March 2, 2018  

* ECB to keep everything the same next week? 

* New steel tariffs to be announced? 

Good Day… And a Happy Friday to one and all… Whew! I’m worn out! I did a lot of walking yesterday, for me that is, and I’m paying for it this morning! UGH!  But an absolutely beautiful day again here, and day baseball… It doesn’t get much better for yours truly! And the day ended with us watching the Full Moon rise up over the ocean, very nice indeed! March sure came in like a lamb down here! I hear that up north they are preparing for a major Noreaster…  Batten down the hatches folks, and be safe! The Allman Brothers greet me this morning with their song; Southbound, which I’m thinking I would be doing if I lived up in the north east!   

Just when  you thought that dollar buying was the rage, it isn’t! Yesterday, we had the dollar buying going in the early morning, and then there was a story from the Eurozone, that the European Central Bank (ECB) will NOT announce any withdrawal from their bond buying program when they meet next week and will delay any such end of the bond buying until at least summer… That news swept through the currencies, and the dollar buying ended on a dime!   

The euro, yen, Swiss francs and U.S. Treasuries were bought as if there had been nothing else going on the past 5 days with the dollar. It was as if we turned back the hands of time to last week, when the dollar was getting sold like funnel cakes at a State Fair. 

Add to all that pressure on the dollar, the fact that there is a very strong rumor that the Trump Administration is going to announce another Trade tariff, this time on steel to add to the one they announced previously this week on aluminum foil…  A double whammy if you will deep sixed the dollar yesterday, lets see how far that carries…  

I’d like to take you back to 2001… A fairly new president, an economy that was just muddling through year after year, so tax cuts were implemented, the National debt was rising, and stiff tariffs were placed on Japanese Steel…  And I wrote a white paper about the Decline of the Dollar, because I saw all of these things as a perfect storm on the dollar… And guess what?

The began a long, deep slide on the slippery slope in Feb. 2002… People thought I had a crystal ball… I had no such thing, but… what I did have was logical thinking in my corner! And now, I’m looking at the horizon here and seeing a lot of the same things as the 2001 recipe for dollar weakness…  Tax cuts, an economy muddling through, the National Debt on an unsustainable path, and now trade tariffs, on steel no less! 

Dollar weakness is just around the corner, in my humble opinion, which could be wrong… But in my opinion the U.S. has not learned anything from history and therefore is doomed to repeat it! That’s my story and I’m sticking to it!  I know that quite a few of you dear readers were around with me back in 2001, and remember how the Decline of the Dollar was met with a lot of criticism because people thought that the King dollar was going to be strong forever, that interest rates would be rising and there was just no way the dollar was going to decline… 

And then that Minsky Moment happened and no one wanted dollars any longer…  James Rickards talks about “snowflakes” that could cause an avalanche… could that snowflake be the announcement of Trade Tariffs? Or could it be the printing of awful economic data like the car sales data that printed yesterday? U.S. Car sales have dropped for 2 consecutive months folks… Detroit auto makers on Thursday reported the second-consecutive collective decline in domestic sales in 2018, with dealers saying that it is getting harder to offer customers an attractive monthly payment.  Uh-Oh!  

Negative Retail Sales, Durable and Capital Goods, and car sales dropping like a rock from a cliff… Then add in the news from yesterday that U.S. Personal Spending showed signs of consumers petering out and you’ve got an economy that’s not going anywhere and certainly not worthy of 4 rate hikes this year!   And whenever the markets figure this all out, the dollar won’t be getting bought … I’m just saying…    

So, the euro got a boost yesterday from the news from the ECB rumor… I can see the ECB doing what its rumored to do, which is nothing when it comes to ending their bond buying.  What has happened to the strong Central Bank presence at the ECB at Duisenberg and Trichet presented to them?  The Eurozone has seen their economic recovery hit a speed bump, as recent data like CPI showed a slowing of inflation, and so on… And their reaction to the speed bump is to take cover and not come out until the sun is shining again on their economy… 

I don’t know why I’m so against the ECB’s decision here, as it sure gave a boost to the euro, which in turn sure needed one! But you dear reader know me all too well, and know that I’m against the ECB’s decision, because it means that their stimulus measures are not going to begin to be withdrawn now, but is getting pushed off until summer, and who knows then IF the sun and moon will be aligned to allow them to begin the withdrawal process…  I’m all about if you need to or want to do something, do it.. NOW!  My dad always told me, “there’s no time like the present, Chuck”…  

The U.S. Data Cupboard yesterday had January Personal Income and Spending, of which I touched on the Spending piece above. But Personal Income did show the effect of tax changes, as personal taxes fell 3.3 % in the month to help underpin total income which rose a solid 0.4% for a second straight month. But Personal Spending, well, showed some signs of consumer fatigue… and only printed up  0.2 % overall and marking a weak first-quarter start for the consumer. Spending on durable goods fell 1.5 percent on a downturn in vehicle sales.  

Speaking of those awful car sales… Remember back a few months ago after the hurricanes hit the U.S. I said that car sales would be brisk the following month, but it would be a one and done?   Well, since October’s hurricane-replacement sales boom, vehicle sales have been very soft, posting steep declines in two of the last three retail sales report. And sales in February failed to improve, coming in at a 17.1 million annualized unit rate vs 17.2 million in January.

Folks… this is the first indication of February consumer spending and it sure doesn’t point to acceleration, now does it? But the Fed heads aren’t going to let weak data get in the way of their mission to hike rates are they?    

Gold had another one “those days” yesterday, where it attempted to mount a rally throughout the day, only to be me by large short sales, and the shiny metal ended the day pretty much flat from the previous day’s close… But Gold traders are getting with the dollar selling in the early morning trading today, and Gold is up $14!   Wait until “boys in the band” see that!   I don’t think I need to remind you that the period beginning in 2002 going forward we saw a HUGE climb higher in the price of Gold… 

To recap…  The dollar buying ended on a dime yesterday after a rumor spread that the ECB won’t be ending their stimulus / bond buying next week when they meet, and will most likely announce a delay in that process of ending bond buying. Add to that the rumor that the Trump Administration will announce stiff tariffs on Steel, and the recipe to sell dollars fell into the laps of traders.  The euro, yen, and francs are the main beneficiaries of this dollar selling…   

For What It’s Worth…  Since I mentioned James Rickards above, I recalled reading a piece he submitted to the Daily Reckoning yesterday, and sure enough my friend, Ed Steer, highlighted it in his letter today, so I’m going to do the same… This is about the end of Conservative Spending, and can be found here:  www.dailyreckoning.com   

Or, here’s your Snippet: “Remember the “tea party” revolt in 2009-2010 against government bailouts and government spending?

Remember the “fiscal cliff” drama of Dec. 31, 2012, when Congress raised taxes and cut spending to avoid a debt default and government shutdown?
Remember the actual government shutdown in October 2013 as Republicans held the line against more government spending?

The days of caring about debt and deficits are over. In just the past two months, Republicans passed the Trump tax cuts that will increase the deficit by $1.5 trillion on a conservative estimate, and probably much more.

Then Republicans and Democrats “compromised” on eliminating caps on defense spending and domestic spending by agreeing to more of both. That repeal of the so-called “sequester” will add over $300 billion to the deficit over the next two years. Then there’s a tsunami of student loan debts in default that the Treasury has guaranteed and will have to pay off. Finally, the higher interest rates from this debt will add $210 billion to the annual deficit for every 1% increase in average federal debt funding costs.

Today we are looking at $1 trillion-plus deficits as far as the eye can see.”

Chuck again…  I had a reader point out how wrong Rickards had been lately about things, and told me I needed a new source…  Hey! we’re all wrong now and then, that doesn’t take away this man’s knowledge and experience…  

Currencies today 3/2/18… American Style: A$ .7761, kiwi .7241, C$ .7777, euro 1.2317, sterling 1.38, Swiss $1.0696, European Style: rand 11.8418, krone 7.7785, SEK 8.2386, forint 254.69, zloty 3.4030, koruna 20.6228, RUB 56.62, yen 105.40, sing 1.3194, HKD 7.8281, INR 65.14, China 6.3496, peso 18.88, BRL 3.2496, Dollar Index 90.08, Oil $60.79, 10-year 2.80%, Silver $16.46, Platinum $965.29, Palladium $992.29, and Gold… $1,320.00

That’s it for today… The NCAA Basketball Conference Championship tournaments get started this weekend, but I doubt I’ll watch much of the games given how nice it is to be outside here, and I do have baseball games today and Sunday… We celebrated our friend Diane’s birthday yesterday with breakfast at one of my fave places down here, the Juno Beach Café… And then it was onto the ballpark, where it was a hot one yesterday, that required lots of liquids… wink, wink…  HA!  My spring vacation is a week away… YAHOO! I think that today is a Good Day, to have a Good Day! Earth, Wind, and Fire are seeing that I get it started that way with their dancing in the seat song: September taking us to the finish line today!  Now, go out and make this a Fantastico Friday, because that’s what I hope to do!  And Be Good To Yourself!   

Chuck Butler 

March 1, 2018

 * dollar buying is the rage…

* Eurozone Unemployment Rate remains steady…  with no shenanigans!   

 

Good day… And a Tub Thumpin’ Thursday to you! And Welcome to March! One of my fave months! Today is the birthday of one of our visiting guests from St. Louis… So, front and center today, Happy Birthday Diane! Our Blues finally played some real hockey last night… I was beginning to wonder what was going on in the locker room there! I’m running really late this morning, as I just couldn’t get my motor running this morning for some reason.. The Band Doucette greets me this morning with their song: Mama Let Him Play…    Jazz is much too crazy he can play it when he’s old, he’s too young for the blues, he’s still in his first pair of shoes! 

The markets are still enamored with the thought of 4 rate hikes here in the U.S. this year, and so the dollar buying is still the trade that most traders are willing to execute, because, well, if interest rates in the U.S. are going to be hiked 4 times, then dollar deposits will enjoy a positive rate differential to most of the world for the first time in several months of Sundays! 

And nothing is being spared with the collateral damage of dollar buying being far and wide. I wouldn’t be brave enough to step in front of this moving bus that’s being driven by a crazy idea in my opinion. Sure the idea of 4 rate cuts isn’t that far fetched, given the rise of inflation that we’ve seen, but to act on the idea of 4 rate hikes is just plain crazy if you ask me!

