Author: admin

September 28, 2017 

* Slip Sliding Away stops… 

* RBNZ leaves OCR unchanged

* Gold gets whacked! 

 

Good day… And a Tub Thumpin’ Thursday to you! I want to send a Thank You note to the Cardinals, or the schedule maker, for moving their game up an hour, so I could watch my team lose again to the Cubs! Everything was going along just fine, and the it didn’t! And the season was lost… There are 4 more games to be played, but in reality there’s nothing to play for but their pride, which I would have called into question back in April… I had a great lunch with Frank Trotter yesterday, more on that in the last paragraph, and The Blue Jays have the perfect song this morning to greet me… The Blue Jays were a spinoff from the Moody Blues, with Justin Hayward, and John Lodge starting the Blue Jays, and producing one album, which is one of my fave albums… Anyway their song this morning is: When You Wake Up… See? Perfect title for an early morning letter!

The dollar bugs took a breather yesterday, and the currencies’ values stopped slip sliding away. The Big Dog euro dug in at 1.1750 and remained there all day. Gold on the other hand, it nearly gave back the $13 it gained the day before, losing $11.20 on the day… It was as if “the boys in the band” took a pause for the cause on Tuesday, and when they came back they saw what had happened, and decided they needed to do something quick! And do something they did, as the volume in Gold contracts traded yesterday was a monstrous 330,000… 

The President’s tax reform plan was presented yesterday, and so far, it appears to be something that as they used to say on the farm… “that dog ain’t gonna hunt”…. So, the boost the dollar got the previous day when it was announced that the President was ready to present his plan, didn’t get wiped out, but I think as the days go on, and more and more people/ traders/ hedge fund managers/ etc. See, that over $1 Trillion in deductions for tax payers will be eliminated, in order to pay for the tax rate reductions, I believe the dollar will give back those gains… A classic buy the rumor, sell the fact… of course, once again for any new readers, that’s my opinion and I could be wrong!

In the overnight markets the euro has carved out a small gain, and I mean small! But at least the slip sliding away has stopped for now… And I have to think that how the markets view the President’s tax reform will be the determinate of whether or not the currencies get back to the underlying trend of weak dollar / stronger currencies. 

The Bank of Canada Gov. Poloz, spoke yesterday, and I was thinking that this was going to be his chance to really take a large portion of the air out of the housing bubbles in Toronto and Vancouver, by saying something like, the rate hike last week was just the beginning of a new rate hike cycle…  But NOOOOOOOO!  Instead he has this to say: ““There is no predetermined path for interest rates from here,” the Governor concluded. “Monetary policy will be particularly data dependent in these circumstances and, as always, we could still be surprised in either direction. We will continue to feel our way cautiously as we get closer to home, fostering economic growth and keeping our inflation target front and center.”   

Hmmm…  Well, longtime readers know that I’m not a fan of Poloz, as he still allows his roots as a “trade guy” to influence his rate decisions. Trade Guys don’t like a strong currency because it makes it more difficult for them to promote trade of goods and services.  I recall talking about this the day after Poloz was named Gov. of the Bank of Canada…  And I’ve talked about it just about every opportunity I’ve had since!  So, the loonie lost move ground yesterday, because the markets were really wishin’ and hopin’ and thinkin’ and prayin’ that Poloz would let down his guard, and talk about a new monetary policy…  But that didn’t happen, so we move on from here, for we’ve spent far too much time in Canada this morning!

I don’t know if you’ve been paying attention to the U.S. Treasury 10-year yield moves in recent days?  But, September has not been kind to 10-year Treasury owners, as the yield has risen from around 2.09% in early Sept. to 2.34% today… That’s a move that’s been flying under the radar, that is unless you own the bond, or are a bond trader/ salesman.  And for all of you new to class, bond yield/ price move in opposite directions, so as the yield on the bond rises, the bond price drops, and vice versa… 

I would imagine that there are some young bond guys out there that have never next a bear market in bonds. I’m not sayin that this is what this move represents, but I’m just saying that these young guys have only really see bond prices rise… Yesterday the yield dropped 7 Basis Points, and that drop had to be tied to the Tax Reform talk … 

As I said above if the markets like the tax reform plan, and think it will give the economy the boost it needs, then the dollar will get bought, stocks will shine and bonds will go dark…  I’m just saying… 

Things have been pretty quiet In the Eurozone, but they did print some data today that is responsible for helping the euro carve out that small gain I talked about above…   Eurozone Business Climate and Economic Sentiment both saw increases in their index numbers with the Business Climate rising from 1.08 to 1.34… And the Economic Sentiment index rose from 111.9 to 113 last month…   

Germany will also auction off their 10-year Gov’t Bond today… Guess where you can buy a 10-year German Gov’t Bond?  I’ll give you a hint… It’s yield is lower than the 10-year U.S. Treasury!  2.19%!  Is that amazing or what?   I was talking with Frank Trotter yesterday, and I mentioned that the I was surprised that Angela Merkel won her reelection, given that she was responsible of the immigration mess in Germany (and the rest of the Eurozone), and Frank replied… Well, Germany’s economy is doing very well, and that pretty much tells you why she was reelected.  

See? I told you he’s the smartest man I ever met! I should have been able to put two and two together there, and not be so surprised that Merkel won, but I didn’t, and Frank did at the drop of a hat! 

And in Japan today they are going to empty out their Data Cupboard in one day, and print August data for Inflation, Industrial Production, Retail Sales and their Unemployment Rate…  Whew! Couldn’t they break those up some? Do that have to all print on the same day?  Oh well, I don’t see any of these scream, “buy yen”!    I see inflation, and Industrial Production falling from July’s prints, with Retail Sales rising a bit, and the Unemployment Rate remaining Steady Eddie at 2.8%…  

Norway’s Norges Bank met last week, and while I had tiny hopes that the Norges Bank would step up and hit the ball out of the park, by saying that with inflation rising they are going to meet it head on, but that didn’t happen and the Norges Bank remained with a neutral bias, and then we had the political uncertainty in Germany this past weekend with the election results, pulling the euro down, and we had the price of Oil jump $2… And the krone got pulled by the euro weakness, and not the Oil price rise…  UGH!  

And the Reserve Bank of New Zealand (RBNZ) met overnight (Friday morning for them) and they left their OCR unchanged. For those of you new to class, in New Zealand the OCR is the Official Cash Rate, like our Fed Fund rate…  I didn’t see any major change in the leadership of the RBNZ, as former Gov. Wheeler stepped down this month and the acting Gov. Spencer, basically said the same things that Wheeler has been saying the past couple of meetings… That the economy is growing nicely, with the help of a weaker currency…    And he just basically flicked the housing bubbles going on in New Zealand off his shoulder, like it wasn’t a problem… I shake my head and wonder if Central Bankers can see anything any longer!   

Well, my thoughts for interest rates in New Zealand haven’t really changed I still think the RBNZ will be moving to a rate hike cycle by year end, and hike rates in the 1st QTR of 2018… 

Well, IT HAPPENED! Just like the CEO of the mining company said it would this year!  Yes, I’m talking about the rise in price of Palladium that took it above the price of Platinum! It happened in the past 24 hours, and Palladium pulled past Platinum (that’s a lot of P’s in a row!)  and the spread between the two now goes in the opposite direction!  Hey! it feels good to cheer on something, and watch it go in the direction your cheering for, doesn’t it?    

I said above that Gold sold off by $11.20 yesterday with another day of monstrous volume in paper contracts, of 330,000…  So, Gold is below $1,300… I would think this to be an excellent area to look to buy, but then that’s just my opinion, and so on…  Given everything that’s going on in the world right now, I don’t see how “the boys in the band” can continue to fight the tide of physical Gold buyers too much longer…  At least that’s what I’m hoping!   

The U.S. Data Cupboard saw Durable Goods Orders for August attempt to climb out of the negative -6.8% hole from July, and rose 1.7%…  A nice try, but no cigar!  Capital Goods Orders were lower in August than in July, so no gains there…   Today’s Data Cupboard will have the latest revision to 2nd QTR GDP…  And they are going to attempt to get us to swallow a 3.1% 2nd QTR GDP…   Yeah, and I have some… oh never mind, you know how I feel about Gov’t data reports…  

To recap… The Slip Sliding Away for the currencies came to a stop yesterday, and the euro has carved out a small gain in the overnight markets. The rest of the currencies haven’t really gone with the euro yet…Gold nearly gave back the $13 it gained the previous day, and Palladium has seen its price rise pas the price of Platinum! 

Before I head to the Big Finish today I wanted to acknowledge that Hugh Hefner has passed on…    And then in the order of this letter… 

On a sidebar… I read last night that the U.S. has fallen from the number 1 position for countries’ ability to feed their people. Ireland moved in front of the U.S., and when you factor in climate, the U.S. falls to 4th! I don’t know why I thought this was important to write about, but it’s a part of the overall weakening that I see, I guess…

For What it’s Worth…  Well, this article has been around the block a couple of times, and had different names on it… But this is the original, and it’s about the dollar being doomed, and can be found here: http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?fiidarticulo=313   

Or, here’s your snippet: “In 1934, through the Gold Reserve Act, President Roosevelt devalued the dollar from $20.67 dollars per ounce, to $35 dollars per ounce.

The devaluation was excessive, meaning that at $35 dollars per ounce, the world considered that it would rather own American dollars – as undervalued – rather than gold; for this reason, and because of fears regarding another World War, the world shipped enormous quantities of gold to the US, in exchange for US dollars.

The consequence was that the stash of American gold, at the end of WW II, was about 22,000 tons of gold.

The huge error which the American administration committed at the Bretton Woods, N.H., international monetary conference in 1944, where the monetary order of the post-war world was determined, was to force upon the world a defective monetary system: gold was to be the foundation of the post-war world economy, supported by the US dollar, which was to be considered – like it or not – as good as gold.

This huge mistake has brought the US and the world to an enormous economic distortion: all production in all countries of the world, today, and all economic relations, both internally within nations and with regard to their international relations, are disconnected from reality.”

Chuck again… This article goes on with some very well written thoughts by Hugo Salinas Price…   

Currencies today 9/28/17… American Style: A$ .7820, kiwi .7192, C$ .8016, euro 1.1775, sterling 1.3390, Swiss $.9742, … European Style: rand 13.6037, krone 7.9594, SEK 8.1404, forint 264.26, zloty 3.6617, koruna 22.1294, RUB 58.04, yen 112.72, sing 1.3607, HKD 7.8096, INR 65.65, China 6.6384, peso 18.19, BRL 3.1777, Dollar Index 93.33, Oil $52.74, 10-year 2.34%, Silver $16.84, Platinum $923.36, Palladium $934.40, and Gold… $1,286.50  

That’s it for today… Whew! I almost threw my laptop in the waste basket this morning… There I was writing the Pfennig, and it froze up…. I tried rebooting, and nothing, everything I had was lost! And so I tried rebooting one more time, and this time everything came back, and I was able to finish writing the letter! Whew!  Had a great lunch with my good friend, Frank Trotter yesterday… I have to say that retirement looks good on him, he looked so relaxed, and free of all the things he couldn’t tell me! We talked about everything under the sun and moon and couple of hours later, we parted… Congrats to the Cubs for winning the Central Division last night… I have two good friends that are HUGE Cubs fans, Charlie, and Dennis, I know they are happy this morning, while I cry in my coffee!  Neil Young takes us to the finish line with his classic rock song: After The Gold Rush… And with that it’s time to get out of your hair for today, and hope that you have a Tub Thumpin’ Thursday!  Be Good To Yourself!  

 

September 27, 2017

* Tax reform talk gives dollar another favor!

* Gold get whacked, with 346,000 contracts traded!

* Are we reaching Peak Gold?

 

Good day, and a Wonderful Wednesday to you! It’s the middle of the night, and I’m awake… So, I decided to read a little, and begin to put the Pfennig together. My beloved Cardinals hung on to win one last night, holding off the celebration of the Cubs. Apparently, the Cardinals gave up 4 late runs, after I had gone to bed! Loggins & Messina greet me this morning with their song: Your Momma Don’t Dance…  the song goes: Your momma don’t dance and your daddy don’t rock-n-roll… When darling daughter Dawn, was a little girl, she used to sing:  My momma does dance and my daddy does rock-n-roll!  Memories…  

Yesterday, I told you that the currencies had been seeing their recent gains slip sliding away, and our Tom Terrific Tuesday didn’t change any of that, as the currencies’ gains kept slip sliding away…  I also told you yesterday that all the saber rattling between the U.S. and N. Korea was adding to the dollar’s favors, with the first favor coming from the Fed’s statement last week about how the U.S. economy is strong and robust. Well, we can add a 3rd favor for the dollar now in the form of a the announced tax reform from the President.  

