Author: admin

April 15, 2019 

* Currencies rally on Friday, but give some back last night… 

* Chuck uncovers a jobs report that tells the truth… 

Good Day… And a Marvelous Monday to you! It’s also April 15th, Tax Day… and Pfennig Tradition says I need to sing this song by the Beatles… Let me tell you how it will be, There’s one for you, nineteen for me, ‘Cause I’m the taxman, yeah, I’m the taxman…
Man, do I dislike taxes… When I was a young man just starting out and didn’t have two nickels to rub together, I would say, “Give me the income, I’ll gladly pay the taxes”… And then when I began to earn the income, I would say, I hate taxes! At least now, that I no longer have any income stream, my tax burden has reduced tremendously… So, I’m back where I was in 1973! Man, did I see a fun game on Thursday last week! My beloved Cardinals finally broke out their bats, and scored 11 runs! Of course the Dodgers helped with some of those runs… Longtime fave, Billy Squier greets me this morning with his song: In The Dark…

Well, while I was gone on Friday, the currencies decided to get off the porch and chase the dollar down the street… The euro popped back over the 1.13 handle, the Aussie dollar (A$) closed in on 72-cents, and so on… There was good and bad news from the Eurozone on Friday… First, the February Industrial Production printed a negative -0.3%, but that was better than expected which was for a much deeper negative -0.6%… That was the bad news…. The good news was that Speculators were buying the euro in response to reports on Mitsubishi UFJ Financial Group’s planned purchase of the aviation financing business of Germany’s DZ Bank, dealers said. The transaction was announced on March 1 and MUFG said the it was expected to close after June.

Now, I’m sure some of you are scratching your heads and wondering why in the world would that news help the euro? Well, you see when these major merger deals take place across borders, the company in one country has to buy the currency of the other country to fulfill the terms of the transaction… So, based on the news that Mitsubishi is going to be buying the German Bank, they’ll have to be buying euros, and that got the buying in euros started…

However, before we, as non-dollar holders, rejoice, the overnight markets last night took the currencies to the woodshed… How, could, on Friday, the currencies rally so much, and in the overnight markets last night, they give it all back? Well, not all, but most… Did something happen this past weekend that would generate this kind of dollar buying? Well, no… So, I go to my back pocket and pull out my “expose the PPT card”… That’s all I’ll say about that!

OK… so, like I said, “not all the gains, but most of them” were given back last night… The euro is still above 1.13 this morning, but the pep and vigor that the currencies were trading with on Friday, just isn’t there this morning… 

The price of Oil has slipped back below $64 in the past 24 hours so that means that the flyer the Petrol Currencies were trading on last week, as the price jumped higher, is no longer in play…  UGH! Not that I want to see Oil prices soar, but a rise to $70 would do wonders for the Petrol Currencies… 

Gold hasn’t been able to find a bid for a few days now… Last Thursday and Friday were both down days for the shiny metal, and today in the early trading Gold is down $3.80…  I’m finding this downward direction of Gold to be very interesting… My longtime friend, Ed Steer of www.edsteergoldandsilver.com tells me that: “there was another monster decline in the Commercial net short position in that precious metal as well, as it fell by a whopping 42,637 COMEX contracts, or 4.26 million troy ounces of paper gold.”

So, one has to reason that if the short positions are declining, that Gold should be rallying, right?  And if it isn’t, what else is there to move the price of Gold downward? And that my friends, is the $64 question. Could it be, oh, no it couldn’t, could it be? Oh, no, not that! The humanity! But, I guess it could be physical Gold owners selling…   People do the strangest things, folks… 

Last Monday, I spent the day talking about the Jobs report the previous Friday, that just didn’t make any sense to me… And now this whole charade is being exposed… There’s a report that called the JOLTS report, and it shows Job Openings… And it reflected that for the March there were 133,000 less new hires… And this report has now been down 3 of the last 4 months…  Which leads me to believe that the surveys that are done are probably reflecting the proper numbers, but then the BLS adds their “magic”, and things get all out of whack. 

Late last week, China printed some decent economic data that had everyone thinking that things in China aren’t so bad, and that got the Global Growth folks all lathered up… But remember just a week ago. the IMF downgraded their Global Growth forecast, to the lowest level it’s been since 2006-7…  So, I’m not going to get tricked into thinking that Global Growth is going to rally… And I would think it to be prudent that you not think that too!

I just had a chuckle to myself when I was typing the word “prudent”, and thinking of Dana Carvey doing his SNL impression of President Bush back in the 80’s… “No, it wouldn’t be prudent, and we have all these points of light”…  funny stuff!

OK… The Data Cupboard here in the U.S. last week had a late week surprise, when March PPI (wholesale inflation), which had been on a downward plane, surprised everyone with a 0.6% gain in March VS Feb which was just 0.1%, and the expectation for March of 0.3%…  We also saw the Consumer Confidence Index fade a bit this month from 98.4 to 97.5… Still stronger than it should be, in my humble opinion! 

This week’s Data Cupboard starts the week with the Empire State PMI (New York region manufacturing index)  And tomorrow we’ll see two of my faves, Industrial Production and Capacity Utilization for March… I’m better a free undercoat right now that these both will be very weak… 

To Recap…  The currencies had a day in the sun last Friday, but in the overnight markets last night they have given back most of their gains from Friday. Chuck has no explanation for this move last night, expect to pull out his “expose the PPT card”…   Gold can’t find a bid and this is getting very weird… And Chuck points out that the JOLTS report tells us a different story than the BLS tries to pull over our eyes each month… 

For What It’s Worth…  OK, going a different direction this morning and give you something that the GATA folks sent me… And it’s about all the stuff the Central Banks are pulling and getting away with and since it’s the GATA letter I can’t share with you the link to it…  But, I do have a snippet! 

Or, here’s your snippet: “Central banks get away with the flaming hypocrisy illustrated below because mainstream news organizations don’t dare to put a critical question to them.

Here, if David Lawder and Leika Kihara of Reuters were serious journalists, and their editor, Paul Simao, had the wit for his job, someone from Reuters would have asked the managing director of the International Monetary Fund, Christine Lagarde — in the name of the “accountability, transparency, and effective communication” she purported to be advocating — to identify the markets in which her member central banks are surreptitiously trading and when they are surreptitiously trading, and to explain the objectives of their surreptitious trading.

Instead Reuters makes itself a mere press-release service, like PR Newswire.

How easy it would be for any news organization to show central bankers up and shut them up. A single critical question would do it, but there isn’t one in all of Earthly journalism.”

Chuck Again… Yes, wasn’t it just complaining last week about the lack of real journalism?  There’s a whole article on Reuters that is being referred to above, and you can find it here: https://www.reuters.com/article/us-imf-worldbank-lagarde/imf-chief-calls-for-central-bank-accountability-communication-idUSKCN1RP0KW?il=0

Currencies today 4/15/19 American Style: A$ .7177, kiwi .6763, C$ .7510, euro 1.1315, sterling 1.3112, Swiss $1.0028, European Style: rand 13.9570, krone 8.4913, SEK 9.2436, forint 283.18, zloty 3.7760, koruna 22.6458, RUB 64.31, yen 111.95, sing 1.3523, HKD 7.8389, INR 69.45, China 6.7035, peso 18.76, BRL 3.8805, Dollar Index 96.82, Oil $63.23, 10-year 2.56%, Silver $14.89, Platinum $886.81, Platinum $1,369.28, and Gold… $1,286.64

That’s it for today… A bit late, I know…   Well, our Blues won Friday night, and then came home and lost in front of a raucous home crowd last night…  They’re up 2-1 in the series, but, last night was very disappointing to say the least…   My beloved Cardinals played in Mexico this last weekend and split their two-game series… Good thing they weren’t here, because it was downright cold here! I even saw snow falling in Columbia, Mo. yesterday morning! UGH!  My little d… granddaughter Delaney Grace, received the news that she will sing the national anthem at the Independent ballpark across the river, and in St. Charles this summer! WOW!  Well, I have some doctor appts this week, it’s been 4 months since I’ve seen a doctor here! YAHOO!  But that all changes this week! OK, Steely Dan takes us to the finish line today with their song: Kid Charlemagne… Is there gas in the car?, yes there’s gas in the car..   I hope you have a Marvelous Monday, Tax Day… and are you will Be Good To Yourself! 

Chuck Butler

 

 

April 11, 2019 

* Currencies for the most part remain in yesterday’s clothes… 

* EU gives May a 5 month extension for a BREXIT deal… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m heading to the Cardinals day-game with the Dodgers a little later today, so I’m a happy camper, and no amount of manipulation, PPT, or weak data is going to upset me this morning, because…. I’m going to baseball heaven for a day game! OK… I laughed so much yesterday at something that my stomach hurt! CNBC sent out a news article and misspelled the word “refinance” And they had the gaul years ago to tell me to take my thoughts on manipulation to Hollywood? What a bunch of dolts! Mr. Excitement, Jackie Wilson, greets me this morning with his song: Your Love Keeps Lifting Me Higher… They don’t write songs like that any longer, I’m just saying…

Well, it appears that the folks at the IMF are getting on board with me, regarding a global slowdown, led by the U.S. They downgraded their forecast for 2019 global growth yesterday… And I never saw one mention of this on TV, except when I switched over to a show on the markets… But econoguy, David Rosenberg, didn’t miss it. So, let’s hear what he had to say about what the IMF did yesterday… This from his Twitter handle: “The permabull trollers may have missed this, but the IMF just took another hatchet to its 2019 global growth forecast, down to the slowest pace for the cycle. In just two words, the Fund politely concluded that we have reached a “delicate moment”

I have to say front and center this morning, that the comment about having reached a “delicate moment” is a real classic in my book… Now if I were on the journalists team following the IMF, I would have asked them to explain that comment… “Ahem, what do you mean by a delicate moment?” Would it have hurt anyone’s feelings, because we all know we have to be careful not to hurt anyone’s feelings these days, to have asked that question?

Are there any “true journalists” out there these days?

OK, well, there were two currencies that saw gains yesterday… The Norwegian krone, which I talked about yesterday, as having gained recently VS the euro, made strides against the dollar when it was made clear that consumer inflation in Norway is rising, with the March print at 2.7% VS expectations of 2.5%… This has traders thinking that the Norges Bank will hike rates soon…

The other currency to show some gains was the Aussie dollar (A$)… no data here, just people looking at inflation and how it’s probably going to begin to go higher sooner or later around the world, and that spells good times for the commodities, and the further the commodity currencies, led by the A$.