I’ve talked about bond debt servicing before, and if the U.S. Fed Funds rate is almost 3% by the end of the year, the yields on Treasuries will rise even more, and that will put a crimper on the spending of the Gov’t… But will that stop them? NO! They’ll just pass a bill that allows them to deficit spend more!   The Debt Clock projects 4 years out should nothing change, (like 4 rate hikes) and the Debt Clock says that in 4 years our National Debt will be $23.3 Trillion… But I think that’s a conservative outlook, given what’s going on with rates and debt servicing here in the U.S.  

Recall that last week I told you that the latest Treasury Auction by the U.S. saw buyers demand higher yields, and the bills and bonds were being auctioned at rates not seen since 2006…  This is just the start folks… I tried to point out how important the auction was last week, but I’m just one guy with a laptop and an internet connection, that sees things differently than the average bear, and tries to warn his readers of the dangers of the decisions of dolts…  The markets are a beast, and it takes the likes of Lola, aka Goldman Sachs to move them in a different direction…  

Speaking of Lola… She made an announcement yesterday that spooked stock jockeys, but should have spooked dollar bugs too… Lola said that stocks could lose 25%, if the 10-year Treasury yield rises to 4.5%…   The 10-year Treasury’s yield is currently flirting with 3%, and eventually will go above that level. I recently wrote in my Dow Theory Letters (www.dowtheoryletters.com) Thursday letter about how quickly yields on Treasuries can rise once they get moving in that direction… I’ve seen it in the past, folks… I was a short term investments trader back in the day when interest rates here in the U.S. rose to 20%…

They didn’t start a 1.38% like the 10-year’s yield did in, can you believe that it was all the way back in 2012? no way! The 10-year’s yield was 1.38% just a couple of years ago, right? Time flies, eh? Yes, it’s been 6 years since that happened, but let’s just go back 6 months ago, when the 10-year’s yield was 2.07% (9/7/17) You can see how quickly things can change, and the bond boys haven’t really bought into the 4 rate hikes this year campaign yet… When they do… Uh-Oh! 

With the dollar being bought, euros are getting sold, and have given up the 1.22 handle overnight. And with the euro getting sold, all the other currencies are falling line behind the euro to receive their marching orders to the woodshed. Gold held tight yesterday, but is getting sold in the early morning trading, and the price of Oil continued to slip lower with the thought of surging supplies. 

There hasn’t been much news from the Eurozone in recent weeks, and the economic data continues to show a healing process going on with Germany leading the way. The German political scene got good news this week when a ruling coalition was formed, but the euro didn’t get any love from that, with all the dollar buying going on.  This morning, the Eurozone Unemployment Rate held steady for January at 8.6%…  There are no hedonic adjustments in the Eurozone Unemployment Rate calculations, just a simple question, do you have a job… yes or no!

Not like the shenanigans that are played with U.S. job counts…  Where one of the questions are probably like this… Have you worked in the last 10 years? yes or no…   If yes, then you’re counted as employed!  HA!   I kid, but I don’t doubt that something like that is used by the BLS!  

The U.S. Data cupboard showed us the latest revision to 4th QTR GDP and like I said it would do, it was revised downward to 2.5% from 2.6%, which was a downward revision from the original at 3%, and let’s not forget that he New York Federal Reserve  raised its estimate of U.S. gross domestic product growth for the fourth quarter of 2017 closer to 4 percent back in December!    What a Charade!  Can these guys get anything right?

I shake my head in wonderment that the Fed employs thousands of propeller head economists from Harvard and other top notch schools, and they can’t get this forecasting right… Better they stop forecasting altogether, right? HA!   

Today’s Data Cupboard has plenty for us, with Personal Income and Spending for January, which spending should take a hit given the negative print of Retail Sales in January… We’ll also see the Feb ISM (manufacturing index) which will remain bloated at 59…  And Fed Chairman Powell, makes the 2nd leg of his trip to the Hill, today to speak to the House..  I wonder if he has made some changes to his prepared notes in case someone throws him a curve today instead of those soft balls that thrown to him to easily hit out of the park! 

To recap… The dollar buying continues and looks to be strong and wide right now. It’s all about the 4 rate hikes talk that has the dollar bugs all excited, and Chuck thinks the idea is fine, but to act on the idea is crazy given what we all know about debt servicing… Gold held steady yesterday but is getting sold in the early morning trading, and the 4th QTR U.S. GDP was revised downward, but I bet you didn’t hear about that on the evening news!   

For What It’s Worth…  I received this from the GATA folks, but they pulled it from here and so can you?  https://www.telegraph.co.uk/business/2018/02/28/libor-surge-nearing-danger-level-debt-drenched-world/

So, I’ll set this up… I talked a lot about debt servicing above, and the great writer, Ambrose Evans-Pritchard has given us his two cents on the subject, so… here it is…  

“The stress signals of the global credit system are flashing amber. The offshore dollar funding markets that lubricate world finance are facing an incipient squeeze.

The “Libor-OIS spread,” watched carefully by traders, has risen to levels reached during the onset of the Chinese currency crisis in early 2016 and during the onset of the Italian and Spanish funding crisis in late 2011. The three-month rate for dollar Libor (London Interbank Offered Rate) used to price a vast nexus of financial contracts around the world has spiked to a 10-year high of 2 percent this week. A third of all U.S. business loans are linked to Libor, as are most student loans, and 90 percent of the leverage loan market.
The U.S. can doubtless handle the sixfold rise in Libor costs over the last two years since it is a reflection of economic recovery itself. America needs tighter money: The economy is on the cusp of overheating, with a double blast of irresponsible fiscal stimulus coming from the Trump tax cuts and Republican pork barrel spending.

Whether the rest of the world can handle it is less clear. The Libor spike is transmitted almost instantly through global finance. The Bank for International Settlements says any rise in short-term borrowing costs on dollar markets resets rates on $5 trillion (L3.6 trillion) of dollar bank loans.

It tightens the whole credit structure in Asia and emerging markets regardless of what currency it is in. The Libor-OIS spread measures the extra cost that banks charge each other for short-term “unsecured” dollar loans on the London interbank market. It basically takes the pulse of the lending markets.”  

Chuck again… Maybe the markets will listen to Mr. Pritchard! Because they sure don’t listen to me!   

Currencies today 3/1/18… American Style: A$ .7732, kiwi .7220, C$ .7783, euro 1.2188, sterling 1.3750, Swiss $1.0577, European Style: rand 11.8752, krone 7.9298, SEK 8.2875, forint 257.40, zloty 3.4328, koruna 20.8531, RUB 56.27, yen 106.71, sing 1.3266, HKD 7.8269, INR 65.20, China 6.3260, peso 18.89, BRL 3.2467, Dollar Index 90.73, Oil $61.26, 10-year 2.83%, Silver $16.30, Platinum $ 970.68, Palladium $1,014.05, and Gold … $1,311.60  

That’s it for today…  Back to the ballpark today for my second Spring Training game of the year, hopefully our pitcher can get through 2 innings without giving up 6 runs! Again Happy Birthday Diane! And I’m counting the days now until my spring vacation that will begin next Friday! YAHOO! Our Blues won last night, but the St. Louis U. Billikens lost their basketball game, UGH!  Friends from St. Louis and Oklahoma City arrived yesterday, and the good times began immediately! March will be busy with guests and goings on, and that has me pumped!  The great band Chicago takes us the finish line today with their song: Movin’ In…  from their 2nd album, the one that blew me away as a young man listening to it the first time…  And now 46 or so years later, I’m still listening!  And with that, it’s time to go… I hope you can make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!  

Chuck Butler

February 28, 2018    

Good Day…  And a Wonderful Wednesday to you! What in the world has happened to our Blues? I tried to watch their game last night, but that’s just bad hockey that’s being played by our team! UGH! I also watched my beloved Missouri Tigers win their basketball game. College basketball teams are getting ready for their Conference Championship tournaments, and then the NCAA National Championship tournament. March as always will provide us many college games that keep us on the edge of our seats, for they don’t call it “March Madness” because all games are boring! Carlos Santana and Dave Matthews joined together for the song that greets me this morning… Love Of My Life…  

We’re here… The end of February, which has been a beautiful month, weather-wise down here in S. Florida, and it has been a month of fighting back for the dollar. But before we could close the books on the month, new Fed Chairman, Jerome Powell, gave his testimony on the Hill to lawmakers yesterday.  This used to be called the Humphrey-Hawkins Bill that required the Fed Chairman to give both the House and Senate his take on the economy. The Bill ended many years ago, but Fed Chairs since then have still honored that old requirement.

So, the Fed Chair comes to the Hill, with his prepared speech, (remember that because we’re coming back to it) and then answers some softball questions from the lawmakers… Yesterday, Powell, was prepared to tell the lawmakers that the Fed’s team was trying to put out a message that it wasn’t in a hurry to lift interest rates aggressively, no matter the passage of the fiscal stimulus in the form of tax cuts and the $300 billion-plus budget bill. That’s what he thought he was prepared to say…   In Central Bank parlance that means 3 more rate hikes this year… 

But, instead of a softball that he could hit for a home-run, a lawmaker threw the old Uncle Charlie (curveball) to Powell, and instead of sticking with the prepared comments about things wouldn’t change, he went down a road the markets were not prepared to hear… Stocks went south, bond yields rose, and the dollar got bought…  Here’s  his prepared comments… “In gauging the appropriate path for monetary policy over the next few years, the FOMC will continue to strike a balance between avoiding an overheated economy and bringing PCE price inflation to 2 percent on a sustained basis.”  All was Ok until a lawmaker asked him this question… ” what would cause the Federal Reserve to hike more than three times that the central bank’s guidance currently calls for?”  

And this is where Powell, got in trouble…  As you can imagine…  I can see him fumbling around with his notes, to find the answer to that question in the notes, and then frustrated, he puts down the notes and decides to “wing it”…   He first explained how the “committee” arrives at a rate hike decision, and that they would be getting together in March to review the economic data, that he felt was continuing to show the economy strengthening. Apparently he hadn’t seen the most recent prints of Retail Sales, Car Sales, Durable & Capital Goods Orders, or the New Home Sales data… He made the point of saying that in his opinion the economy was showing strength, and that was the straw that stirred the rate hike camper’s drink…

The thought quickly switched to 4 rate hikes this year, which sent the dollar soaring, bond yields higher, stocks down and Gold down… It was not a pretty sight to see on the day, if you owned bonds, stocks and Gold and euros. 