Even a comment from Fed Chair, Janet Yellen, that should have stopped the dollar in its tracks, was just treated like water off of a duck’s back… Yellen told reporters that, “the rate hike path is not set in stone”…  Now, if you were to ask me what my take on that statement was, I would tell you, no wait! I am telling you…  That this is the Fed’s way of laying words between the lines, as songwriters used to do.  This way, when December comes along and the Fed skips the rate hike again like they did last week, they’ll be able to point to that statement and say, “well, we gave you a hint 3 months ago”… 

So…  Saber rattling, exaggerations about the economy, and talk of tax reform, has the dollar firmly on the rally tracks with the Big Dog euro slip sliding down to 1.1750 this morning, and the yen giving back its so-called safe haven gains. Gold, which had gained back some of the previous day’s losses has run into a buzz saw in the early morning trading today, and is down $7 in the early trading.  Is this all the Plunge Protection Team (PPT) stepping in to the markets to keep the dollar from falling too low?  Or, is this simply the dollar rallying on the items I mentioned above?  

Well to be fair and balances, I’ve got to say that It’s a little bit me, and a little bit you, no wait!  Come on Chuck, people don’t want to read about Monkeys lyrics!  OK, I get it… but what I was trying to get at was that it’s probably a lot of the fundamentals causing traders to rethink their recent switch of sentiment away from the dollar, and some PPT trading sprinkled in just to smooth out the rough corners!  

And, let’s not forget the fact that political uncertainty in Germany couldn’t have come at a worst time for the euro… I’ve read that current German Chancellor Angela Merkel, is having difficulty negotiating a coalition government, and the longer this plays out the more the euro will suffer…   

The political uncertainty in New Zealand is much the same with regards to not getting anywhere, and here the task will be much more difficult, and could end up taking 3 or 4 weeks to finalize, and all that time kiwi will suffer, because I’ve told you dear readers that traders don’t like uncertainty, and New Zealand and Germany are poster children for uncertainty right now. 

There’s a good article on the Bloomberg this morning asking the question, Have we reached peak Gold?…  The head of the World Gold Council (WGC) was interviewed for the article and he talked about the unsustainable demands from countries like India and China, and how miners can’t keep up with the demand if it were continue. The WGC head also talked about the U.S. political uncertainties, and how when you add up all things going on right now that it “seems like very fertile ground for investors to get into Gold”   He also went on to talk about how he saw Gold’s price rising to $1,400 in the next year…

 I’ve always questioned the WGC’s reports on gold holdings but this guy seems to be “with it”, at least from what I read in the article!   Peak Gold… Hmmm, now that’s something to think about, eh?    When I was doing my reading earlier I came across two things that I think will eventually come to everyone’s attention and they’ll say, “how’d this happen so quickly?”  When in reality it took a long to time, they just weren’t paying attention…   

The first thing is a little ditty that I came across and it made me think of how it was pointed out to me when I was making such a big deal out of household debt rising that the population had increased and therefore the increase wasn’t to be worried about…  Well, in 2016, the U.S. population only grew 0.7%, the smallest annual increase in population in 80 years! So… I guess now we CAN worry about the increase in household debt, eh?

 And the second thing is all this talk of unwinding the Fed’s Balance Sheet has got a lot of people talking. But one person that I do listen to when he talks is Lacy Hunt, well respected investment analyst, and “go-to guy” for John Mauldin…  Lacy Hunt says that the unwinding of the balance sheet will only cause the yield curve to flatten out…  And then I look at the yield curve and I see it has already begun to flatten!

The spread between the 10-year and 2-year Treasury bonds  stood at 78 Basis Points yesterday which was the flattest the yield curve spread has been since the current expansion has begun, which was 2009!  The spread widened a bit to 82 Basis Point in the past 24 hours, but still you see what’s happening here, and once a yield curve is flat, it doesn’t take much for it to go negative, and when that happens, you might as well write down that the economy is in a recession, or will be in one soon! 

Gold got whacked good yesterday, after fighting in the early morning trading to rebound. But that was not to be, for long that is, and soon the short paper trades were swirling around the shiny metal and when all the dust settled there were 346,000 contracts traded yesterday, which pushed the price of Gold down $16.70 on the day.  In the early morning trading this morning Gold is getting off on the wrong foot again. UGH! 

And for those of you keeping score at home, the spread between Platinum and Palladium is just $9 this morning… Just $9, that’s what I said!  But getting back to Gold for a minute… I just keep thinking about James Rickards call for a price reset for Gold that will come around the time we change our calendars to a new year… I sure hope he’s bang on with that call!  

The U.S. Data Cupboard today finally gets some real economic data in Durable and Capital Goods Orders for August…  Like I said yesterday, I think it was, that Durable Goods Orders, which were a negative -6.8% in July are expected to print a positive number, but based on the previous month’s figure, which isn’t going to say much…    

Yesterdays Data Cupboard saw August New Home Sales drop from July’s print, and the same with Consumer Confidence, while the Case/ Shiller Home Price print ticked higher from 5.8% to 5.9% increase… Maybe that’s why New Home Sales dropped?   

To recap…   The gains the currencies have made keep slip sliding away, as now the dollar has another favor, which is the unveiling of the President’s tax reform plans… And the euro and kiwi continue to have to carry around political uncertainty like an albatross around their necks! The WGC mentions peak Gold.  But Gold gets whacked good on Tuesday, and is set for more losses today. The Platinum to Palladium spread is just $9 this morning! WOW!    

For What It’s Worth…  Since I talked about Gold in two different places in the Pfennig today, this makes sense to carry the Gold talk on with this article about how Gold is money, and can be found here: http://www.internationalman.com/articles/gold-as-the-monetary-sun   

Or, here’s your snippet: “For millennia, people believed that the sun revolved around the earth, appearing, as it did, on the eastern horizon in the morning and setting on the western horizon in the evening.

Greek astronomer Aristarchus of Samos is generally credited with the concept that the universe is heliocentric, with all the planets revolving around the sun. Yet it took a further eighteen centuries before Nicolaus Copernicus came along and convinced people that this was the case.

So, we can be forgiven if we educated modern-day people sometimes have difficulty in understanding that gold is the monetary sun.

Even those of us who have been tracking gold’s progress for decades frequently give in to the ease of quoting gold’s value in terms of fiat currency—most commonly in US dollars.

And yet, we have it the wrong way round. Gold is in fact the centre of the economic universe, and all the fiat currencies (including cryptocurrencies) revolve around gold.”  

Chuck again… I think this is a very good article that all Gold holders should read, and even non Gold holders so that they might be moved to actually buy some Gold!   

Currencies today 9/27/17… American Style: A$ .7851, kiwi .7192, C$ .8075, euro 1.1750, sterling 1.3384, Swiss $.9738, … European Style: rand 13.4545, krone 7.9194, SEK 8.1410, forint 265.38, zloty 3.6610, koruna 22.1371, RUB 57.65, yen 112.74, sing 1.3586, HKD 7.8084, INR 65.84, China 6.6294, peso 18.04, BRL 3.1612, Dollar Index 93.37, Oil $52.13, Silver $16.87, Platinum $925.39, Palladium $915.89, and Gold… $1,294.70   

That’s it for today…  Well, I recovered from my Monday shut down enough yesterday to get my errands taken care of. memo to self… Don’t go to license bureau the last week of the month for ANYTHING! And today will be a special treat, as my longtime friend, and former boss, Frank Trotter and I are meeting for lunch! I can’t wait to hear about what he’s been up to, and what’s next for the smartest man I ever met. Boy I’m glad I went to bed before the Cubs nearly tied the game last night. I would have been fitted for a white suit if I had watched that! I’ve decided that I don’t care to watch another NFL football game again. I don’t have a team to root for, and now with all this going on, I just don’t need them any more. College football will be my main focus this year…  Yes, takes us to the finish line today with their song: Time And A Word…  And with that I hope you have a Wonderful Wednesday… and please Be Good to Yourself!

September 26, 2017

* The dollar is back in the driver’s seat… 

* Thanks to all the saber rattling!

* Gold has a good day! 

Good day… And a Tom Terrific Tuesday to you! I don’t know what hit me yesterday, but right after hitting send, I began to get the chills, and all my energy was sapped, it was all I could do to climb the steps back to my bedroom. I put on not one sweatshirt, but two sweatshirts, a hat, and my hoodie, laid down and fell asleep until well into the mid afternoon! Then when I woke up I was burning up, and had to start shedding all that extra stuff I put on to warm me up! My head was till pounding last night… But I think I’m better today, YAHOO! And one of my all-time fave songs is playing right now, as Supertramp greets me with their song: Hide In Your Shell…

The rebound that the currencies saw on Friday, was quickly snuffed out with dollar buying yesterday, and the euro continued to slip further down in the 1.18 handle. But gold rebounded nicely closing up $13.20 on the day! I had a good friend send me a note and ask me if he should wait to buy more Gold, since it was up so strongly today… I always think about that, but who’s to say it won’t be up big again today, or the next day? I’ve never been a market timer, if I want something I buy it when I want it… I used to tell the story in my presentations about not buying when you want to buy… I would tell the audience about a man, who’s main objective is to get downtown, waiting for a bus… And when one comes along, he looks at it and decides that the next bus will be shinier and newer, and when the next bus comes it is indeed shinier and newer, but that get’s the man thinking again, and he decides not to get on the bus, because the next one will probably be high tech, etc. And indeed it was, but this went on all day, and the man never did get downtown!

So, where was I anyway? Oh, yeah, talking about Gold’s rise yesterday… And just as impressive was the rise in the price of Oil, which gained nearly $2! And I think that, along with N. Korea saying they will attack our planes in international airspace, got Gold moving upward yesterday. What does the price of Oil have to do with Gold? You see, if there is a rise in commodity prices, led by Oil, then that means the commodity traders see rising inflation, and guess what shiny metal does good in a rising inflation environment? You got it!, aw come on, that was too darn easy!

The currencies are seeing their gains slip sliding away, slip sliding away, you know the nearer your destination, the more your slip sliding away…  – Paul Simon…   And Oil backed off its lofty level above $52 yesterday in the overnight trading… All this saber rattling between the U.S. and N. Korea is wearing on the currency traders, and when they get that way, they buy dollars and wait for something to change. 

This doesn’t change my thought that the strong dollar trend has ended, this is the volatility I always talk about when it comes to there being no One-Way Street in currency trends. So, what does that mean for investors that recently bought currencies? Well, it means, in my humble opinion that is, that could be wrong, that you go back and buy more at cheaper prices to dollar cost your avg. downward!  

So, this morning, the euro has slipped through the 1.18 handle and looks like it will end the day in the 1.17 handle.  The Petrol Currencies of Russia, Norway, Brazil, Canada, and others, weren’t able to rally on the jump in the price of Oil because the pull from the dollar was too strong, and overrode the price jump in Oil. Wouldn’t you just know that would happen? Oil jumps $2, and the Petrol Currencies aren’t able to rally on that move because the dollar was too strong… UGH! 

And the Canadian loonie could have used a boost, as it continues to give back nearly all its gains from the rate hike two weeks ago.  But the loonie isn’t alone there.. The Aussie dollar (A$) and kiwi have also given back huge chunks of their previously gotten gains.  The only currency, besides Gold, that had a good day yesterday VS the dollar, was the Japanese yen, and yen still has its rally shoes on this morning, thus proving once again that for some strange reason, yen is considered a so-called “safe haven currency”…  And the saber rattling between the U.S. and N. Korea has investors and traders buying safe havens…  

The weird thing about the safe haven buying is that the euro normally plays a large part of that buying, and not so much this time. The uncertainty that we talked about yesterday in German politics is weighing very heavily on the euro right now… 

Another safe haven is U.S. Treasuries, and the 10-year yield did drop by 1 Basis Point yesterday… Nothing to write home about here, so just move along, for these are not the droids we’re looking for!