There was also some minor positive moves in the Russian ruble, but they were very small… But gains nonetheless…

Gold found a way to push and shove its way to a $3.80 gain on the day, only to see it given back in the early trading this morning.  The gain yesterday had pushed Gold above its 50-day moving average, and seeing that, the price manipulators couldn’t let that happen, and well, they brought Gold back below the average this morning. UGH!

The European Central Bank (ECB) met yesterday and left rates unchanged, and ECB President Draghi, tried to throw the euro under the bus, but his Eeyore impression didn’t cause too much damage to the euro, and the single unit was able to recover quickly after falling following the meeting. Eeyore, I mean Draghi, had this to say… “The risks surrounding the euro area growth outlook remain tilted to the downside, on account of the persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets.”

Notice how he took the opportunity to take a shot at President Trump’s Trade War? I did, and I’m sure that the folks at the White House did too… But it was like water off a duck’s back to the folks at the White House… They don’t care who the Trade War is hurting, including themselves… I’m just saying…

OK… The EU gave U.K. PM May until Roctober to come up with a BREXIT deal that everyone would accept…  That’s more than 5 months to get a deal done… But let’s see here, they’ve had a couple of years prior to now to get a deal done, and nothing has been accepted, what makes the markets believe that something will get done in 5 months?  I ask that question because just about every article I’ve read talks about how this extension of time is like Manna from Heaven…  And I view it as a stay of execution…

The U.S. Data Cupboard had an interesting print in the Stupid CPI yesterday, with consumer inflation growing in March at 0.4%, which was double the previous month’s print and the expectations.  There was one piece of data that usually gets combed over but I think it’s telling us something, and that is Real Hourly Earnings for March which were negative -0.3%… Wait, What?  I thought earnings were growing? I guess not, eh?  

Oh, and as far as putting another brick on the wall, I had a reader send me a note highlighting an analyst’s comments on the Trucking industry…  It doesn’t look good folks… layoffs, empty trucks, etc. are beginning to pop up, in yet another sign that the economy is heading to recessionville… 

But like I said above, all that stuff isn’t going to dampen my mood this morning!   So, before I ruin that thought with something else to talk about, I had better head to the Big Finish, and hopefully I won’t run into any rabbit holes to fall down the rest of the letter!  Hmmm, but Chuck, what about that FWIW article on derivatives that’s coming up?  Oh, darn it, I knew there would be a rabbit hole I wouldn’t be able to avoid! 

To recap…  The U.K. received a stay of execution, and has until Rocktober to come up with a BREXIT plan that will be accepted… Chuck has his doubts… The ECB met yesterday, and left everything unchanged, while ECB President Draghi, did his best impression of Eeyore! The currencies pretty much remained in the same clothes as yesterday, except the krone, which was bought after a strong CPI printed than expected…   And Chuck is heading to the baseball game today!  

For What It’s Worth…. Longtime readers of the Pfennig, know that I’ve been warning them about how many derivatives there are in the markets these days, and how no one knows what happens if they begin to get execution… There are more derivatives ( and here I mean bad derivatives) now than were on the books of financial institutions in 2007… When their mere existence almost caused a financial collapse, but instead we had a financial meltdown… Well, this is an article on Bloomberg.com that talks about the mess we have in derivatives now, and can be found here: https://www.bloomberg.com/opinion/articles/2019-04-10/derivatives-are-still-too-dangerous

Or, here’s your snippet: “Financial regulators have done a lot to reform the derivatives markets that helped turn the financial crisis of 2008 into a global disaster. But their work is unfinished — and there’s even a danger that, in one way, they might have made things worse.

Derivatives are bets on the performance of something else, such as stocks, interest rates or creditworthiness. They can be useful in mitigating risks and expanding investors’ choices: A bank, for example, might use an interest-rate derivative to protect itself against rising borrowing costs, or a hedge fund might use a credit derivative to bet against a company’s bonds. But because they enable big wagers with little money down, they can quickly generate losses and cash demands large enough to destabilize the entire financial system.

For a long time, governments left the derivatives market largely to its own devices. At best, only the parties to the contracts knew who owed what to whom, or how much collateral had been posted to cover potential losses. The folly of this approach became apparent when, in the darkest days of the 2008 crisis, it emerged that a single company — insurance giant AIG — owed billions on subprime-mortgage bets to several of the world’s largest banks and didn’t have the cash to pay up. Taxpayers had to provide $182 billion to keep the company afloat and avert a broader collapse.”

Chuck Again… This is a good article, and talks about how the Gov’t tried to step in to prevent another 2007, but probably only made matters worse…
Reminds me of the old quote from Ronald Reagan… “The scariest words ever spoken are: “Hi, I’m from the Government, and I’m here to help”…

Now, that wasn’t THAT bad was it Chuck?

Currencies today 4/11/19 American Style: A$.7160, kiwi .6755, C$ .7487, euro 1.1279, sterling 1.3085, Swiss $1.0020, European Style: rand 13.9862, krone 8.5010, SEK 9.2506, forint 284.86, zloty 3.7962, koruna 22.6996, RUB 64.56, yen 111.15, sing 1.3532, HKD 7.8440, INR 68.99, China 6.7147, peso 18.88, BRL 3.8373, Dollar Index 96.90, Oil $64.07, 10-year 2.48%, Silver $15.15, Platinum $900.74, Palladium $1,376.17, and Gold… $1,304.23

That’s it for today…  Another win by my beloved Cardinals over the Dodgers last night… Suddenly, they’ve found their bats… but they are facing the Dodgers’ young stud pitcher today, so their found bats might be lost again after today, but then you never know, right? That’s why they play the game!  Our Blues got the playoffs off to a great start with a comeback in the 3rd period to win on the road! Alex and Chuck had two TVs set up so we could watch the baseball game on one and hockey on the other…   Pretty cool set up…  Alex is going to the game with me today, along with a couple of my spring training buddies, so a good time should be had by all…   The Strawbs takes us to the finish line this morning with their song Autumn…  “hold on to me… I’ll hold on to you… The winter long I will always be with you”…    I hope you have a Tub Thumpin’ Thursday, and will Be Good To Yourself!      Let’s Go Blues!

Chuck Butler

 

 

April 10, 2019 

* U.S. data continues to print very week… 

* What the heck is going on in Italy? 

Good Day.. And Wonderful Wednesday to you! Well, I was away from the laptop, research, reading and writing yesterday, and guess what the currencies did? They had a mini rally! My day of travel began very early in the morning, and ended back in St. Louis, with the temperature in the 70’s! YAHOO! It’s warm! I know it’s spring here, and warm weather can be fleeting, but at least for now, I’m a happy camper! I want to start today off with a note to my former asst. and colleague, Jennifer Mclean… She’s celebrating her 20th year at the bank, even though it’s no longer EverBank, it’s still 20 years… We had a lot of good years together, I’m sure I mad her mad on occasion and vice versa, but we still got along just fine… So… Happy 20 years there Jennifer! Leon Bridges greets me this morning with his song: I’m Coming Home…

Front and Center this morning I have to talk about the news from Italy, where there was an announcement of tow laws that could strip the Gold reserves from the Central Bank … Taking a page from FDR, who instead seized it from citizens… One draft law may, reportedly, oblige the central bank’s owners to sell their shares to the Italian Treasury at prices from the 1930s, while the second law is set to declare Italian nationals to be the owners of the Bank of Italy’s reserves.

What the heck is going on over there? I sure hope they don’t give the U.S. lawmakers any ideas! Gold guru, Jeff Clark had this to say about the news… “Revolution is in the air! Seems like it’s similar to the movements in those countries that want to repatriate their gold back home.

Yeah, it’s not clear what the full ramifications will be, we’ll see if the law passes.” – Gold guru Jeff Clark

Yeah, it’s too early to go Rambo on them, just for coming up with laws like this, but then one never knows for sure, now does one?

Ok, back to our regular programming… So the mini-rally in currencies was yesterday, and in the overnight markets… they moved a little higher, as they must not have figured out that I’m back in the saddle! HA! 

And Gold got back up on the rally horse yesterday… And I think it’s because of some words uttered by the President, about “how the world hasn’t seen the last of my Trade Wars”… So, while the China and U.S. talks are winding down, the jabs at Europe and the rest of the world are being made… OK, for those of you new to class… I understand that our trade partners have taken advantage of our good will for a long time… And negotiations are the way to end that, not placing tariffs on goods with your trade partners… That’s what causes slowdowns in economies folks…

Remember, this folks… Trump wants a narrower Trade Deficit… Why else would he be complaining that the dollar is too strong? And chancing major slowdowns in economies with trade tariffs?

The ministers at the European Summit are expected to grant the U.K. yet another extension to iron out their BREXIT details. 1. I’m really surprised that U.K. PM May is still in control, and 2. that the pound sterling isn’t just falling like a rock off a cliff…  Everything is muted, as everybody is holding out hope that a deal can be ironed out…  Well, that is everybody but me! 

How about the price of Oil? It just continues to ratchet higher, inch by inch, step by step, and before you know it, Oil is trading with a $64 handle this morning.  I’m not a fan of higher Oil prices, except that they help the Petrol Currencies like rubles, krone, real, loonies, and others… 

Speaking of the krone… I read this morning that recently the krone has been moving positively VS the euro… I was very skeptical of this, headline, so I read on, and saw the facts… The krone has been moving positively VS the euro, which is something that I don’t know that I’ve seen, as the krone has always taken its cue to move in one direction or the other from the euro… 

Many years ago, the people from Forbes Magazine came to me and asked me to write an article that talked about alternative currencies other than the euro… I told them that I would be writing about the Norwegian krone… and after I sent them the article and backing graphs, etc. they decided to make it a cover story, and they called the krone, “The safest currency in the world”…  They had their Oil revenues, and their largest in the world Sovereign Wealth Fund to support the krone…  Well, they still have their Oil revenues, albeit much smaller VS back “in the day”… And they still have their Sovereign Wealth Fund, so I get that traders would take a flyer on krone…  But it can’t get too far out in front of the Big Dog, euro, folks…. I’m just saying. 

