is a sign for the krone to push the rally further.  The Canadian dollar / loonie has really gotten a lot of movement from the rate hike last week, and then the fact that the price of Oil retained its $46 handle. 

“It” all appears to be coming together, folks…  What’s “It”? I’m talking about the end of the strong dollar trend, that I’ve been talking about for a couple of months now, as sentiment changes from the love of dollars to the love of the euro…  Well, this will be a BIG week for the euro, and give us some real understanding of whether or not this overall currency rally is on terra firma or not… 

The European Central Bank (ECB) meets this week on Thursday, and the markets are all thinking that ECB President, Mario Draghi, will start the conversation about how and when some accommodation will be removed… IF that actually happens, we could see the euro really start to move higher… Remember, the technical chartists’ said that 1.1428 was the level the euro needed to trade past, and once there, its next stop would be 1.17…  

About a month ago, I wrote for the Dow Theory Letters (DTL) (www.dowtheoryletters.com) about this change of sentiment in favor of the euro, and said then that I thought we were seeing signs that the strong dollar trend was over, as the dollar can’t get love when it prints a good data report (not that often) , and gets the snot knocked out of it when it prints a weak data report. For those of who were around at the beginning of the last weak dollar trend, (Feb. 2002) will recall how everyday was a new record level for the euro VS the dollar… This time we won’t see any new record levels, but, we’ll revisit some old ones that sure looked good back “in the day”… 

On Friday, Gold was allowed to gain $11.10 to close at $1,228.40, and is up a couple of bucks in the early morning trading today. I just finished off my most recent piece for the DTL and it was on Gold… I have a very important point to make in that letter about Gold and the “boys in the band”… I realize that a DTL subscription costs money, which is pretty tight these days, so once it has printed and been out there for readers for a period of time, I can talk about it here… So, you have that to look forward to! HA!

Have I told you lately, that I love you… No wait! Have I told you lately that… I truly enjoy the writings of Grant Williams and his Things That Go Hmmmm, letter that arrives in my email box every other Sunday? This past Sunday had a quote in it that I thought just supported what I’ve been telling you for some time now … That the U.S. Consumer has tapped out! This was taken from iNet and is investment analyst, Jim Chanos speaking on this very thing…

“(iNet Economics): We’re seeing weak consumer spending numbers in both auto and housing, which are big drivers of the economy. With unemployment so low and the expansion where it is, these figures should be better than they are. There are portents of even worse things when you look at state and federal tax receipts, which are down, and other leading indicators.

It could all just be a soft spot in an ongoing expansion — time will tell. But the narrative we were told is that animal spirits would take us to the next level of economic activity. That clearly is not happening in mid-2017. We’re 8 years into an economic expansion, and economists say that the modern U.S. economy has never gone more than 10 years without a recession. So as recoveries go we are well into it.
People have bought their cars and remodeled their houses and done a lot of things that one does in an economic recovery. I think incremental spending [spending based on increased disposable income] is going to be harder and harder to come by as time goes on.” – Jim Chanos

And all I have to say about that is… Right arm, farm out, and out of state! HA! I guess that should be: right on, far out, and out of sight! Just some old hippie sayings from the early 70’s… 

To recap… Friday’s data day in the U.S. was a disaster, and the dollar got put on the selling blocks right away, and stayed there in the overnight markets, but then saw more sliding after China printed 3 strong, better than expected, data reports this morning, 2nd QTR GDP, Industrial Production and Retail Sales. The currencies are all on the rally tracks this morning, led by the BIG DOG, euro… And Gold gained $11 on Friday!

For What It’s Worth… I received this in my email box over the weekend, and immediately thought this is good stuff for the FWIW…It’s a tirade by JP Morgan’s Jamie Dimon, and can be found on MarketWatch here: http://www.marketwatch.com/story/dimon-says-bad-policies-are-hurting-the-average-american-2017-07-14

Or, here’s your snippet: ” Tell us what you really think, Jamie Dimon.

J.P. Morgan Chase & Co.’s outspoken CEO on Friday broke into an impassioned, expletive-tinged rant on the state of Washington politics and its impact on the U.S. economy during one call to discuss second-quarter results.

Dimon said U.S. growth was held in check by a lack of policy momentum in D.C. that has failed to deliver a spate of pro-growth legislation that could help to boost an otherwise sluggish economy. “We have to focus on policy that is good for all Americans,” Dimon said, speaking Friday morning on a call with reporters to discuss earnings.”

Chuck again… Well he goes on and on about this stuff in the article, so if you want to read his tirade in full, click on the lick above… 

Currencies today 7/17/17… American Style: A$ .7824, kiwi .7332, C$ .79, euro 1.1463, sterling 1.3060, Swiss $.9629, … European Style: rand 12.97, krone 8.1719, SEK 8.3311, HUF 266.94, zloty 3.6764, koruna 22.7669, RUB 59.03, yen 112.45, sing 1.3683, HKD 7.8032, INR 64.30, China 6.7708, peso 17.54, BRL 3.1782, Dollar Index 95.21, Oil $46.67, 10-year 2.31%, Silver $16.01, Platinum $926.10, Palladium $857.98, and Gold.. $1,229.60

That’s it for today… I told you I had a lot to discuss with you, and I kept my word, eh? Cardinals are licking their wounds after losing 2 of 3 to the Pirates to start the second half of the season, and now head to the Big Apple.. I received my new letter from Grant Williams last night, and am looking forward to reading it when I get a chance today. While I’m on vacation, little d, Delaney Grace will turn 10.. Can you believe that? She was born right after I had my first two major cancer surgeries, and so I’ll always know how old she is going to be! There used to be this cute little couple that were Pfennig Readers, and every time they saw me at a show, they would ask to see a recent picture of Delaney… Marvin Gaye and Tammy Terrel take us to the finish line today with their song: Ain’t Nothing Like The Real Thing… And with that, it’s time… I hope you have a Marvelous Monday, and Be Good To Yourself!

Chuck Butler 

 

Chuck Butler’s: A Pfennig For Your Thoughts

July 14, 2017

• A Big Day for data here in the U.S.
• Gold gives back Wednesday’s gains… 
• What the heck is Denmark thinking?
• Another hazy, lazy, crazy day of summer… 

 

Good day… And a Happy Friday to one and all! With the way I’ve been feeling this week, I’m ready to attempt to make this a Fantastico Friday! Who’s with me? Baseball gets started again today, YAHOO! Some very loud storms rolled through in the middle of the night here. Our power went out just briefly, but they were so loud they woke me up… The Byrds greet me this morning with their song: Turn, Turn, Turn… 

Well, today’s the day… the day that I give you the details on the Gold price suppression that I’ve been promising you… I’m not going to tell you where you can find it in the letter, so that you’ll read the whole letter… See how tricky I am? First we need to go through the normal process… So, with no further ado, here we go!

It was another hazy, lazy, crazy day of summer yesterday for the currencies, which saw little movement during the day, and only saw some minor gains in the overnight markets. I think that the markets are waiting to see the color of today’s U.S. Data prints before taking any further risks. But as of now, before the data prints here in the U.S., the dollar has a weekly loss… 

And I don’t think it will find any solace in the data prints today that include the stupid CPI and Retail Sales…  I can tell you that the BHI (Butler Household Index) indicates that Retail Sales will reflect the hazy, lazy, crazy, days of summer, but they won’t be negative like in May…  And while I refuse to give two hoots about the stupid CPI, the markets continue to think it’s the Cat’s Meow, and therefore we have to cover it…  And in my opinion, we’ll see CPI (consumer inflation) continue to reflect slowing inflation, which was a concern of Janet Yellen’s this week as she gave two prepared talks to lawmakers. 

And with inflation continuing to slow down, the markets believe that the Fed will have to back off deviate from the “dots”…  Don’t know that is? Ahhh, grasshopper, the Fed uses a graph with dots that are projections of where the Fed Funds interest rates will be. To me, their “dots” are ridiculous… And no one organization, such as the Fed, should be allowed to set market rates… The markets should set their own rates! 

OK, enough on the Fed, before I go down a rabbit hole and don’t ever come back! I’ve got other things to get to today! 

The price of Oil moved higher in the past 24 hours and now trades with a $46 handle… And the Petrol Currencies are taking that move and getting on the rally tracks this morning, led by the Russian Ruble. But the Norwegian krone and Brazilian real are far behind! I told you earlier this week what was pushing the real to higher ground, but now with the price of Oil moving higher, the real has really taken to the higher ground. 

And Gold… I look at yesterday’s trading and just laugh… Not a funny-ha-ha laugh, but more of a cynical laugh, for on Wednesday, Gold gained $2.80 and yesterday it lost $2.70…  But the real short selling came in Silver as the every day man’s Gold, got whacked good!

So, I wrote about this quite a few years ago, long before there was a “change” in my writing…  So, are you ready?  OK, here goes…  Let’s say your job here in the good old USA is to be the guy who’s supposed to protect the value of the dollar. (you’ve done a horrible job, by the way!) And you’ve taken your eye off the ball a couple of times in the past 40 plus years since Gold has freely traded. But when you get you eye back on the ball, you realize that something has to be done to stop the bleeding in the dollar, and it’s all that darn Gold & Silver’s fault! 

So, you devise a plan to short the metals using brokerage houses to execute the trades, and assure them that the regulators will never find their dealing illegal, wink, wink.   I’m not saying that this is what actually goes on, I’m saying it’s a possibility, eh?  So, please keep that scenario in mind as you read this next part…

Well… In lieu of a FWIW today, I have this for you, as promised… this is a memo regarding how the U.S. needed to suppress the price of Gold back in 1974… Well, if it was done then, who’s to say that it isn’t being done now? Read on, or hit the link at the bottom to see the office letterhead, etc. that the memo was written on… Here it is, as promised…

A long memorandum written in March 1974 by a U.S. State Department official for Secretary of State Henry Kissinger and copied to future Federal Reserve Chairman Paul Volcker, then the Treasury Department’s undersecretary for monetary affairs, describes the desire of the United States and its options to prevent European countries from increasing the use of gold in the international financial system.

The memo, titled “Gold and the Monetary System: Potential U.S.-E.C. Conflict,” was recently discovered in the State Department archive by GoldMoney Vice President John Butler and brought to GATA’s attention this week by GoldMoney research chief Alasdair Macleod. It emphasizes the longstanding U.S. government policy of subverting gold as a reserve currency in favor of the Special Drawing Rights issued by the International Monetary Fund, an agency then and now largely controlled by the United States.

The memo’s author, Sidney Weintraub, deputy assistant secretary of state for international finance and development, wrote:

“To encourage and facilitate the eventual demonetization of gold, our position is to keep the present gold price, maintain the present Bretton Woods agreement ban against official gold purchases at above the official price, and encourage the gradual disposition of monetary gold through sales in the private market.

“An alternative route to demonetization could involve a substitution of SDRs for gold with the IMF, with the latter selling the gold gradually on the private market, and allocating the profits on such sales either to the original gold holders or by other agreement.”

Weintraub copied his memo to Volcker just a month before Secretary Kissinger met with his assistant undersecretary of state for economic and business affairs, Thomas O. Enders, to hear a similar argument. Whichever nation or group of nations controls the most gold, Enders explained to Kissinger, can control the currency markets by changing gold’s value periodically. Thus, Enders said, replacing gold as an international reserve with SDRs was in the interest of the United States.