So… I’ve talked a lot about all this rate hike stuff this morning, and quite frankly, I’m not buying it…  Powell and what ever other Fed Head they send out to spread their message can go on an on about 4 or 40 rate hikes, I’m not in line to buy the T-Shirt…  Why not? Because, the economy isn’t as strong as they want to believe it is!  

Look at yesterday’s real economic data… The U.S. Data Cupboard wasn’t kind to all those flag wavers that think the U.S. economy is strong… January Durable Goods orders printed worse than expected an posted a negative -3.7% print… Capital Goods Orders were also negative at -0.2%… But those that think that everything is seashells and balloons in the economy, thought it best to push the stupid Consumer Confidence to a level of 130.8 from a previous level of 124.3, which I thought to be preposterous!   

So, in the last week, we’ve seen the January reports for Retail Sales, Durable & Capital Goods and all three have printed negative to start the year! And later this morning, the latest revision to 4th QTR GDP will print, and I believe it will be lower than the last revision of 2.5%…  The 4th QTR laid an egg, and now the 1st QTR of 2018 is doing the same, but the 4 rate hike campers are out there marching in the street, and they loud and they are proud!  

The price of Oil saw some slippage yesterday as once again the Oil supplies showed another build up in reserves..  This whole Oil price / supply scenario is simply a case of lather, rinse, repeat, and do it again, and again, until everyone gets tired of it all and takes their bat and ball and goes home… We haven’t gotten to the end yet here, but we will, one day… 

Did you hear the latest news on Trade with China? The U.S. announced that had placed  stiff duties on aluminum foil from China after concluding that the country’s producers are receiving unfair subsidies and dumping the product in the American market.  And the timing of the announcement couldn’t have been better, given that Chinese President Xi is sending his top economic adviser, Liu He, to Washington for discussions over the two nations’ trading and economic relationship. 

Now, I get it… Liu arrives in Washington, and without the announcement of stiff duties on Aluminum foil, they wouldn’t have much to talk about, but now…  Hey, Mr. Liu.. here’s something we can talk about!  That makes two tariffs, if you will, on Chinese exports to the U.S. if you’re keeping score at home!   I’m just saying…   

I mentioned that Gold got sold yesterday afternoon, but didn’t get into the particulars.. So here you go… Gold lost $15 yesterday, and finished the day around $1,317… The shiny metal is back up a couple of shekels this morning to $1,320…  The number of contracts traded yesterday in Gold were 297,000, of which there were quite a few short Gold paper trades, in my humble opinion, as the short sellers saw the markets moving and decided to go student body right on Gold… UGH!

To recap…  It was all about Fed Chairman Jerome Powell’s testimony on the Hill to lawmakers yesterday about the state of the economy, and someone threw him a curve that he hadn’t prepared for, and decided to wing it with an answer that pretty much told the markets that Powell believes the economy is very strong and will need 4 rate hikes this year, which sent the dollar soaring, but stocks, bond prices, Gold and euros down on the day…    

For What it’s Worth…  I found this on Zerohedge.com and thought, that it would be good to offset the Powell, “everything is beautiful” talk above, with Powell, talking about an unsustainable path for debt in this country… You can find it here:  https://www.zerohedge.com/news/2018-02-27/fed-chair-admits-us-not-sustainable-fiscal-path  

Or, here’s your snippet: “Less than a week after Dallas Federal Reserve Bank President Robert Kaplan sounded the alarm over the level of debt that America’s government is projected to carry, Fed Chair Jay Powell told Congress today that “the U.S. is not on a sustainable fiscal path.”

Echoing the recent Goldman analysis, which warned that the recently implemented Republican spending plan could lead to an “unsustainable” debt load, Kaplan predicted the U.S. fiscal future beyond 2 years: he said that while the corporate tax cuts and other reforms may boost productivity and lift economic potential, most of the stimulative effects will fade in 2019 and 2020, leaving behind an economy with a higher debt burden than before.

“This projected increase in government debt to GDP comes at a point in the economic cycle when it would be preferable to be moderating the rate of debt growth at the government level,” Kaplan said”  

Chuck again, as I said when the first comments from a Fed Head came out about our debt presenting a problem, it’s about time they noticed!  But when I think about that I’m convinced that they’ve noticed all this time as our debt was rising, but are choosing to talk about it now…  Could it be that they are trying to deep six this administration?  I’m just thinking out loud here, no real statement on my part!   

Currencies today 2/28/18… American Style: A$ .7810, kiwi .7215, C$ .7835, euro 1.2220, sterling 1.3867, Swiss $1.06, … European Style: rand 11.73, krone 7.8725, SEK 8.2568, forint 257.07, zloty 3.4190, koruna 20.7985, RUB 55.90, yen 107.11, sing 1.3228, HKD 7.8273, INR 65.17, China 6.3107, peso 18.79, BRL 3.2328, Dollar Index 90.44, Oil $62.91, 10-year 2.89%, Silver Z516.4

February 27, 2018

* Rosengren begins to talk like Chuck!  

* Data returns to the U.S. Data Cupboard…

Good day… And a Tom Terrific Tuesday to you! What an awful night of restlessness for your truly.. UGH! Oh well, as they say in the military, “sounds like a personal problem”…  No Olympics last night, no good games on TV, and the stars weren’t participating in my usual night on the deck singing to them, led to a night where I was searching for things to write about… I found a few, but the findings just weren’t there in numbers!  The Beau Brummels greet me this morning with their song from the 60’s: Just A Little…

A few years ago, we experienced a trading pattern where the overnight markets of Asia and Europe sold dollars, and in the U.S. session dollars were bought… And so far in this week’s trading that’s what we’re seeing once again.. And that makes be think about the Plunge Protection Team (PPT) which operates in the U.S. markets. I told you a couple of weeks ago how the PPT, in my humble opinion which could be wrong, had stepped into save the stock market and the dollar, which both were about to fall off a cliff.  This trading pattern makes me think the PPT is in each day to ensure that we have none of that stuff from a couple of weeks ago… 

Of course I could be caught off base on this thought, but years of experience tells me that traders on different sides of the ocean don’t usually think differently on how assets should be traded, and when you see the dollar getting sold overseas, but bought here, something is awry folks… I’m just saying…   

So, yesterday morning we had the currencies and Gold rallying against the dollar, but as the day in the U.S. went along, those rallies were snuffed out. For instance, Gold, which yesterday was up $11.90 in the early morning trading found its way higher by a couple more bucks and the Dollar Index was continuing to drift lower than 89.55, but then they weren’t, just like that the tables had been turned on the currencies and Gold, and the two assets struggled the rest of the day to find a bid. 

Gold was able to hold on to $4.70 for an overall gain on the day, but was higher during the day before what I believe was the entry of the PPT in the markets. 

The euro also saw some love early in the day after the overnight markets had bought the currency and sold dollars. But soon the 1.2343 level for the euro yesterday morning, was reduced to a figure below 1.23… But overnight, the buying of euros and selling of dollars returned, and the single unit is back above 1.23 at 1.2330… 

I told you yesterday about how S&P had upgraded Russia’s credit rating, and how the ruble was looking like it could trade below 56 if the price of Oil continued to rise… And that’s exactly what happened in the past 24 hours… The price of Oil has continued to recover, and the Russian ruble has dropped below 56 to 55.90 (rubles are priced in European terms, which means as the price number drops, the less of the currency it takes to convert to a dollar, and that means it is rallying VS the dollar. 

The rest of the Petrol Currencies, like the Norwegian krone, Canadian dollar / loonie, and Brazilian real didn’t really participate in the rise in the price of Oil, but that doesn’t mean they won’t, as sometimes their reaction time is slower, that I would think it to be.   

The Mexican economic data, has really taken a nosedive in recent months… Yesterday, Mexican Retail Sales printed a 2% plunge, the biggest drop since 2013.

It is perhaps no coincidence that Mexico’s retail sales peaked in November 2016 — the month President Trump was elected — and have fallen ever since. This marks the 5th straight month of annual declines in Mexico retail sales… I was reading this on www.zerohedge.com and agree with the writer that both Mexico and Canada are seeing major downturns and disappointments in their macro data in recent weeks, as NAFTA negotiations get critical. 

In China yesterday the leaders said that they would change their “one man rule” that limits the President to two terms.. This means that Chinese president Xi will remain in power and continue his drive to bring China out of the dark and into the Capitalist world…  The Chinese renminbi was allowed to appreciate by a wide margin overnight, and there hasn’t been much uproar over this change, which I thought there could very well be some…  

The Chinese political arena is completely different than ours, so thislifting of the  two-term limit isn’t as bad a thing for the country as it would be here…   

Speaking of here in the U.S. I think the debt is beginning to get on people’s minds, and we’ll start to see those that don’t think accumulating debt is a Big Deal, and those, like me, that think it’s not going to lead to good things… Yesterday, we had Boston Fed President, Rosengren, talking about debt, and apparently he’s leaning toward the way Chuck thinks, as he told an audience that, “Large deficits now may make future actions difficult” for the government. He added it was “difficult to depend on” fiscal policies in the face of a recession “given political pressures and uncertainties.” – Eric Rosengren…     

And this note was found here: www.reuters.com   “Since mid-December the Republican-controlled Congress and U.S. President Donald Trump aggressively cut taxes and boosted spending limits, two fiscal moves that are expected to push the annual budget deficit above $1 trillion next year and expand the $20 trillion national debt.”    

Of course when the tax cut reform passed and the budget deficit was announced I went all DEFCON 4 on our leaders for increasing spending and cutting revenue at the same time, but usually it takes “others” to repeat what I’ve said to really get what I’ve ranted about to sink in with the masses…   And this is one of those cases… 

The U.S. Data Cupboard finally gets a chance to get in the game today when it will show us the color of the January Durable & Capital Goods Orders… I told you yesterday that I see Durables printing like Retail Sales.. Negative…  And Capital Goods should follow suit…  

Yesterday’s Data Cupboard was not kind to New Home Sales, which saw January’s numbers  crashed 7.8%, following December’s awful fall of 9.3%… This housing stuff is beginning to worry me folks. How about you?