Well, there was a lot of hub-bub in Russia the past few days, as their Central Bank Reserves were nearing $500 Billion ($487 Billion), and the calls for the Central Bank to cut of purchases of their reserves grew louder and louder until this was said… “In the latest statements the bank said it is necessary to “increase FX and gold reserves even more” from the current highs, given the “persisting sanction risks and current economic structure,” deputy head of the CBR Sergey Shvetsov told the press on April 3.”   

So, it appears to me as this was nothing more than a tempest in a teacup, and Russia will continue to buy Gold for its reserves…  

The U.S. Data Cupboard didn’t have much for us yesterday, and today they step it up a bit, with the stupid CPI, The Federal Budget, and the Fed’s Meeting Minutes… OK, before we get all giddy about the meeting minutes, let me offer that I used to think that we would get the true goings on at the Meetings with these minutes, but over time that’s just not the case… But I’m sure the markets will be looking for any sign, wink or nod that the Fed Heads are getting scared, and are readying their battle stations for a return to a rate cut cycle… 

If you recall, on Monday this week, I told you that February Factory Orders would probably print negative, and that’s exactly what they did, printing negative -0.5%…  all in all, it’s just another brick in the wall…  I mean what did everyone expect? Durable and CPAPEX Orders for the same period already printed negative, there’s no way Factory Orders were going to be anything but negative!  

The economic data here in the U.S. continues to print weaker and weaker with every passing month, except the lies that the BLS tells us each month about the labor picture…  

I told you Monday that the European Central Bank (ECB) was meeting this week… I do believe it’s tomorrow, but could be today… either way I don’t expect anything exciting to be mentioned here… So move along, for these aren’t the droids we’re looking for… 

Before I head to the Big Finish…  Bloomberg is reporting this morning that The BIG BOYS are heading to “the hill” today… Here’s Bloomberg’s take on this… “JPMorgan Chase & Co.’s Jamie Dimon and Goldman Sachs Group Inc.’s David Solomon are among U.S. bank CEOs set to face a grilling in front of the House Financial Services Committee from 9 a.m. this morning. They are likely to be questioned on pay, profit and regulation during the session in which Democrats are expected to go on the attack on the industry’s track record a decade after the financial crisis.”

Well, since I’m no longer employed at a bank…  Man, let’s see, I started at the old First National Bank of St. Louis, in 1978, so that means I had been in banks for 40 years!  Ok, what I was going to say is that since I’m no longer employed by a bank, I can say I hope these guys get fileted!  and the fire is so hot that the meat sticks to the grill! 

To Recap…  The Currencies and metals have a mini-rally on Tuesday while Chuck was away, and flying the friendly skies, and so far in the overnight markets nothing has changed… BREXIT may get a stay of execution from the European Summit today, and while the China / U.S. trade talks seem to be winding down, President Trump, is making sure that everyone is on notice!  Chuck talks about some stupid stuff going on in Italy…  And the ECB meets tomorrow… 

For What It’s Worth…  Well, since I was on Bloomberg this morning looking for things that would catch my eye, I did find this, and it plays well with my mention of Russia continuing to buy Gold above… It’s about China’s renewed physical Gold appetite and can be found here:https://www.bloomberg.com/news/articles/2019-04-07/china-continues-gold-buying-spree-as-pboc-adds-for-fourth-month

Or, here’s your snippet: ” China’s on a bullion-buying spree as Asia’s top economy expanded its gold reserves for a fourth straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings. Prices advanced back toward $1,300 an ounce.

The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website on Sunday. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.

China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the U.S. The latest data from the PBOC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018.

Last year’s bullion buying by emerging-market central banks was the most robust in a long time as countries diversified reserves, Ed Morse, Citigroup Inc.’s global head of commodities research, said in a Bloomberg TV interview on Monday. The bank’s positive on gold, targeting $1,400 by year-end.”

Chuck again… I continue to monitor these Central Bank physical Gold purchases, because of numerous reasons, but most of all, to prove in my mind and yours that physical Gold demand is still strong, and should see a strong Gold price in tandem with this demand… 

Currencies today 4/10/19 American Style: A$.7150, kiwi .6755, C$ .7505, euro 1.1276, sterling 1.3083, Swiss $1.0005, European Style: rand 13.9669, krone 8.5067, SEK 9.2524, forint 285.27, zloty 3.7966, koruna 22.7080, RUB 64.81, yen 111.22, sing 1.3527, HKD 7.8383, INR 69.38, China 6.7117, peso 18.86, BRL 3.8499, Dollar Index 96.90, Oil $64.42, 10-year 2.50%, Silver $15.25, Platinum $891.68, Palladium $1,384.60, and Gold… $1,303.80

That’s it for today… A nice win VS the Dodgers last night for my beloved Cardinals!  And our Blues begin the playoffs tonight… Let’s Go Blues! I’m all excited about the hockey playoffs! And I bought some tickets last night to tomorrow’s day game! YAHOO!  Day Baseball… Love it like a kid loves cake! I’m going to be very busy with doctor appts. and scans next week, so this day game came at the right time!  This is the longest period of time that I’ve gone without a blood draw, doctors, scans and other fun things, in 12 years! But that reprieve from those things ends next week. UGH!  I’m sure the docs aren’t going to be happy with the cellulitis in my leg, but it is what it is…   Cat Stevens takes us to the finish line today with his song: If You Want To Sing Out, Sing Out…  I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

April 7, 2019

* BLS tries to pull a rug over out eyes… 

* Currencies remain stuck in the mud… 

Good Day… And a Marvelous Monday to you! My last day here in what I call paradise, as I leave for home base tomorrow morning… A friendly spiderman reminder that there’s no Pfennig tomorrow… Well, Opening Day was in St. louis on Friday… I love the Clydesdales… I used to get goose bumps when I was in the stadium and they would come prancing in… They are such large animals, but beautiful in my eye! Well, we’ve got lots to talk about today… I really don’t want to get started on the Jobs Jamboree, but something inside of me tells me I must be me, and do it anyway! Graham Nash greets me this morning with a song from his Songs For Beginners album: Military Madness… I used to not only play guitar to most of the songs on that album, but the piano too! I’m not much of a piano player, but I can bang out chords with the best of them!

Before I get started… This is going to be a Trade Talk, BREXIT talk, free zone today… 

OK… Didn’t I tell you that there would be some major shenanigans played with the Jobs report for March? Recall, I played out a scenario, where the chief bean counter at the BLS was called on the carpet after last month’s dismal 20,000 gain for Feb., and reminded that there’s a shelf full of hedonic adjustments at his disposal, and that 20,000 should never happen again! And guess what happened? 196,000 jobs were created in March, according to the BLS… Really? We went from 20,000 one month to nearly 200,000 the next month? Don’t give me weather problems in February either… If, you lost your job in February, I don’t care how bad the weather was, you would be at the unemployment office filing for benefits! So, really, markets, you believed this BS from the BLS?

I guess you did, swallowing it, hook, line and sinker! What a shame, what a shame… Don’t you know by now that the BLS is there to just make you feel better, so you’ll go all-in buying stocks? I shake my head in disgust, folks… Of course there were 51,000 jobs added by the BLS after the surveys were received, and then they massaged the surveys, added some eye of newt, and other magical things, and voila! Nearly 200,000 jobs created!

Speaking of the surveys… I’ll  let the folks at the Burning Platform explain what they saw in the surveys, this will really get you scratching your head… “And this isn’t some one month hiccup. The Household Survey showed we had 156.9 million Americans employed in December, but only 156.7 million employed in March. Does that sound robust?” – the Burning platform.com

OK, I give up! Quite a few months ago, I told you I didn’t care about what the BLS was printing any longer… But that proved to me false, because when I saw that number on Friday morning, I about came out of my recliner swinging! Screaming at the walls! (good thing they’re concrete walls and no one is next door to me!) So, I guess I do care, because it hurts the people that keep investing thinking the economy is strong and robust, when it’s really just all smoke and mirrors…

Currency traders didn’t exactly fall for the numbers, as the dollar remained well bid, but didn’t gain any more ground on Friday, and the currencies remained in Thursday’s clothes… Gold was able to eke out a $2.60 gain, to follow up on Thursday’s $2.80 gain… Whoopee! Right?  Oh well, you have to take gains any way you can… I’m just glad the price manipulators didn’t whack it again like they did earlier in the week! 

While Gold is fresh on my mind…. Well, there I was, minding my own business, filling out a Saturday Crossword puzzle online, and an email hit my box… it was a notification of a Twitter posting. So, needing to get my mind off the crossword clue I couldn’t figure out, I clicked on the email and it took me to Twitter, where a graph of Annual Returns for the last 20 years (1999-2018) was staring me in the face… This was so good, as far as I was concerned because, there are still so many people out there that don’t believe in Gold…. So, here’s the lineup for 20-year Annualized Returns by Asset Class…
REITS 9.9%
Gold 7.7%
Oil 7%
S&P 5.6%
Bonds 4.5%
Homes 3.4%
Inflation 2.2%
And the average individual investor…… 1.9%…

Now, one more time…. Got Gold?

And don’t look now, but it sure looks like the scenario I talked about a month or so ago is coming to fruition… I’m talking about the pricing of Platinum and Palladium. I talked about how it could be possible that the price of Palladium had gotten too expensive and auto makers could switch back to Platinum…  The pricing action of the two metals are looking very much like this is happening, as Platinum has been going up and Palladium’s price is getting cheaper by the day…  Just something to think about, this fine morning! 