See memo here: http://www.gata.org/files/WeintraubMemo-03-06-1974.pdf

Well, how about that? There’s another memo from Kissinger around that same time, regarding the need for Gold suppression, out on WikiLeaks, that I used to have, but have misplaced it, and when this one came across my desk, I figured it was as damaging as the other one. And did you see the mention above about the used of SDR’s? (Special Drawing Rights) A recent Economist magazine even had a cover story on how they believe that very soon, everyone in the world will be using the same currency… Brother! I shake my head in disbelief and disgust! 

Before I head to the Big Finish today, minus a FWIW, Did you hear about how Denmark has predicted it’ll be the first country in the world to get rid of notes and coins altogether. They’ll be replaced by plastic and tap and go technology as soon as next year.

And Australia might not be far behind…   Wanna know what will be the biggest loss of individual and financial freedom IF it ever takes place here? Moving to a cashless society… But don’t get me started on that! I’m having a good Friday morning so far, and don’t want to ruin it!

But just take a minute and think about that cashless society, sure it will be convenient, but… Imagine all the fees that everyone and their brother will now be able to charge you each month, because they have control of your bank account?  Come on Chuck, move on, you said you were going to!

To recap… it was another hazy, lazy, crazy day of summer again yesterday and it was just too hot, for the currencies to move further against the dollar, but they did see some minor gains in the overnight markets…  I remember when Alex was little and played baseball one game he was told to go the field, and he refused to go, saying that “it was too hot”….  I took him home, and he was not allowed to play baseball again that year.. 

Currencies today 7/14/17… American Style: A$ .7760, kiwi .7315, C$ .7714, euro 1.1415, sterling 1.2965, Swiss $.97, … European Style: rand 13.1889, krone 8.23, SEK 8.3436, HUF18 268.45, zloty 3.6964, koruna 22.8529, RUB 59.91, yen 113.21, sing 1.3744, HKD 7.8087, INR 64.41, China 6.7826, peso 17.65, BRL 3.2080, Dollar Index 95.68, Oil $46.36, 10-year 2.33%, Silver $15.66, Platinum $908.11, Palladium $863.59, and Gold.. $1,218.60

That’s it For today… Little d (Delaney Grace) and brother Everett were at the house last night. Little d as I call her, is so sweet to me. She always runs to give me a hug when she first gets here, and always asks me how I’m feeling, and if I’m alright. And then gives me a kiss when she leaves…  Baseball gets started again tonight after the ASG break, my beloved Cardinals have two weeks to prove that they shouldn’t be broken up as a team… They have the ability get it done, I don’t know if they have the “want”…  Reminds me of one of my fave comedian’s lines.. From Ron White: “I had the right to remain silent… I didn’t have the ability”…  The late great Alvin Lee takes us to the finish line today with his song: Choo, Choo Mama… And with that, it’s time to get off this bus this week, and head to a place where I can have a Fantastico Friday!  Please join me! And Be Good To Yourself!

Chuck Butler

 

Chuck Butler’s: A Pfennig For Your Thoughts

July 13, 2017

• Yellen speaks & the markets move!
  
• Dollar index on the slippery slope…
• Terry Duffy talks about Gold & Silver…
• A$ & Kiwi kick some tails!

 

Good day… And a Tub Thumpin’ Thursday to you! And I’m ready to do some Tub Thumpin’! I’ve got quite a few things to get to this morning and I don’t want to go on as long as I have lately, so I’ll get right to the meat of the market moving stuff, have some opinions, and more… Loggins & Messina greet me this morning with their song: Nobody But You.. This was from their live double album, that I wore out, years ago… 

Monday, I highlighted the “Mom, he’s doing it again” commercial in reference to the BLS, and their hedonic adjustments…. And today, I have to change a word, to say, “Mom, she’s doing it again!” And of course the “she” is Fed Chair Janet Yellen, who did the first of her two stops on Capitol Hill yesterday, with the second coming today. In her first production of: “things that I’ll tell the lawmakers to get them on my side.” She bobbed and weaved, did a little rope-a-dope, and said her piece and left without any major incidences… I’ll let Yahoo Finance take it from here with their description of her testimony…

“In what may be one of her last appearances before Congress, Yellen depicted an economy that, while growing slowly, continued to add jobs, benefited from steady household consumption and a recent jump in business investment, and was now being supported by stronger economic conditions abroad.

The Fed “continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate over time,” Yellen said in her prepared testimony. Reductions in the Fed’s portfolio of more than $4 trillion in securities are likely to begin “this year,” she said.
But she also noted that given current stoestimates, the federal funds rate “would not have to rise all that much further” to reach a neutral level that neither encourages nor discourages economic activity. The Fed still feels the economy needs loose, or accommodative, monetary policy, so a lower neutral rate means the Fed may feel compelled to slow the pace of rate hikes down the road.”

See what I mean?  But… she did have this grenade to toss at the lawmakers…. “Let me state in the strongest possible terms that I agree” the U.S. federal debt trend is unsustainable, may hurt productivity, and living standards of Americans.”   Hello? Testing, one, two, is this microphone on? Can you hear me in the back? Good, because I want to make a point here… Where has all this concern about our debt path been for the past 8 years when the debt was doubled?  Come on, inquiring minds want to know!

Well, the Fed Chair did turn a little dovish when she talked about how the Fed Funds rate “would not have to rise all that much further”… And that set the dollar down the slippery slope…  Stocks rallied, currencies rallied, Gold rallied, bonds rallied, and all because she slipped up and sounded a bit dovish.  The Dollar Index feel through the 96 handle and is trading with a 95 handle this morning, with the big mover being Japanese yen, Swedish kroner, and a little help from the euro.  Last fall (Sept.) we saw this type of move in the Dollar Index and it proved to be a false dawn. I thought then that the strong dollar trend was ending, but had to cool my jets for 3 months and wait for the next round of dollar weakness to make that call…

Well, it wasn’t all about Janet yesterday, The Bank of Canada (BOC) did raise their internal rate 25 basis points (1/4%) just like I told you they would do yesterday. The thing I didn’t like about the statement following the rate hike was that the BOC seemed to be content that this hike would tamp the housing bubbles… Hmmm…  seems like a strange comment to make, given this is the first rate hike since 2010!  But then it BOC Gov. Poloz, who as I pointed out the day he was named BOC Gov. and I’ve pointed out several times since, and that is, that he’s from the Trade side of the Gov. the people always whining about how they need a weaker currency to help exports.  And that’s why he’s dragged his feet through a mile of broken glass to keep from hiking rates, but given the recent strong data prints in Canada, this rate hike had to be made… Knowing that a rate hike could push the loonie higher, he had to do/ say something…  And that’s why I think the questionable statement was in the statement.. 

So, yesterday, I talked about Lola, aka Goldman Sachs, sending out a note that they preferred Japanese yen as a safe haven currency over Swiss francs…  Personally, I don’t care for either one of them, the only safe haven currency I know of is Gold (&Silver of course!) , but I digress there… I wanted to point out that Lola says something, and then voila! Things happen! And Japanese yen rallied like the Bank of Japan (BOJ) had just hiked rates 200 Basis Points (2%)!  As recent as Tuesday this week, yen was trading 114.35, and this morning it is trading 112.96. I told my good friends, Kevin and Duane yesterday, while we cooled off at our local watering hole, that apparently, Lola was long yen, and needed to get investors to buy to run up the price so they could unload their long position at a profit… Now, I don’t know if that’s reality or not, but in my years of following currencies, it sure seems like that’s the scenario that exists any time a large Investment House comes out with a statement on a currency out of the blue! 

The three of us also had a long conversation about Gold… I was pleasantly surprised to hear friend Duane, explain the store of wealth story. I thought, “Hey, at least someone is listening to me!”  Well, Gold found a way to carve out a tiny gain yesterday of $2.80, to close at $1,220.00. The shiny metal is up $2.50 in early morning trading today… I told you last week that I had a piece on Gold suppression for you this week, and we’re getting pretty late in the week, aren’t we? Well, I’ll have it for you tomorrow, for sure, promise… 

In Ed Steer’s letter this morning (www.edsteergoldandsilver.com) he has a link to a videoed interview between Neil Cavuto and Terry Duffy who is the CEO of the CME, and instead of having to watch the whole video, he highlighted a comment by Duffy that I think is important for us… Let’s take a listen…  OK, let me set this up… Cavuto asks Duffy why the price of Gold & Silver aren’t higher given all the problems in the world today, and Duffy blurts out, “that with all the problems in the world, people will wake up and precious metals, gold and silver, will be substantially higher — and they will wonder why, and then they will realize that an event does impact the precious metals positively.”

What this a wink, wink that metals prices are about to move “substantially higher”?  I think so, folks… And here’s why I think that… Then Duffy will be able to say, “I warned you!” 

Two HUGE movers overnight, but not part of the Dollar Index, is the A$ and kiwi… I told you previously that these two were not as much in demand given their positive rate differential with the U.S. dollar was narrowing, but when Yellen turned dovish yesterday, these two took off! 

So, the European Central Bank (ECB) will meet next week, and right now, there are so many thoughts going around about how the ECB will announce that they are ready to begin to withdraw accommodation… In other words, dismantle their monetary policy that has them putting negative deposit rates in the banks, and buying so many bonds, that now they have run out of bonds eligible to buy.  These thoughts have helped the euro, but let’s face it, the ECB and president Mario Draghi have disappointed us before, and they could very well do it again next week. 

Either way, I don’t think the sentiment toward the euro will change that much, because by then we’ll have seen more weak U.S. Data, and the Fed’s words about growth picking up in the second half will ring hollow…  The euro wasn’t able to keep above that line in the sand figure of 1.1428, so as I explained yesterday, the euro’s move above the figure didn’t constitute a “complete take out” as it couldn’t hold above the figure for more than a day. The single unit is bouncing back and forth around the 1.14 figure this morning… 

Speaking of data… Here In the U.S. yesterday, the Data Cupboard was dominated by the Janet Yellen show… And she’s scheduled to do an encore today on the other side of the Hill, but it will be a rinse and repeat from yesterday, so unless someone asks her to elaborate further on her thoughts on the debt being “unsustainable”, I doubt we’ll hear much from the speech. 

Today’s Data Cupboard will have the June PPI (wholesale inflation) which won’t do much for the dollar, and the Federal Budget print… And THAT most definitely won’t do much for the dollar, especially given Yellen’s thoughts on debt are fresh on the markets minds right now… 

To recap… It was all about Janet yesterday, well, sort of that is, because the Bank of Canada also made news by hiking rates for the first time since 2010 yesterday. Lola said it liked yen over francs, and yen rallied almost two whole figures! Gold found some scraps at the metals gains table and added $2.80, and CME CEO Terry Duffy gives us a warning about Gold prices… 

For What It’s Worth… I thought this would lighten up the mood a little this morning and it can be found on the Washington Post site here: https://www.washingtonpost.com/news/worldviews/wp/2017/07/12/german-police-are-searching-for-a-stolen-gold-coin-its-the-size-of-a-manhole-cover-and-worth-3-9-million/?utm_term=.d545f8e14851

Or, here’s your snippet: “Brother, can you spare a gigantic gold coin?