To recap,  The first two days of trading this week reminds Chuck of a trading pattern we saw a couple of years ago, he believes the PPT is behind it all. Gold gained a bit yesterday, but had a better gain during the morning session, and the Price of Oil continued to ratchet higher, allowing the Russian ruble to rally to the 55 handle overnight.  

For What It’s Worth…  Since I was talking about the PPT above, that when I saw this on the Daily Reckoning I thought it would be good to follow up, with some else, and that’s what I have for you today… This was written by Nomi Prins at the DR, and can be found here: https://dailyreckoning.com/secret-force-behind-todays-rigged-markets/   

Or, here’s your snippet: “Markets were up again big today and volatility was down. But we haven’t seen the last of rising volatility, nor of the central banks’ attempts to thwart it. This week, new Fed Chair Jerome Powell will be giving his first congressional testimony, and you can be sure that markets are waiting on his words with bated breath.

Before his testimony, the Fed will be releasing its Monetary Policy Report, which will also give an indication to the direction of Fed policy.
Because these will be his first official comments as Fed chair, Powell will want to both make a personal mark and make sure markets don’t panic over his remarks.

I believe he will temper his comments to neutralize any negative market impact the report could have.”  

Chuck again… I read a lot of stuff that Nomi Prins writes and I find her to be quite good… I’m just saying…   

Currencies today 2/27/18… American Style: A$ .7843, kiwi .7283, C$ .7880, euro 1.2330, sterling 1.3968, Swiss $ 1.0680, … European Style: rand 11.6285, krone 7.8174, SEK 8.1764, forint 254.38, zloty 3.3816, koruna 20.59, RUB 55.90, yen 107, sing 1.3188, HKD 7.8264, INR 64.91, China 6.3152, peso 18.65, BRL 3.2347, Dollar Index 89.79, Oil $64.76, 10yr 2.87%, Silver $16.65, Platinum $996.59, Palladium $1,060.93, and Gold… $1,334.20  

That’s it for today…. After two awful game last weekend by our Blues, the GM tried to shake things up by trading a popular player yesterday… I find that these late season trades in hockey usually upset the chemistry in the locker room. I guess we’ll have to wait-n-see what happens here…  Another beautiful day here in S. Florida yesterday…  March will be my last month here, so I sure hope it moves slowly, and not as fast as February did! I don’t see another baseball game until Thursday. UGH!  Pink Floyd takes us to the finish line today with their song: Learning To Fly…  And with that, I’m going to hope you have a Tom Terrific Tuesday, and also hope you remember to Be Good To Yourself!   

Chuck Butler

 

February 26, 2018   

* S&P upgrades Russia’s Credit Rating!

* Bank fraud pushes rupee down… 

Good Day… And a Marvelous Monday to you! And welcome to the last couple days of February.  I have to say that February has been a fantabulous month, weather-wise down here…  Yesterday, was an absolutely beautiful day, which I spent at the ballpark watching my beloved Cardinals in a spring training game VS the World Champion Astros. The only black mark on the day was that the Cardinals laid an egg for their fans. But sitting there with friends, Jack and Lorraine was so delightful that I forgot about how badly our pitcher was pitching!  Billy Squier greets me this morning with his song: In The Dark…  

This should be short-n-sweet this morning, as there’s just not a lot going on… These past few trading days have seemed like we’re already in the Dog Days of August… But we’re not, so we had better figure out what’s going to light a fire under the Currency traders! It could come from the handful of real economic data that we get this week, that looking over it, I don’t see anything that’s going to support the dollar’s rally last week. In fact, the dollar is getting sold this morning, as traders prepare for a week of sub-performing economic data from the U.S. 

Gold, after losing a few shekels on Friday, has bounced back in the early morning trading today by nearly $12 (11.90)!  And the price of Oil continues to climb up off the mat, and trades this morning with a $63 handle. This morning, we have the currencies led by the Big Dog euro, moving higher VS the dollar, but as it stands right now, the moves aren’t HUGE. 

One currency that’s struggling is the Indian rupee, which not only has had to deal with the announcement of additional and extended Stimulus, but also a major Indian Bank fraud that was discovered last week. The fraud involved import export loans, and the discovery has led to a closing of the ranks for the import export loan business in India… And that is not a good thing for the rupee!  

The antipodean currencies of Australia and New Zealand, are back on the rally tracks this morning. It’s always a sunny day for me when these two currencies are on the rally tracks… And last week was tough for me to watch as traders sold these two on the thought that the U.S. Fed would be hiking rates 4 times in 2018, starting with March, and that would eliminate the yield differential that these two have on the dollar right now. 

But, calmer heads have prevailed and they have decided to wait to see what new Fed Chairman Jerome Powell has to say when he gives the lawmakers his testimony on how the economy is doing later this week. 

So… Did you hear the BIG NEWS from Russia this past weekend? The Ratings agency, S&P, raised its estimation of Russia’s sovereign credit rating from BB+ to BBB-. This is good news for the Russian Federation as it continues to realign its economy in response to the various sanctions that the West, mainly the United States, keep imposing on the nation. Sanctions? What Sanctions, I can hear Russian President, Putin saying…  or singing that old county song by Johnny Paycheck… Take This Job and Shove it, but changing the words to: Take those sanctions and shove it! 

The Russian ruble traders responded favorably to the S&P upgrade, and we could very well see the ruble trading with a 55 handle should Oil keep tracking higher..  The ruble has come a long way from the depths of collapse a few years ago, but still has some major wood to cut to get back to the levels it traded before the conflict in Ukraine came about… Back “in the day” the ruble traded steady around 35…  

I read an article this morning that the writer was saying that the U.S. National Debt had risen more than $1 Trillion in the past 6 months! YIKES! So, I immediately fired up the U.S. Debt Clock at usdebtclock.org and while we can’t do anything about water under the bridge, we sure could wrap a tourniquet around the bleeding, right?  The Debt Clock tells me that if all things remain the same that the National Debt will be $23.3 Trillion in 4 short years, an be equal to 106% of GDP…  

There’s a caveat there that I must point out, and that’s the fact the its in the words “if all things remain the same”… Which I don’t believe they will, we’re bound and determined to have a recession in the next 4 years, and that will throw a spanner in the works of a rising GDP, which would in turn increase the percentage of Debt to GDP…

I guess ;we shouldn’t worry about the rising debt, right? No, I haven’t gone to the dark side on debt.. I’m being facetious given the remarks from U.S. Treasury Secretary Mnuchin over the weekend… Check this out…Treasury Secretary Steven Mnuchin brushed aside signs that investors are nervous about rising prices and criticism that growing debt will harm U.S. economic security, declaring that President Donald Trump’s policies won’t cause inflation. Really? You must be kidding me with that statement, Mr. Mnuchin!  But there’s more where that came from! 

“There are a lot of ways to have the economy grow,” Mnuchin said in an interview aboard a train to Philadelphia on Thursday, where he toured the U.S. Mint. “You can have wage inflation and not necessarily have inflation concerns in general.”

He also said he isn’t concerned about foreign investment in new U.S. debt, which analysts expect will exceed $1 trillion this year…  I just shake my head in disbelief and disgust at the thought process that’s going on here… 

The U.S. Data Cupboard gets restocked this week, and we’ll begin seeing real economic data tomorrow with the January print of Durable & Capital Goods Orders, which I believe will fall in line with the negative prints of Retail Sales last week. Then as the week goes on we’ll see the color of the Home Price Index, the latest revision of 4th QTR GDP, which I believe will be another downward revision. On Thursday we’ll see Personal Income & Spending, but have to wait an extra week for the Jobs Jamboree, which is usually the first Friday of a new month, but will print March 9…  

I’ll be on vacation then from writing… As a reminder, I’ll be gone starting March 9, through March 23…   I know you’ll miss me (HA!) but I’ll miss you more!  

To recap… Have the Dog Days of August come early? Probably not, as the lack of data last week, put a crimper on trading activity, but that all changes this week, and Chuck thinks the data will be no friend to the dollar this week, and traders seem to be in line with his thinking, as the dollar is getting sold this morning. Gold is up $11.90 in the early morning trading and the price of Oil continues to rise… S&P upgraded Russia’s credit rating, and the ruble is on the move…   

For What It’s Worth…. Since today I highlighted Russia, this article continues to add to that highlight, and talks about how Russia is adding Gold, while the U.S adds debt, and can be found here: https://www.washingtontimes.com/news/2018/feb/22/russians-are-hoarding-gold-while-us-piles-up-debt/   

Or, here’s your snippet: “It’s a little-known fact in the West, but Russia has very little sovereign debt.

In fact, if you ignore the corruption and misallocation of capital in the Russian economy, you could make the case that Moscow has been more financially responsible than Washington over the last several decades. The Bank of Russia skillfully raised rates to head off further devaluation of the ruble during the recent recession, and the Kremlin is famous for building up rainy-day reserve funds during the oil boom years, pots of money they have heavily relied on during the period of Western sanctions and the collapse of oil prices on international markets.

In fact, after draining the funds for use to plug holes in the federal budget, the Kremlin has once again started building the funds back up, albeit very slowly.” 

Chuck again… And don’t forget that while the Central Bank of Russia (CBR) has been cutting rates, as their inflation drops, that the ruble still enjoys higher than the average bear interest rates… 

Currencies today 2/26/18… American Style: A$ .7876, kiwi .7340, C$ .7920, euro 1.2343, sterling 1.4068, Swiss $1.0716, … European Style: rand 11.5510, krone 7.8056, SEK 8.1340, forint 253.94, zloty 3.3774, koruna 20.5535, RUB 56.11, yen 106.58, sing 1.3148, HKD 7.8239, INR 64.73, China 6.3350, peso 18.60, BRL 3.2370, Dollar Index 89.55, Oil $63.49, 10yr 2.86%, Silver $16.76, Platinum $1,061.50, Palladium $1,061.50, and Gold… $1,342.20…

That’s it for today… a little longer than I anticipated when I began, but oh well… How about my adopted team for the Winter Olympics, the U.S. Men’s curling team won Gold! A awful weekend for our Blues, who were shut out twice, UGH! This is the time of year when hockey teams should be building toward the playoffs, but our Blues seem to be in a real funk… Uh-Oh! I experienced my annual emotional moment when I first see the baseball diamond yesterday… Good thing Kathy and our guests had walked ahead of me… We begin to see the visitors from St. Louis trickle down here this week, next week my spring training buddies will be here, then Alex, will visit, and kids and grandkids, and then Spring Training will be over and it will be time to head home for Easter!  Mitch Ryder and the Detroit Wheels take us to the finish line today with their rocking song: Jenny Take a Ride, that goes into C.C. Rider… a real foot stomping song for sure!  OK, let’s go make this a marvelous Monday and be sure to Be Good To Yourself! 