I was doing some reading last night, because my Cardinals had already fallen behind, big time,  in their must-win game VS the Cubs, and I came across an article on the Puerto Rico… I read where no credit cards can be used because power is down throughout the island country. And that got me thinking… About the cashless society that I keep writing about… Take Puerto Rico, what if the country’s residents were using cryptocurrencies? Well, that’s not going to work… And what if they were using Apple pay or whatever pay? Well, that’s not going to work, and probably won’t work for several weeks… Ahhh, but if you had a pocket full of cash, you are first in line for meals, and what have you because, well, you have physical money… Just think about that for a minute, and then carry it over to here in the U.S. where people keep writing about how the power grid is vulnerable to N. Korea’s hydrogen bombs… That reminds me I need to get to the ATM and get some cash, as the stash in my pocket is getting thin!   

Oh, and the Cardinals lost that game last night 10-2… A real country beating as my dad used to say! Boy the game of baseball sure has changed since I was a kid… One Cubs player made a statement before the game that they will especially enjoy celebrating winning the division at Busch Stadium… Now back in the day, the player would have earned some chin music, and then one in his ribs…  Where are the Bob Gibsons and Don Drysdales these days? Of course maybe that all happened last night because I didn’t watch it after the first inning!  Sorry about going there, but I just had to get that off my chest!   

You know how I’ve been following the spread between Platinum and Palladium since the CEO of a mining company made a bold prediction that Palladium’s price would surpass the price of Platinum this year… When he made that statement I saw that it would either be a HUGE rally in Palladium or a significant drop in Platinum’s price, or both…  And that’s exactly what we’ve had… The spread today stands at $19… It’s come a long way, eh? 

The U.S. Data Cupboard has 3 data prints today that won’t necessarily move the markets but here they are anyway…  First up is the Case/Shiller Home Price Index for July… Then we’ll see Consumer Confidence, and finally August New Home Sales…. So, go ahead and knock yourself out if one of those is your cup-o-tea! HA!  

To recap… The Cardinals blew a tire last night, and all the saber rattling has got the markets all frenzied up again, and this time euros are not part of the safe haven buying, because of the uncertainty of German politics right now. Gold had a good day gaining $13, and the price of Oil jumped $2.  And Chuck goes on and one about old time baseball!    

For What It’s Worth…  Remember when the interim President in Brazil took over and I said that he was going to open up trade and get the economy moving again? Well, this is a part of that, as Brazil opens up their Oil industry and the article can be found here: http://www.marketwatch.com/story/brazil-lets-in-big-oil-firms-a-decade-after-ejecting-them-2017-09-26   

Or, here’s your snippet: Brazil will on Wednesday begin reversing what industry officials say was a costly and ultimately disastrous decision a decade ago: setting aside billions of barrels from the Western Hemisphere’s largest oil discovery in 30 years for its state-run oil firm at a time when deep-pocketed foreign companies were clamoring to invest.

Brazil removed key acreage from a 2007 auction that could have yielded $100 billion in signing bonuses plus hundreds of billions more in spending commitments when the price of oil was near record highs, according to several former executives at Western oil companies.

Now, Brazil may generate just a fraction of what it could have as it looks to exploit its oil potential and revive its economy.

“We are trying to put the country back on track,” Energy Minister Fernando Coelho told an oil conference in Houston earlier this year.””

Currencies today 9/26/17… American Style: A$ .7904, kiwi .7206, C$ .8070, euro 1.18, sterling 1.3454, Swiss $ .9715, … European Style: rand 13.3095, krone 7.8569, SEK 8.0836, forint 263.89, zloty 3.6305, koruna 22.0835, RUB 57.51, yen 111.71, sing 1.3537, HKD 7.8105, INR 65.52, China 6.6155, peso 17.94, BRL 3.1417, Dollar Index 92.88, Oil $51.93, 10-year 2.22%, Silver $17.11, Platinum $944.98, Palladium $914.93, and Gold… $1,307.70…  

That’s it for today… Boy I hadn’t had a day like yesterday in some time, and hopefully never again! But really, with regards to the drug that I get infused into my blood system every other week. I tolerate it pretty well, with only a few days here and there where I feel like death warmed over.. So, I consider myself lucky, because there are some cancer patients that feel like death warmed over all the time! UGH! I used to say that I was going to be stubborn and live so I would eventually see the “magic pill”… I’ve got to keep my focus on that day… I have some errands to run today, so I have to have my strength back! And I think I do… So that’s a good thing! Peter Gabriel takes us the finish line today with his song: Big Time…  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 

September 25, 2017

 

* Japan to announce another stimulus package?

* # of short paper trades in Gold & Silver Increases!

* Petrol Currencies get on the rally bus! 

 

Good day… And a Marvelous Monday to you… I bounced back to life quicker than normal after my infusion last week, so that was a good thing… I got to watch my two grandsons play soccer (well, it kind of looks like soccer anyway). Both Braden and Everett play on the same team. Saturday, we went to St. Louis University, where they were celebrating their Homecoming… the “tailgate” was sparsely attended, but the men’s soccer game looked pretty packed! And Sunday, was the White Coat ceremony at St. Louis University. Alex received his white “doctor’s coat”, as the professional phase of his education to be a Physical Therapist, begins now. He’s actually a senior at SLU, but his program is a 6-year program where he’ll come out with a doctorate in Physical Therapy… The Ceremony was long, but I did take a short video of him getting his white coat put on him, and sent it to his siblings for them to see their “little brother”… Chris Issac greets me today with his song: Wicked Game… Love the guitar work in that song!

Well, I thought a lot about how hard I was on the Fed last Thursday, this weekend, and have decided that… It was all deserved! No taking back anything from me, no siree Bob! My weekly letter on the Dow Theory Letters (www.dowtheoryletters.com) this week will be about how the Fed keeps saying the Economy is strong and robust, and I keep saying… “I’m from Missouri, show me!” And believe me, I don’t hold back any punches in that letter either!

The Currencies and metals gained some last ground back on Friday, but the moves were small with the euro only gaining about 1/3rd of a cent, and Gold gaining about $6… The dollar bugs are still scampering about the floor, having come out of the floorboards when the lights were turned off, and giving us that old, “The dollar is the best currency in the world” stuff.. And I just point to the scoreboard… For what currency is worth more than the dollar? Come on quick, it’s a layup! Of course it’s the euro! And of course the precious metals! But, they don’t look, nor do they listen, thsee dollar bugs are a pesky lot… 

But that was Friday… In the overnight markets last night and into this morning’s European session, the dollar has won back that lost ground on Friday, and continues to reap the rewards of having a “perceived” hawkish Central Bank. I’m really at wit’s end with this “hawkish Fed talk”, but there are times you have to just swallow your pride, put your tail between your legs and go to the back of the room and keep your head down as to not gain any attention.  And it looks like this is one of those times for me!  

It appears that both the euro and kiwi are taking on water this morning from the old “uncertainty bug”…  The uncertainty comes from elections held in Germany and New Zealand this past weekend, where the party that won, is going to have to deal with a coalition government, since the winning party wasn’t able to gain a majority seats in the government. 

In Germany, Chancellor Angela Merkel won again, but her party was knocked to their knees and so the negotiations for a coalition government will begin, and that brings about uncertainty for the Eurozone’s largest economy, and that is not a good thing for the euro. 

In New Zealand, the incumbent National Party won 58 of the 120 government seats, and the opposition party, the Labor Party won 45 of the seats, so now both parties are going to have to woo the New Zealand First Party, to form a ruling government. So, here in New Zealand, the uncertainty is even greater than it is in Germany, and this process could take a coupe of weeks!  And just when kiwi was getting some legs under it… Hmmm…  

I had to laugh out loud when I read that Japan’s PM is rumored to be ready to announce yet another stimulus package for Japan… Crazy, isn’t it? I mean they’ve been doing stimulus packages of some sort since the mid 90’s. I know, because, well, I was writing the Pfennig back then and thought at that time that they were a little off their collective rockers in Japan…   But then that was just the beginning of a long love relationship between whatever Gov’t is in, and stimulus packages in Japan… But, yet the yen continues to hold ground below 1.20?  I don’t get it folks… And that’s saying a lot for me to say/ admit, eh?   

The Petrol Currencies are, for the most part, the currencies with something to say this morning VS the dollar, with gains that aren’t great, but gains nonetheless. The Price of Oil, which started to rise late last week, and continued throughout the overnight session, and sits at $50.60 this morning, which has given the Russian ruble, Norwegian krone and Brazilian real a reason to believe they can gain VS the dollar even when the Big Dog euro, is not participating. 

One Petrol Currency not participating with its kissin’ cousins is the Canadian loonie. I told you all last week that the loonie had to go back and fill in the gaps that it skipped through on its way to .8250, after the rate hike a couple of weeks ago, and that I think the 81-cent handle is more where the loonie should be trading right now… And I guess loonie traders think so too! 

Well, “the boys in the band” took a pause for the cause on Friday, and there were no major selloffs during the day or in the after hours markets for Gold.  The shiny metal has slipped back below $1,300 on all the volume from last week.  In Ed Steer’s Saturday letter each week he puts in a graph of the concentration of short paper trades and how many days of production of each metal it would take to fill all those short paper trades…

And for the longest time Silver’s number of days of production needed to fill the short paper trades would be 180 days… But this last weekend I noticed that the number has grown to near 200 days!   And Gold, which stood at around 85-90 days, has moved to 100 days!   And the thing that just really piles on here is the fact that Platinum and Palladium make the list and have more days of production needed than Gold!  

That’s shameful, that we allow this to continue and not only continue but get even larger! And that’s where I’m going to end this discussion on the short paper trades because I’m just not ready to go all Rambo on them this morning! 

I read this weekend (thanks Bob!) that China now has more Billionaires than the U.S….  Now you may be thinking , so what? Well, think of it this way… The wealth of the people in the nation, keeps the nation wealthy…  And when China’s # of B’s flew past the U.S. it passed the U.S. like it was a statue on the side of the road! China has 609 B’s, and the U.S. has 552 B’s…  I just happen to think that shows how far China has come in the past two decades…  

The U.S. Data Cupboard was a BIG dud last week, but gets back into the swing of things this week with some real economic prints like: Durable and Capital Goods Orders, and Personal Income and Spending… There are some housing prints, and other not-s0-important prints this week. As far as Durable Goods, which printed a negative -6.8% in July, I would expect that the number would be a positive this month, but coming from a -6.8% that’s not saying much!  

To recap…. The currencies and metals rebounded on Friday, but have seen, for the most part, a reversal of fortune in the overnight markets, with the dollar getting bought. The euro and kiwi are seeing selling based on uncertainty from the elections held in Germany and New Zealand this past weekend. Both countries will have to negotiate a coalition party to rule and there’s uncertainty in that, and the markets don’t like uncertainty. And Japan is ready to announce yet another stimulus package! 

Where are you Rick Monday? That’s all I’m asking/ saying about that!

For what It’s Worth… Thanks to longtime reader, Bob, for this article on just how much Gold Russia is hording these days… The article can be found here:http://russiafeed.com/how-big-russias-gold-reserves-are/

Or, here’s your snippet: “The amount of monetary gold in Russia’s international reserves increased by 0.9 percent in August and totaled 56.1 million ounces (1,744.9 tonnes) as of September 1, the Bank of Russia reported on Wednesday.

The value of gold in reserves in August increased by 4.94 percent up to $73.5 billion as of September 1, 2017, while the share of gold in international reserves increased to 17.34 percent from 16.74 percent a month before, according to the report.” 

Chuck again… that’s it on the story there, it was short-n-sweet! Here’s the number, deal with it, was what it basically was saying!  

Currencies today 9/25/17… American Style: .7960, kiwi .7282, C$ .8112, euro 1.1887, sterling 1.3514, Swiss $ .9736, … European Style: rand 13.2536, krone 7.8195, SEK 8.0230, forint 260.94, zloty 3.5892, koruna 21.8977, RUB 57.50, yen 112.02, sing 1.35, HKD 7.8128, INR 65.18, China 6.5959, peso 17.77, BRL 3.1294, Dollar Index 92.45, Oil $50.60, 10-year 2.23%, Silver $16.99, Platinum $937.92, Palladium $922.80, and Gold…. $1,298.30   

That’s it for today…  Another dagger for the Cardinals as they dropped a pair of games in Pittsburgh over the weekend… UGH! The come home how to play the last 7 games of the regular season at Busch Stadium! They have to win all 7 to have a chance to make the playoffs… This will mostly likely mark the second consecutive year of not making the playoffs…  And that’s a reflection of management, the GM down to the manager. The ownership may be wearing blinders, but the fans know it in their heat of hearts that this is not a “Cardinals” team…  Kathy, Chuck and Alex went to lunch yesterday after his White Coat Ceremony”. We tried to stay around St. Louis University, but parking was a major problem…  But we finally found a place to go!  There sure were a lot of very proud parents in the Church yesterday for the ceremony, of which we were part of for sure!  Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Jenny Take a Ride…   I hope you have a Marvelous Monday, and Be Good To Yourself!