Hundreds of special German police officers executed raids across several buildings across southern Berlin early Wednesday, nabbing four suspects in the hunt for a 220-pound gold coin valued at about $3.9 million. It was stolen from Berlin’s Bode Museum in March, where it had been since 2010.

The police, who conducted the raids wearing masks and strapped with heavy weapons according to the Associated Press, are questioning nine others in connection with the missing coin. The four main suspects are related and between 18 and 20 years old.

The coin was not recovered in the operation.

“We assume that the coin was partially or completely sold,” Carsten Pfohl of the Berlin state criminal office said at a news conference. Police are picking apart clothes and vehicles used by the suspects to find traces of gold left behind.”

Chuck again… A Gold coin the size of a manhole cover? WOW! I have a phrase I use when talking about someone who’s cheap.. I say, he throws around quarters like they’re manhole covers…  HA!  Well, I guess this manhole cover sized Gold coin, would make that phrase not very funny any longer!

Currencies today 7/13/17… American Style: A$ .7738, kiwi .7333, C$ .7741, euro 1.14, sterling 1.2918, Swiss $ .9652, … European Style: rand 13.1777, krone 8.2721, SEK 8.3601, HUF 269.24, zloty 3.7120, koruna 22.8954, RUB 60.34, yen 112.96, sing 1.3788, HKD 7.8104, INR 64.42, China 6.7891, peso 17.72, BRL 3.2347, Dollar Index 95.73, Oil $45.36, 10-year 2.31%, Silver $15.92, Platinum $919.60, Palladium $872.77, and Gold.. $1,221.60

That’s it for today… No baseball last night or tonight, as my beloved Cardinals get ready to start the second half of the season in Pittsburgh on Friday night… Carlos Santana was in town last night, and it reminded me of a few years ago, when he was here, and I tool Alex to the concert, and Alex, being an excellent guitar player, wasn’t that impressed with Carlos Santana… I was shocked! And told him that was blasphemy! All 3 grandkids were here yesterday to swim in the pool, as it reached 102 degrees here yesterday! I love it when they are here! And the great Steely Dan takes us to the finish line today with their song from the album of the same name: Aja…  (Steely Dan’s best album in my opinion too!)  OK… Now let’s go out and do some Tub Thumpin’ Today! And Be Good To Yourself!

 

Chuck Butler

 

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Chuck Butler’s: A Pfennig For Your Thoughts

July 12, 2017

 

Good day… And a Wonderful Wednesday to you! Hot, Hot, Hot… And for all you 80’s music lovers out there (Hi Rick!) I’m not talking about the 1987 hit song, I’m talking about the weather outside! But after spending a majority of the day right here at my writing desk in the air conditioning, it felt real good to go outside and “warm up”! The Outlaws greeted me this morning with their song: Green Grass and High Tides… Now that song will get your motor started in the morning!

The currencies rallied VS the dollar yesterday, but in the overnight markets, there has been some profit taking. UGH! One of the first things I learned as a young trader was: It’s not a profit until you take it!  So, here we are on this Wonderful Wednesday, with the dollar having “bounce days” recently, but for the most part, the sentiment is in the process of switching from the love of dollars to the love of the currencies. 

Last night I was checking the currencies in the Asian markets and saw that the euro was getting very close to climbing above 1.15, but I guess that signaled a sell for profit taking, and the single unit is 1.1457 as I write this morning. Remember when I told you that the chartists / technical traders said that 1.1428 was the last line of defense for the dollar, and if that level was completely taken out, that the next stop for the euro was 1.17?  Well, it sure looks to me as though the 1.1428 level has been completely taken out, or is in the process of doing so… I’m just saying… wink, wink… 

So, what does “completely taken our” mean? Well, it’s really one of those “moving targets” if you will. I view it as the level was taken out, and the asset continued to move above it, and then stayed above the level for a day or two… These brief breaches above a level don’t count in my book! 

Well, today is the day Canadian rates might be raised for the first time since 2010, as the Bank of Canada (BOC) meets. The Canadian bond guys seem to think that the rate hike is in the bag, as they’ve driven bond yields up 26 basis points in the last month.  IF the BOC does hike rates today, and I believe they should, should have, and will be real dolts if they don’t, it will be a 25 basis point (1/4%) move to bring their internal rate to 75 basis points or 3/4’s of a percent… Still pretty darn low, eh? 

I said this a few weeks ago, but that might have been before the email version of the Pfennig was being sent, and it was only being posted on the website: www.dailypfennig.com, which remains the first place you’ll see the Pfennig in case the email version is being delayed. Anyway, getting back to what I was saying, I said this a few weeks ago, and it is really showing up this morning… 

The Norwegian krone is finally getting of its duff, and dusting off its old, strong currency clothes, to see if they still fit! The krone has been held down by the falling Oil price, and the fact that the euro was in the doldrums… But now that the euro is picking up the pace with a strong rally of its own, the krone can take hold of the euro’s coattails and rally too.. It also doesn’t hurt the krone for the price of Oil to not be slipping and sliding down the slippery slope! 

A currency that I don’t talk about often, is also on the rally tracks, and is doing it very quietly, as to not wake up those around it… The Hungarian forint is also grabbing hold of the euro’s coattails and pulled itself up on the rally tracks.  The Hungarian forint (HUF) was once a part of a trio-of- currencies that I called the “Euro Wannabes” that also included the Polish zloty, and the Czech Republic koruna. These three were all in the ERM (exchange rate mechanism) that the currencies had to trade in for a period of time before being accepted into euro club. But one by one they began to have problems with their financials and didn’t meet the criteria of the Maastricht Treaty, which most of the other euro countries didn’t meet either, but this caused each country to eventually pull their currencies out of the ERM, and live for another day. 

And now they sit outside of the euro/ Eurozone, and wait for the day that their financials are better, and their respective currencies are ready for that trip to the ERM.. 

I told you on Monday that the Brazilian real was rallying and I would find out more… Well, here you go! Real traders were anxiously awaiting the voting returns from the Brazilian Senate on a new set of laws on labor… And then yesterday they got their wish, and the Senate approved the law that  aims to reduce costs for businesses and allow firms to negotiate contracts freely with employees.

It was deeply unpopular with unions, who say it will reduce job security and called two general strikes in protest

The vote is expected to give President Michel Temer a boost before Congress’ lower house decides if he should be suspended to face corruption charges. The bill will now be sent to President Temer to be signed into law.

And the real is still on the rally tracks this morning! Overall, the currencies look much healthier this morning as evidenced, sort of, by the drop of the Dollar Index below 96…

I have a friend, Sean Hyman, who is a technical guru when it comes to charts, and he sent me a note the other day, saying that he thought the Dollar Index looked vulnerable and could fall to the 93 region…  I thought, “hmmm, that sure would be good for euros, & Gold”

Speaking of Gold… The shiny metal was allowed to gain $3.10 yesterday and close at $1,217.20.. It lost some ground in the “after hours” trading, but has gained back $2.90 so far this morning in the early trading to sit at $1.216.90..  Did you see this news?>>>>  The Trump administration has taken a key step toward paving the way for a controversial gold, copper and molybdenum mine in Alaska’s Bristol Bay watershed, marking a sharp reversal from President Barack Obama’s opposition to the project.”

The Environmental Protection Agency on Tuesday proposed withdrawing its 2014 determination barring any large-scale mine in the area because it would imperil the region’s valuable sockeye salmon fishery. The agency said it would accept public comments on the proposal for the next 90 days.  Very interesting don’t you think? It’s all politics, and apparently the politics have changed..  But you won’t see me get in the middle of this! I’m just here to report the news! 

The price of Oil has rebounded to trade above the $45 handle this morning.. I have more on this in the FWIW section today, so keep reading to get there! HA!

Yesterday’s U.S Data Cupboard had a couple of interesting prints… Wholesale Inventories and the NFIB Small Business Index. Not exactly what I call “real economic prints” but things to keep an eye on anyway… The NFIB Small Business Index fell in June, and notably the gauge of expected business conditions fell 6 points last month, and the NFIB says that 6 points is “significant”!    We also saw Wholesale Inventories, and for that information I’ll turn this over, ever-so-briefly to the folks at zerohedge.com… 

“Well they “built it”, but in May, “no one came.” Wholesale Inventories rose a better-than-expected 0.4% MoM but sales tumbled worse-than-expected 0.5% (the 3rd monthly decline in a row).
Inventories reversed April’s decline…but sales keep falling…and accelerating…

Automotive inventories rose 0.7% MoM (against April’s 1.4% drop) but Automotive sales dropped 0.5% in April.

Wholesale Inventories are still marginally lower for Q2 so far (-0.13%) providing a modest drag on GDP, but sales are down 0.77% in Q2 with the biggest 3-month decline since March 20.”

Today’s Data Cupboard has the return of the Janet Yellen show for us! The Fed Chair, will make the trip up to the Hill to visit with members of the House one day, and the Senate the next day, in what used to be called the “Humphrey / Hawkins Bill” that required the Fed Chairman to report to Congress the state of the economy twice a year. That bill expired a very long time ago, but Fed Chairmen and now the Chair have continued to give their reports… 

This will be important for the dollar, currencies, Gold and bonds today folks… Because even though she has been wrong since she took over the leadership of the Fed, but continues to rinse and repeat the same line about how the Fed sees a pick up of growth and inflation in the second half this year, the markets will react to what she says..  Why? you ask, since her previous forecasts have as bad as, well, they’ve been bad? 

You’ve got me on that one, Joe… They should get a good belly laugh and then sell dollars if you ask me… But that’s not what they’ll do, IF she rinses and repeats again today. 

It’s a good thing Congress doesn’t request Paul Craig Roberts to give them his report on the economy’s progress… You may recall that name, as Paul Craig Roberts was the Treasury Sec. for President Reagan, and yes that was a long time ago, but he has become a real pain in the side for the Government, as he calls them out all the time..  Here’s a recent tirade from him about the BLS… 

“It is very easy for the government to report a low jobless rate when the government studiously avoids counting the unemployed.

Now, let’s do what I have done month after month year after year. Let’s look at the jobs that the BLS alleges are being created. Remember, most of these alleged jobs are the product of the birth/death model that adds by assumption alone about 100,000 jobs per month. In other words, these jobs come out of a model, not from reality.

Where are these reported jobs? They are where they always are in lowly paid domestic services. Health care and social assistance, about half of which is “ambulatory health care services,” provided 59,000 jobs. Leisure and hospitality provided 36,000 jobs of which 29,300 consist of waitresses and bartenders. Local government rose by 35,000. Manufacturing, once the backbone of the US economy, provided a measly 1,000 jobs.”

His tirade can be found in its entirety here:   http://www.informationclearinghouse.info/47417.htm

Before I head to the Big Finish today, I wanted to highlight something that made me scratch my balding head… Lola, aka Goldman Sachs, has issued a report calling for Japanese yen to become the better safe haven than Swiss francs..  Wait! What? Japanese yen? You’re kidding me right? And don’t tell me I’m your favorite goat! Come on Lola what have you been smoking? Japanese yen? YIKES!  I have to steer clear of that one folks, otherwise I’m going to get in trouble with the folks at Lola… 

And one more thing… some folks ask me from time to time why I call Goldman Sachs, Lola.. Because you know the song, “what Lola wants, Lola gets”, and that describes Goldman to a T… 

To recap… The lazy, hazy, crazy days of summer found some shade yesterday, and cooled off, which allowed the currencies, for the most part to rally VS the dollar. The currencies were stronger last night before some profit taking took place. The Bank of Canada meets today and are expected to hike rates 25 basis points, their first rate since 2010. And more weak data for the U.S. yesterday.. 