Ok… So, all-in-all it’s just another brick in the wall… For those of you new to class, I’ve been singing the Pink Floyd song, whenever we see a piece of data that’s weak and we add it to the “wall”… On Friday, I came across something that really caught my eye… It was from G. Edward Griffin’s letter, which can be found here: https://needtoknow.news/2019/04/americans-borrowed-88-billion-dollars-last-year-to-cover-their-medical-bills-in-spite-of-insurance/

And it says… “Americans had to borrow 88-billion dollars to cover their medical bills last year, proving the abject failure of the American healthcare system. While most Americans have ‘health insurance,’ many are afraid to go to the hospital because of high cost. Two-thirds of personal bankruptcies in the United States are caused by medical bills, and most of the people going bankrupt had health insurance”

Chuck again… As someone who’s had to convert my employer insurance coverage to a private insurance, I can tell you that it stinks! And I completely understand where these people are coming from, for I’m in the same boat, with one more year to go…

I know, I know, I’m really getting carried away talking about things today…   But this has got to be talked about, before…. Well, I’ll let you read and see where this it taking you….  The weekend Bloomberg Opinion had this juicy bit…. “President Donald Trump said the Fed should juice up the economy, but central banks around the world are in a bind over what to do.” – Bloomberg quoting Donald Trump…

What to do, what to do… Well, I sure hope they don’t resort to following Janet Yellen’s call for the Fed, to do when the going gets tough… and that was to buy stocks and corporate bonds… Longtime readers may recall me going bananas over this shocking announcement by Yellen, back when she made it… And how I said, “ She’s just greasing the tracks, folks”… Of course back in 2016, there wasn’t this black cloud hanging over the economy like there is now…

You know… this has all been done before… the Bank of Japan has been buying stocks for years now… Has it had anything to do with stirring economic growth? No… has it supported the Japanese stock market… yes…
And in Europe, the European Central Bank (ECB) had been buying corporate bonds for years, (just stopping on 12/31/18)… Did the buying of these bonds do anything to stir economic growth? No… did it support the bond market? … yes…

So, when we get back to the beginning of QE here in the U.S. did all that bond buying stir economic growth? Well, not if you expected more than 2.2% economic growth for the past decade… It did support housing, bonds, stocks, and leveraged loans… And now, we’re thinking of going back to the drawing board? Oh My!

I’m now wishing I had bought a private island somewhere in the S. Pacific…   Yes, we’re turning Japanese yes, I really think so!

I’ve been a little harsh with the Beaver this morning, June… And reminds me that you don’t read this letter to just read about what’s going on in the U.S. right?     I’m reminded of a dear reader who chastised me for always banging on the U.S….   My response is simple…  Most of my readers are here in the U.S. so these are things that should matter to them regarding their investments… And two… We’re the U.S…. aren’t we supposed to be better than this? 

My good friend, Dennis Miller of www.milleronthemoney.com, sent me a note yesterday from an email he received, that had a picture of the Economist magazine and they are quoting a former big shot in the IMF, as saying we’re heading to a global currency… all for one and one for all… 

I immediately, told him of the times on the trading desk, when we used to hear about the Amero, all the time… We even had customers that claimed they had some Ameros in their hands…   Well, we don’t hear about the Amero any longer now do we?   Oh, and there’s also the “great revaluation of the Iraqi dinar” We had some many people call us and “guarantee the great revaluation” was going to happen on X-day… So many X-days came and went, with no great revaluation, that I doubt they hear anyone talk about any longer on the trade desk… (I wouldn’t know, I’m no longer there!)

The Petrol currencies are the only currencies moving stronger VS the dollar and their moves are muted in a way… The Price of Oil is trading with at $63 handle this morning, so you can see why the Petrol Currencies are stirring… 

I’m not seeing anything market moving on the data calendar from around the world this week, except for an ECB meeting on Thursday…  Things haven’t looked to strong in the Eurozone economic data lately, I wonder what the ECB will have to say…  ECB President Draghi, will probably attempt to throw the euro under the bus again… We shall see… 

The U.S. data Cupboard today has February Factory Orders… Given what we already know about the Durable and CAPEX Orders for February printing negative… I would suspect Factory Orders will print negative too…   So, much for that robust economy, eh? 

To recap…  not much movement once again in the currencies and metals, with Gold able to eke out $2.60 in gains on Friday… The Jobs Jamboree has got Chuck all up in arms this morning… Good thing there’s no one in the unit next to him, as he screamed at the walls on Friday!  Lot’s of other things going on too, that since Chuck won’t be writing tomorrow, he really went to town on today… So, happy reading!

For What It’s Worth…. Well, last Friday, my former colleague, and metals guru, Tim Smith, sent me a link to an article, and I soon found out that it was FWIW worthy! It’s about a change in Russia that will allow gold purchases by individuals without the special tax that’s put on Gold now, and can be found here: http://www.sbma.org.sg/media-centre/publication/crucible-issue-9/changes-coming-to-russias-gold-market/

Or, here’s your snippet: “This year is highly likely to be a year of changes for the investment gold market in Russia: the Ministry of Finance will assess the feasibility of VAT exemption on investment gold, the State Duma will consider a bill to allow citizens to purchase precious metals in individual investment accounts, and the Central Bank will make changes to its pricing policy when conducting its market operations.

Moscow Exchange sees potential in attracting the demand of non-residents through the International Clearing Members mechanism and has launched three new Asian POPs (point of presence) – Singapore, Hong Kong and Shanghai.

According to the World Gold Council, the demand for precious metals from individuals in Russia in 2018 was near 2.8 tonnes per year, whereas in China it reached 304.2 tonnes, 162 tonnes in India, and 96 tonnes in Germany. The main reason for such low figures is the current tax regime on physical precious metals. As an instrument of savings, gold is promising, but individuals buying the metal from a bank must pay VAT at a rate of 20%, which is not refunded to the individual investor when he/she sells it. This makes investing in gold unattractive.

The VAT exemption on investment gold in Russia is a promising change that may occur. If this happens, it would lead to a significant change in the structure of the precious metals market, growth in demand for this class of assets among individuals, and a significant increase in market liquidity.”

Chuck Again… Ok, it’s not a done deal… yet! But it looks like it could very well be a done deal soon, and that, could open up a brand new vein of Gold buying by individuals in Russia!

Currencies today 4/8/19 American Style: A$.7105, kiwi .6735, C$ .7477, euro 1.1237, sterling 1.3057, Swiss $1.0001, European Style: rand 14.1415, krone 8.5747, SEK 9.2795, forint 286.16, zloty 3.8168, koruna 22.8188, RUB 65.28, yen 111.45, sing 1.3560, HKD 7.8476, INR 69.69, China 6.7172, peso 19.09, BRL 3.8723, Dollar Index 97.26, Oil $63.39, 10-year 2.50%, Silver $15.15, Platinum $911.70, Palladium $1,377.78, and Gold… $1,297.26

That’s it for today… Well, I told you all a month ago, that my beloved Cardinals can’t hit… That was in Spring Training, and I know lots of people that would say “so what, it’s Spring Training”.. But I’ll contend that you play for real the way you practice… I’m just saying… Our Blues are back in the playoffs! Who would of thunk that given their start to the season?  But they’re back and playing good as the playoffs start, let’s hope they can keep going this year! Let’s Go Blues! The song that’s playing as we head to the finish line, reminds me of the good movie Almost Famous… I lived that life depicted in the movie, so that’s why I think it’s good!  It’s Elton John singing his song: Tiny Dancer…  I hope you have a Marvelous Monday, and I’ll talk to you again on Wednesday! Be Good To Yourself! 

Chuck Butler

 

 

 

April 4, 2019 

* Dollar continues to hold down the currencies and metals

* Chuck gives us a glimpse into his old Presentations! 

Good Day… And a Tub Thumpin’ Thursday to you! I heard the weather channel did a bit from Palm Beach Gardens, which is right next to us here in Juno Beach. And they talked about how bad the weather was… I looked outside, and wondered what planet they were on, for here on the beach, the sun was mostly shining and it was 75 degrees… A bit windy, but that’s the beach! This will be my last weekend down here, as I return to St. Louis on Tuesday (no Pfennig that day) next week. I don’t want to go home, I don’t want to go home! But, all good things must come to an end, right? I’ll be back though, probably mid summer… Carlos Santana greets me this morning with his band’s song: Black Magic Woman…

I’m going to start the letter a little differently today, and give you the results of the Data Cupboard, first, because, well, the Data Cupboard revealed quite a lot to us yesterday… First, the ISM, (non-manufacturing index ) for March printed, and it showed a large weakening in the index number to 56.1 VS 59.7 in Feb… That’s a huge drop for that data folks… Did any cable news casts talk about this? I doubt it… There was also the ADP Employment report, which is a precursor to the BLS Jobs Jamboree on Friday, showed that only 129,000 jobs were created in March… The so-called experts are forecasting an increase of 179,000, so we’ll see which one we get, eh?

But once again, currency traders didn’t give any notice to the data… As there was little to no movement in the currencies yesterday, with a slight move down being the only thing happening… And Gold lost a few bucks in trading on the day… Thanks to those of you who sent along a note thanking me for saying what I said yesterday regarding Gold pricing… I know of a former colleague and friend, that was shaking his head no, to all that I said… But that’s OK… I know where he stands on it, and he knows where I stand on it… I’m not here to attempt to get someone to change their position… Just present the facts, as I know them, mixed with some speculation!

OK… So, when will the weak data finally get recognized that it’s not something good for the dollar? A weak economy, means smaller interest rates… And OMG! I totally missed something in Fed Chariman Powell’s recent talk… He said that instead of allowing Treasuries that the Fed holds, to mature, that they were going to reinvest them… This, folks, is what I’ve been talking about… that the Fed would be reversing their tightening… And it’s also what I’ve told you is going to happen with regards to QE… Yes, it’s not going to be called QE… But you can put lipstick on a pig, and it’s still a pig… I’m just saying!

This morning in Germany, the Eurozone’s largest economy, the economic print was not so good… In fact it was miserable!  Factory Orders for February fell -4.2%, and year on year the were -0.4%…  A few weeks ago, we saw data from Germany that painted a different picture for the economy, but this new picture is not a good one, and the euro got sold on the news…  Hmmm… Bad data is noticed by euro traders, but not the dollar…  Double hmmm…   

That fact alone tells me that the dollar is still hanging onto its strong trend, for when a currency is in a strong trend, the old saying that “the trend is your friend” couldn’t be more correct!  Bad things are ignored, while bad things for the currency not in a strong trend get magnified… 

But what I’ve been talking about for some time now, is that all this bad data that’s piling up on the dollar will be too much weight for the dollar to bear, and it will bring about a shift in trends… This current strong dollar trend has been around since 2011, when the debts of Greece were exposed…  A look at trends history would be a good thing here, Chuck, just like you used to go through it in your Presentations!   Are you ready for this?  If you never attended a conference that I spoke at, this is what it would have sounded like… 

It all began in of August of 1971, when then President, Nixon, closed the Gold Window and removed the backing of Gold from the dollar. Within a couple of years, after some failed attempts to restore a Gold backed currency system, the rest of the world succumbed to this new “fiat currency” era.