Chuck Butler

February 23, 2018

* Retail Sales in Canada falter…

* Dollar buying ends in the overnight markets…    

Good Day…  And a Happy Friday to one and all! A much better night’s sleep for your truly last night, has me ready to go this morning! Go where? Nowhere in particular, but once my fat fingers begin flying across the keyboard, only the Shadow knows where they will take us! How about that U.S. Men’s Curling Team? My adopted team for this Olympics, have stormed back from a rocky start and will be in the Gold Medal Game on Saturday! WOW! Tom Petty & the Heartbreakers greet me this morning with what should be my theme song… I Won’t Back Down..  

Another day of very little data here in the U.S. or for that matter around the world… Canada did print their December Retail Sales, and loonie traders wished that the report had not printed! Canadian Retail Sales for December dropped by -0.08%…  That report finished out the 4th QTR, for the Canadian economy, and left it with a sour taste in its mouth, for sure! Especially when a 0.2% increase was expected! This is the worst Retail Sales report since March of 2016, and really points to something that I’ve been warning the Bank of Canada (BOC) about for a couple of years now…  

And that’s the Housing Bubble in Toronto and Vancouver, and how the BOC needed to hiking rates a long time ago… How does this tie in to the awful print of Retail Sales?  Well, look at like this… Home values keep rising, and home owners kept taking equity out of those homes, and spending it, but there comes a time when there’s no more blood in the turnip, right? Well, it looks like this is the time, and if the BOC had nipped the housing bubble in the bud when it had the opportunity, then all this wouldn’t be happening!  

Needless to say the loonie got whacked on the data print, as it should have, and opposite of how the U.S. dollar bugs traded the dollar after the U.S. printed its own negative Retail Sales figure last week! 

Well, the dollar buying ended in the overnight markets last night, and the currencies are attempting to rebound… They’ll need Paul Silas to grad a strong rebound though, as we’re ending the week of not much news, and I get the feeling that traders just want to do their 8 and get out of there today… 

The euro has gotten up off the canvas and climbed back to 1.23 this morning, and the Dollar Index has fallen back below 90 again… Gold saw trading yesterday that it hasn’t seen in a while. The trading volume was 188,000 contracts! That’s it! And without all the short Gold paper trades, Gold saw a rise in its price of $7.40 on the day…  Where were the short paper traders? Maybe they all had to attend continuing education classes yesterday, HA! But I don’t care where they went, and I would hope that wherever they went, that they stay there! They don’t have to go away mad… They just have to go away!   

The price of Oil got a boost yesterday, when the Oil supplies data showed an unexpected drop for last week. But Oil’s rise in price hasn’t helped the Petrol Currencies this morning. I think the Petrol Currency Traders have finally figured out just what the heck is going on here and they aren’t going to be caught going back and forth with the price of Oil any longer!

I would hope that they finally saw the trees in the forest here! I never said that they were rocket scientists!  

In Russia overnight, they printed their latest PMI (manufacturing index), and even with the economic sanctions that the U.S. and Eurozone have placed on Russia, their Feb PMI number gained! The Feb PMI was 52.1 VS 51.6 in January… Remember.. any number above 50 indicates expansion of the manufacturing sector… I’m just thoroughly impresses with the Russian economy given the obstacles it’s had to face… I’m telling you once again that the Central Bank of Russia (CBR) Gov. Elvira Nabiullina is the best Central Banker out there… And that goes a long way toward how the economy reacts, the currency trades and the overall outlook for the country improves!  

Not like the shenanigans that go on in Japan, and the U.S. with our Central Bankers, that’s for sure! 

OK… back to the euro…  It would seem, that if you just looked at this week’s trading that the dollar is once again on top and the euro is getting sold…  But those are short-term moves folks… The upward trajectory of the Eurozone’s economy is still in place, and in my humble opinion, the pricing of the removal of stimulus by the European Central Bank (ECB) hasn’t really begun to set it, which would be a HUGE boost for the euro when it does. 

So, what I’m saying is this… Don’t get your shorts all bunched up over what’s happened this week… It’s short-term trading, and has nothing to do with the new weak dollar trend that’s been in place since the middle of last year.  So, what does this week’s trading present us with? Buying at cheaper levels that’s what!    

So, I’m ending this a little short today, as I can’t make up stuff to write about, and the markets just aren’t giving me anything!  Besides, I’ve got a real treat for you in the FWIW section today… It’s Dennis Miller with some jaw-dropping information on Social Security for us!  

To recap…  The dollar buying ended overnight, and the currencies are attempting a rebound this morning. The euro has climbed back to 1.23, and Gold gained $7.40 yesterday.  Canadian Retail Sales were awful in December, and Chuck points to the root reason why. The loonie got whacked as it should!   No data, no news, a shorter than usual Pfennig today…  

For What It’s Worth… Longtime readers know that I have a good friend, named Dennis Miller, the Retirementor. Dennis writes a letter that’s geared to retirees or investors that are thinking about retiring.  He writes about things that are so important, and when he does, I highlight his writing as I’m doing today…  Please check out  https://milleronthemoney.com/     Today’s letter is about Social Security.. 

And here’s your snippet: “Did I achieve a journalistic milestone? I got my first tip from an insider. What I learned is darn important for our readers.

Our article “The Social (IN)Security Charade”, discussed how the government gave us a COLA increase and took it right back by increasing medical premiums.

The tipster confirmed I was spot on – however, I barely scratched the surface. While I prefer interviewing the experts, he politely declined, wishing to remain anonymous (now John Doe).

John’s concerned; all generations need to know the facts, so they can plan accordingly. After following his research suggestions, I’ve come to a conclusion about social security.”  

Chuck Again… This is important stuff folks… please check it out, and while your there, sign up for Dennis’ letter, I think you’ll be glad you did!   

Currencies today 2/23/18… American Style: A$ .7815, kiwi .7292, C$ .7869, euro 1.23, sterling 1.3948, Swiss $1.0703, … European Style: rand 11.6040, krone 7.8656, SEK 8.1612, forint 254.29, zloty 3.3893, koruna 20.5518, RUB 56.64, yen 106.82, sing 1.3223, HKD 7.8222, INR 64.84, China 6.3508, peso 18.59, BRL 3.2603, Dollar Index 89.93, Oil $62.39, 10-year 2.89%, Silver $16.59, Platinum $ 993.75, Palladium $1,037.41, and Gold… $1,331.50   

That’s it for today…  Well, February is winding down next week, and that brings us to March, one of my fave months! As tradition calls for, I’ll be on be on vacation from writing for two weeks in March… I’ll miss you each day, but you can be assured that I’m recharging my batteries for the future!  The Number 1 recruit in basketball last year was Michael Porter, Jr. and he chose to play at my beloved Mizzou! He then got hurt in the first game, had back surgery, and is now cleared to play again! Watch out SEC! And with that, Melvin and the Blue Notes takes us to the finish line today with their song: If You Don’t Know Me By Now…   I hope you can make this a Fantastico Friday, and Be Good To Yourself!  

Chuck Butler

February 22, 2018   

* Fed minutes are the same-o, same-0 to Chuck!

* Another blow to Carney’s rate hike promises… 

 

Good Day… And a Tub Thumpin’ Thursday to you! I have an early date with the Honda Service garage this morning to deal with some brake adjustments… But… I truly believe that I’ll be on my way to a Tub Thumpin’ Thursday later today! Last night, I had one of the best meals I’ve had in years, and shared it with friends that made the meal even better! We feasted at the Okeechobee Steak House, the oldest steakhouse in Florida, and brother I ate more last night than I have since my Labor Day BBQ! That’s nearly 6 months ago, folks… I sure hope I don’t have to wait another 6 months before enjoying a meal like that again! I do have to admit though that during most of these past 6 months I’ve not felt like eating… I guess being off the chemo for a month now, has its benefits, eh? The group Live greets me this morning with their song: I Alone…  

The FOMC Meeting Minutes that  saw the light of day yesterday upset the stock market rally cart and brought about more dollar buying late in the day, and carried over in the overnight markets. So, I guess we have to dig into the Minutes to see what all this fuss is about, eh? 

Let’s see here… I see nothing new. The Fed Heads have been spewing this garbage to the markets and investors for some time now. They basically said, “that  they have revised upward the economic and inflation projections they made at the previous meeting in December. The Fed Heads  see increased economic growth and an uptick in inflation as justification to continue to raise interest rates gradually, according to minutes from the central bank’s latest meeting.  

Of course I disagree to a point, in that I do agree that inflation is going to become a real problem for the U.S. economy, but I don’t agree with the “increased economic growth”, unless that is you’re comparing today’s economy with that of 2008! And that’s where the Fed Heads get to hide behind their words… They didn’t say that that think the increased economic growth was compared to anything, and knowing them the way I do, they could very well be comparing today to 2008!  OK, maybe not that extreme, but you get the picture…  For the record, I’m calling for low growth, and high inflation going forward. Stagnation if you will.. 

Of course these minutes were recorded 6 weeks ago, and the Fed Heads certainly didn’t know that January Retail Sales would print negative, along with Industrial Production…  I’m just saying…  

So, more rate hikes are on the horizon and that spooked the stocks market, and sent the yield on the 10-year Treasury to a 4-year high if 2.93%. Gold held steady Eddie, but is getting sold in the early morning trading today by $7.   

Then, to top the FOMC Meeting Minutes, Fed Head,  Quarles, had this to say… “The U.S. economy appears to be performing very well and, certainly, is in the best shape that it has been in since the crisis and, by many metrics, since well before the crisis.”   Really? Tell that to all the malls that are closing up, the stores that have shuttered, and the car makers, who are about to see car sales go for a ride on the slippery slope, in my opinion, which could be wrong, of course! 