 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts  

September 21, 2017    

* Fed leaves rates unchanged… 

* But wins back the markets! 

* And Chuck goes crazy! 

 

Good day… And a Tub Thumpin’ Thursday to you!  Well, I’m in one of those moods this morning… Full of you know what and vinegar! I sure hope I don’t write something that gets me in deep dookie…  It’s also an infusion day, so I need to wrap this up and get out of here this morning in a timely manner… Someone sent me a note the other day, and said that he admired how I talk about chemo infusions like they’re a walk in the park…  It made me think about my infusions… I certainly don’t like them, I don’t like going to the infusion center (it’s so depressing), and I figure that no one wants to hear that stuff, so… It’s an infusion day for me, and that’s all I’ll say about that!   We’ve got lots of stuff to get to today too, so let’s quit dawdling here!  Steely Dan greets me this morning with their song: Deacon Blues…    

Well, Vini vidi, vici…  You can say that the Fed came, saw, and conquered the markets yesterday…  The won back the credibility that they had lost with all their flip-flopping around, with a bold statement yesterday, about how they are on track to hike rates one more time this year, and 3 more times in 2018, and while all that’s going on, they will be unwinding their balance sheet, with Treasury sales or redemptions of $10 Billion per month, and increasing the monthly total as we go along until they are at $600 Billion per year…  

The markets were impressed, and thought, “I guess we were wrong to ever doubt the Fed’s word.”  And then they went about buying dollars, and selling the currencies and metals…  It got very ugly yesterday afternoon and in the overnight markets, with the euro losing one full cent, and the other currencies following the lead of the Big Dog. 

Gold is $18 cheaper this morning than it was yesterday morning, as “the boys in the band” saw the selling of Gold as an opportunity to “pile on”… I  just don’t “get it” folks…  One day, the markets are convinced  that the Fed doesn’t know what they are doing, and are selling dollars like funnel cakes at a State Fair, and the next day the markets are down on their collective knees and bowing to the Fed saying, “We’re not worthy, we’re not worthy”…    Well, here I go, I’m getting up on my soapbox now, better protect the kids ears, or hide them out in the cellar!    

Distortions, lies and omissions… That was the title to an article regarding the journalists explanation of the conflict between Russia and Ukraine, a few years ago… I dug that up because it rings true these days, with all the talk of a “strong economy”, and “we’re on a roll” and “we’re still on the lookout for rising inflation”… And so on. I sit here in my basement at my writing desk in utter amazement that these contortions to the truth, just keep getting repeated, and the markets believe them… Just last Friday, we had Industrial Production and Retail Sales both print NEGATIVE! And Capacity Utilization, one of the few forward looking pieces of data that we see, fell from 76.9 to 76.1? And that’s just the most recent data prints! Factory Orders, Durable & Capital Good Orders have all been weak to disappointing, and yet, we keep getting told that the economy is strong… Well if it so dang strong, why didn’t the Fed hike rates yesterday? I’ll just leave that one out there floating around and maybe someone has an answer.

I have an answer, but nobody likes to hear it! But guess what? You’re going to get to hear it because, well this is what you pay for! Wait! Chuck, have you begun charging readers for the Pfennig? No, why do you ask? Because you said “this is what you pay for”… Ahhh, grasshopper, the pay part is in their time in reading the Pfennig, which I’m now causing them to have to read and take up their time! HA! But the Fed didn’t hike rates yesterday, saying that they will hike them one more time in 2017 (Yeah, right, and I’ve got some land for sale that situated between North and South Korea), because they’re finally seeing what they have done… They hiked rates into a weakening economy, and they did so hoping that inflation would rise… What were they thinking? If you want your economy to grow you don’t hike rates! If you want inflation to rise, you don’t hike rates! And when you’ve dug yourself a hole, and realized you dug it in the wrong place, you don’t keep digging in the same hole!

Let’s look at GDP here in the U.S. Well, the Fed Atlanta has a computer system they call GDPNOW, and it throws all the factors together and projects quarterly GDP… Guess what they projected for the 3rd QTR here in the U.S.? They projects 2.2% GDP…. And my old pals at Kipplinger recently posted a projection of 2.1% GDP for the whole year 2017! Now, let me ask you, and be honest with yourself and me, here… Would you call 2.1% GDP a strong, growing economy? Or would you call it an economy that is just muddling through, year after year after year? OK, I’ve said enough here, I need to quit before I either say something I’ll regret, or begin yelling at the walls, which wouldn’t be a good thing at this time of the morning with Kathy sleeping upstairs!

So, the Fed didn’t hike rates yesterday, but you dear Pfennig Readers knew that was going to be the result of their two-day meeting, months ago, when I told you that there would be no rate hike in September! However, the Fed DID make an announcement that they will begin to unwind their balance sheet in Rocktober to the tune of $10 billion in assets in Rocktober and slowly raise the rate of sales in the months to come.

OK, let’s say that Chuck got transported to the Eccles Building yesterday,  and had the opportunity in the Q & A session to ask a question I would have asked this: “Ahem, if I don’t pronunciate very clearly, please excuse me I have a tumor in my mouth… But what I would like to ask you is this… When you first announced that the balance sheet unwinding talks were underway, you said that there would be no selling of Treasuries, just allowance of the bonds that mature to run off with no replacement bond purchased… So, why now, are you going to sell $10 Billion per month?”

Oh, I’m sure I would get some cockamamie response like, “well when we first talked about the unwinding of the balance sheet, the economy wasn’t as strong as it is today, and therefore we have changed out minds about how to unwind the balance sheet”

And I would say, “OK, a follow up question then, if I may… Please show me where Factory Orders, Durable & Capital Good Orders, Industrial Production and Retail Sales, to name a few, illustrate this “strong economy” you speak of.” And then these guys with guns on their hips and body camera came and asked me to go with them. Shoot Rudy, I thought I was going to get to go basckstage and meet Ms. Yellen in person! But NOOOOOOOOOO! As the great comedian Ron White says… The police said I was drunk in public, but I was in the bar, and they threw me out into “public”, I wanted to be drunk in the bar! I was thrown out the doors and asked to never come back… Fine, with me, because all I got out of the day was Distortions, lies, and omissions… 

I admit that using the word, Lies, is a little harsh, and I don’t mean to say that anyone is telling lies… It was just part of the phrase that I dug up… So, there’s the “nice Chuck” coming out, which one do you like better? HA!    I’m just so riled up about this change of mind for the markets, that I could spit!  I guess, we’ll have to deal with this change of heart for the markets, which means dollar strength, until the economic data begins to pile up showing them that there is no economic strength that the Fed speaks of…  Looking at past months’ prints didn’t help here, so like everyone else, the markets are a “what have you done for me lately” group… UGH!   

The stock market didn’t seem to care about what the Fed has to say yesterday, but the stock futures are down a little bit this morning, so it will be interesting to see what direction the stock jockeys take stocks today… 

The price of Oil gyrated back above $50 in the past 24 hours, and for now that appears to be the trading pattern… Go above $50, get sold back below the figure, and then rinse and repeat…   When will this change? Good question! I don’t think it will change until “something” happens to disrupt the apple cart…  Let me see, I would need a calculator to add up all the things up in the air right now, that could disrupt the apple cart!  

The Petrol Currency traders have taken the tact that they aren’t going to get caught up in the price of Oil’s daily gyrations… Good for them!  These guys have gotten drug through a mile of broken glass in recent years, and there’s no need for them to keep going back over the trail they trudged… 

Speaking of the Petrol Currencies…  I read an article this morning that said that the Norwegian Sovereign Wealth Fund (SWF) had reached a total value of over $1 Trillion!   The SWF is officially known as the Government Pension Fund…  Remember last year, when I told you that the SWF had announced that they were increasing their purchases of stocks? And I questioned their sanity? I guess I was the one that needed a sanity check, eh?  The SWF is now the owner of  on average 1.3 per cent of every listed company in the world!  I still question the increased stock buying by the SWF, for what goes up, must come down, spinning wheel got to go around. No wait! Now, there’s some lyrics I haven’t used before from Blood, Sweat and Tears…  But really, what happens when the “correction comes”?    Will the SWF panic and sell into the correction?  I sure hope not!   

I was taught at an early age in the business that you buy into weakness and you sell into strength…   If you do that with every investment you make, you’ll be doing alright!  But going back here, and circling the wagons, kudos to the Norwegian Sovereign Wealth Fund for reaching $1 Trillion in value..     I know that I’ve talked about this before, but this is a good time to talk about it again since the SWF was in the news…  Norway’s pension fund gives every single person in Norway a pension fund from the time they are born till they die. And a few years ago now, they even started a pension fund for “yet to be born Norwegians”…  it’s quite costly to live in Norway, but you have this pension fund… Pretty cool if you ask me!    See? more nice Chuck for you to go along with the upset Chuck!    

Yesterday’s U.S. Data Cupboard had the FOMC experience, and Existing Home Sales, which were down in August, but hardly anyone noticed given the goings on at the Eccles Building! I heard that there was some dude there giving Janet Yellen a difficult time, and then was escorted out of the building and thrown into public… I wonder if that was true! HAHAHAHAHHA!   

Today’s U.S. Data Cupboard has a couple of economic prints for us, but the only “real economic print” will be the Leading Indicators…  It will be interesting see what this data shows today…   

To recap…  The Fed left rates unchanged yesterday, but pointed to another rate hike this year, and 3 more next year, and announced their plans for unwinding their balance sheet… Chuck wonders what the stock jockeys will think about this unwinding…. And Chuck goes DEFCON 4 regarding the description of the economy… You won’t want to miss that! And Gold has lost $18 since yesterday morning…     

For What It’s Worth….  this is really good stuff folks, and I hope you have to time to read through it… The GATA folks, sent me a note yesterday that talked about how the Russians know all about Gold price manipulation, and then gave me the link to an article on the subject that can be found here:https://sputniknews.com/business/201709201057560325-who-manipulates-gold-prices/   

Or, here’s your snippet:  “When the gold price manipulation started on August 5, 1993, these were central banks that initiated the process, and namely the then head of the US Central Bank Alan Greenspan. He did not want to let the gold price rise over $400,” Speck said, adding that Greenspan feared that a significant increase in gold prices might affect the “inflation thermometer.”   

Chuck again… that’s all I have for you, as I don’t want to spoil your appetite! Read the article and get the  “rest of the story”…    

Currencies today 9/21/17… American Style: A$ .7950, kiwi .7351, C$ .8105, euro 1.1910, sterling 1.3493, Swiss $ .9714, … European Style: rand 13.3394, krone 7.8237, SEK 8, forint 260.24, zloty 3.5964, koruna 21.9127, RUB 57.99, yen 112.35, sing 1.3511, HKD 7.8051, INR 64.90, China 6.5132, peso 17.81, BRL 3.1303, Dollar Index 92.41, Oil $50.41, 10-year 2.28%, Silver $17.01, Platinum $941.89, Palladium $913.75, and Gold… $1,298.20

That’s it for today and this week… Cards’ bats come alive last night, but one has to wonder why that doesn’t happen against the “good teams”…  I like my new oncologist ( I liked my old one too!)  she’s a no-nonsense, tell it like it is doctor, and I appreciate that, for I don’t want someone spraying me with Febreeze just to make me feel better!   This was quite the long Pfennig today, after my soapbox speech! But that’s not too bad considering no Pfennig tomorrow!  The band, Lighthouse takes us to the finish line today with their classic rock song: One Fine Morning…    Not familiar with that one? YouTube it, I think you’ll like it!   And with that, I’ll get out of your hair for today, and send you out to make this a Tub Thumpin’ Thursday!   And please Be Good To Yourself! 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

September 20, 2017

* Currencies get back on the rally tracks!