You see the debts of President Johnson’s, “ great society”, and Vietnam disaster, had grown so much that countries holding dollars were skeptical that the U.S. would be able to pay off their debts with Gold… So, as the story goes, France called the U.S.’s bluff, and that’s when Nixon closed the Gold Window.

And the first currency trend was born… It was a weak dollar trend, that began in 1971, and ended in 1978… Do you recall this time period? Remember WIN buttons? WIN stood for Whip Inflation Now… But before that we had the first Oil embargoes and stagflation, a Presidential resignation, from a scandal, and it wasn’t all bad, we did get to celebrate our Bicentennial, and Chuck and Kathy were married!

During this weak dollar trend, the Swiss franc gained 186% going from 4.30 to 1.50, and if a currency diversification investor like yourself (hopefully) were to own a simple combination of DMarks, francs and yen, they would have had a 131% gain VS the dollar or a 17% annual return… Not too shabby for a defensive move in your investment portfolio, eh?

But by 1979, interest rates in the U.S. were beginning to go sky high, and fundamentals being a HUGE part of currency valuations in those days (before the financial meltdown) the weak dollar trend ended, and a new strong dollar trend began and lasted for 6 years, from 1979 to 1985… Do you recall what happened in 1985, that would have turned the dollar’s fortunes around? It was a meeting of the finance ministers around the world, who came to the Plaza Hotel in NYC, to discuss the dollar’s strength, and their fear that the U.S. Current Account Deficit had reached 2.5% of GDP… It was decided then that the dollar would back off from its strong trend. But during its strong trend it gained back 47% of its losses to the Swiss franc going from 1.50 to 2.85, and our combo of DM, Sfr, and yen, gave back 39%, or a -6% annual return.

So, now we’re into the 3rd trend, and it’s another weak dollar trend, that began in 1985, and lasted ten years to 1995. By 1995, interest rates in the U.S. were above 6%, and the U.S. stock market was experiencing, in the words of Al Greenspan, “irrational exuberance” And the weak dollar trend ended, but during its run of 10 years, the Swiss franc gained back 138% of the ground going from 2.85 to 1.20, and our combo of three currencies gained 171%, or another 17% annual return.

The years 1995 to 2002, 7 years, saw good times and bad times, and through it all the dollar gained back 30% of the ground it had lost VS the Swiss franc, with the franc going from 1.20 to 1.72, and our combo of currencies lost 36% or a -5% annual return. By 2002, with the Dot-Com bust, corporate scandals left and right, and people around the world feeling squeamish, about owning dollars they took a flyer on a relatively new currency, the euro, and the next weak dollar trend was born.

2002, though 2010, 8 years… this weak dollar trend was different than the others before it due to stops and starts… from 2002 through 2004, and in those 3 years, the Swiss franc gained 40% VS the dollar. In 2005, the dollar rebounded on a tax rebate for Corporate earnings, and once that ended in 12/31/2005, the dollar went right back to its underlying weak trend. So, the total, including a down year in 2005, gain for the franc 2002-2010 was 52%… And our combo, which now was euro, francs and yen, gained, are you ready for this? 155%!

But just when it looked like the dollar might not ever rebound, along came the discovery of the debts of the Club Med (Greece, Italy, Spain, Portugal) countries of the Eurozone, and the euro, which had quickly become the offset currency to the dollar in a very short time period, was sold like funnel cakes at a State Fair! And so it began the last full trend that we’ve seen, a strong dollar trend, that lasted 7 years, from 2010 to 2016, and during that time the dollar gained back 8% VS the Swiss franc, and our 3 currency combo also lost a total of 48% during those years. Since 2016, we’ve witnessed a couple of false dawns, when it appeared that the strong dollar trend had ended, only to be fooled once again… UGH!  But now that fundamentals are no longer the king of the hill in valuing currencies, it’s been quite difficult to read trader’s minds, for the sentiment of traders is what moves markets these days, along with a dash of fundamentals… 

So to add it all up… The dollar has lost a total, net of strong dollar years, 291% to the Swiss franc, and our 3 currency combo was up 334% to the dollar…

So, as you can see, during weak dollar trends, the dollar loses far more than it ever recovers during strong dollar years. Now there one thing I want to make perfectly clear, and that is that during a trend, there can be volatility, which means a trend is not a ONE-WAY Street!   But from this little exercise we know for sure that a “trend is YOUR friend”! 

OK, that was fun…  In 2006, the year before I was diagnosed with Stage 4 cancer, I spoke 35 times…  That’s right 35 times… I was everywhere!  And in demand from anyone holding a conference. I was interviewed for the Wall Street Journal on two different occasions by two different writers, with one of those writers carving out one chapter in his book, about me! It was very much like the Frank Sinatra song…  I was flying high in 2006, shot down in 2007…  

But during my time as a conference speaker, I nearly always told the story of the dollar trends…  I once had an audience of 750 in Vancouver, singing along with me the Lemon Tree song…   Now that’s something that had never been done at a financial conference!  

Ok, sorry, I got going down that memory road, and just couldn’t turn around!  

The U.S. Data Cupboard is pretty much empty today, and is preparing itself for the grand entry of the Jobs Jamboree tomorrow…  What happens to the dollar, if we get another disastrous jobs report tomorrow that’s much like February’s 20,000 number?  I would think that this could be the straw that breaks the camel’s back, but then I’ve been wrong before, and I’m not afraid of being wrong…  Like I said earlier in the week, I’m sure that the folks at the BLS (Bureau of Labor Statistics) got the “memo” reminding them that they have a shelf full of hedonic adjustments to use to keep a disastrous jobs report from happening again…

Before I head to the Big Finish…  I wanted to mention this… In my old office we had a bank of windows on the east side of the building, and during the winter, Mike Meyer and myself would note the position of the sun each day, as it moved north in the sky, and would always give us a feeling of hope that spring wasn’t far away…  I mention this because I noticed this morning that the sun is moving north across the sky, as my view to the east no longer has the sunrise in it…  

You know, my dad always told me that “just when you think you’ve got something, somebody has something greater”…  I was on a boat recently and the captain pointed out a house that he explained had a rotating living room, so that the owner could watch the sunrise, and the sunset without leaving his couch!  WOW!  I guess I just need more windows down here!

To Recap…  Another day of dollar strength, albeit soft dollar strength, but strength nonetheless was what Wednesday was all about, and the overnight markets didn’t give an inch either. Germany received some bad economic data today with factory orders for Feb. falling -4.2%! The euro took a bit of a hit on the news…   And Chuck gives us a glimpse of his old presentations! 

For What It’s Worth…  Ok, longtime reader Bob, sent me this and while reading it, I thought it to be FWIW worthy… It’s about a Financial Tax that’s being talked about by lawmakers… and it can be found here: https://www.globalresearch.ca/why-us-needs-financial-transaction-tax/5673391

Or, here’s your snippet: ” The financial transaction tax is an issue that never goes away from the public agenda completely. It keeps coming back to the policy and political discussions in different forms across the world. Currently, the idea of a financial transaction tax (FTT) is gaining in popularity within the Democratic Party of the United States as a policy tool to curb excessive speculation and high-frequency trading that destabilizes markets; and to generate a significant amount of revenue to finance social programs such as free college tuition.

On March 5, Democrats in both houses of Congress introduced bills to introduce a financial transaction tax in the US. Senator Brian Schatz of Hawaii introduced a bill titled, “The Wall Street Tax Act of 2019”[1] in the Senate while Representative Peter DeFazio of Oregon introduced a companion bill in the House of Representatives. The bill proposes a 0.1 percent tax (i.e., 10 cents on every $100 financial transaction) on stocks, bonds, foreign exchange, derivatives and other financial assets traded in the US markets. While initial public offerings (IPOs) and short-term debt of fewer than 100 days would be exempted from the proposed FTT. Further, the proposed tax would apply to the actual payment for the derivatives contracts between the seller and the buyer, rather than to the notional value of derivatives contracts.”

Chuck Again…  Well, I’m no fan of taxes, folks… And this tax would be a real problem for investors… I’m just saying… 

Currencies today 4/4/19 American Style: A$.7115, kiwi .6780, C$ .7487, euro 1.1230, sterling 1.3156, Swiss $1.0018, European Style: rand 14.1660, krone 8.5829, SEK 9.2732, forint 284.63, zloty 3.8206,  koruna 22.868, RUB 65.23, yen 111.40, sing 1.3533, HKD 7.8492, INR 69.12, China 6.7101, peso 19.24, BRL 3.8547, Dollar Index 97.15, Oil $62.46, 10-year 2.50%, Silver $15.08, Platinum $886.71, Palladium $1,412.52, and Gold… $1,291.65

That’s it for today, tomorrow and the week!  This letter was a bit long today, but since I don’t write on Fridays any longer, I like to extend the Thursday letter a bit…  Like I said above, no Pfennig next Tuesday, as I’ll be traveling early in the morning.  Well, today was supposed to opening day for my beloved Cardinals in St. Louis… But they’ve already called off the game and the opening day ceremonies, because of rain that scheduled to hit there today… So, Opening Day in St. Louis, which is like no other city when it comes to Opening Day, will be tomorrow… I used to be lucky enough to gain a ticket or two for Opening Day, from my good friend, Sandra, but… times change… And now I’m not even “in town” for Opening Day! The Moody Blues take us to the finish line today with their song: I Know You’re Out There…   I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler

 

 

 

April 3, 2019 

* Dollar holds its gains during the day yesterday… 

* But the currencies fight back in the overnight markets! 