Poor Mark Carney… The other day, I looked up the definition of putting one’s foot in its mouth, and they had a picture of Mark Carney! For those new readers, Mark Carney is the Gov. of the Bank of England (BOE), and before that job he held a similar job at the Bank of Canada (BOC)…  And it’s there at the BOC that he got his reputation, called by me, of making promises to hike rates, and then never coming through with them. 

The sad thing is that recently when Carney called for rate hikes to come, it marked the 3rd time he has done so, having done one at the BOC, and now two at the BOE…  Yesterday, I told you that his rate hike call got a blow to the midsection with an increase in the Unemployment Rate, and today his rate hike call received an upper cut, from a weaker 4th QTR GDP than previously printed…  Yes, 4th QTR GDP was revised downward, as was the Year-on-Year data…  Where have all the rate hikes gone? Long time passing, eh, Mark Carney?   

And the pound gets caught up in all this, which is why, I continued to question the mental geniuses that keep buying the pound, whenever Carney speaks about rate hikes… They aren’t coming, any time soon, folks, and that’s all I’m going to say about that!  

That Indian rupee warning I gave you last week, sure seems to be playing out with the rupee trading to 65 handle (it’s a European priced currency so the higher the number the lower the value VS dollars) Crazy rupee traders that though the way to currency appreciation was through extended and increased Stimulus…  If they only listened to me! HA! 

I mentioned above that I think car sales are going to begin to really drop. We could see an indication of that in the Retail Sales data that printed last week for January. When you took out the car sales, Retail Sales were flat, instead of negative.  My new fave economist, Danielle Di Martino Booth, sent out her weekly letter (that costs) yesterday, and it was titled: Clear and Present Danger: Will Autos Crash The U.S. Economy?  

She give us a teaser, saying: “This week I’ve taken the opportunity of being called out to make some calls to the best and the brightest covering the auto sector. The analysis and data they provided from multiple sources provided plenty of back-up to support my initial assessment. If anything, I fear forecasts calling for new car sales to decline to a 16.7-million annual rate are overly optimistic.”  

Yikes! I’ve said for sometime now, that I see new cars being driven all over, and sooner or later, everyone that wanted and could afford a new car and even those that can’t afford a new car have bought them, and there had to be a leveling off… And now Ms. Booth, agrees with me! YAHOO! I got someone to agree with me, that’s a real economist! YAHOO!  I’m going out on the deck that overlooks the beach and ocean and yelling this out loud! 

To recap… the Fed’s FOMC Meeting Minutes roiled the markets yesterday, and have sent stocks, currencies and metals down, and bond yields higher, as the Fed Heads are calling for more rate hikes…  The U.K. saw a downward revision to their 4th QTR GDP, and sterling got sold.  And Chuck doesn’t agree with the Fed Heads, go figure, right?  

For What It’s Worth….  I told you earlier this week that the only data that would print this week was some housing data, and yesterday was one of those housing data prints… Existing Home Sales, and brother is there a problem here… this appeared here: https://www.zerohedge.com/news/2018-02-21/existing-home-sales-extend-plunge-december-nar-blames-inventory-not-rates  

Or, here’s your snippet: “After new- and existing-home sales tumbled in December, expectations were for a modest 0.5% rebound in January (despite plunging mortgage applications and soaring rates). But that did not happen as existing home sales tumbled 3.2% MoM to its lowest level since Aug 2016.

(NOTE – this data is based on signed contracts from Nov/Dec, which means the recent spike in rates is not even hitting this yet)

The West (-5.0%) and Midwest (-6.0%) saw the biggest drop in sales and while the blame (see below) was put on inventories, data shows a 4.1% increase, in “available for sale” homes?

Of course NAR is careful to blame inventories – and not soaring rates affecting affordability: Lawrence Yun, NAR chief economist, says January’s retreat in closings highlights the housing market’s glaring inventory shortage to start 2018.

“The utter lack of sufficient housing supply and its influence on higher home prices muted overall sales activity in much of the U.S. last month,” he said.”  

Chuck Again…  Houston, we have a problem… I’m just saying…  

Currencies today 2/22/18… American Style: A$ .7820, kiwi .7332, C$ .7880, euro 1.2284, sterling 1.3877, Swiss $1.0661, … European Style: rand 11.6945, krone 7.8945, SEK 8.1372, forint 254.24, zloty 3.40, koruna 20.6187, RUB 56.60, yen 107.35, sing 1.3223, HKD 7.820, INR 65.05, China 6.3412, peso 18.78, BRL 3.2558, Dollar Index 90.05, Oil $61.49, 10yr 2.93%, Silver $16.49, Platinum $986.68, Palladium $1,026.65, and Gold… $1,325.70   

That’s it for today… Happy Birthday George Washington! I won’t get into my discussion I had on Lincoln’s Birthday, but it applies to today too! Congrats to the U.S. Women’s Hockey Team for their Gold medal win last night… This game was decided by a shoot out, and even though the U.S. won, I still say that it’s no way to decide a Championship! Sunday is getting closer… My first Spring Training game this year! The end of February next week will mean that my building friends will be leaving to go back home…  Hopefully we get to get together again next year! But March brings friends from St. Louis, then my Spring Training buddies, then darling daughter Dawn, Delaney, Everett and Jerry, so I’ll have plenty of company in March! YAHOO!    And with that, Cheap Trick takes us to the finish line today with their song: I Want You To Want Me…  Now, let’s go make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!  

Chuck Butler

February 21, 2018  

* The Treasury’s Auction Meets Higher Yields! 

* Russia continues to add HUGE amounts of Gold! 

 

Good Day… And a Wonderful Wednesday to you! What an awful night for the sports teams that I follow… First off, the USA Men’s hockey team lost in a shoot out last night. What a horrible way to end a game, with a shoot out! UGH! There was no T.J. Oshie to save the U.S. this go around!  Our Blues lost, the St. Louis Billikens lost, and the one that hurt me the most was that my beloved Missouri Tigers lost on their home court! UGH! The Gin Blossoms greet me this morning with their song: Hey Jealousy…  

The topper on all those losses was the fact that Lola aka Goldman Sachs, says that all this fuss about debt worries are not to worry about, and the dollar shouldn’t be getting caught up in the worries…  So, OK, I don’t have any idea if this scenario actually happened, but in my mind this is how it came about…  The U.S. Fed gives Lola a call… “Hello, yes, I can hear you just fine… What’s up?  The Fed: We need some help… you see we’ve been telling everyone from the Gov’t. to the sheeple that the economy is just fine, no worries on the debt, and that to not worry, be happy… But “things” keep popping up telling everyone differently… Could you spread the word that everything’s right on the night?   Lola: Of course! We would be glad to, for it helps us to get stocks out the door!”  OK, this call never happened right? Right…    

And the sheeple followed, and before you could say, What happened? The dollar buying became the thing to do again, and all those currency and metals levels from last week that looked like they were ready for a moon shot higher, are no longer on the launch pad. They’ve been shuttled back to the storage garage…  I’m so tired of these “manipulators” that swing assets to their way of thinking or someone else’s way of thinking that they agree with!  

Here’s something for Lola and the rest of the manipulators to think about… Speaking of the rebound in the stock market… Longtime readers know that I often say, “I’m not a tock jockey”… But I do follow stocks, and I follow people who write about stocks, and the other day, I had an article sent to me from a guy that really follows the stock market… He claims, like I often do, that the Plunge Protection Team (PPT), which consists of the Fed, Treasury, the SEC, and the CFTC, was responsible for propping up the stock market last week… In fact, he points to a report from a good friend of his that works at a large public pension fund, who claims that his firm did a “stress test” with the data he had provided to him from the Big public pensions… And he says…

“Based on all current stated underfunding at every big pension fund, if the DOW/ SPX declined 10% or more over a sustained period of time (3-4 months) that EVERY PUBLIC PENSION FUND IN THE COUNTRY WOULD COLLAPSE!!!! He then goes on to show that every 10% drop in the stock market since August 2015 has been met with an equally forceful recovery… I found this at www.investmentresearchdynamics.com The study is pretty convincing to those that don’t believe in the PPT…

Well, I told you yesterday morning that Gold was getting whacked at that time by $15, and the whacking didn’t stop there, as Gold finished the day down $17… Why? Because the short Gold paper traders saw to it that it happened! I have a challenge for you dear reader… Write your Congressman / woman, or representative in the House, and tell them 1. The Fed needs to be audited, and 2. To put pressure on the CFTC to come clean with their findings of Gold & Silver price manipulation… Will you do that for me?  

OK…  Recall me telling you many times over and over again that this dance is gonna be a drag? No Wait! Not that! I’ve told you over and over again that the accumulation of debt by the U.S. was going to eventually cause problems with selling Treasuries to finance the debt? And that yields on those Treasuries would have to move much higher to get foreigners interested in buying them…

Well, the higher levels are being demanded already by buyers, as yesterday’s auction of $179 Billion of 3 and 6 month Treasury Bills saw the markets demand higher yields on the Bills, and the yields on these two Bills rose to levels not seen since 2008!  Oh, and the Treasury has $258 Billion of longer bonds to auction still this week…  Hello Mr. Treasury yield, what floor are you going to? The top floor, please, and don’t stop along the way for me!    

I told you yesterday that there’s not much in the way of U.S. Data for this week, but we will see the color of the Fed’s FOMC Meeting Minutes this afternoon… and the markets are waiting with much anticipation to see why it was that central bank officials pledged to make “further gradual adjustments” in interest rates as opposed to simply “gradual adjustments” at last month’s gathering.  To me, I couldn’t give two hoots to find this out, but the markets seem to be Nervous Nellies about this, so I’m talking about it..    