For What It’s Worth… I mentioned above that the price of Oil had gained a bit yesterday, and there are two reasons for this… And both of them are discussed in this article that can be found here: https://www.bloomberg.com/news/articles/2017-07-10/oil-holds-gains-above-44-as-u-s-crude-stockpiles-seen-falling

Or, here’s your snippet: “Oil rose the most in more than a week after the Energy Information Administration cut its U.S. crude output forecast for next year and as investors focused on the pace of rebalancing.

The EIA cut its 2018 crude output forecast to 9.9 million barrels a day from 10.01 estimated in June. It’s the first time the EIA lowered its forecast for 2018 production since the agency started posting the estimates in January. The market earlier shrugged off a report that Saudi Arabia, the world’s biggest oil exporter, told OPEC it raised output above its agreed-upon limits.

“This pull-back in production is kind of wake-up call to people who thought that shale was going to be viable no matter what OPEC did,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, said by telephone. If output doesn’t rise as much as previously anticipated, “then it’s time for the bears to start questioning their religion again.”

Chuck again… Boy, do I wish I had read this article before sending off my most recent piece for the Dow Theory Letters website (www.dowtheoryletters.com) for I wrote about Oil… and the what moves the price, etc. And called for Oil to remain range bound in price… I used to tell this joke, about a dumb guy, who is a comedian, and he says, “I’m a dumb comedian ask me what the hardest part of my job is” and before the respondent can finish his response, the comedian says, “timing”…
That’s how I feel this morning… timing is everything, especially when you mistimed something!

Currencies today 7/12/17… American Style: A$ .7650, kiwi .7233, C$ .7738, euro 1.1457, sterling 1.2851, Swiss $.9628, … European Style: 13.3798, krone 8.2616, SEK 8.4149, HUF 268.38, zloty 3.7037, koruna 22.7881, RUB 60.61, yen 113.44, sing 1.3844, HKD 7.8119, INR 64.55, China 6.8019, peso 17.89, BRL 3.2512, Dollar Index 95.72, Oil $45.77, 10yr 2.35%, Silver $15.80, Platinum $906.75, Palladium $859.01, and Gold… $1,216.90

That’s it for today… Well, I tried to stay awake for the All-Star Game last night, but didn’t quite make it. I did see Cardinals catcher Yadier Molina, hit a home run though!  But the NL lost 2-1, UGH! Growing up, I don’t recall seeing the AL win an All-Star Game, but as an adult, they’ve won quite a few! Cardinals pitcher, Carlos Martinez pitched very well for his 2 innings. And I’ve gone on too darn long today, sorry… I hope you have a Wonderful Wednesday, and remember to be Good To Yourself!

Chuck Butler

 

Chuck Butler’s: A Pfennig For Your Thoughts

July 11, 2017

• A Hazy, lazy, crazy days of summer…
• Will the BOC hike rates tomorrow?
• What are Gold sellers thinking?
• A thought from Frank Trotter!

Good day… And a Tom Terrific Tuesday to you! Well, I wasn’t that interested in taking time to watch the Home Run Derby last night, but I did tune in for a bit of it, and that rookie, Aaron Judge sure did put on a show, hitting 47 total home runs with 4 over 500 feet! Someone turned up the thermostat outside! Reminds me of the words to a  song… Oh, it’s a hot one, like 7 inches from the midday sun!  And I was greeted this morning by Shooting Star playing their song: Last Chance…

Well, it was one of those “lazy, hazy, crazy, days of summer” yesterday, with little movement in anything… The Big Dog, euro remained on the porch all day, just sleeping the day away, and all the little dogs followed the Big Dog… Gold gained $1.90, and Oil bumped up to the $44 handle, from $43.88 yesterday.  Nobody wanted to take a flyer on a currency, metal or commodity yesterday… What’s up with that?

So, with that, no movement, in place yesterday, that gives me an opportunity to rail on somebody, something, or I could be nice and talk about sunshine, lollipops and rainbows with regards to the U.S. economy… What shall it be? Hmmm… How about I do a little of both? Well, not talk about sunshine, lollipops and rainbows regarding the U.S. economy, but maybe I should? I think not!

I have received a few emails from readers in the past week, with very nice thoughts about me and the Pfennig, so I thank you all very much for sending those along…  OK… let’s see.. I’ve also had a few readers want to know what’s going with the Swiss franc, as it is not participating in the change in sentiment from dollars to euros, et. al.. So, we’ll start there this morning…

The thought with the Swiss franc is simple… They are the only Central Bank in Europe still stressing that the franc is overvalued, and that they will keep their negative rates and current monetary policy, while the other Central Banks of Europe are at least hinting that they are ready to pull the plug on their accommodating monetary polices.  So, traders, being, astute, and forward looking, see this as a reason to sell francs… I would too, given these facts and adding  that the Swiss National Bank (SNB) is still buying U.S. stocks for its reserves..

What are they (SNB), thinking buying U.S. stocks? The Bank of Japan (BOJ) has been buying stocks too, but they keep their stock buying confined to  Japanese stocks… Recall a few months ago, I told you that the BOJ had become the largest buyer of Japanese stocks…  I don’t like Central Banks supporting any market, much less the stock market, but at least the BOJ is keeping things close to home, while the SNB has reached out and added a ton of U.S. stocks…  What happens IF the stock market has a correction?

So, that’s what’s going on in Switzerland and with the franc. Another currency that readers ask me about is the Indian rupee… It was a big mover against the dollar earlier this year, but that move appears to have been capped, and now the rupee just range trades, in a very narrow range, I might add! Indian PM Modi has really ruffled a lot of feathers in India, with his removal of currency denominations, and now the tax on undeclared Gold… And the Gov. for the Reserve Bank of India (RBI) that I really liked, Rajan, left last year… So, unless Modi can pull a rabbit from his hat, or the RBI has a trick or two left up their sleeve, I suspect the rupee will remain a range bound currency…

And finally, the last currency that readers ask about a lot, is the Canadian dollar/ loonie… Recall that I kept saying that the loonie was rising and traders were scratching their collective heads trying to figure out why, given that the price of Oil had stumbled?  Well, now those same traders are saying that the loonie has risen too far, too fast…

Well, we now know what was behind the loonie’s move and that was the thought that the Bank of Canada (BOC) will hike rates soon, and that thought was made stronger last month, when BOC Gov. Poloz hinted that he was ready to hike rates… Well, now the futures are pricing in a rate hike at tomorrow’s BOC meeting, and given the fact that last Friday, their version of a Jobs Jamboree, showed strong employment gains to back up a rate hike…  So, the initial reaction to a rate hike in Canada would be good for the loonie, but at this point I would have to think that the rate hike has all been priced in for the loonie…

I’ve been harping on Poloz to hike rates in Canada for a couple of years now, pointing to the housing bubbles in Toronto and Vancouver as reasons for the need to hike rates.. But nooooooooo! Poloz couldn’t pull the trigger until he saw the U.S. Fed go for the gusto and hike rates 3 times in the last 7 months…

I had to laugh out loud at something that  I read from a writer that was talking about how this was the week the dollar was going to turnaround… Here are his thoughts: (not mine let me remind you!) “With no expectations for any fiscal stimulus this year, plus a market-implied probability of March 2018 being the next period for a 25-bps rate hike, and US economic data momentum already at a six-year low, how much worse could it get? Not much more, if at all, it would seem.”

Well, I’ve go news for this guy! Things could get a lot worse, and that will if my thoughts play out… Of course that’s his opinion, and I have mine, which could be wrong… But, when we get to Friday, we’ll know for sure! Yesterday, I told you that on Friday, we’ll see Retail Sales, and Industrial Production, along with Capacity Utilization…

Retail sales need to rebound in June to help second-quarter consumer spending but the  consensus isn’t calling for much strength, at a gain of 0.1 percent vs an outright 0.3 percent decline in May. Unit vehicle sales proved flat in May which is not a positive indication for the autos component of this report which has posted 4 monthly declines so far this year.  And while Industrial Production is going to attempt to come out of the red numbers with a 0.3% gain in June, but… The manufacturing component, which has been in sizable contraction in 2 of the last 3 reports, is expected to post a more limited gain, at a consensus 0.2 percent.

So, I don’t see anything there that would turnaround the current sentiment toward the dollar do you?  We will have Fed Chair, Janet Yellen give a testimony to Congress tomorrow regarding the Fed’s thoughts on the economy and so forth… This is where the sunshine, lollipops and rainbows will be evident, folks… But today, is more of the same lazy, hazy, crazy days of summer in store for us..

And what do I always point to when talking about the U.S. or England, or Japan’s inability to generate strong economic growth? Debt levels… I have always maintained that an economy can’t grow at a pace that would be considered to be strong, as long as they have to deal with financing debt…

I keep telling you about my new face economist, Danielle DiMartino Booth, author of the book: Fed Up, and a former advisors to Dallas Fed president, Richard Fisher… Well this is what she recently had to say about global debt levels….  “Rather than address the underlying over-indebtedness that detonated systemic risk and culminated in a full-blown catastrophe, [central bank] policy had simply catalyzed further indebtedness…From a starting point of the end of 2007 through mid-year 2014, global debt rose by $57 trillion to $199 trillion. As a percentage of global gross domestic product (GDP), global debt had risen to 286 percent from 269 percent. — Danielle DiMartino Booth

I told you above that Gold gained a whopping $1.90 yesterday… but is down $3.60 in early morning trading.  What ARE these people thinking that are selling their Gold?  I have this feeling in my bones that these sellers of Gold will rue the day they sold their store of wealth!  I guess these sellers think that the Fed is going to aggressively hike rates here in the U.S. I can’t think of any other reason they would be selling, can you?

I had a dear reader send me a note yesterday, in which he told me that he thought that I hadn’t cut my apron strings from my former employer yet, because I said, “I had better stop there” on something…  I responded to him that I had cut the apron strings, and that “sometimes there are things that are better left unsaid”…  The point of this is to simply say, I don’t have anything holding me back, except my inner thoughts on what is right and wrong…

Speaking of Debt… The U.S. Data Cupboard had the May Consumer Credit (read debt) for us yesterday, and apparently, U.S. consumers went hog-wild with their credit cards or taking out loans, as the debt level for May was a whopping $18.4 Billion, VS $12.9 Billion in April..  Granted, $18.4 Billion is not the plus $20 Billion prints we saw a couple of months last year, but is still a very large amount of debt to be taking on by consumers in a month…

All this debt is going to end up with tears being cried… At least that’s how I see it…

Before I head to the Big Finish… I was going through my email box yesterday, because it had grown in size by too much! And I came across an email from my good friend, and former Big Boss, Frank Trotter. He quoted some lyrics from the Mrs. Robinson song by Simon and Garfunkel…
Here they are:
Sitting on a sofa on a Sunday afternoon
Going to the candidates’ debate
Laugh about it, shout about it
When you’ve got to choose
Every way you look at it you lose”

Still true, or maybe more true today

Ah, that Frank… always willing to stir up the pot!