* Chuck forgets talk like a Pirate day!

* The FOMC members talk “Risk”?

      

 

Good day… And a Wonderful Wednesday to you! Boy did I miss something yesterday that I always make a big deal of! I guess if I wasn’t up at 2 am writing the Pfennig, because I couldn’t sleep, gives me an excuse, right? HA! AS IF! Yesterday was “talk like a pirate day” What was I thinking mates? I tried to go the movies but couldn’t get in because the movie was rated ARRRRRRGH! HA! I have my pirate shirt and of course an eyepatch, but I completely let it slip my brain! Arrrrrgh! The three Amigos, Rick, Duane and Chuck, used to see an entertainer in Jupiter, actually on Singer Island, named Fritz, and he would do the Jimmy Buffett song: A Pirate looks at 40, and when he got to the part where he would sing: Yes, I am a pirate, the three Amigos would all throw our fists in the air and shout Arrrrrrgh! Good times… Oh well… I missed it… what a dolt! In honor of the day yesterday, and that song, I spooled it up on the iPod this morning and so: A Pirate Looks At Forty greets me this morning!  

Some conversations overheard as the Fed members assemble at the Eccles Building for their two-day meeting… “Hey! make sure you get the Risk game down from the shelf, that way we can tell people that we looked at Risk in the statement tomorrow.”  HAHAHAHAHAHA!  Boy, I sure have fun with these Two-Day FOMC meetings, don’t I? One thing the Fed might discuss in reality, is the fact that their preferred inflation calculator/ data print, the Personal Consumption Expenditures (PCE) has been moving in the wrong direction…  

That’s right PCE at its last print was 1.4062…  At last check, that’s not 2%, or even closing in on it, as the Fed members promised us it would in the second half of this year. No, wait a minute, they’ve been promising us that for the last 3 years, haven’t they?  Yes, the “Transitory” (the Fed’s words, not mine!)  slowing down of the economy seems to be more than “transitory” doesn’t it now?  Of course I could easily point the blame finger right back at the Fed, for hiking interest rates… 

I’ve said this before and I’ll continue saying it until someone shows me I’m wrong, and even then I’ll probably keep saying it because I’m a hard-headed Irishman!  But a Central Bank doesn’t hike rates in hopes that it fuels inflation and a growing economy… But that’s what the Fed has done, and now they’ll sit around the Eccles Building for two-days, scratching their heads and wondering why their “magic potion” for the economy and inflation didn’t work…   Don’t you feel for them? They’ve failed, and yet, some still think that their words are worthy, of moving markets…  

OK, Chuck, move on here, you could spend all day talking about the Fed and their failures…  Jackson Browne sings a song titled: These Days, and in it he sings: Don’t remind me of my failures, I’ve not forgotten them…  And that’s all I’m going to say about that today!   

The currencies, for the most part, are back on the rally tracks this morning. The upward move began yesterday afternoon, with the only things that could be pointed to as reasons for the dollar selloff would be the new expectations for the FOMC meeting, which is for no rate hike, Hey! come on board my wagon, there’s room for you here, glad you have finally decided to see things my way!  And the Current Account Deficit (CAD) which, I told you yesterday that I thought would be greater in size than the expected $117 Billion, and it was far greater in size than I even imagined, as the 2nd QTR CAD was $123.1 Billion!   YIKES!  

The biggest movers since yesterday afternoon are the Aussie dollar (A$) and kiwi, which makes sense to me, given that these two currencies are always thought of when investors / traders, think of currencies with positive rate differentials to the U.S.  And while A$’s and kiwi don’t have Huge positive rate differentials, they do have them, and proving that fundamentals still play a part in currency valuation, A$’s and kiwi were cooking gas last night and this morning. 

The Bid Dog, euro, came back into Trader’s focus yesterday afternoon, when everyone had a V-8 head slap moment and realized the Fed isn’t going to hike rates today, and sold dollars and bought euros… The Big Dog climbed back above 1.20…  Yesterday, I talked about the rarified air that 80-cents seemed to he for the A$, and you could say “ditto” for the euro and 1.20…  But both currencies are playing in the rarified air again this morning, let’s see how long they can remain there…   

Speaking of an asset that can’t seem to hold above a psychological figure… The price of Oil slipped back below $50 (just barely, but it is below $50) in the past 24 hours…  All the Petrol Currencies took on some water with the slippage of the Oil price.  One of the hardest hit in the past couple days has been the Canadian loonie. While I loved seeing the loonie soar to well above 82-cents after the Bank of Canada (BOC) hike rates 10 days or so ago, I never really felt like that level was sustainable…  For once again traders got ahead of themselves, and went a little too far on a 25 Basis Points rate hike… 

The .8150 level the loonie is trading around today looks a little more comfortable to me… But should the BOC hike rates again while the smoke clears from the previous rate hikes fireworks, that would warrant a stronger loonie for sure!  

Well, so much for the rate hike talk in the U.K. from last week… Yesterday, Bank of England (BOE) Gov. Mark Carney had this to say about BREXIT and the U.K. economy in a speech to the International Monetary Fund that BREXIT will boost inflationary pressures in Britain and undercut economic growth. He said there is “little the central bank could do to help because BREXIT represents a real shock about which monetary policy can do little.” So, higher inflation, but slower economic growth… I would not like to think that Carney would go down the same road as the Fed, and hike rates into a weakening economy, even without signs of runaway inflation!

But then Carney is a Central Banker, and logic, and doing the “right thing” sometimes eludes Central Bankers…  In honor of “talk like a Pirate Day” yesterday, I would make all Central Bankers walk the plank! Well, not all…  Elvira Nabiulina from Russia is a “cut above” the other Central Bankers, in my humble country boy opinion…  

Gold trading was choppy yesterday, but in the end the shiny metal was able to gain a few bucks, and has added a few more bucks of gains in the early morning trading today.  “the boys in the band” took it easy on Gold & Silver yesterday and decided to take a pound of flesh from Platinum and Palladium, which had been lucky to fly under the radar of “the boys in the band” until yesterday that is…  

I’ve not mentioned Gold researcher extraordinaire, Koos Jansen, lately, and it’s my fault, because I ten to forget about checking the bullionstar.com website for his latest research, but not last night! And so I have something here that’s quite interesting…  The article on the website goes through the explanations of Chinese Gold exploration and production, but the thing that caught my eye was this: “the 2016 mineral resource bulletin which now claims that at year-end 2015, China has a huge 11563.5 Tonnes of identified in ground gold reserves[8]. The Ministry of Land and Resources also claims to have discovered an additional 1130.3 Tonnes of gold reserves during 2016.”   

Looks like Chinese mining companies have a lot work to do, eh? But think about that… It’s now thought that the Chinese have already accumulated more than 5,000 Tonnes of Gold (and probably more), and then add to that the 11,563 Tonnes yet to come out of the ground and well, you’ve got the country with the most physical Gold… He who has the Gold, rules, right?  I’m just saying…   

Today’s Data Cupboard, is dominated by the FOMC meeting and press conference following the meeting…  So, we need to be somewhere else today at 1 o’clock S.T. , right? HA!   

To recap…  it’s FOMC meeting conclusion day, and Chuck is happy that everyone else has jumped on his bandwagon, which is the thought that Fed won’t hike rates at this meeting. And that V-8 head slap moment hit traders yesterday afternoon, and they began to sell dollars once again, with the A$ and kiwi the best performers because of their positive rate differentials VS the dollar.  Gold & Silver were spared yesterday, but Platinum and Palladium were the focus of “the boys in the band”…  

For what It’s worth…  Thanks to dear longtime reader Bob for this article that really should be all over our cable news, but you probably won’t see it there, because it’s about Russia…  The headline reads: Putin orders end to dollar trade at seaports…  And you can find it here: https://www.rt.com/business/403804-russian-sea-ports-ruble-settlements/   

Or, here’s your snippet: “Russian President, Vladimir Putin has instructed the government to approve legislation making the ruble the main currency of exchange at all Russian seaports by next year.” 

Chuck again…. That’s really all you need to know in the article. Talk about giving the ruble a major boost should this legislation be approved, which if Putin says “approve it” , I can’t imagine that it doesn’t get approved.    

Currencies today 9/20/17… American Style: A$ .8040, kiwi .7351, C$ .8150, euro 1.2010, sterling 1.3515, Swiss $.96, … European Style: rand 13.3130, krone 7.7866, SEK 7.94, forint 256.73, zloty 3.5594, koruna 21.7456, RUB 58.09, yen 111.34, sing 1.3448, HKD 7.8070, INR 64.35, China 6.5843, peso 17.77, BRL 3.1332, Dollar Index 91.68, Oil $49.97, 10-year 2.23%, Silver $17.39, Platinum $954.39, Palladium $911.03, and Gold… $1,317.60  

That’s it for today… A nice comeback win by my beloved Cardinals last night in Cincinnati, sure wish they could have had a couple of those in Chicago last weekend… UGH!  Well, I’m not home alone any longer, as Kathy got back from her trip to our place in S. Florida to inspect the damage, which thank goodness wasn’t much, and certainly not what was forecast… Whew! I just realized that the Pfennig is a bit shorter than usual today, so what are you going to do with those extra 2 minutes? HA! This will make my friend Rick happy… The Outfield takes us to the finish line today with their song: Your Love…  (80’s music…  there was some that was salvageable! HAHAHAHA! )  Time to go! I hope you have a Wonderful Wednesday, and Be Good To Yourself! 

 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts  

 September 19, 2017  

* Gold gets whacked again! UGH!

* Currencies drift ahead of FOMC

* Mexico to monetize silver coin?

 

Good day… And a Tom Terrific Tuesday to you! Well, here I am once again in the middle of the night, awake, and unable to get back to sleep, so I come downstairs to my writing desk and begin putting together the Pfennig for the day…  So, this should show up in your email box quite early this morning, that is if I can wake up the squirrels on the treadmill that generates the power for my email server! HA!  Styx greets me in the middle of the night with their song: Suite Madame Blue…  

The fears of what may happen with N. Korea are backing off once again, and that’s a good thing, I guess… But not for Japanese yen, Gold, Treasuries and euros…  And that’s our thought for the day. Thank for you coming, there’s a nice parting gift for you at the door!  

The currencies, for the most part yesterday, drifted about and there was no real conviction to buy or sell them VS the dollar. I have the feeling that this is the pattern we’ll see leading up to the FOMC meeting that will conclude days of board game playing tomorrow afternoon.  Currencies like sterling, loonies, Aussie dollars (A$), have slipped from recent highs, but on the other side of the coin, currencies like the euro, krone, krona, have gained VS yesterday morning’s levels.  

Gold got whacked again yesterday, losing $12… I was sitting here scratching my balding head, trying to figure out why Gold has become persona non gratis these days, when I received an email from the GATA folks explaining it all… Let’s listen in… “Gold swaps by the Bank for International Settlements, Dave Kranzler of Investment Dynamics writes today, correlate inversely with the gold price. That is, the more gold is swapped by the BIS, the more metal is made available to bullion banks for sale into the market and shipment to Asia to prevent demand there from boosting gold’s price.”