Good Day… And a Wonderful Wednesday to you… Well, as I predicted yesterday, the first part of the day here was beautiful, and then later a heavy downpour came, but went quickly, and soon the sun was shining again! I think I’m beginning to believe that I can predict the weather down here better than the meteorologists! HA! Isn’t that the way it always is: Someone believes he can do a better job than the person holding the job? Give them the keys, and let them drive, we’ll soon see just how good they are! No baseball for hockey for me last night… The Rolling Stones greet me this morning with their song: Wild Horses…

Well, we start today the same as we have for the past week… The dollar bugs continue to have their way with the currencies and metals… I have to say this right here, right now… I truly believe and always have that the U.S. Gov’t is behind the price manipulation of both the dollar and the metals… Sure, it’s the likes of the JPMorgans that do the dirty deed, but the way I see it, is they get the wink and nod from the government, and the government keeps the regulators off their backs… It goes back to those WikiLeaks papers I presented to you years ago… Where, oh, Chuck forget about it, either the readers are believers or non-believers… And I can’t change their minds…

OK, I had to get that off my chest, because things are becoming more and more frustrating to me on a daily basis… So much so, that I can easily get myself all riled up reading articles, but have been able to, so far that is, stop and do something else when I feel my blood pressure rising…

Gold was able to gain $4.80 on the day, but in my eye, this is small potatoes compared with what should be happening.. We have a Trade War going on… We have the U.K. failing miserably at leaving the EU… We have debt everywhere… We have tons and I mean tons of negative yielding bonds in the world… And wars going on that never seem to end, and Gold can’t find a bid on a daily basis?  I shake my head in disbelief, and disgust, but that’s doesn’t change anything, Chuck… So, chin up, Wilbur! 

The overnight markets have been much kinder to the currencies than they received during the day yesterday…  The euro has pushed to a 1/2-cent gain, and the Aussie dollar (S$) is back above 71-cents this morning. All-in-all, things look a little better this morning than they did all day yesterday!  Maybe someone with an ounce of gray matter looked at the U.S.’s data cupboard and decided holding dollars just didn’t seem like the thing to do…  maybe?

On the Data Cupboard front yesterday, we had the Durable and CAPEX Orders for February… let me see if economist guru, David Rosenberg had something to say about the negative CAPEX orders… This from his Twitter feed: “Core capex orders dipped 0.1% in February and have declined now in three of the past four months. Over that time, they have contracted at a 3.5% annual rate. Nothing I see tells me Q1 weakness was transitory.” – David Rosenberg on Twitter 4/2/19

For those of you new to class… CAPEX stands for Capital Expenditures… And this is where I find that most of my thinking about a coming recession comes from… You see, I learned in Economics 101 that Businesses should take their profits and invest in equipment, work places, people to insure economic growth for not only themselves but the economy as a whole. Without CAPEX, you have an economy that’s not growing, and one that’s not growing is soon to be contracting… Now, I’m not sure what you learned in Economics 101… But I learned from some of the greatest economic minds of our time… I’m just saying.

And now… we’re in that position of being able to say that CAPEX has been negative 3 of the last 4 months… And that doesn’t look good for the economy going forward… Recall the tax reform last year, and how it was supposed to get Corporations to invest in their respective companies, making CAPEX purchases, but I told you when the tax reform was announced that it wouldn’t be used for CAPEX, but instead these mental giants that run Corporate-America would be using the tax gains to buy-back their respective company’s stock…  And so, that ends today discussion on CAPEX… aren’t you glad you sat through that?  HA!

I was doing my daily reading yesterday, and came across an article on Reuters that sums up what’s been going on so far this year, quite nicely… They talked about how Currency Traders fret as sleepy markets slow to calmest in years…    Yes, I would imagine that currency desks around the world are spending a lot of time cruising the internet at work these days… 

Today’s Data Cupboard here in the U.S. has the ADP Employment Report for March, and is the precursor to the Jobs Jamboree which will take place on Friday this week…   I wonder what the BLS has in store for us this week? Recall that last month they surprised everyone and their brothers with a very small 20,000 jobs created in February report…   I would suspect that whomever released that report got called on the carpet, and told that the BLS does not deal in truths, and to go back and revise their numbers, for this month’s report… 

And in BREXIT news… The articles on the subject seem to be more positive this morning, as U.K. PM May requests an extension… Anytime things look better on the BREXIT front, pound sterling gets to rally, and vice versa when things go sour… 

To recap…  Yesterday saw the dollar gain VS the currencies most of the day, but in the overnight markets things seemed to have shifted, and the euro fought back… Gold was able to gain $4.80 on the day, but Chuck is convinced that these kind of daily gains are small potatoes VS what he believes they should be.  The U.S. Data Cupboard yesterday had some negative numbers for Durable and CAPEX Orders reports, and Chuck talks about how CAPEX orders are the root of the economy… 

For What It’s Worth…  In yesterday’s reading I came across an article on Reuters regarding Gold Sales at the Perth Mint, and thought it would be a good FWIW article, and when I went back this morning to find it… It was nowhere to be found (was I really on Reuters?) But Ed Steer saved the day, and he posted it in his daily letter: www.edsteergoldandsilver.com and you can find the article here: https://finance.yahoo.com/news/perth-mints-gold-sales-jump-09320

Or, here’s your snippet: “The Perth Mint said on Monday its gold products sales in March surged about 68 percent from the previous month, touching the highest level since November last year.

Sales of gold coins and minted bars in March rose to 32,757 ounces from 19,524 ounces in February, the mint said in a blog post.

Silver sales last month jumped 60.2 percent from the previous month and touched their highest since October last year at 935,819 ounces.

In March, benchmark spot gold prices posted their second straight monthly decline, falling about 1.6 percent, hurt by a strong dollar.

The Perth Mint refines more than 90 percent of newly mined gold in Australia, the world’s second-largest gold producer behind China.”

Chuck again…  OK, so demand for physical Gold remains strong… where are the daily gains of Gold? 

Currencies today 4/3/19 American Style: A$.7120, kiwi .6796, C$ .7516, euro 1.1247, sterling 1.3178, Swiss $1.0035, European Style: rand 14.1275, krone 8.5508, SEK 9.2636, forint 284.15, zloty 3.8157, koruna 22.8393, RUB 65.33, yen 111.50, sing 1.3525, HKD 7.8494, INR 68.94, China 6.7197, peso 19.13, BRL 3.8541, Dollar Index 96.99, Oil $62.76, 10-year 2.52%, Silver $15.14, Platinum $858.74, Palladium $1,426.21, and Gold… $1,291.81

That’s it for today…  no sunrise to be seen this morning, as it’s very cloudy out right now… But the sun will be out later, I’m sure of that! So, how’s the start of the season going for your baseball team?  My team is pretty shaky right now, but I think once they get their sea legs, they’ll be fine…  Speaking of Teams… My pick for the NCAA Basketball Champion is Michigan St. (I had to pick them two weeks ago) And they’ll play in one of the two Semi-finals on Saturday… The Final Four day is a pretty exciting day for basketball fans…    Weezer takes us to the finish line today with their song: Island In The Sun…   catchy tune…  I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

 

 

 

April 2, 2019

* Another day of dollar buying, on mixed data prints… 

* Petrol Currencies gain on bump up in Oil to $62… 

Good Day… And a Tom Terrific Tuesday to you!  A good day here yesterday, turned to an even better day, when my beloved Cardinals found a way to win a game, and our Blues kept the pedal to the metal with a shootout win last night. I still say a shootout is the dumbest way to settle a match, that is unless the match involves shooting guns! I think the Cardinals’ front office is beginning to have some buyers’ remorse feelings about their purchase of an aging pitcher, of whom I won’t mention… I hope he can ‘find the magic” he once possessed…  Little Feat greets me this morning with their song: Fat Man In The Bathtub…  I think that only Little Feat fans would know that song… 

Another day, another day of dollar buying…  And to answer Ed Steer’s question about “has the bottom been reached” in Gold, I would say no…  The data prints yesterday, here in the U.S. were mixed and in no-way reflect the kind of buying that took place with the dollar. Something is fishy about this dollar buying folks…  Stocks aren’t getting bought, bonds have backed off their buying, currencies aren’t getting bought, and neither is Gold / Silver. 

The one asset I do see gaining is the price of Oil… Oil is trading with a $62 handle this morning, and the Petrol Currencies are the only currencies with a some form of gain VS the dollar…  The ruble, real, and loonie are the best examples of that.  I read something the other day that scared the bejeebers out of me, regarding Oil…   The Mexican peso has long been considered a Petrol Currency, but recently their Oil production has fallen from the sky! A major fall in production in 2018, has Oil traders wondering if the well is running dry in Mexico…   I’ll have to do more research on that subject folks, so stay tuned… 

Oil trading pales in comparison to Bonds, currencies and even stocks with regards to size, but still this move higher is something to behold, and comes to us by way of a deep plunge in Oil production by the Saudis…  Just in time for the summer driving season… I’m just saying… 

Another thing I read recently is something that I’ve talked about previously on many occasion, and that is the dumping of U.S. Treasuries by Russia and China (and Japan to a lesser degree)…  Yesterday, I told you that Russia had announced that the value of their reserves, including Gold, were greater than their external debt. ( A very BIG DEAL in Chuck’s book!) But failed to give you the skinny on Russia’s Gold accumulation…  And for that we have… Data from the Russian central bank cited by Bloomberg show that its gold reserves have nearly quadrupled over the past ten years, and that 2018 marked the most “ambitious year yet” for Russia gold-buying, which coincided with the Central Bank of Russia’s mass-dumping of its Treasury holdings.