To recap… it was a nothing day in the currencies and commodities yesterday, and today looks to be another day of lazy, hazy, crazy days of summer… Gold added $1.90 but is down $3.60 in early trading today. Chuck cleans out his email box, and gives us updates on: francs, rupees and loonies.. And then talks about some debt stuff..

For What It’s Worth… Since I asked the question above (in the franc update) about what happens if the stock market has a correction?  I thought that this piece on the Bloomberg was apropos…  And it can be found here: https://www.bloomberg.com/news/articles/2017-07-10/odey-says-drunken-markets-ready-to-topple-as-bearish-bets-pay

Or, here’s your snippet: ”

Crispin Odey, who made money for a second straight month by sticking to bearish equity bets, said the chance of a market crash is rising as growth slows and the Federal Reserve normalizes interest rates.

The credit cycle boosted by loose monetary policy has peaked and there’s a widespread slowdown in the auto, commodity, industrial and retail sectors, Odey wrote in a letter to investors. Unlike previous dips since the financial crisis, central banks aren’t responding by printing more money.

“This time they are doing the reverse,” which is likely to exacerbate the negative trend, the London-based hedge fund manager wrote. “All this sits very uncomfortably with the fun being felt in the stock markets. When I look at the move up since Trump’s election as president, I detect the walk of a drunken man.”

Chuck again… Yeah, but what about the Plunge Protection Team? Will they sit idly by as the stock market crashes? I don’t think so…

Currencies today 7/11/17… American Style: A$ .7610, kiwi .7218, C$ .7741, euro 1.1396, sterling 1.2909, Swiss $.9693, … European Style: rand 13.5032, krone 8.3581, SEK 8.4335, HUF 270.50, zloty 3.7218, koruna 22.9355, RUB 60.30, yen 114.33, sing 1.3843, HKD 7.8115, INR 64.57, China 6.8011, peso 18.04, BRL 3.2699, Dollar Index 96.12, Oil $44.15, 10-year 2.39%, Silver $15.47, Platinum $895.47, Palladium $840.76, and Gold… $1,209.90

That’s it for today…  So, did you watch the Home Run Derby? I’ll tell you that I was more interested in it when Albert Pujols played for the Cardinals and was in the Derby! The Cardinals catcher, Yadier Molina is an All-Star for the 8th time! Of course Stan Musial, the greatest Cardinal was an All-Star 24 times! Baseball people forget about Stan Musial, and how great a player he was. When he retired he held 17 major league records, 29 National League marks and nine All-Star Game records. Well, I’m hearing one of my top 5 songs right now, so, the Blue Jays take us to the finish line with their song: I Dreamed Last Night… and with that, it’s time to go! I hope you have a Tom Terrific Tuesday! And Be Good To Yourself!

 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts

July 10, 2017

 

Good Day… And a Marvelous Monday to you! Another absolutely beautiful weekend, weather-wise here in the St. Louis area this past weekend! WOW! We sure have had our share of good weather so far this summer, but it appears that it’s going to really ratchet up the temps this week, so hot, humid days will return! The great Al Stewart greets me this morning with his song: Song On The Radio.

Mom… He’s doing it again! OK, let me explain… There’s a classic rock-n-roll station here in St. Louis that’s been on the air since the late 60’s… And about 30 years ago, they ran a TV commercial, with the Rolling Stones song, Brown Sugar playing those very recognizable guitar chords… And a dad in his study, with the radio turned up real loud, playing the air guitar to the song. The daughter opens the door to the study, and see’s her dad, playing the air guitar, and she shouts… “Mom, He’s doing it again”! The TV commercial was way more funny than I just described it, and the reason I brought this up today is simply that, every month, when the BLS reports the jobs created in the previous month, I quickly go out to their website and see how many jobs they added out of thin air to the surveys, and I think of this TV commercial… Folks, they’re doing it again….

So, the total jobs created in June, according to the BLS was 222,000… Of which 102,000 were added by the BLS after their surveys were finished, and only showed job creation at 120,000… Now, we can’t have that can we? Not according to the BLS, who probably got their marching orders from… Well, it’s better that I not go there… But they got them from someone, and voila’. 222,000 jobs were “created” for June! Ain’t it a shame that we have to put up with this nonsense? I’m so fed up with the BLS that if I were President, they’d all be fired!

My oh my, the games people play, every night and every day. I could go on, but what’s the point, we all know that the BLS cooks the books each month when it comes to the Jobs report…  I sent out a Tweet on Friday after the numbers printed, and said, “BLS says 222,000 jobs added in June, but 102,000 of the jobs were added by the BLS with hedonic adjustment.”

And like most days when the jobs numbers are printed, the dollar wasn’t able to significantly move higher, even though the number looked strong. The dollar did gain a bit, pushing the euro back below 1.14, and the Aussie dollar (A$) back below 76-cents, but those moves were very small on Friday, and in the overnight markets, there hasn’t been much movement at all, so we start the week, with the currencies itching to move against the dollar on an upward path, knowing that this week is chock-full-o-data here in the U.S, which normally isn’t good for the green/peachback…

I don’t like hitting you right out of the starters blocks like that with my thoughts on the Jobs #’s but the BLS has got to be stopped!  The ADP Employment Report, which is what I’ve always said should replace the BLS report, because, ADP does the payrolls for almost every business in the U.S. so, they KNOW how many new payrolls were added, and how many were taken off each month, without guessing the number, print last Thursday and said that only 158,000 jobs were added in June…  That’s a 64,000 difference, a subtle little difference that makes all the difference in the world!

Oh and the things I told you to actually pay attention to.. The Average Hourly Earnings grew at a 0.2% clip in June, and May’s data was revised downward from 0.2% to 0.1%… So, no wage inflation here… The Average Workweek was 34.5 in June, up from 34.4 in May… No great shakes here! And the Labor participation rate ticked up in June to 62.8%…  this is not a good level folks..

And like I’ve always said, traders swallow the BLS report, hook, line and sinker, and buy dollars on a strong report, and that shouldn’t take place… There’s also something going on that I discussed in my weekly article for the Dow Theory Letters website (www.dowtheoryletters.com) a few weeks ago, and that is that the Swiss National Bank (SNB) has been buying U.S. Stocks with their reserves, which is another bump upward for the dollar, since the SNB has to buy dollars to buy U.S. Stocks…  I really drove the point home about Central Banks buying stocks in the article… I know it’s a paid for subscriber newsletter, but given the other writers that contribute to it, and of course my stuff, I feel it’s well worth the cost.

OK…  Well, let’s see, what’s in the news… The G-20 summit came and went without any surprises in the communique’.  The U.S. and Russia did agree to a ceasefire in Syria, which can only be a good thing. But besides that, there were no market moving items this time… And THAT, can only be a good thing too! Because these market moving items that DO come from the G-20 usually don’t have any staying power in them.

So I was doing some research this past weekend (early morning, didn’t want to miss going outside!) and came across a forecast for the euro that caught my eye…  While most analysts are forecasting the euro to remain around the 1.13-1.14 area for the next year, The analyst at German Bank DZ Bank AG,  which had the best estimate for the second quarter for the euro, says the euro will reach 1.15 by year-end, and move to 1.18 in 2018…

I think he’s being too conservative, myself…  I don’t think he’s seeing what I’m seeing, which is an end of the strong dollar trend, which would bring about dollar selling, and we all know what dollar selling brings us don’t we? That’s right! Euro buying! But my momma didn’t raise no fool! I’m not going to say the euro is going to X.XX, I just think it will be stronger as we go along in the change of sentiment from dollars to euros.

But let’s not forget that the euro has already gained 8% VS the dollar this year, and has marked up gains against all of its G-10 peers…

I mentioned above that the Aussie dollar (A$) fell back below 76-cents on Friday, and is trading around .7555 this morning. 76-cents seems to be sort of a line in the sand for the A$, as it has reached that level a couple of times in the past couple of weeks, and has failed to hold it. The A$ still enjoys a positive yield difference VS the dollar, euro and yen, and its mother-land’s currency, pound sterling. And Australia continues to do a good job weaning itself from a dependence on the mining sector…  A good diversified economy is as important to a country’s outlook, as a good diversified investment portfolio is for an individual investor!

Sure when China was growing at a better than 10% clip all those years, it made sense for Australia to ramp up the mining sector, but now that China’s economy has cooled its jets, things must change, and they are!

I received an email from the Reserve Bank of New Zealand (RBNZ) this past weekend, telling me that this is the 50-year anniversary of the introduction of the decimal dollar…  So, kiwi is turning 50 this year, just like the Summer of Love, and the release of the Beatles Sgt. Peppers album! I remember when I first was trading foreign bonds for the World Markets group at the old Mark Twain Bank, and was charting currencies, and noticed that kiwi was really moving higher, and mentioned it to one of the “seasoned” guys on the trade desk, and he told me, “don’t waste your time with kiwi, it’s too small of a market”…

A year later, he was writing to his clients about how great kiwi was and how he found this great currency! I about came over the desk to grab him and shake him, but, I thought, oh well, it’s all good for the investors! Well, I like kiwi again… I told you a couple of weeks ago, I’m all about euros and kiwi these days…

What’s gotten into the Brazilian real lately? After months of weakness due to a Political scandal and the falling Oil prices, the real turned on a dime last week and began rallying. I’m going to have to look into this, as I had just written off the real because of those two items just mentioned that pushed it down.  So, more on this maybe tomorrow.

I’m going to switch gears here because there are a couple of things I need to get off my chest…

Well, I’m calling this the “Recovery That’s Not For Everyone”… Why? You ask… Because of this recovery that supposedly began in 2009, has left some states out in the cold… Yes, that’s right, Arizona, Connecticut, Mississippi, Nevada and Wyoming have not yet recovered… These 5 states still haven’t regained their levels of gross domestic product from before the financial crisis, more than five years after the country as a whole hit that milestone. Eight states are below prerecession levels of employment. And 15 have home prices that have yet to rebound fully.

Oh but the BIG Metro city areas are doing just fine, right? The problem is, that there’s just not enough Big Metro City areas to make up for the rest of the country that is still mired in a recession…

And as I said above, Eight states are below prerecession levels of employment! Wyoming, West Virginia, Connecticut, New Mexico, Mississippi, Vermont, Maine and Alabama… And there are more problems…

15 states have home prices that have yet to rebound fully.. They are: Connecticut, Nevada, Maryland, New Jersey, Rhode Island, Delaware, Arizona, Illinois, Florida, New Mexico, Virginia, New Hampshire, Alabama, Maine, and New York.

Even with this information, Robert Hall, a Stanford University economics professor, and the man who heads of the National Bureau of Economics, the folks that make the “official call” on when a recession starts and ends, says that, “The National Recovery is absolutely complete!” Wait, what? You’re telling me/ us, that the recovery is completed, but this is all we get out of it? Less than 2% growth, and an economy that can’t seem to get out of its own way? Wasn’t there supposed to be more from a recovery? Especially one that had zero interest rates for most of it, Trillions of bonds being bought by the Central Bank for the most of it, and easy credit? This is it? Say it ain’t so, Joe! (Or Robert Hall!)