They then went into just how much Gold is being used by the BIS… Again, let’s listen in, “Disclosures in the August statement of account published by the BIS indicates that during August the bank increased “substantially” (I put those quotation marks around the word substantially), the use of Gold swaps. An estimated 130 Tonnes of new gold were make last month, worth about $59 Billion at the month-end Gold price, and the total level of Gold swap a the end of August was close to 500 Tonnes”

Well, I wasn’t aware that “the boys in the band” had a new member to their group, but apparently they do! All I’ll keep saying over and over again is that these things give investors that want to buy Gold, an opportunity to buy it cheaper than it was a week ago, and so on… 

I was writing down the prices of the currencies and metals for the currency roundup when I came to Palladium and stopped… Yes, Palladium has gotten caught up in the metals selloff, but to a lesser degree… And that got me looking back at the price history of Palladium…  In January of 2016, Palladium had fallen to a price of $450, and this morning it has a price of $929.71… 

Earlier this year I wrote about the CEO of a mining company who made a bold prediction that the price of Palladium would exceed the price of Platinum by year end…  Well, right now Palladium is narrowed the spread to Platinum to less than $30…  

And one more thought about Palladium and Platinum…  These two are industrial metals that are used in the making of catalytic converters in new cars… Well, we all know, because I told you so, that the new car auto industry has been circling the bowl… But… here’s a sliver lining from all the flooding from the hurricanes… There’s bound to be a HUGE amount of new car buying when it’s all said and done, because those flooded autos, even if they start up again, won’t be worth holding onto…  And that would be good for Palladium and Platinum if new car buying ramps upward…   

So… the euro is knocking on the 1.20 handle’s door again this morning, which is interesting given the drifting of the other currencies. I would think that some of the euro’s strength is coming vis-a-vi the cross with sterling.  Yes, sterling which a couple of trading days ago, was soaring on the rate hike talk that come from the Bank of England’s (BOE) meeting last week. But then some calmer heads, using the logical thinking side of their collective brains, thought more about this rate hike talk, and decided that it was a little premature, and went back to sell sterling to fill in the gaps that it passed on its way to Mars last week…  

The Aussie dollar (A$) seems to get a little light headed every time it climbs to 80-cents… the 80-cent air must be difficult for the A$ to breathe, because every time, in recent days, the A$ get to 80-cents and above, it doesn’t last very long…  In reality, I would bet a dollar to a Krispy Kreme that the Reserve Bank of Australia (RBA) is intervening to keep the A$ from getting to strong…   

The price of Oil has reached $50 once again, and that has helped the Norwegian krone and Brazilian real to strengthen, but the other Petrol Currencies of Russian rubles, Canadian loonies, Mexican pesos, and pound sterling are not rallying along with Oil this morning… Sometimes the ruble seems to lag Oil’s price moves, which seems to be a prudent thing to do, given the price of Oil doesn’t stay at one level very long these days, and just as easily it could be heading downward again tomorrow… 

So, have you heard the news regarding the Libertad Silver Coin in Mexico? Apparently, there is a group making a plea to the Mexican congress to monetize the coin at a fixed rate, so that the Mexican people would have a coin they could invest in and save with…  The proposed plan would center around a fixed price that’s higher than the current spot price of Silver that would be held steady by the Central Bank even if the spot price of Silver falls, but would rise with the spot of Silver should Silver enjoy a rise in price. 

And Interesting plan, if I do say so myself, and one that has seen several attempts to  get the Mexican congress to agree to through the years.  It reminds me of the great Gold price reset scenario that James Rickards talks about in his book: A New Case For Gold. I won’t give the scenario away, but I will say that James Rickards has updated his scenario for the great Gold price reset…  And Gold holders will be happy as they can be IF his scenario comes to fruition…  

Let me give you a heads up…  IF you hear of a meeting of international heads at the President’s Florida Mar-a-lago, you might want to be calling Gold dealers and buying before everybody else wants to buy Gold… wink, wink…     

OK, Chuck enough of that stuff! It’s all up in the air, and we don’t really know if it’s going to come down to earth and reality… So, let’s talk about something else!  OK…  Well then, the retail Armageddon continues, as Toys ‘R Us filed Chapter 11 bankruptcy last night…  The company has been hurt by shrinking sales, online competition, and a massive debt load from a leveraged buyout more than a decade ago!  

The key word/ problem there “massive debt”…  Eventually it gets to everyone and when it does, there’s no turning back, either you just keep adding on debt like the U.S. Gov’t, or you cry out, “no mas”…  

The U.S. Data Cupboard today has the Housing Starts and Building Permits data prints for August, and the Current Account Deficit will also print for the 2nd QTR…  The deficit is expected to be around $117 Billion, but I think it will be higher than that…  

To recap…   Gold got whacked again and now we’re seeing a driving force behind the selling, with the BIS operating in the Gold Swaps arena BIG Time…  The currencies, for the most part, drifted about yesterday, with some selling in sterling, loonies, and A$’s…  The price of Oil is back to $50 this morning, and Chuck wonders for long it will stay there this time?  The so-called safe havens of yen, treasuries, Gold and euros are being treated rudely, except for euros, due to a backing off of the tensions regarding N. Korea…    

Before I head to the Big Finish… I wanted to highlight something that was sent to your email box yesterday evening from my good friends, and now publishers, Mary Anne and Pamela Aden of the Aden Forecast… They wanted to make sure that you dear Pfennig Readers were aware of the excellent newsletter that the Aden Forecast is each week. And they offered you a special price to subscribe, or take a 3 month trial…

Longtime readers know that I’ve very seldom asked you for things… your prayers, your support for my son Alex’s Ironman fund raiser, and that’s about it… I take our relationship very seriously, and wouldn’t want to mess it up with frivolous things. And so I wanted to make certain that you knew that I was aware of this and I wholeheartedly agreed that Pfennig Readers should have the research available to them in the Aden Forecast each week! So, I hope it was something that you found worth a couple of minutes to read, and that now you’re contemplating whether to subscribe or not… I think you will be very satisfied with your decision if you do decide to subscribe! Go forth now… onward and upward!  

For What It’s Worth…  I saw this on Ed Steer’s letter this morning (apparently he can’t sleep like me!) and thought it no not only be funny, but worth the read, so it’s about how large sums of euros were found in toilets, etc. in Switzerland… And can be found here: https://www.theguardian.com/business/2017/sep/18/dirty-money-mystery-over-shredded-500-notes-swiss-sewers   

Or, here’s your snippet: “Tens of thousands of euros have been flushed down the toilet in Geneva, leaving Swiss prosecutors scratching their heads over whether the money is dirty.

Wads of €500 notes were discovered cut to shreds in the sewer system of a branch of Swiss bank UBS, while three more large deposits turned up in the toilets of nearby bistros.

Prosecutors confirmed the notes were worth tens of thousands of euros in total but said they had yet to identify the person who felt flush enough to dispose of the bills.

Swiss investigators said the money appeared to have come from a safe deposit box in Geneva belonging to unidentified Spanish women.

A lawyer for the women appeared at a local police station, according to the Tribune de Genève, but only offered money to pay for plumbing work at the UBS branch and the three restaurants.”  

Chuck again… Can I say it? Go ahead and say it! No, Can I say it? Ok, I’m going to go ahead and say it… That’s what I call dirty money!  

Currencies today 9/19/17… American Style: A$ .7987, kiwi .7295, C$ .8131, euro 1.1996, sterling 1.3520, Swiss $ .96, … European Style: rand 13.3027, krone 7.8048, SEK 7.9385, forint 257.75, zloty 3.5763, koruna 21.7736, RUB 57.80, yen 111.71, sing 1.3482, HKD 7.8031, INR 64.21, China 6.5619, peso 17.77, BRL 3.1179, Dollar Index 91.81, Oil $50.24, 10-year 2.21%, Silver $17.24, Platinum $929.17, Palladium $929.71, and Gold… $1,312.50

That’s it for today…  No baseball for me last night, and I just can’t get into the NFL yet this year, maybe because we no longer have a team in St. Louis, or maybe because the NFL did nothing to address the antics of players on the sidelines during the National Anthem…  that’s all I’m saying about that..  Just a baker’s dozen of games left in the baseball regular season. After the Cardinals laid an egg in Chicago last weekend, there’s not much hope left the games left that they can rally to be a playoff team… UGH!   The Cure takes us to the finish line today with their song: Close To Me… And with that, I’ll get out of your hair today, and send you on your way to a Tom Terrific Tuesday… Be Good To Yourself!

Chuck Butler’s: A Pfennig For Your Thoughts 

September 18, 2017  

* What did traders know on Friday?

* Portugal gets upgrade from S&P

* FOMC meets this week!

 

 

Good day…  And a Marvelous Monday to you! Well, that was very, much a let down this weekend, sports-wise, as both by beloved teams decided to not come to play… The Cubs swept the Cardinals, and my Mizzou Tigers, looked like kitty cats… I flew my Mizzou flag, anyway…  I flew it when the won the Eastern Division of the SEC two years in a row, and I have to fly it now that they couldn’t beat “bye”…  A Flock of Seagulls greet me this morning with their song: Space Age Love Song…   

On Friday, last week, I tweeted the following:  “U.S Retail Sales are sluggish, Cap. Utiliz. falls, another sign that U.S. econ. has no legs” And so it was on Friday, the first day of the week with “real economic” data, that we saw disappointing results once more… When is someone at the Fed going to step up to the microphone and say, “We were wrong to hike rates with the economy weakening like it was, and now all we’ve done is weaken the economy more.”  HA! As if! That’ll happen with pigs fly, folks…  

The Currency traders saw the writing on the wall and pushed the dollar down on the day…  But then as we ended the day, things began to unravel, and the currencies and metals were sold as if they the traders “knew something”… The overnight markets haven’t brought us much movement and so we’re pretty much seeing the currencies trade in the same clothes as Friday morning before the data prints.  

So, let’s take a quick jog around the world this morning to bring us up to date…     In the Eurozone, Portugal got a nice surprise as S&P Global Ratings upgraded Portugal’s debt rating, and their 10-year benchmark Gov’t bond fell 27 Basis Points to 2.53%…  Something is wrong with this picture, or… maybe something’s not wrong with it… I’ll let you decide for yourself… The mighty U.S. 10-year Gov’t bond yields 2.21%, and Portugal, mind you, as a 10-year Gov’t yield of 2.53%…   Wait! What? You mean to tell me that you only get a bump up of 32 basis points to swap out of a U.S. Gov’t bond to a Gov’t bond in Portugal?     I’m just going to leave that out there to float around and let everyone chew on it a bit…  

Besides, this is supposed to be a quick jog around the world, Chuck, not an epistle on Gov’t Bond yields…  Sorry about that! OK, in the U.K. they had the excitement of a rate hike talk last week, that really pushed pound sterling higher, and this week they have PM May, to talk about BREXIT, and it’s here that we’ll hear for the first time the numbers associated with the exit…  I’m thinking that the rate talk excitement will have cold water thrown on it after the BREXIT discussion.  

In China, Consumer Confidence is rising to very high levels, and the Chinese are working on reform packages for the Chinese economy, and markets…  Pretty smart if you ask me…  What better time to introduce reforms than when consumer confidence is soaring?  I can’t think of any better time!  In other news from China, they reported that Chinese home prices fell last month, which is a sign that the measures that the Chinese put into place to cool the housing market have begun to take hold… 

Wouldn’t that have come in handy back in 2005 or 2006, when the U.S. housing sector was bubbling up?  To have had the Central Bank or Gov’t step in to say, “enough is enough” we’re putting an end to this bubble right now!  Of course that didn’t happen, and why would it, when the Fed Heads themselves say they couldn’t see the bubble until it popped?   I don’t know what they were looking at, but in 2003, in the white paper that I wrote, I pointed out that I saw a housing bubble forming in the U.S.  How in the world did they not see one, if little old me saw the housing bubble forming years before it popped? 

OK, that’s a discussion for the Butler Patio, so let’s take it out there, and leave the calm, adult,  discussions here…   Still working my way around the globe, brings me back to Canada…  The loonie, which really saw some major buying after the Bank of Canada (BOC) hike rates a couple of weeks ago, is slowly seeing the love for the loonie fade, and it appears that the loonie is going to lose the 82-cent handle, unless a change in direction can be brought about.  There’s no real data to rely on, so the loonie just drifts… UGH!  

And now, back home, the U.S. Fed’s FOMC meets this week to discuss rates… Recall that I’ve said for months now that the Fed will skip going to the rate hike table at this meeting…  We could hear them break down how they will begin to unwind their Balance Sheet…  And that brings me to how this is all explained in the press conference that will take place after the rate announcement on Wednesday at 1 o’clock CT…  I’m going to save some bits and pieces about the Fed’s meeting for the next two days, so that’s all I have to say here for now…  

Well, “the boys in the band” had their way with Gold on Friday… UGH!  Gold climbed out of the mud it had been throw in at 1,327 on Friday morning to $1,334, and then well, let’s just say, it got sold…  And the sellers drove the price of Gold down to the closing figure of 1,319.20… There were a whopping 306,000 contracts traded on Friday… The excuse given for all the selling was that it appeared that the U.S would go the extra mile in attempting to resolve the N. Korean tension with diplomatic discussions, and not resort to a war. 

I would like to think that for the sake of human lives that an agreement can be worked out… But the practical and logical side of me says, Chuck, you dummy! The N. Korean leader is hell bent and whisky bound to pick a fight with the U.S., so how will “diplomatic discussions” work? I guess we’ll have to wait-n-see, eh?   