Well, this is shorter than usual this morning, because I’m not on top of the world today…  But keep in mind that currency trends are not ONE-WAY Streets and there is volatility within the trend… So, I’m going to look for bargains here and think it would be a prudent thing for all investors to do..  I’m just saying…  

Oh! I almost forgot to point out two things this morning… First, U.K. Unemployment ticked higher last month, which is not going to help Bank of England Gov. Mark Carney’s quest to hike rates… Sterling got sold on the data, and the other thing is that Russia added 600,000 ounces of Gold to their stockpile last month… At least they tell us what they’re adding, as opposed to China who keeps everything under their coats… 

To recap…. The dollar is back to being bought, courtesy of Lola, and Chuck has a scenario that he made up that makes a ton of sense… Gold got whacked badly yesterday losing $17 on the day, but is flat this morning so far. The Treasury is about to find out just how much demand there is for their Bonds that need to be sold to finance the exploding debt… The Treasury got a glimpse of what will be needed yesterday, but has a ton of more bonds to auction this week…   And the Fed’s FOMC Meeting Minutes will print this afternoon…   

For What It’s Worth… Well, with the President trumpeting his new Tax Cut Bill as the reason for this turn around in small business growth, I thought it would be good to highlight the growth.. a good story for once, eh? And it can be found here: https://www.cnbc.com/2018/02/20/small-business-confidence-hits-record-in-2018-after-tax-reform-win.html   

Or, here’s your snippet: “Small-business confidence is surging in 2018 as optimism rises among small-business owners about the newly enacted tax-reform package, according to the latest CNBC/SurveyMonkey Small Business Survey, released Tuesday.

The CNBC/SurveyMonkey Q1 Small Business Confidence Index saw an increase of five points, from 57 to 62, a record high and the largest quarter-to-quarter move the index has seen since CNBC and SurveyMonkey began measuring last year. This is the first survey since President Donald Trump signed the Tax Cuts and Jobs Act into law on December 22, 2017.

In the Q4 survey, small-business owners were split evenly on the core question about the effect that tax policy would have on their business. Opinions have shifted significantly: Twice as many now expect changes in tax policy to have a positive rather than negative effect on their businesses. Forty-six percent of those surveyed say tax policy changes will have a positive effect, up from 38 percent in the fourth quarter. The number of those saying tax policy changes will have a negative impact fell sharply, from 36 percent in the fourth quarter to 23 percent in the most recent survey. ”  

Chuck Again… Well isn’t that all just peachy? I’m just saying…  

Currencies today 2/21/18… American Style: A$ .7850, kiwi .7340, C$ .7898, euro 1.2320, sterling 1.3914, Swiss $ 1.0670, … European Style: rand 11.7193, krone 7.8400, SEK 8.0980, forint 253.20, zloty 3.3720, koruna 20.5717, RUB 56.50, yen 107.45, sing 1.3207, HKD 7.8248, INR 64.81, China 6.3443, peso 18.72, BRL 3.2416, Dollar Index 89.89, Oil $61.35, 10yr 2.89%, Silver $16.48, Platinum $996.19, Palladium $1,026.24, and Gold.. $1,330.90   

That’s it for today… That was a heartbreaker, the U.S. Men’s hockey game last night…  No Miracle movie for this team…  The wind is still present outside this morning, but the sun is shining so I won’t complain! In just two weeks, my spring training buddies will be here… My first game at Roger Dean is this Sunday, with some friends here in the building. I can’t wait to walk up the ramp for us not able to negotiate steps too well, and see the field, I always get a chill down my spine, and tear in my eye, the first time at the ballpark, because, well, if it were up to the American Cancer Society, I would not be able to experience the ballpark any longer… I’m lucky, and I know it…   And with that, James Taylor takes us to the finish line today with his song: How Sweet It Is To Be Loved By You…  Now, go write that letter, and have a Wonderful Wednesday, but remember to be Good To Yourself!    

Chuck Butler

February 20, 2018  

* Switching from euros to yen? Really

* Gold gets whacked again 

Good day and a Tom Terrific Tuesday to you! If you were lucky enough to be able to celebrate a 3-day Holiday weekend, good for you! I thought to myself and then even mentioned it to someone here that the weather we had last week and through the weekend reminded me of one of my fave movies: Groundhog Day, where every day was repeated.. All good things come to an end though, and the wind returned yesterday. At least it’s a warm wind now! The Olympics have been good TV at night, and Spring Training is in full mode now. YAHOO! Supertramp greets me this morning with their song: Give A Little Bit…

I’m really into the Olympic Curling… Looks to me like it would be a good “drinking game”, like botche ball, bowling, shuffle board, and some others! My stomach seems to be betting straightened out, at least so far that is, and that’s all I know from Lake Woebegone! HA! With the U.S. on Holiday yesterday, the overseas markets decided to  move things in the wrong direction…. The euro lost about ½-cent on the day, along with the Aussie dollar (A$), and Gold is getting whacked this morning, I was waiting for this to come along, by $15… No data prints, but “the boys in the band” have become so brazen that they feel they don’t need no stinkin’ data to cause a disruption in the rally of Gold! 

In the overnight markets, last night, the selling of the currencies and metals continued. Suddenly there’s an air in the markets that’s foul, to me that is… And I’m talking about this “The U.S. economy is strong, so buy dollars, because interest rates are going to rise.”  Well, in my humble country bumpkin opinion, they have some of that right… The U.S. economy isn’t strong, and interest rates might be going up, but not because of the strong economy, but rather they might be going up because we have knucklehead Fed Heads and they have a different agenda for rates than what the economy calls for!  

I just sent off my Dow Theory Letters submission for this week, and in it I dive really deep show readers that what’s really going on in the economy. I’m telling you now so you’ll listen to me later, the www.dowtheoryletters.com site is very good, with different economic/ markets writers each day, and culminating with the Aden Sisters on Friday and a classic Richard Russell letter. It does cost money, but Shoot Rudy, only the Pfennig is free! 

OK… That public service announcement was brought to you by the good folks of Aden Research!  

The new foul air that I talked about above has really taken off in a new direction, and the euro is getting sold because of that. Germany, the Eurozone’s largest economy, saw the Economic Sentiment Index, as measured by the think tank ZEW, remain positive last month, and this comment on the German economy from ZEW followed the data print.  “The latest survey results continue to show a positive outlook for the German economy. The assessment of the current economic situation is still on a very high level and the economy is expected to improve in the coming six months. Economic growth in Germany is substantially driven by the very good development of both the global economy and private consumption. Inflation expectations for Germany and the Eurozone have also started to increase.”    

And on top of all that foul air, is another smelly subject, and that is an article on Bloomberg this morning that talks about how traders have grown tired of waiting for the European Central Bank (ECB) to begin to unwind their stimulus, and have switched to buying yen to short the dollar… Recall, I was questioning how in the world yen was rallying lately? Well, here’s your answer!  What on God’s Green Earth are these traders thinking? What’s in yen that so sexy?  I just don’t see it, and I think these traders will rue the day they thought yen was a better alternative! 

A look around the currencies this morning shows that the Russian ruble, Norwegian krone,  and Brazilian real are the only currencies trading in the green this morning, and those moves aren’t exactly show stealing!  The price of Oil ratcheted upward since Friday, and that has helped these Petrol Currencies to at least hold on to Friday’s gains. 

Remember last week when I told you that in India, PM Modi had announced that stimulus measures would not only be extended but also added to and that the ruble was rallying on that news, but I doubted the rally would last because that stimulus news was not a good fundamental? Well, once again, things went my way, and the Indian ruble has given back all those knee-jerk reaction gains, and more… 

I do have something that I saw last night, that’s not in my DTL letter this week, so a bonus for free! And that is a little thing called a report that the St. Louis Fed (FRED) issued that tracks Household’s Net Worth as a percentage of Disposable Personal Income…  And guess where we are right here and now?  Well, let me set this up first… In the past 18 years we’ve been above the 600% level of Household New Worth (which is really just pure debt) and that was 2000, and 2007, and we all know what happened in those years, right?  Well.. 2018 has the largest divergence in modern history, and sits today around 680%!!!!!!    Hey! I don’t make this stuff up folks, it’s right there on The St. Louis Fed’s website!

The U.S. Data Cupboard printed the stupid Consumer Confidence Index for this month, and believe it or don’t, Consumer Confidence in the U.S. is soaring! The Index rose from an already unbelievable number 95.7 to 99.9! I know, I know, it’s all about the stock market, and its recovery last week back to the 25,000 level, but still, Confidence is soaring? Please!

In addition, the Import Price Index for January printed, and I don’t know why I’m talking about this, because the markets don’t care about it, but, Import Prices rose 1% in January… Makes sense to me, given the dollar’s 2% decline in the month.

U.S. Data this week is sparse… In fact we’ll only see some data prints on Wednesday and Thursday… And those prints will be non-market moving, so a week that the dollar has to trade on its own… Hmmm…  But from the looks of how we’re starting the week… UGH!   

Gold saw little movement yesterday while we were perusing the mattress sales, but this morning is a different story, as I said above, the shiny metal is getting whacked in the early morning trading today…  $1,350 seems to be the line in the sand that “the boys in the band” have drawn on Gold’s price, because every time Gold rises to that level, it gets brought back down, and not by a small amount, just like today… UGH! One of these days, Alice… To The Moon!  But until “that day” we have to deal with these turkeys that trade short Gold paper trades.    

To Recap….  A 3-day Holiday weekend, kept the markets from moving yesterday, but in the overnight markets, dollar buying is back, and only the Petrol Currencies have carved out some small gains this morning… The euro couldn’t even gain a shekel or two after a good ZEW report this morning, and Chuck points out that traders are shifting to buying yen to short dollars… Hmmm, Chuck thinks they’ll rue the day they did that! 

For What It’s Worth…  This is pretty interesting in that it’s Lawrence Kotlikoff speaking, he’s the professor that believes that instead of the $112 Trillion of Unfunded Liabilities that on the books of the U.S. that the number is greater than $200 Trillion…  You can find the article on Forbes, here: https://www.forbes.com/sites/kotlikoff/2017/12/08/has-our-government-spent-21-trillion-of-our-money-without-telling-us/#26c08a8c7aef   

Or, here’s your snippet: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” ~ Article I, Section 9, Clause 7, The US Constitution.

On July 26, 2016, the Office of the Inspector General (OIG) issued a report “Army General Fund Adjustments Not Adequately Documented or Supported”. The report indicates that for fiscal year 2015 the Army failed to provide adequate support for $6.5 trillion in journal voucher adjustments. According to the GAO’s Comptroller General, “Journal vouchers are summary-level accounting adjustments made when balances between systems cannot be reconciled. Often these journal vouchers are unsupported, meaning they lack supporting documentation to justify the adjustment or are not tied to specific accounting transactions…. For an auditor, journal vouchers are a red flag for transactions not being captured, reported, or summarized correctly.”