Gold lost $12.80 on Friday… The short Gold paper traders and the naysayers to manipulation, will point to the trumped up BLS jobs report as the reason Gold took a hit on Friday… But I say hogwash!  Well, Gold is down another $2.40 in the early morning trading today… The short sellers won’t be happy until the drive the price below $1,200… Again, these trades have got to be stopped!

Speaking of Gold… I saw a graph on Friday of the Gold exports by the U.S… They have increased this year so far, VS last year’s exports to the same date… (Jan through April)… This just reinforces my thought that I’ve had for years now… That here in the U.S. investors look at Gold as a commodity that should go up or down, and in the East (Asia, Russia, etc.) they view Gold as a “store of wealth”… Here in the U.S. we lament when the price of Gold goes down, in the East, they rejoice, for they get to continue to add to their storage of wealth at cheaper prices… Sort of like the: One man’s trash is another man’s treasure.. And that’s why, even though I get upset when the price of Gold gets “whacked by Da Boyz”, I don’t get that caught up in the price of Gold… To me, it is what it is, and eventually it will go higher in my opinion. But while it doesn’t go higher, it gives me opportunities to add to my stash of Gold (& Silver of course!) at cheaper prices… I guess, I think like someone in the East, eh? For I look at it, simply as a store of wealth, a store that has never gone to zero, and never will!

Well, I’ve built up the Data Cupboard’s print this week a couple of times in the past few days, so with no further ado, here’s the “real economic data” that’s scheduled to print this week…

We start the week slowly and build to a crescendo! Today we’ll see the color of May’s Consumer Credit (read debt)… Tomorrow we’ll see May’s Wholesale Inventories… Wednesday, Janet Yellen will speak… this ought to be good, that is as long as someone asks here the question, “why are you hiking rates when the economy is weakening, and don’t give me any of that “we see the economy growing strong in the second half stuff, because you’ve told us that the last 3 years!”

Thursday, we’ll see PPI (wholesale inflation) and the Federal Budget numbers… And then finally on Friday, we start with the stupid CPI (consumer inflation) and then move to Retail Sales for June, and then finish off the week with Business Inventories, and two of my fave prints, Capacity Utilization and Industrial Production.  Whew! I’m tired out after all that!

To recap… The Jobs Jamboree was interesting in that the BLS added 102,000 jobs to their surveys… And the traders swallowed the data hook, line and sinker, thus pushing the dollar higher, not by much, but higher nonetheless!  Chuck talks about the euro, the A$, kiwi, the uneven economic recovery in the U.S. and that the U.S. was net negative with Gold exports last month… That and more!

For What it’s Worth… Since the world was watching G-20 for something special this past weekend, I thought this was worth a shot for a FWIW section article today…  It’s about how China and Russia are teaming up to deal with the President… You can read it all here: https://www.unz.com/article/the-great-power-shift-a-russia-china-alliance/

Or, here’s your snippet: ”

Top Russian and Chinese leaders are busy comparing notes, coordinating their approach to President Donald Trump at the G20 summit in Hamburg this weekend. Both sides are heralding the degree to which ties between the two countries have improved in recent years, as Chinese President Xi Jinping’s visits Moscow on his way to the G20. And, they are not just blowing smoke; there is ample substance behind the rhetoric.

Whether or not Official Washington fully appreciates the gradual – but profound – change in America’s triangular relationship with Russia and China over recent decades, what is clear is that the U.S. has made itself into the big loser.

Gone are the days when Richard Nixon and Henry Kissinger skillfully took advantage of the Sino-Soviet rivalry and played the two countries off against each other, extracting concessions from each. Slowly but surely, the strategic equation has markedly changed – and the Sino-Russian rapprochement signals a tectonic shift to Washington’s distinct detriment, a change largely due to U.S. actions that have pushed the two countries closer together.”

 

Chuck again…  OK, G-20 has come and gone, let’s move on too, eh?

Currencies today 7/10/17… American Style: A$ .7555, kiwi .7269, C$ .7738, euro 1.1393, sterling 1.2873, Swiss $.9668, … European Style: rand 13.3350, krone 8.3460, SEK 8.4387, HUF 270.37, zloty 3.7155, koruna 22.91, RUB 60.35, yen 114.20, sing 1.3855, HKD 7.8138, INR 64.55, China 6.8045, peso 17.94, BRL 3.2795, Dollar Index 96.15, Oil $43.87, 10yr 2.36%, Silver $15.25, Platinum $900.98, Palladium $836.81, and Gold.. $1,207.30

That’s it for today.. Cards take two of three from the Metropolitans this past weekend and head into the All-Star Break under .500 for the first time in 10 years! That’s unacceptable, and when they come back they’ll have 2 weeks to change things or some changes will be made for them! Had a great day yesterday, with friends, and partial family in the backyard, watching the ballgame from the pool!  Son Andrew commented that “you know it’s hot when dad’s in the pool” Ambrosia takes us to the finish line today with their song: Holdin’ On To Yesterday… And with that, It’s time to go… I hope you have a Marvelous Monday, and Be Good To Yourself!

 

 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts

7/7/17

• Currencies continue to rebound…
• G-20 begins today…
• Former RBI Gov talks about Gold…
• What will the BLS have for us today?

 

Good Day… And a Happy Friday to one and all! My infusion confusion isn’t that bad today, so I’ll carry on in normal fashion this morning… The summer heat has arrived! There are a few things that I like about the summer heat, but only 2 that I should talk about here… 1. It’s not cold!, and 2. the sun normally shines!  The Gin Blossoms greet me this morning with their song: Until I Fall Away…

It’s been a strange week with two Mondays and all, and in the currencies we had Monday and Tuesday with dollar strength, and then a recovery of the currencies the rest of the week. I told you that the “dollar day” wouldn’t last long, and it didn’t! You see, the sentiment has changed toward the dollar, and traders are no longer believing what the Fed is telling them, that the economy is ready to take off and inflation will rise…

So, the sentiment toward the dollar has or is being switched to the euro, and soon a new weak dollar trend will be in place. I say that with full conviction because if you’ve watched the dollar’s reaction to data prints, you can see it all there…  The dollar has failed to gain (except on Monday with the strong ISM report) most days when it should have because of data prints that aren’t weak, but when weak data does print, the dollar gets sold…

The currencies are being led to higher values by the Big Dog, euro, which has climbed back above the 1.14 level this morning. The little dogs (other currencies) are all ready to jump off the porch and join the Big Dog in a chase the dollar down the street game…

Today is a Jobs Jamboree for June…  I told you yesterday that the forecast for the report is 177,000 jobs created in June…  No great shakes, and no reason to write home about it! And the dollar will most likely get sold, because in 9 of the 10 last Jobs Jamboree Fridays the dollar has gotten sold, even when the jobs report was better than expected!

Maybe currency traders have gotten the memo from me that the BLS Jobs report is trumped up by hedonic adjustments to the survey, with the Birth/ Death Model the biggest and worst hedonic adjustment there is! And I’m the only analyst/ newsletter writer that talks about this stuff… They call me: Lone Wolf, HA! (actually they call me Looney Tunes! HA!)

For those of you new to class, I don’t care about the BLS jobs report any longer, because it’s not even close to being right. But there are things that I’ve always pointed out as more important parts of the Jobs Jamboree than how many jobs the BLS “created”… And that is the Average Hourly Earnings, the Avg. Hourly Work Weeks, and most important of all … The Labor Participation Rate…

The G-20 summit begins today in Europe…  This ought to be an even more interesting summit because President Trump is attending it! We’ll find out on Sunday when the communique’ is issued that tells us what G-20 ministers decided on… I have to say that more comes from the G-20 meetings than the G-7 meetings, so maybe we’ll see something about how to deal with N. Korea…

I’m afraid though that they will spend an inordinate amount of time attempting to get the U.S. to return to the Paris Climate Accord…  We’ve said we’re leaving, can’t they just leave it at that?

You know… I had a dream last night that I was a car’s muffler…  and I woke up exhausted! HAHHAHAHAHA!

OK, enough on G-20, let’s talk about Gold… The shiny metal saw a “nothing day” yesterday, with little volume and a price change of only $1.70 to the downside, and close at $1,225.00l. Gold is down another $2 in the early morning trading today, and I’m still scratching my balding head and trying to figure out how in the world Gold didn’t rally on Monday when the antics of N. Korea were confirmed!  And then all the saber rattling that’s going on since N. Korea successfully fired an ICBM..  Where’s the bid?

I saw a graph on Ed Steer’s letter this morning that showed the Gold demand from the Silk Road countries of: India, Turkey, Russia and China… and it’s quite impressive…  I tried to move the graph here, but it exploded my letter and I had to start all over again! UGH! So, I’m guessing it was “user error” and not software, so I’ll have to find out from the guy who created the site how to do that!

And the price of Oil slipped further in the past 24 hours… This would be very telling about the future of the price of Oil, should this slide continue before the price of Oil was able to rebound to $50… I’m worried about the financialization of Oil… All those junk bonds issued to finance the debts of the Shale Producers…

The U.S. Data Cupboard yesterday, had the Trade Deficit for May, and came in at $46.5 Billion deficit…  And get this… the ADP Employment Report only showed 158,000 jobs added in June…  The ADP report is supposed to be the appetizer for the Jobs Jamboree, so if that holds true, the Jobs report would show less than the forecast 177,000 jobs created in June…  Uh-Oh!  But fear not, for Dudley Do-Right is here! No wait! I mean the BLS is here to add jobs to their surveys out of thin air, so there will be no “bad employment report”, not on the BLS’s watch!

Today’s Data Cupboard is all about the Jobs Jamboree, but… not to worry.. next week’s Data Cupboard is stocked to the brim with data prints!

Before I head to the Big Finish today, I wanted to highlight this quote by the former Gov. of the Reserve Bank of India, Y.V. Reddy…  He comes out and states that Central Banks fear Gold…   Let’s listen in to his comments… “Gold has the characteristics of a currency, competing with the official currency as a form of savings or a store of value. It is a commodity by definition — but its links with the financial sector provoke central bank concerns.”

I’ve got something for you on this for next week folks… You’ll want to make sure you come back and read it, because it’s going to blow the doors off the naysayers regarding Gold manipulation…

For What It’s Worth…  I saw this on MarketWatch, and thought, why not highlight it in the FWIW section today? it’s about how even low-income families spend money on luxuries… It can be found here: http://www.marketwatch.com/story/low-income-families-spend-40-of-their-money-on-luxuries-2017-06-28?link=MW_popular

Or, here’s your snippet: “It turns out that all Americans, regardless of income, spend a large percentage of their income on what economists categorize as luxuries.

Even the lowest income families (the bottom 5th of earners) spend 40% on luxuries and 60% on necessities, according to the study’s author: Torsten Slok, chief international economist for Deutsche Bank Securities.”

Chuck again… Pretty interesting don’t you think?