Remember when I told you that Russia’s central bank had liquidated $81 Billion in Treasuries, nearly its entire holdings. And how that sales had dropped Russia out of the top 30 countries with Treasury holdings?  Well, It appears now that Russia didn’t just buy Gold with their Treasury sale funds…  The Chinese renminbi got bought up by the truck load, and has led to a mess of Central Banks buying renminbi…  

All these external things going on around the world have really caused the Chinese architects of getting the renminbi greater distribution in the world, to take their eye off the ball, in recent months…  But news like this has to be like manna from heaven to the Chinese leaders… 

This relationship between China and Russia has gotten a little strange… Two countries that were historically at odds all the time, have gotten together to trade Oil for Gold, to develop a new transfer payments system to use if they get kick out of using SWIFT again.  And now their buying each other’s currency as reserves…   I don’t like these goings on folks… I’m just saying, but it’s more than that, I’m afraid…  

The U.S. Data Cupboard, as previously stated, was a mixed bag-o-nuts yesterday, with February Retail Sales printing a Big Fat negative number to match the January red numbers… Feb. Retail Sales were negative -0.2%… And when they take out Auto Sales the number gets even more red at negative -0.4%…  I’m said this before folks, but spending is a Big Deal here in the U.S. and when spending isn’t taking place, the economy grinds to a halt…  

The positive side of the Data Cupboard yesterday was the increase of the ISM Index (manufacturing) in March… I told you yesterday that  the recent index direction has been to weaken each month, but March’s result was a positive gain from 54.2 to 55.3…    I don’t know that happened, given the other data prints, like the Chicago PMI that printed last week, so I’ll put that down to smoke and mirrors… That’s what the deal is as far as I’m concerned…  

Negative yielding bonds are making a comeback… As the rest of the world deals with low to zero interest rates, their bond issuance reflects this, and to highlight this, Germany’s recent bond auction saw a huge cover and interest in their negative yielding bonds…  Wait! What?  Yes, investors are lining up to say, “yes sir, may I have another?” to negative yielding bonds…  So for the next 5, 10 or whatever maturity length they buy, they’re saying that this is the best we can get, and we realize that at maturity, I will have taken a loss…  

I don’t know, maybe you have to be a little strange in your thinking to sign up for something like that, eh?  I don’t see it, as something that I would hear me telling my financial advisor to look into buying for my investment portfolio…  So, let’s hope it never happens here in the U.S.  But one never knows, right? 

This dollar trend has really been hanging around much longer than I would have suspected it to hand around, but then even a blind squirrel can find an acorn, right?  But if you’re diversified with currencies and metals, you’ve reduced the overall risk of your investment portfolio, and when things turn around, and they will, no trend grows to the moon, you’ll be set to see those asset classes perform nicely…   

Well, a new and improved BREXIT deal is being worked on as I write…  And all the while the U.K. economy suffers, and pound sterling does too…  Hey Bank of England Gov. Mark Carney, Hello… Is that really you on the phone? OK, Great! I’m humbled that you would take my call, but I have a question for you… How’s that call that you made about how interest rates would be going higher?   Oh, I seem to have lost you, the line went dead… I’ll call back to get my answer… 

Today’s Data Cupboard here in the U.S. will have February Durable Goods and CAPEX Orders… I suspect them to be negative once again… I’ve played the record of me talking about how important CAPEX orders are to an economy, that I’ve worn a groove in the vinyl, and now it’s stuck, and keeps playing the same thing over and over!   

And remember when I was talking about Retail Armageddon?  Well, longtime reader, Bob, sent me a link to something that is pretty scary to me… Walmart has been closing stores…  Wait! What? Walmart? not Walmart?  Yes, it’s true… And on a much smaller scale, I saw yesterday that Steak-n-Shake restaurants are being closed here and there…  I Googled the nearest Steak-n-Shake to me, down here, and it’s 34 miles away… Just reading that made me crave a double steak burger with cheese!  HA! 

To recap…  Another day, and another day of dollar buying yesterday, with the only exceptions the Petrol Currencies, who saw their values increase along with the Price of Oil that is trading with a $62 handle this morning. The U.S. Data yesterday, was mixed with Retail Sales printing negative, but the manufacturing index increasing this month…  Gold can’t find a bid, and keeps dropping, and has Chuck scratching his balding head once again… 

For What It’s Worth…  I was doing my usual research yesterday, and checking out what the Reuters people were writing about, and came across this article about the White House calling out the Fed rate hikes, and thought it to be FWIW worthy… So here’s the link to the article: https://www.reuters.com/article/us-usa-fed-trump/white-house-calls-for-fed-to-reverse-u-s-rate-hikes-idUSKCN1RA2MB

Or, here’s your snippet: “U.S. President Donald Trump said on Friday that the Federal Reserve made a mistake by raising interest rates and blamed the central bank for hurting the U.S. economy and stock market.

“Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0 percent GDP, and Stock Market, would have both been much higher & World Markets would be in a better place!,” Trump tweeted.

The remarks were part of a new attack the White House has launched against the independent central bank in their unusual public split. The Fed’s Board of Governors did not immediately comment.

No fewer than five Fed officials this week have touted the underlying strength of the American economy and argued a recent spate of weak data on business activity is more likely to prove fleeting than lasting. None said they currently back a rate cut.

Prior administrations have taken care not to comment on Fed policy, but Trump has railed repeatedly against the U.S. central bank’s rate hikes. Friday’s comments were uniquely specific about the course of action now favored by the president.”

Chuck Again… You know, love him or hate him, the guy doesn’t have a problem speaking his mind on things, and for that I applaud him…  And that’s all I’ll say about that!

Currencies today 4/2/2019 American Style: A$.7078, kiwi .6770, C$ .7506, euro 1.1205, sterling 1.3052, Swiss $1.0003, European Style: rand 14.1787, krone 8.6087, SEK 9.3181, forint 287.23, zloty 3.8373,  koruna 22.9835, RUB 65.35, yen 111.38, sing 1.3555, HKD 7.8496, INR 69.16, China 6.7092, peso 19.16, BRL 3.8913, Dollar Index 97.37, Oil $62.04, 10-year 2.47%, Silver $15.02, Platinum $850.00, Palladium $1,404.52, and Gold… $1,288.50

That’s it for today…  It was a real foggy day outside this morning down here… Fog is something I’m used to see back home in my little river town, but now down here!  A nice sun-filled, warm day, today is supposed to turn nasty this afternoon, so I had better get out and enjoy the sun while it’s still shining this morning!  Played email catchup with a former colleague yesterday… it was great to hear from Lauren again… Day one, alone was OK… Onto Day two… And most of the “renters” here in this building have gone home, so there aren’t many people here… So, there’s no one to bug me! HA!  The Reverend Al Green takes us to the finish line today with his song: Love And Happiness…   I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler

April 1, 2019 

* Gold gets a $22 hickey on Thursday… 

* Russia’s reserves cover their external debt! 

Good Day… And a Marvelous Monday to you! And welcome to April! It’s also April Fools Day, but I have no hijinks to play on you today… Well, how did you do with your NCAA Basketball bracket? Crazy games this past weekend, for sure! I’m here by myself, once again, as my wife went home on Saturday. I refused to go home that “early”, and so I’m here, by myself… I have doctor appts. And scans that are due the middle of April, so I guess I have to go home by then! UGH! It was Opening Weekend for baseball, and my beloved Cardinals didn’t get started on the right foot, but there are 158 more games to… So I’ll calm down now… Lynyrd Skynyrd greets me this morning with their bluesy song: The Legend of Curtis Lowe…

Well… what comes next in the U.K.? PM May’s latest version of a BREXIT plan was voted down by the Parliament once again… This divorce is getting quite ugly… sort of like that divorce movie from years ago, Kramer VS Kramer… I guess the people in the U.K. that got the masses all lathered up about leaving the European Union, should have looked at the pre-nuptial agreement’s terms of divorce before making their stance…

It’s the same thing in Greece, Italy, and whatever Club Med country that is up to its respective ears with debt, and think that they can simply leave the euro, and go back to their legacy currency and then devalue the hell out of it, to pay back the debts with devalued currency… It won’t happen!  A few years ago my longtime friend, and former Big Boss, Frank Trotter, handed me a two -inch thick document that outlined the fire hoops a country would have to jump through to leave the euro… And given Greece or Italy, or any other Club Med country’s lack of “get it done” attitude, and would rather things are given to them… I doubt anyone is going anywhere anytime soon!

Now, that was quite the way to start the Pfennig today, wasn’t it? On Thursday last week, I was treated to a phone call from Robert Vrijhof from Weber Hartman of Switzerland! Yes, my phone lit up and it was a call from Switzerland! I had mentioned his interview with good friend, Dennis Miller for www.milleronthemoney.com a couple of weeks ago, and seeing that I was still writing he contacted me! It was nice to know that someone else with years and years of experience in these markets is as frustrated with the way currencies and metals are valued these days… He told me that going forward, when I needed to talk to someone to contact him! And you can bet your bottom dollar I will!

So, that was my lead-in to telling you that the dollar bugs had their way with the currencies on Friday… Gold was able to eke out a $2.60 gain, but that was after a $22 hickey it had to suffer through on Thursday… Ed Steer of www.edsteergoldandsilver.com asked, “Is the bottom now in?” The price manipulators like to have a day where they really whack the you know what out of Gold, and then go in a buy at cheaper prices… The Bank for International Settlements (BIS) was really active in the selling on Thursday… Why? Because they didn’t have anything else to do that day, I guess… UGH!

The U.S. Data Cupboard last week, wasn’t anything to write home about for the dollar bugs, but they continued to rule the roost… Personal Spending for January recovered a bit. You may recall that December’s consumer spending was a negative -0.6%… January’s recovery was nascent at best with a 0.1% increase. So, to me, this data is telling us that consumer are maxed out… And since consumers are a big part of the country’s GDP… Well, I think you know where this goes… Another piece of data last week that was eye-opening, was a piece that normally doesn’t get any spotlights shined on it, and that is the Chicago PMI (manufacturing index)… The March print was 58.7, which on paper sounds good, right? Well, not when you look at it VS February’s print which was 64.7…

But like I said, the dollar bugs just won’t step down from their position as king of the hill… But eventually, all this weak data has to pile up an weigh heavily on the dollar, right? Well, I would think so, but then I look at things logically… I have an article from Reuters in the FWIW section today that has them scratching their collective heads too, as to why the dollar is buoyed when the data keeps printing weaker and weaker…

In Russia today, the reports are indicating that Russia’s gross international reserves, including gold, has reached $487.1 billion as of March 22 — enough to cover Russia’s external debt dollar for dollar in cash.   Did you hear that correctly, folks?  Russia’s reserves can cover their debt!   And what does Russia rubles get for this announcement, that should send it soaring to the moon?  It gets sold…  UGH!

I’m in the middle of another interview with Dennis Miller, and in I talk about currencies that I like…  I talk about the Russian ruble and that was before I read that their reserves were large enough to cover the debt! Here’s the thing that I especially like that’s going on in Russia with regards to finances…  The Central Bank of Russia (CBR)  has worked their magic and gotten inflation down to 5%…  The internal rate (like our Fed Funds rate) is 7.25%…  So, in Russia, their key rate is higher than inflation!  There aren’t many countries in the world that can claim that! But in today’s world, the ruble gets sold…  Oh, well, it does give investors an opportunity to buy at cheaper prices, now doesn’t it? 