Chuck Again… the 60’s song by Joe South is always popping into my head when I read stuff like this… The games people play…   

Currencies today 2/20/18… American Style: A$ .7883, kiwi .7362, C$ .7938, euro 1.2337, sterling 1.3973, Swiss $1.0698, … European Style: rand 11.7554, krone 7.8377, SEK 8.0808, forint 252.79, zloty 3.36, koruna 20.5277, RUB 56.40, yen 107.10, sing 1.3189, HKD 7.8239, INR 64.86, China 6.3429, peso 18.64, BRL 3.23, Dollar Index 89.64, Oil $61.92, 10yr 2.90%, Silver $16.58, Platinum $1,004.68, Palladium $1,032.10 and Gold… $1,341.20  

That’s it for today…  Well, the marks on the left side of my face still haven’t completely healed, and I go back to the dermatologist this morning to see what she has to say about that! I stayed up way too late last night to watch the U.S. men’s hockey team win and advance… It’s fun watching the young kids with all their speed playing for the U.S. The Russians have ex-NHL players and KHL players, so it’s the same as it used to be our college players VS men… UGH!  Don Henley takes us to the finish line today with his song: The Heart of the Matter…   We got to see Don Henley at the Fabulous Fox year years ago, and we were in the 4th row… A great show for sure!  And with that, it’s time to go! I hope you have a Tom Terrific Tuesday and Be Good To Yourself!  

Chuck Butler

February 16, 2018

* Bart Chilton sings: I can see clearly now… 

* A day of allowing the dust to settle… 

Good Day… And a Happy Friday to one and all! From the looks of the sunrise this morning, it appears that it will be a carbon copy of the beautiful days we’ve had here in S. Florida, today, and so I’m proclaiming this to be a Fantastico Friday, right out of the starting gate this morning! The Pfennig is coming out a little later than usual this morning, as I was a real bum this morning, and slept through two alarms! The Group, Styx greets me this morning with their song: Lady…   

Well, after a day when Gold gained $20, and the Chicken Littles were out screaming that the sky was falling because the stupid CPI ratcheted up to 2.1% yoy, we had a day of drifting yesterday…  The currencies are, for the most part, trading in the same clothes as yesterday, as witnessed by the Dollar Index, which yesterday morning was 88.84, and today it’s 88.83.

It was a day of allowing the dust to settle form the awful data here in the U.S. the previous day. However, the U.S. data again was very disappointing yesterday… The economy seems to be slip-sliding away, you know the nearer your destination, the more you’re slip-sliding away…  

We did see some minor gains VS the dollar in: kiwi, rubles, real and krone, with the later 3 all being Petrol Currencies, which saw some love from another gain in the price of Oil yesterday. After gaining $2 the previous 24 hours, Oil added another $1 to its price in the past 24 hours, and is trading with a $61 handle this morning…  Up, down, later, rinse and repeat  for the price of Oil, which I went through a couple of days ago… 

I told you yesterday that kiwi was sneaking up on 74-cents, and last night it broke through that level! This last upward move in kiwi came courtesy of a report by the Reserve Bank of New Zealand (RBNZ), that showed that businesses in New Zealand are expecting inflation to rise this year, and that led to the idea that the RBNZ will have to begin their rate hike cycle soon…  I had just said yesterday, that I was convinced late last year that the RBNZ would be removing the dust covers from their rate hike machine in the 1st QTR of 2018… I sure hope this all comes together like a good plan, because longtime readers know that I love it when a plan comes together! 

Could it be that inflation is ready to rise all around the world? Why not? Most countries have kept their respective currencies under wraps too long, and allowed inflation to enter their economies…

I had a dear reader question me yesterday about me calling the euro the offset currency to the dollar, and wondered why I’ve been such a fan of the euro since its inception…  Well, the euro is the second most traded currency in the world, which moves it ahead of Japanese yen as the offset currency to the dollar, that’s a layup… 

But me being a fan of the euro since its inception? I recall me sitting in an audience in London, in 1998, and the moderator asked: Who here thinks the euro will be successful? Then he asked to see a show of hands of those that think it would fail? I raised my hand…  And after the euro’s introduction, I looked to be bang on with my thought, as the euro was introduced at a price of 1.17, and quickly fell to 90-cents… 

But it survived, and I love survivor stories, especially after being diagnosed with cancer in 2007! And the euro began to win me over… Remember this was pre-2000… or Y2K as they used to call it.  So, I sat there thinking about what changed my mind so many years ago, and then it hit me…  The European Central Bank (ECB), was the key… Under the leadership of Wm Duisenberg, the ECB quickly gained respect… 

Now, if you think back to the beginnings of the Fed here in the U.S. you’ll recall that there were two failed attempts to get the Fed off the ground here in the U.S., before Woodrow Wilson, made the big mistake of allowing the cartel of banks to pull the wool over his eyes, and create a “new” Fed/ central Bank…    

There was none of those shenanigans with the creation of the ECB, folks… Yes, we’re talking about eons ago, but the comparison is a good one, and one of the reasons, I quickly turned coat and jumped on the euro’s band wagon. In fact, I wrote a white paper in 2002 titled: The Year of the Euro! 

OK, time to move on here… Recall last week when I highlighted the article that claimed that there was manipulation of the VIX (volatility Index), and said that it didn’t surprise me any to hear that, because in my eye, all markets are manipulated these days… Well, I came across this yesterday, and found it pretty interesting… Bart Chilton, a former member of the Commodity Futures Trading Commission, said a whistleblower’s allegation of manipulation of the CBOE Volatility Index “rings true.” “The VIX has been suspect for at least seven years,” Chilton said.

My oh my… what being free of the Government’s or deep state’s control can do to a person’s view point, eh? I mean look at former Fed Chair Alan Greenspan, who was a Gold Bug before he was nominated to the Fed Chair, but then forgot all about Gold during his 19 year run as Chairman, but since he’s retired from the Fed, he’s all about ownership of Gold again… Hmmm… And now we have Bart Chilton, formerly of the CFTC (the commodities regulator), who NOW sees that there could be manipulation in the VIX, even though the CFTC “suspected it for years”…    

The U.S. Data Cupboard yesterday, as I mentioned above, had some disappointing data yesterday… Industrial Production here in the U.S. for the month of January printed a negative -0.1%, and Capacity Utilization fell from 77.7 to 77.5… Folks, remember, slippage in the Capacity Utilization data indicates that looking forward, businesses think that their businesses will be working at a slower pace…  

We also saw January PPI (wholesale inflation) yesterday, and it ratcheted up 0.4%… Uh-oh!  That means coming down the pipeline are price increases folks… Got Gold?  

Let’s do a quick review of the data this week…  Household Debt rose to a new record level, Retail Sales were negative, and flat when taking out the slumping car sales, Industrial Production was negative, and Capacity Utilization lost ground… Not a good week for all those “the economy is strong” flag wavers, eh?   

Gold gained $3.10 yesterday, with 234,000 contracts traded… I’m somewhat surprised given the rise in PPI that we’ll talk about in a minute, that Gold didn’t gain more on the day, but I’ll take $3.10 gains rather than a whacking! 

To end this week that contained Valentine’s Day, I came across something that ties romance with debt… Leave it me, to do that, eh? But in a recent survey, it was found that a romantic partner would be kicked to the curb if they disclosed that they had more than $11,000 in credit card debt…

So, all you youngsters out there, that think that the Gov’t has your back on your credit card debt accumulation, you might find that you grow old, live alone with all that debt… I’m just saying!

To Recap…  More disappointing data for the U.S. yesterday, but the markets were more about allowing the dust settle on the upward moves in the currencies and metals the previous day. So, for the most part the currencies are trading in the same clothes as yesterday… Don’t run up credit card debt or else you’ll have problems finding a soul mate! And Bart Chilton is singing the Johnny Nash hit, I can see clearly now…   

For What It’s Worth…. I saw this yesterday in the WSJ and it about blew my socks off! This is a tiered subscriber article, which means you can read some of it, if you aren’t a Wall Street Journal subscriber, by clicking here: https://www.wsj.com/articles/fannie-mae-to-require-3-7-billion-government-cash-infusion-1518616798 It’s about how Fannie-Mae needing another tax-payer infusion of cash… Here we go again!

Or, here’s your snippet: Fannie Mae reported a net loss of $6.5 billion for the fourth quarter, triggering what is expected to be the first taxpayer-funded infusion for the mortgage-finance giant in six years.

The quarterly loss was due to a one-time accounting charge due to the reduction in the corporate tax rate. But Fannie, which has been under government conservatorship since the financial crisis, said Wednesday that its regulator, the Federal Housing Finance Agency, would seek a fresh taxpayer infusion of $3.7 billion from the Treasury Department…” 

Chuck again… As I said… here we go again…  

Currencies today 2/16/18… American Style: A$ .7948, kiwi .7402, C$ .8005, euro 1.2467, sterling 1.4040, Swiss $1.0820, … European Style: rand 11.6524, krone 7.7694, SEK 7.9538, forint 249.65, zloty 3.3394, koruna 20.3263, RUB 56.59, yen 106.28, sing 1.3105, HKD 7.8208, INR 64.33, China 6.3439, peso 18.52, BRL 3.2216, Dollar Index 88.83, Oil $61.34, 10yr 2.89%, Silver $16.76, Platinum $1,007.14, Palladium $1,034.54, and Gold… $1,357.20  

That’s it for today…  It’s a 3-day Holiday Weekend as we celebrate President’s Day… I’ve always said that we shouldn’t clump the President’s birthday’s together… If the President deserved to have a Holiday to commemorate his birthday, then let’s celebrate that day! Feb 12, and Feb 22 should be holidays, not clumped together! I’m just saying! I can’t wait to get out to the deck with my cup of coffee this morning…  So, no Pfennig on Monday… I hope you can get through the withdrawal! HAHAHAHA! March is right around the corner, folks, and longtime readers know that I take a spring vacation from writing every year during March… I’m just throwing that out there to get you prepared…  Mathew Sweet takes us to the finish line today with his song: Girlfriend…  And with that, I hope you have a Fantastico Friday, and it sure looks like a Good Day to have a Good Day, eh? Remember, to Be Good To Yourself!  

Chuck Butler