Currencies today 7/7/12… American Style: A$ .7588, kiwi .7281, C$ .7743, euro 1.1415, sterling 1.2913, Swiss $ .9620, … European Style: rand 13.4360, krone 8.3860, SEK 8.4355, HUF 269.92, zloty 3.7097, koruna 22.8709, RUB 60.07, yen 113.67, sing 1.3818, HKD 7.8107, INR 64.67, China 6.8015, peso 18.22, BRL 3.2941 Dollar Index 95.92, Oil $44.30, 10-year 2.38%, Silver $15.83, Platinum $905.77, Palladium $838.50, and Gold… $1,221.10

That’s it for today…  A nice day game win for my beloved Cardinals yesterday… I was wishing I was there yesterday, instead of in the infusion center! Do we have another swimming prodigy in the family? Little Braden Charles sure has taken to the water and his dad (the swim coach) has him swimming in races, and he’s doing quite well! Way to go Braden! Of course that could all change tomorrow, when his interests change… I’m well aware of how this all works, with three kids having gone through it all before. Little Delaney Grace is in a community play’s rendition of Fiddler On The Roof, I’ll be there to watch her, I just love her to pieces!  OK… I don’t know how this worked out like it did, but we ended yesterday with a Johnny Rivers song, and look who’s taking us to the finish line again today… Johnny Rivers singing his song: Poor Side of Town…  And with that it’s time to get off the bus this week, and send you on your way to having a Fantastico Friday! Be Good To Yourself!

 

Chuck Butler’s A Pfennig For Your Thoughts

July 6, 2017

• Dollar strength fades…
• Factory Orders’ print is awful!
• Fed Heads disagreeing?
• Gold sees 2 days of gains!

Good day… And a Tub Thumpin’ Thursday to you! This week is so strange, as it feels like there were two Mondays! It’s an infusion Thursday for me, so I won’t be doing any Tub Thumpin’, so I leave it all up to you!  I feel like I repeat myself every other Thursday, so forgive me for that! The Moody Blues greet me this morning with their song: New Horizons, from one of my all-time fave albums: Seventh Sojourn..

The “dollar day” on Monday, that spilled into Tuesday, with thinned out volume, due to the U.S. Holiday, began to give back some ground it took in trading yesterday and overnight. The Dollar Index has dropped again, and looks like it will head south of 96 soon. The U.S. received some more very ugly economic data, and the Fed Heads can’t seem to agree on when to start their unwinding of the balance sheet.  Those two things look to be the culprits undermining the dollar’s strength today.

Gold has seen two consecutive days of $3 gains, which I’ll take given the shiny metal has not been able to find a bid in the past 10 days.  I read where UBS (Union Bank of Switzerland) wealth advisors are telling their clients to buy Gold around this area ($1,200) because they like the idea of the insurance that Gold provides an investment portfolio. Hey! I don’t make this stuff up folks.. Check out the article I saw here:https://www.bloomberg.com/news/articles/2017-07-04/ubs-wealth-unit-recommends-buying-gold-near-1-200-for-insurance

And the price of Oil saw some slippage yesterday, but then recovered some of the slippage when the supplies data showed that Oil & Gas supplies had fallen in the past week…  The U.S. Strategic Crude stockpiles have fallen to the lowest level in 12 years, and the White House has pledged to sell more…  So, the price of Oil has the old give and take going for it right now…  You see, the U.S. shale producers are doing their best to keep the supplies at high levels… So, you have high production, VS the selling of the supplies…  And the price of Oil appears stuck in the mud with that scenario going on.

That means the Petrol Currencies are also stuck in the mud…  UGH! But the Petrol Currencies that have other things going on to support their respective currency’s value, are doing just fine… That list is short, but includes the Canadian loonie, and Norwegian krone..

The euro, which saw the brunt of the dollar’s strength in a bad way, that is, has strapped on its boots and is picking itself off the floor. The Big Dog, euro, is sneaking up on the 1.14 level again this morning, and if we see more weak data from the U.S., which in my humble, country boy, opinion, is a given, then we’ll see more dollar selling..

Aussie and N. Zealand’s currencies have also picked up the pieces (great song by the Average White Band) and returned to the rally tracks this morning. But currencies like the Mexican peso, Indian rupee, Brazilian real and Russian ruble, can’t find their way to the rally tracks.  So, we have a mixed-bag-o-currencies today, but for the most part, the dollar is getting sold…

As I said above, a reason for the dollar weakness this morning is the news that came from the Fed’s FOMC Meeting Minutes where it was revealed that the Fed Heads are deeply divided in when to start their unwinding of the balance sheet. The Fed has said that it wants to begin the balance sheet plan this year. The minutes of the June meeting said several officials wanted to start “within a couple of months,” while others favored waiting, suggesting that officials are debating whether to begin in September or wait until December.

I’m not a fan of reducing the balance sheet right now, for when they reduce the balance sheet it will be like hiking rates, and we don’t need additional rate hikes at this time, when the economy is weakening like it is doing right now!

Last year, I explained to you, dear reader, how the Fed works, these days, with the decisions being ironed out before the meeting so that it appears that there is no dissension going on… Fed Chair, Yellen, Fed Vice Chair, Fischer, NY Fed President, Dudley, and Fed Gov. Brainard, form the nucleus of the decision makers… Once they agree, they then make certain the rest of the Fed voting governors are in line with the decision…

Knowing this scenario exists, I found it interesting that there was a a division of opinions on when the unwinding of the balance sheet would begin…  At the last meeting where the Fed hiked rates, there was one voting member that voted against the rate hike. Neil Kashkari, Fed Minneapolis President..  We need more Fed Governors like this guy, folks… One that would stand up to the “decision making nucleus” at the Fed…  It used to be Richard Fischer of the Dallas Fed, but he retired from the Fed a few years ago… Then it appeared that Fed member, Rosengren, was going to be the flag bearer for questioning the “decision making nucleus”, but that didn’t last long either…

OK, I didn’t mean for this to become just a letter about the goings on at the Fed! Besides if I talk about the Fed too much I begin to break out in a rash! HA! So, let’s switch over to the other reason for the dollar weakness this morning, which would be the awful print of Factory Orders for May.

Yesterday, The U.S. Data Cupboard had the May Factory Orders print for us yesterday, and like I said it would print, the print showed a decline of -0.8%, and April’s negative print was revised downward from -0.2% to -0.3%… I also saw a report that showed Consumer spending on long-lasting durable goods dropped at a 1.6% annual pace in the first quarter, the weakest showing since the second quarter of 2011.

Today’s Data Cupboard has the Trade Deficit for May, which will be around $46 Billion, The ADP Employment Report, which is supposed to be the appetizer for tomorrow’s Jobs Jamboree, but never really turns out like that, because of the games that the BLS plays with the Jobs numbers. And of course as on every Tub Thumpin’ Thursday, we see the Weekly Initial Claims data…

I don’t see the dollar getting love from any of this data today, so the currencies should be able to add to their gains from yesterday and overnight. Tomorrow is the Jobs jamboree, and longtime readers know that I just don’t care about the BLS Jobs report any longer, because of the hedonic adjustments, and the way the markets take the report, hook, line and sinker, and then when the revisions are made later down the line, no adjustment is made…  So, I don’t care any longer, but the markets do, so I have to report on it, and right now the so-called experts are calling for job creation of 177,000 for June…  No great shakes, no reason to believe that wage inflation is going anywhere either!

Well, have you noticed the rise in the yield on the 10-year Treasury bond in recent days? I highlighted it last week, pointing out that the yield has risen by 22 Basis Points…  Well, the worst of the move higher in yield seems have been put behind us… This bond selloff seems to be overdone in my opinion… Now, I’m not saying that yields should drop to the 2.15% area again right away, but bond yields shouldn’t be rising this quickly either! Things in the U.S. are not moving in the right direction, and that’s always the things that moves bond yields lower… Remember, yield and price on bonds move opposite of each other… So, when the yield goes down, the bond price goes up, thus signaling a bond rally…

To recap…  The dollar days on Monday and Tuesday have come to an end, and the currencies, for the most part, are gaining back some lost ground. The Big Dog euro, is sneaking up on the 1.14 level once again. The price of Oil saw some slippage, but gained some of the slippage back, when it was revealed that U.S. Supplies of Oil & Gas have dropped to 2011 levels. Gold was allowed to gain $3 again yesterday, thus marking two consecutive days of $3 gains. Chuck points out that UBS wealth advisors are recommending to their clients to buy Gold for insurance…

For What It’s Worth… Well, thanks to Ed Steer, and his letter www.edsteergoldandsilver.com because that’s where I found this… And since I’ve made such a big thing out of the “Consumer having tapped out” this article on Zero Hedge makes a lot of sense to print…  You can find it all here: http://www.zerohedge.com/news/2017-07-05/whats-going-us-consumers-store-traffic-crashed-8-july-4th-weekend

Or, here’s your snippet: ”

First it was auto the auto parts suppliers getting hammered after O’Reilly Auto announced unexpectedly poor results (duly blamed on “mild weather” and weaker than expected Hispanic spending) and tumbling the most in 5 years, and then it was the retail REITs turn, after channel checks at Prodco Retail Traffic Analytics revealed that the US consumer continued to hibernate into the July 4th weekend with North American store traffic 8.1% lower in the week leading up to the July 4 holiday weekend, a steeper drop than the year-to-date trend of down “only” 6.6%. In the week ending July 1, with footfall at luxury retailers down 9.7%, and 8.3% weaker at apparel stores, Bloomberg reported.

The justifications for the abysmal results were legion: retail Q2 sales results may be impaired by weak traffic, as consumers still prefer digital, and they swap shopping for travel, dining out, or outdoor recreation. Shopping less in-store continues to hurt retailers’ ability to prompt unplanned purchases.

The companies impacted the most included retailers such as Abercrombie & Fitch, Macy’s, J.C. Penney, Tailored Brands and Nordstrom reported declines in traffic and same-store sales. And since they’re among the tenants of REITs Kimco and General Growth, the the S&P 1500 retail REITs index fell as much as 2.8%, the most intraday in two months, with all 24 members declining.
Based on the above, it appears that 2Q retail sales will once again be hurt by overall weak spending even as Amazon continues to wreak havoc among the traditional retail sector.
Abercrombie & Fitch, Macy’s, J.C. Penney, Tailored Brands and Nordstrom all reported declines in traffic and same-store sales.

And while many would be first to blame the (near) monopolistic dominance of Amazon in the online retail space, reading between the lines confirms that U.S. households are aggressively shrinking their overall spending basket, as store checks by Retail Metrics throughout the month found continued soft traffic, although the May retail deterioration appears to have stabilized at a low level. This, despite elevated promotional levels at both specialty apparel retailers, and department stores.”

Chuck again… I was having a discussion with a couple of ladies the other day, and they insisted that it’s all Amazon’s fault for the all the retails store closings, and I attempted to correct them and say that some of it’s Amazon, but the real culprit is a U.S. Consumer that has tapped out..  They wouldn’t listen to me though… UGH!