The good part of the days leading up to a FOMC meeting is that there’s a silence from the Fed Heads that is quite refreshing! But a quick look at the Economic Calendar tells me that as soon as that “black out period” ends the Fed Heads will be coming out in droves to speak. 

The U.S Data Cupboard on Friday had the disappointing prints of Retail Sales, Industrial Production and Capacity Utilization… here’s the rundown on those prints… Retail Sales for August were a negative -0.2%, with auto sales causing the majority of that drop… Industrial Production also saw a negative print for August with IP printing at -0.9%, and Capacity Utilization fell from 76.9 in July to 76.1 in August…  That’s a forward looking piece of data folks, and it fell by a large amount in August… 

The U.S. Data Cupboard doesn’t really have much for us this week… So, the markets  will be focusing on the FOMC meeting the concludes on Wednesday afternoon….  And I’m wondering how the markets will take the news of no rate hike…   Probably not kindly to the dollar, BUT, if Fed Chair, Janet Yellen describes the unwinding of the balance sheet, which is widely thought to be her main mission this week, in a way that that gives the markets the idea that the unwinding will be of the size that represents a rate hike, then the dollar might not be so vulnerable to the no rate hike talk… 

To recap…  The U.S. Data on Friday was very disappointing, with two negative prints and one falling by a large amount…  The currencies and metals tried to rally after these awful prints, but their rallies were met by strong sellers, that came out of the woodwork, and we ended the day with the currencies pretty much flat on the day, and Gold down $9.80 on the day…  The FOMC meets this week…   

For What It’s Worth…  I was doing some reading on Saturday morning, waiting for my Tigers and Cardinals games to begin, and I came across this article about Russia becoming the 2nd largest leading Gold producer and thought it to be worthy… You can find it all here: http://news.xinhuanet.com/english/2017-09/14/c_136609991.htm

Or, here’s your snippet: “Russia will become world’s second largest gold producer with the launch of a major mining and smelting facility in the Far East, said the press service of the Ministry for the Development of the Russian Far East Wednesday.

After the facility was launched by Russia’s gold producer Poluys to develop the Natalka gold deposit in the country’s Magadan Region, the volume of ore processing will exceed 10 million tonnes per year, while the volume of gold production will be 13 tonnes per year, which increases the country’s gold production by 5 percent, the ministry said.

This will make Russia the second largest gold producer in the world after China, the press service quoted Polyus CEO Pavel Grachev as saying.

Polyus officially launched the first stage of hot commissioning of Natalka on Sept. 5. Full production is expected before the end of 2018.”  

Chuck again… OK, so remember when I wrote about how Russia said they would retaliate the U.S Sanctions by ramping up their de-dollarization?  And one of the ways they will do that is to ramp up their Gold holdings, and now they’ll be the 2nd largest producer of Gold? That certainly helps their plans, now doesn’t it?  

Currencies today 9/18/17… American Style: A$ .8005, kiwi .73, C$ .8202, euro 1.1946, sterling 1.3550, Swiss $.96, … European Style: rand 13.2121, krone 7.8268, SEK 7.9587, forint 258.94, zloty 3.5893, koruna 21.8318, RUB 57.60, yen 111.27, sing 1.3465, HKD 7.8166, INR 64.15, China 6.5516, peso 17.69, BRL 3.1192, Dollar Index 91.91, Oil $49.96, 10-year 2.21%, Silver $17.58, Platinum $968.58, Palladium $935.16, and Gold… $1,318.20

That’s it for today…  The cleanups in Texas and Florida, Georgia, etc. from the hurricanes continues, and they’ll end up costing hundreds of Billions of dollars in the end… Like this country had that in their kitty, right?  UGH!  Darling daughter Dawn and Delaney Grace stopped by to see me yesterday and make sure I was OK, here by myself…  Delaney ran in, jumped on my lap and gave me the biggest hug… I needed that, and I think she knew that… we talked about all kinds of things before she had to leave. It’s an infusion week, so that means no Pfennig on Friday, just a friendly reminder…  Tyrone Davis takes us to the finish line today with his song: Can I Change My Mind…  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 

September 15, 2017 

* Sterling soars on rate hike talk… 

* Currencies rebound to end choppy week…

* What’s with traders these days?

 

Good Day… And a Happy Friday to one and all!  Let’s go ahead and proclaim that this is going to be a Fantastico Friday!  Cards and Cubs in a day game today, I had ice cream last night in the form of a shake, ymmmmmmy! And this is about a big of a 3-game series at this time of year as you can have! Go Cards!  And R.E.M. greeted me this morning with their song: The One I Love…  Back in the 80’s to the mid 90’s, you couldn’t find a more popular band than R.E.M…  But time waits for no one, and it didn’t wait for them…  

Whew! Yesterday, I watched the currencies and metals slog through a day with some gaining, some losing ground, and some trading sideways… Until… There was news that N. Korea fired another ICBM over the country of Japan. I think that N. Korea’s leader, wanted to show that he could do just what he was talking about earlier in the day, when he expressed anger and said that he would  sink Japan and reduce the US to “ashes and darkness” for leading the latest UN Security Council sanctions imposed on the country.  

Gold shot higher on the news, as it should, and the dollar sunk a bit more, not much but some.  In the overnight markets where they have to deal more with N. Korea, things were a bit more serious and trading picked up steam.   But the shiny metal ran into some problems in the overnight and early morning markets, and gave back all those initial gains…  

Wait! What? N. Korea shows it could sink Japan as they shouted out during the day, and traders are becoming numb to the goings on with N. Korea?  Well, that’s what it seems like to me… Yen got whacked, as it should when the missiles are directed at your country, but Gold couldn’t hold its gains, and U.S. Treasuries, which I’ll talk more about in a minute, didn’t see any love thrown its way?   I question the thought process here by traders, becoming comfortably numb with N. Korea… 

Tell me if you’ve heard this one before… The Bank of England’s (BOE) Gov., Mark Carney, said after leaving rates unchanged at yesterday’s BOE meeting, that “the majority of the members of the Monetary Policy Committee, myself included, see that the balancing act is beginning to shift, and in that order to return inflation to that 2% target in sustainable manner, there may need to be some adjustment of interest rates in the coming months.” -Mark Carney…     I’ve documented in these letters over the years how many times that Mark Carney, as Gov. of the Bank of Canada, and now the Gov. of the Bank of England has talked up the need to remove accommodation (rate hikes) and they never materialized. 

So, I was surprised to see pound sterling traders respond so favorably toward Carney’s rate hike talk…  the pound jumped from yesterday morning’s 1.3206 to 1.3390 in trading last night… That’s a HUGE jump in one trading session folks, especially for a currency that has so many questions marks around it with BREXIT, and Carney’s past promises to hike rates that never materialized!  

And traders didn’t stop at 1.3390, and took the pound even higher throughout the overnight markets to 1.3590! WOW!  While I find it refreshing that fundamentals weighed in here, I also find that this trade has been overcooked, in my opinion… which could be wrong, but what the heck, that’s what I’m here for! 

And on the opposite end of the spectrum, the Japanese yen got whacked once it was confirmed that N. Korea had fired an ICBM over the islands nation. Normally, you would see yen bought as a so-called “safe haven currency”, but when the missiles are flying over Japan, the yen gets left out of the so-called “safe haven currency” buying…  That left the safe haven buying to euros, Gold, and Treasuries…  And as I said above, traders have become comfortably numb with N. Korea, so there was no need for “safe-haven” buying…   I shake my head in disbelief, here folks…   

Speaking of Treasuries… Have you been noticing in the currency roundup that the yield of the 10-year Treasury has been rising again? Just 9 days ago the 10-year Treasury yield was 2.08%… And this morning it is 2.20%…  I don’t have a Bloomberg to do bond calculations on any longer, for if I did I would show you what that 9 Basis Points move in the 10-year’s yield would be in dollar price… I think it would amaze you how much the dollar price moves with each basis point move..  

But, overall the currencies, for the most part, have rebounded this morning, led by the euro, which is right back to where it was to start Tuesday morning trading…  Up, down, up down, it’s been quite a choppy week for the currencies, as they failed to display any of the signs that a new weak dollar trend has emerged… UGH! 

But that’s not anything to be concerned about, just yet…  You see, when these currency trends end, and a new one begins, it takes a while before everyone is on board with the new trend… There are always those die-hards that believe their strong trend will last forever. But trends don’t last forever, and the sooner they get that through their thick heads, the sooner we can get down to not having choppy weeks of trading!  

Now, mind you, that doesn’t mean we won’t see volatility in the currencies, for there’s always volatility inside a current trend… Sorry, but there’s no ONE_WAY Streets here… 

The Aussie dollar (A$) saw some selling yesterday that brought the A$ back below 80-cents, briefly, but below the figure nonetheless.. The A$ is back above the 80-cent figure this morning, looking none the worse for its trip through the gauntlet.  The A$’s kissin’ cousin across the Tasman, kiwi, is going through the paces of recovering after getting whacked earlier this week. Kiwi had climbed to 73-cents, and then it was as if a trap floor, sprung open under kiwi causing the currency to fall, quickly…  But, like I said, it is recovering, albeit at a slower pace than it fell! UGH!

The price of Oil is inching closer to the $50 figure once again this morning… talk about up, down and all around!  But then if you had signed up for the Dow Theory Letters (www.dowtheoryletters.com) and read my weekly letter that talked about the Oil price, this up, down and all around wouldn’t be a surprise to you…. 

What’s with all the bad-mouthing of BITCOIN lately? Earlier in the week I told you that JP Morgan’s Jamie Dimon called BITCOIN a fraud, and then yesterday, Mexico’s Hugo Salinas Price said that, “bitcoin is just another mass speculation that will burn a lot of people eventually.” And yesterday, Bloomberg ran an article that said that investors are calling BITCOIN the most overcrowded trade…   I’m just wondering why, suddenly, we have these statements, of which I’m sure there will be more, piling on, if you will. Oh, well, cryptocurrencies are not my bag baby, so I’ll just move along…  

Gold saw a HUGE number of contracts with its name on them yesterday… 325,000 to be in the ballpark of pile of contracts traded…  That’s HUGE folks, and of course there had to be quite a few short Gold paper trades submitted by “the boys in the band”…   In the end, Gold went up, and came back down and is trading in yesterday morning’s clothes this morning at $1,327…    

The U.S. Data Cupboard yesterday, had the stupid CPI, which printed with August in mind, and reflected a 0.4% gain in the month, which is HUGE for this data set…  But as I said yesterday that I thought it would, the Year on Year figure was still below 2% at 1.9%…  It’ll be interesting to see if September’s figure can add to the August gains in inflation…   

Today’s Data Cupboard finally gets back to yielding some real economic data prints..  Leading off an plying right field today is Retail Sales for August. The BHI (Butler Household Index) suggests that this report will disappointing…  And then two of my fave prints will show their respective colors, when Industrial Production (IP) and Capacity Utilization (CAPU) go down the cat walk…  And again, I think these two will be disappointing, as they are not expected to show much in gains.  

To recap…  N. Korea shoots an ICBM over Japan and initially Gold gains, but is later sold off, as traders appear to have become comfortably numb with N. Korea, which Chuck thinks is a mistake…  Mark Carney (BOE) is making promises again, and traders believe him, and the pound soars on rate hike talk..  But overall the currencies, for the most part, are recovering their losses this morning, after a very choppy week of trading…  

For What It’s Worth…  I thought I switch things up a bit today, since its a Fantastico Friday!  A few weeks ago in the Dow Theory Letters I wrote about the trend that’s taking us to a cashless society… And one reader sent me this response, which if it weren’t eerily what I was talking about, would be funny…   So here it is… enjoy!

 Hello! Gordon’s pizza?
– No sir it’s Google’s pizza.
– So it’s a wrong number?
– No sir, Google bought it.
– OK. Take my order please.
– Well sir, do you want the usual?
– The usual? You know me?
– According to our caller ID, in the last 12 times, you ordered pizza with cheeses, sausage, thick crust.
– OK! .
– May I suggest to you this time ricotta, arugula with dry tomato?
– What? I hate vegetables.
– Your cholesterol is not good.
– How do you know?
– Through the subscribers guide We have the result of your blood tests for the last 7 years.
– Okay, but I do not want this pizza, I already take medicine.
– You have not taken the medicine regularly, 4 months ago, you only purchased 30 tablets at Drugsale Network.
– I bought more from another drugstore.
– It’s not showing on your credit card.
– I paid in cash.
– But you did not withdraw that much cash according to your bank statement.
– I have other source of cash.
– This is not showing as per your last tax form unless you bought them from undeclared income source.
– WHAT THE HELL? Enough! I’m sick of Google, Facebook, Twitter, WhatsApp. I’m going to an Island without internet, where there is no cell phone line and no one to spy on me.
– I understand sir but you need to renew your passport; it expired 5 weeks ago……..    

Chuck again….  Yes, that’s the kind of world we’ll have when there’s no cash folks… think about it!  

Currencies today 9/15/17… American Style: A$ .8016, kiwi .7265, C$ .8221, euro 1.1947, sterling 1.3575, Swiss $ .9606, … European Style: rand 13.1890, krone 7.8528, SEK 7.9635, forint 258.55, zloty 3.58, koruna 21.8209, RUB 57.64, yen 111.27, sing 1.3445, HKD 7.8158, INR 64.08, China 6.5524, peso 17.70, BRL 3.1295, Dollar Index 91.84, Oil $49.82, 10-year 2.20%, Silver $17.76, Platinum $975.15, Palladium $927.73, and Gold… $1,327.50  

That’s it for today and this week! Well, the BIG 3-game weekend series between the Cards and Cubs begins this afternoon…  I’ve been to Wrigley Field for Cards/ Cubs  3 times in the past, but they were in the years when the Cubs weren’t very good, and the Chicago fans were very friendly to us visitors, but I would have to think that’s changed with the tight race that’s going on now… But maybe not…  My beloved Mizzou Tigers attempt to get back on the winning side tomorrow when Purdue comes to play..  Both the Tigers and Cardinals will be on TV at the same time tomorrow, I guess I need to go get another outside TV! HA!  Elvin Bishop takes us to the finish line today with his song: Traveling Shoes…  That’s a real move in your chair song, and I’m bopping along with Elvin! OK, time to get out of your hair today, and send you on your way to a Fantastico Friday!  and please Be Good To Yourself!   Oh, and one more thing… Today… is a good day for a good day! 

 

 

Chuck Butler’s: A Pfennig For Your Thoughts 

September 14, 2017

* Tax reform talks deep sixes the currencies… 

* Chinese data slips in August… 

* Bank of England meeting today. 

 

Good day… And a Tub Thumpin’ Thursday to you! And I get to do some Tub Thumpin’ Today, so I’ve got that going for me! Hey! How about those Cleveland Indians! The won their new AL record 21st game in a row yesterday! WOW My beloved Cardinals start to act like they’ve been set adrift in space without a tether, when they win 3 in a row! UGH! 21 in a row, that’s just incredible in my book! Heartsfield greets me this morning with their song: House Of Living…    

Well, a couple of months ago, I mentioned one day that the dollar was getting sold because of the fact that the President’s plans for the economy hadn’t gotten off the ground. That’s not so, any longer… And while it’s all talk right now about tax reform, traders are taking that as a sign that we will see it go through and become a reality, and they’re buying dollars by the fistful…   The euro has fallen back through the 1.19 handle, and keeps going back and forth around that figure in the overnight sessions.   Speaker, Paul Ryan, had this to say about tax reform… “the plan is to have a new tax system functioning next year.” And when a Democrat, representative, Joe Manchin,  that attended a dinner hosted by the President to discuss tax reform was asked about the meeting he called them “productive”…    

OK, now I’m not the sharpest tool in the shed when it comes to figuring out what politicians mean when they talk, but that answer seemed to be a long way away from signaling any bi-partisan agreement on tax reform, but that didn’t stop the dollar bugs from throwing the currencies and metals in front of the tax reform talks bus…   I could spend all morning on this, but since I did that yesterday with my talk on debt, I think it best to move along, and just makes sure you realize that these talks could gain momentum, and keep the conn with the dollar… I’m thinking that they won’t gain momentum, but then I always look at things differently than most people…    Well, on top of the dollar getting love from the tax reform talk, it also saw some love come in its direction from the global growth currencies, (A$, kiwi, sing $ and others) last night as China’s latest prints on Factory Output and Retail Sales slumped last month… UGH!   

Chinese Industrial Production gained 6% in August VS the same period last year, and 6.4% in July…   The expectations were for a 6.5% gain, so even though Industrial Production was up from a year ago, the slippage VS last month was highlighted by the markets. It also happens that the 6% print was the slowest reading for China so far this year…   

In addition, Chinese Retail Sales was similar to IP, in that Retails Sales grew 10.1% in August VS 2016, but fell VS the July print which was 10.4%, and the expectation was for a 10.5% print… This print too was the slowest for Retail Sales so far this year…    

The Sky is Falling, The Sky is Falling, and al the Chicken Littles are running around with that “oh the humanity” look on their faces…  When if they just took a step back and looked at the data for what it was, and what caused this slippage they would be able to calm down and get back to work!   You see, I’m looking at these data print slowdowns as a reaction to the fact that the Chinese Gov’t has been closing capacity of those companies that don’t meet the environmental standards, and that enforcement has been much stricter there…  And to me that’s just something that the Chinese businesses will have to adjust to, and figure out how to get back to stronger prints..  

The near daily, appreciations of the renminbi have taken a breather this week, and the renminbi has see markdowns at each fixing so far this week. And that leads me to believe that the Gov’t was aware of the slippage in these reports… Hey! it happens here too! 

So… the Swiss franc is about the only currency with a gain this morning VS the dollar…  And here’s the skinny on how that comes about…  In Europe, the big cross is euro/ francs or francs/ euro, depending on whether you’re trading in Switzerland or the rest of the Eurozone.  The Swiss National Bank (SNB) while having dropped the peg to the euro a few years ago, continue to maintain a large position of euros so they can adjust the price of the franc and keep it weak to the euro for trade purposes…   So, when the euro rallies, the franc gets sold on the cross, and vice versa…  This cross trading carries over to the trading in dollar / franc, and thus the strength in the franc today, as the euro suffers from getting sold. 

The price of Oil is the only other asset rallying VS the dollar this morning, with the price of Oil in the $49 handle once again. Most of the Oil price move came from the reduced supplies of gas that were reported yesterday, where the refineries in the Houston area have been in operable for a couple of weeks.  There’s plenty of Oil, just no place to get it refined into gas…   

The Petrol Currencies (TPC) didn’t rally alongside Oil in the past 24 hours, and that has me shaking my head as I attempt to figure out just why that happened like that?  And the only thing I can find and figure out is that TPC traders just weren’t convinced that the move in the price of Oil was something that would last…  And can you blame them? The price of Oil has been up, down, sideways, and then rinse and repeat over and over again…  But nothing to really hang your hat on and say, “this move is for real” 

Well, Gold go t whacked again yesterday, as “the boys in the band” did tune up their instruments yesterday for the show that saw the early gains in Gold wiped out and more as the trading got going… Gold made it as high as $1,340.50 yesterday, before the rug was pulled out from under it, and closed down $8.90 on the day to $1,322.50…   

The GATA folks sent me a note yesterday that was very interesting and had an ironic twist to it…    Here’s the note that GATA sent me…  “A former trader at UBS Group AG was charged today with conspiracy and fraud over his suspected role in manipulating the price of precious metals.  Andre Flotron, who worked at the bank in Switzerland and Stamford, Connecticut, is the second person publicly charged in the U.S. investigation into the fixing of gold, silver, platinum and palladium prices. Flotron, a Swiss citizen, was arrested while visiting his girlfriend in New Jersey. He was charged with conspiracy, wire fraud, commodities fraud, and spoofing. He faces as many as 25 years in prison on the most serious charge. ” 

And here’s the ironic twist… are you ready for this? Well here it is anyway..   While the arraignment of Andre Flotron was happening…  CPM Group Managing Director Jeffrey Christian was telling Kitco News that complaints of gold market manipulation are “nonsense.”   

CPM is a commodities research, consulting, financial advisory and commodities management firm providing independent research, analysis and advisory services related to commodities markets, corporate and project finance, and the financial management of exposure to commodity oriented investments…   

OK, if that weren’t so sad, it would be funny, and I mean funny ha-ha! But it’s so sad that all this happens right under the CPM nose..  

OK, move on Chuck before you find your soapbox, and just keep saying to yourself that “the boys in the band” are doing everyone a favor by keeping the price of Gold at a level where it can be bought…  

The Bank of England (BOE) is meeting while I write this morning, but I doubt they’ll have any market moving news for us today… But then you never really know with these Central Bankers these days? 

The U.S Data Cupboard had the PPI (wholesale inflation) for us yesterday, and the August PPI didn’t meet the expectations of a 0.3% increase, printing instead at 0.2% VS July..  Annualized, PPI is 2.4% or 1.9% without food and energy, which I’ve always said I have no idea why anyone would look at it without the two major things that consumers use every day…  

Today’s Data Cupboard has the stupid CPI for August…  And I have no doubts that it will remain under 2% year on year (YOY)…  

To recap… It was another Dollar Day yesterday, as the tax reform talk got loud, and influenced traders into thinking that this is going to become a reality, and help the U.S. economy, therefore they bought dollars… The Global growth campers got a kick in the shins yesterday when China printed two data reports that showed slippage VS July…  Gold got whacked again by “the boys in the band”, but the price of Oil rallied on the drop in gas supplies.    

For What It’s Worth…  I came across this in Ed Steer’s letter today, and he took it from the German newspaper De Spiegel and it’s about Stanley Fischer getting in some last minute shots at the president before he leaves office, at least that’s how I viewed the article… It can be found here: http://www.spiegel.de/international/world/eu-worries-over-u-s-economy-grow-a-1166809.html#ref=nl-international   

Or, here’s your snippet: “History repeats itself, sometimes even within a single person’s lifespan. Now an American citizen, Fischer is currently witnessing another major power taking its leave of the world stage. Under the leadership of President Donald Trump, the United States is losing its status as a global hegemonic power, he said recently. America’s role as guarantor of global organizations like the International Monetary Fund (IMF) can no longer be taken for granted, Fischer says. “I had a picture of the world economy in which the United States was an anchor,” he recently told the Financial Times. “Not a source of volatility.”

The U.S. political system could take the world in a very dangerous direction, says the economist, who has held a number of powerful positions in his career. He has been the chief economist of the World Bank, deputy managing director of the International Monetary Fund and governor of the Bank of Israel. His resume makes him part of the caste of “globalists” despised by Trump supporters.

Fischer is seeing things today that he has never experienced in his entire professional career. For instance, he believes the current US government’s efforts to loosen regulation of the banking sector, hardly more than 10 years after the financial crisis, are simply “mind-boggling.”  

Chuck again…  Well, like I said, above, Fischer seems to be taking his last shots where he can…   

Currencies today 9/14/17… American Style: A$ .80, kiwi .7223, C$ .8212, euro 1.19, sterling 1.3206, Swiss $.9660, … European Style: rand 13.1514, krone 7.8955, SEK 8.0104, forint 258.92, zloty 3.5987, koruna 21.9338, RUB 57.73, yen 110.41, sing 1.35, HKD 7.8116, INR 64.09, China 6.5339, peso 17.76, BRL 3.1283, Dollar Index 92.34, Oil $49.64, 10-year 2.19%, Silver 17.82, Platinum $985.35, Palladium $938.95, and Gold… $1,327.10

That’s it for today…  Home Alone again… I’m actually, no wait, don’t say that Chuck! OK.. I’ll just say, being alone isn’t so bad, as long as I know it won’t be forever! Cardinals have a bummer game last night and lose ground in the division race… UGH! I always say in the early spring when baseball begins that the games you win then are games you don’t have to win late in the season, and this year is a prime example of that, as the Cardinals fumbled away so many games early this year, that now they HAVE to win every game…  My weekly letter at the Dow Theory Letters sight (www.dowtheoryletters.com) will print tonight… Last week I gave everyone there who are all new readers to my stuff, a history of Chuck, and this week I did a history of currency trends… There are some very good minds and writers at the Dow Theory franchise… You should check them out!  Van Morrison takes us to the finish line today with his song: And It Stoned Me…  And with that it’s time to go!  I hope you have a Tub Thumpin’ Thursday! And Be Good To Yourself!