Currencies today 7/6/17… American Style: A$ .7596, kiwi .7268, C$ .7733, euro 1.1381, sterling 1.2950, Swiss $.9651, … European Style: rand 13.4732, krone 8.3719, SEK 8.4624, HUF 272.15, zloty 3.7369, koruna 22.9845, RUB 59.81, yen 113.34, sing 1.3833, HKD 7.8104, INR 64.81, China 6.7991, peso 18.33, BRL 3.3003, Dollar Index 96.09, Oil $45.88, 10-year 2.37%, Silver $15.97, Platinum $905.91, Palladium $843.97, and Gold… $1,223.00

That’s it for today..  I saw the sleep doc yesterday, and he showed me the difference in my sleep from before the CPAP to now about 6 weeks after the CPAP, and I was amazed at the change! WOW I told him even though I’m back on my chemo treatments, I don’t feel the need to take an afternoon nap any longer! Off to the infusion center now, I have to go quickly… YIKES I forgot the time!  The great Johnny Rivers takes us to the finish line today with his song: Summer Rain…  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

July 5, 2017

• Dollar crushes everything on Monday!
• N. Korea fires a successful ICBM!
• Russia & China get real friendly…
• It’s a Jobs Jamboree week!

Good day… And a Wonderful Wednesday to you! As Gomer Pyle used to say… Surprise, Surprise, Surprise! I know I said I wouldn’t be writing today, but… A change in plans, and here I am at my writing desk this morning! Boy, I’ve received a lot of unsubscribe emails in the past week, since I returned to the email version… I wonder what I did or said that has caused that? Oh well, I can only do what I can do… As Popeye said, “I am what I am, and that’s all that I am!” The Buckinghams greet me this morning with their song: Don’t You Care…

Well, the dollar day on Monday really took some mighty swings at the currencies and metals… But then I told you that we would probably see that happen, given that the ISM (manufacturing Index) was going to show a rise in the index number that would further fuel the dollar’s gains on the day…  But that could all begin get to reversed today, as we have another round of negative economic data scheduled for the U.S. today. And, the Fed’s FOMC Meeting Minutes print this afternoon…  More on that in the Data Cupboard roundup later..

The BIG News yesterday was that N. Korea has successfully fired off an intercontinental ballistic missile (ICBM), which means that they could reach the U.S…. The U.N. has banned these types of missile tests, but apparently N. Korea doesn’t think that applies to them. Now the question is: How will the U.S. react to this news?

My initial reaction to hearing that news, was “I bet Gold has finally turned the corner and begun to head higher”…  But I was wrong… (mark that down!)  Gold only gained $3.50 yesterday, and that’s only because “da boyz” as Ed Steer calls the short Gold paper traders, were on holiday…

In fact, Ed Steer (www.edsteergoldandsilver.com) had this to say about Gold trading… “There should be no doubt in anyone’s mind that a major bottom is being placed in gold and silver right now — and that’s especially true in silver. It’s still not known whether we’ve seen the last of the engineered price declines in these two precious metals, but if there is any room left to the downside, it would certainly be in gold.

With the bottom in, or mostly in, our eyes should now be focused on what happens during the inevitable rally that will follow. As Ted (Butler) said, how high we go.” – Ed Steer

Alrighty then… Well, like I said above, the currencies have lost that loving feeling that they had last week, and now have to generate the interest in them again. As I’ve said a couple of times now in the past couple of weeks…  We can expect to see days like we did on Monday as we go along, no currency trend is a ONE-WAY Street… And that’s an important thing to remember, as we go along.  So, let’s say you see a currency and want to buy it to further diversify your investment portfolio, but it’s going higher nearly every day, and you don’t want to buy into strength, (smart!) all you have to do is wait for a “dollar day” and then buy into weakness (smart again!)

The other BIG News this weekend came from the Russia/ China summit… And longtime reader, Bob, sent me a link to an article about the Chinese / Russian summit that was held last weekend, and from that meeting, President Putin and President Xi signed a Treaty of Friendliness and Cooperation between the two countries which will see further and deeper integration of Russia and China’s work towards mutual global problem solving.

President Putin later spoke of his optimism for what the One Belt–One Road Chinese economic, commercial and infrastructure project can offer for both countries. And President Xi spoke of the strategic partnership between the two countries as an “historic choice” .

Folks… I really do believe that China and Russia are looking to form an alliance that will scare the bejeebers out of anyone looking to mess with either one of them… Do you hear that Congress? Recall, you just put into place additional sanctions on Russia…

Now, if these two would gang up on N. Korea and have them shutdown their missile program that would work for me!

Speaking of China… I received a note from friend Sean Hyman on the 4th of July, and since Sean is a technical / charts guru, I thought I had better open that right away! And in his note, was a link to an article that talked about China opening up its bond market… Here’s the gist of what it said… “Access to the market will be restricted to “qualified investors” including central banks and sovereign wealth funds, but also commercial banks, insurers, brokerage firms and investment funds, according to the PBOC.

China’s debt market is the third largest in the world, with a cumulative value of about $10 trillion according to Bloomberg news agency.
However, this booming market has been virtually out of reach for foreign investors, who currently hold only a small portion of the bonds issued in China — less than 1.5 percent according to Bloomberg estimates.

China has moved gradually toward opening its capital markets.
In 2014, a trading link between the Hong Kong and Shanghai stock exchanges was introduced, and another was started in December 2016 between Hong Kong and Shenzhen, China’s other exchange.
The links give foreigners some access to China-listed shares, while also allowing Chinese firms to buy Hong Kong-traded stocks.

The bond move is the latest in a series of liberalization pledges from China, which has regularly been hit by complaints from foreign companies and trading partners about access to its markets.”

So.. How about that? Another step for the Chinese to gain a wider distribution of their currency… Folks, I’ve been writing about China’s progress in opening up their markets, gaining a wider distribution for their currency, and their massive accumulation of Gold for a long time now… I do believe that they are getting closer and closer to a float for their currency, backed by some percentage of Gold, and then the push to end the reserve currency status for the dollar really begins…

I don’t think I’ll go into individual currency performances this morning, because I told you the dollar took some mighty swings on Monday, all the currencies are much lower than they were last week, and leave it at that, besides you can check the currencies, metals, commodities out in the currency roundup in about 5 minutes of reading time!

The U.S. Data Cupboard is stocked with data prints this Holiday shortened week…  And it all comes together on Friday, as we will see what the BLS has up their sleeve when the Jobs Jamboree takes place.. Right now, the forecasts are showing that the so-called experts are calling for an increase in jobs for May of 177,000…  In one of my recent articles for the Dow Theory Letters website, I highlighted the fact that if we took out the hedonic adjustment of the Birth / Death Model from the surveys that are taken to determine the job growth/ loss each month, that we would be seeing some very ugly monthly jobs reports…  So, in essence, all the hullabaloo about jobs growth, is just that… because there’s really nothing behind all that hollering and dancing in the streets..

But that’s Friday… Today’s Data Cupboard has the May Factory Orders, which is what I consider to be a piece of what I call “real economic data”… And Factory Orders for May are expected to print even more negative than April’s negative -0.2%…  Durable & Capital Goods Orders, Factory Orders, Industrial Production, Capital Utilization, Retail Sales, the Labor Participation, and the ISM are “real economic data”… And like I said on Monday, the ISM is the only piece of “real economic data” that’s been a bright spot. So what’s up with that? How can manufacturing be a bright spot when Industrial Production and Factory Orders are in the red? Beats me, folks… Just another stranger than fiction item for us to deal with!

I told you Monday that I got a lot of response from my Tweet on Friday about the drop in Personal Spending…  And then I came across this that really helped me stick out my chest, and say… yes, I said that!

Have I told you lately, that I love you… No wait! Have I told you lately that… I truly enjoy the writings of Grant Williams and his Things That Go Hmmmm, letter that arrives in my email box every other Sunday? This past Sunday had a quote in it that I thought just supported what I’ve been telling you for some time now … That the U.S. Consumer has tapped out! This was taken from iNet and is investment analyst, Jim Chanos speaking on this very thing…

“(iNet Economics): We’re seeing weak consumer spending numbers in both auto and housing, which are big drivers of the economy. With unemployment so low and the expansion where it is, these figures should be better than they are. There are portents of even worse things when you look at state and federal tax receipts, which are down, and other leading indicators.

It could all just be a soft spot in an ongoing expansion — time will tell. But the narrative we were told is that animal spirits would take us to the next level of economic activity. That clearly is not happening in mid-2017. We’re 8 years into an economic expansion, and economists say that the modern U.S. economy has never gone more than 10 years without a recession. So as recoveries go we are well into it.

People have bought their cars and remodeled their houses and done a lot of things that one does in an economic recovery. I think incremental spending [spending based on increased disposable income] is going to be harder and harder to come by as time goes on.” – Jim Chanos

You tell ’em Jim! Because that’s what I’ve been doing for some time now! And the U.S. economic train chugs along to Recessionville…

To recap… Monday’s dollar days was very impressive and the dollar took some mighty swings at the currencies, metals, bonds and other commodities. Yesterday, while we shot of fireworks, N. Korea had  fireworks of their own as they successfully fired off a ICBM that could reach the U.S. Chuck thought that would be the thing to turn Gold around, but NOOOOOOO! Russia and China sign agreements to further trade and other things, and China opens up their bond market! Just another step to gaining a wider distribution of their currency folks…

For What It’s Worth…  On Monday I told you that the world’s debt was $217 Trillion, and today I’m going to tell you something else about that amount of debt… You can find it here in the RT:https://www.rt.com/business/394557-global-debt-surge-gdp/

Or, here’s your snippet: ”

Global debt levels have surged to a record $217 trillion in the first quarter of the year. This is 327 percent of the world’s annual economic output (GDP), reports the Institute of International Finance (IIF).

The surging debt was driven by emerging economies, which have increased borrowing by $3 trillion to $56 trillion. This amounts to 218 percent of their combined economic output, five percentage points greater year on year

The biggest contributor was China with $2 trillion. In June, the International Monetary Fund urged Beijing to tackle its ballooning debt, describing it as unusually high for a developing economy. Some estimates say China’s debt stands at 260 percent of its GDP.

Advanced economies have cut debt levels by $2 trillion over the past year. However, the US is approaching $20 trillion, almost 10 percent of global debt.

“Rising debt may I should say “is – and will continue to  create headwinds for long-term growth and eventually I should say “soon will” pose risks for financial stability,” the report said.”

Chuck again… I like how the report talked about China’s debt, and kind of flies over the U.S. Debt… Interesting don’t you think?

Currencies today 7/6/17… American Style: A$ .7590, kiwi .7265, C$ .7717, euro 1.1320, sterling 1.2910, Swiss $.9676, … European Style: rand 13.4420, krone 8.41, SEK 8.5140, forint 272.44, zloty 3.7508, koruna 23.0505, RUB 59.28, yen 113.65, sing 1.3834, HKD 7.8070, INR 64.82, China 6.7991, peso 18.32, BRL 3.3029, Dollar Index 96.44, Oil $46.21, 10-year 2.35%, Silver $15.91, Platinum $904.27, Palladium $847.24, and Gold… $1,218.40

That’s it for today… Well, a very nice weekend that spilled over to Monday, at Bull Shoals Lake in Northern Arkansas, came to an end yesterday. I was beat when I got home! Our 4th of July celebration was non-existent, as I worked on crossword puzzles… Are we really getting that old, I asked myself? My beloved Cardinals can’t seem to find a real winning streak, as they continue to blow games they should have won! UGH! Sorry about the tardiness of Monday’s letter… There are still some kinks we have to work out before this runs as smoothly as it did before… Foghat takes us to the finish line today with their song: Take It, Or Leave it… And with that I hope you have a Wonderful Wednesday, and Be Good To Yourself!

Chuck Butler