In great challenges lies great opportunities… 

According to Bloomberg this morning, it appears that the Trade talks between the U.S. and China are getting somewhere… Bloomberg reports that China has announced that they are willing to give some concessions… Of course Bloomberg didn’t say what those “concessions” were… And if they’re not in the neighborhood of “intellectual property”, then they might as well go back and star all over again!    Because when you boil this issue down you find that “intellectual property” has been the cheese that binds all the time, not tariffs on Big Screen TV’s!  

The U.S. Data Cupboard stars this week with a BANG! We’ll see February Retail Sales, and the March ISM today…  That’s some heavy lifting for the Data Cupboard!  February Retail Sales should print and be just ok…  The BHI (Butler Household Index) indicates that February’s report could be better than the average bear, but… we were under different circumstances in February, than the average bear…  So, I’m going with just OK!

The March ISM (manufacturing index) is what I’m really looking forward to seeing print. Recent months have shown the index number dropping in small moves… If this trend continues it would be a very good indicator that a recession is just around the corner. 

To recap…  The dollar bugs continue to hammer away at the currencies. Gold received a $22 hickey on Thursday, tried to come back on Friday, but was held in check, and is down a buck or two in the early trading today…  The BREXIT debacle carries on… Trade Talks with China and the U.S. seem to be moving along, and Russia announced that their reserves are now large enough to cover their external debt…  Good new like that for a country usually sees the currency rewarded…  But not this time… UGH!

For What It’s Worth… Well, I already told you what today’s FWIW is about, so with no further ado… Here’s the link to the article on Reuters website: https://www.reuters.com/article/us-global-forex/dovish-central-banks-buoy-dollar-even-as-growth-slows-idUSKCN1R903G

Or, here’s your snippet: “With many currencies on the defensive, the dollar has brushed aside a decline in benchmark U.S. Treasury debt yields to 15-month lows. The dollar index, which measures the greenback against a basket of six currencies, gained 0.46 percent to 97.219, at two-week highs in its third day of gains.

The rally continued even after the Commerce Department announced it had cut its measure of U.S. gross domestic product growth in the fourth quarter, when corporate profits fell by the most in a year. The third reading estimated growth at 2.2 percent, down from the initial estimate of 2.6 percent.

The euro weakened 0.2 percent to $1.122 as speculation grew that the European Central Bank will introduce a tiered deposit rate, a sign that policymakers plan to keep interest rates low for longer. The euro remains above 21-month lows of $1.117 touched a few weeks ago. “

Chuck again… Yadda, yadda, yadda, they keep talking about how other Central Banks are just as dovish as the Fed… But we’re the U.S. aren’t we supposed to be better?

Currencies today 4/1/19 American Style: A$.7118, kiwi .6826, C$ .7485, euro 1.1236, sterling 1.3091, Swiss$1.0058, European Style: rand 14.2640, krone 8.5867, SEK 9.2566, forint 285.55, zloty 3.8267, koruna 22.9410, RUB I65.63, yen 111.02, sing 1.3545, HKD 7.8496, INR 69.32, China 6.7111, peso 19.30, BRL 3.9219, Dollar Index 97.09, Oil $60.63, 10-year 2.44%, Silver $15.08, Platinum $848.96, Palladium $,378.63, and Gold… $1,290.78

That’s it for today…  It’s April! If April showers bring May flowers, what do May flowers bring?  Pilgrims! HA!  This is my friend and IRA guru April’s month! I call her April Showers… And she just smiles…  Well, the cellulitis is back in my leg… I know, I know, with me, it’s always something, right? When the NCAA Tournament began, Kathy asked me, “who will be the Cinderella team this year?”  Well, I guess there are two of them… Auburn and Texas Tech… They join Michigan St. and Virginia in the Final Four! It’s supposed to a normal day here, (sunny and 80), so I’ll take the book I’m reading and sit outside to soak up some vitamin D…  Mitch Ryder and the Detroit Wheels take us to the finish line today with their song: Devil With the Blue Dress…  I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

March 28, 2019

* Dollar continues its march to higher ground… 

* The other side of a narrowing Trade Deficit… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m hoping to do some Tub Thumpin’ of my own tonight as I hoping to go to my fave place for live music tonight… It’s a Glorious Day, because…. IT’S OPENING DAY! And today should be a national holiday, to celebrate Opening Day for the national pastime! My beloved Cardinals begin the year on the road in Milwaukee today, and I will be glued to the tv for sure! I just finished watching them play 15 games in 30 days, and you would think I’ve seen enough! But nooooooooo! I only saw the starting lineup together for 1 inning all spring! I’m so excited… I can’t wait for first pitch at 2pm today! Call me crazy, because I am… crazy in love with baseball, and my Cardinals! The Doobie Brothers greet me this morning with their song: Listen To The Music… I like the Doobie Brothers before and after Michael McDonald… He was good, but it wasn’t the same… in my opinion, that is!

So, what’s up with the news media, have they all become Pfennig Readers? Yesterday, I told you that I was thinking that U.K. PM May might have to fall on a sword to get her BREXIT plan passed, and then all day long I’m reading article after article about how May has offered to resign if her plan is passed! I find that to be a very eerie co-inkee-dink!

The euro gave back more ground to the dollar yesterday, not much, but more… I guess having the Trade Deficit shrink to a mere $57.7 Billion was cause to celebrate for the dollar bugs… And while that looks nice, here’s the other side of that coin for you… The U.S. is a nation of consumers, we spend until we can’t and then we spend some more just for good measure… Well, when our imports from China plummet, it should cause some questions to be asked… No one? Ok, then I’ll ask them! If imports from China plummeted then visa-vie our spending has to also plummet, right? Well, I would think so… and that my friends is the other side of a narrowing of the Trade Deficit by the size it narrowed… (59.8 VS 57.7)

I guess I am a glass half full kind of guy… But then there’s no reason to be excited about having half of our glass emptied, unless you did the drinking!

That was all the data to be had yesterday, as we’re still getting delayed signs hung on data release dates… But getting back to something I made a big stink about yesterday, it was the stupid Consumer Confidence Index plunge… I thought it to be significant, and judging from one of my fave economists, David Rosenberg, he thought it was too… Here’s David Rosenberg on his Twitter feed yesterday… “Declines in the Conference Board “jobs gap” index of 5.7 points or more don’t happen every day. In fact, this development was saved for the past five recessions; they don’t happen in expansions.”

David has seen the same writing on the wall that I have, and I feel quite cocky about that, given his stature in the financial arena, and my lack of stature in the financial arena! Dare I say though, that I saw it first? Ooops, I just did say it! Oh, but didn’t say it out loud did I? Ahem, yes you did Chuck… so go on, slap yourself on the back and move along!

I just don’t get what’s going on with currency traders, investors, hedge funds, etc. these days… Jackson Browne sang it best when he sang… These days I sit on cornerstones and count the time in quarter tones to ten… my friend… Don’t confront me with my failures, I had not forgotten them… Currency traders continue to reward the dollar with every weak data print, every sign pointing to a recession, and I just don’t get it!

Back in my day, when I was a currency trader, fundamentals meant something… Now, they’re treated  like the crazy old uncle that you still invite to family gathering because he’s “family”, but then wish you hadn’t when he decided to swimming in the Koi pond!

Isn’t that what old-timers always would say… “Back in my day!” Well, I guess that’s what I’m becoming… They showed me the door, and told me not to come back, and all I have left are memories of “back in my day”…

OK.. enough of that! I have no idea how that all began, but I know how it ended, and I’m better than that!

I had a few dear readers question me about my statement yesterday regarding the dollar being devalued back in the 30’s by FDR… Yes, I’m sure that’s what happened… He didn’t come and say “I’m devaluing the dollar”, but he did decree that the Gold that he had just confiscated from citizens, was going to be repriced higher, thus devaluing the dollar…. Just for fun, I asked Google if the dollar had ever been devalued before and this is the answer I received…

“The more a currency is devalued, the less you can buy with it because the purchasing power decreases. The graph below shows the purchasing power of the US dollar since 1913. … In fact, the dollar has lost over 96% of its value. That means today’s dollar would be worth less than 4 cents back in 1913.”

Ahhh, 1913… I know, I can hear some of you saying, “Oh, no! here he goes again with 1913”… Yes, every chance I get to talk about repealing 1913, I make the most of… 1913 is infamous for 3 reasons….. 1. Woodrow Wilson crammed the Fed Reserve down our throats… 2. Woodrow Wilson ushered in the IRS… and 3. He changed the way State Senators were sent to Washing D.C. before this change, Senators were assigned by each state’s Governor to represent the state’s affairs in Washington D.C. This way, if the senator wasn’t doing his job, he could be recalled very easily, and replaced immediately… Now, doesn’t that sound like a far better idea than what we have now?

OK… enough on 1913… But curtesy of the Federal Reserve which began in 1913, the dollar has lost 96% of its purchasing power…. I’m just saying…

Back to the euro… Well, yesterday one think tank said something that pushed the euro weaker, and now we have the think tank IFO with a different point of view, of which euro traders didn’t seem to be fazed by… So… let’s check out what Germany’s IFO Institute said in its business climate index… It rose to 99.6, beating a consensus forecast of 98.5 and ending six consecutive months of decline. But as I said, euro traders weren’t fazed one iota by this… so we move along…

Boy did the precious metals get their you know whats handed to them yesterday by the boys in the band… Palladium lost over $90 in one day! Gold was sent packing to the tune of $6, and the others fell in line… I wonder if what I was talking about the other day regarding how in the initial days of the financial meltdown that’s coming Gold would get sold to pay for gas, groceries and giggles, but when the dust settled it was time to back up the truck…  I wonder if this is coming to fruition..  

I do keep talking about how I believe the recession hits the U.S. economy in this year, while most economists think it will hit next year…  I’m just saying…

The U.S. Data Cupboard has a 4th QTR GDP revision for us today… Look for a significant drop in the GDP number…  I wonder if that gets the currency traders to notice?  Other than that, we have a few Fed Heads hitting the speaking circuit today, including St. Louis Fed President, James Bullard, who has been a very outspoken dove… Maybe he can make the currency traders notice?  

Oh, and one more thing… It’s being reported that U.S. shale exports are being turned away by Asian importers because the oil is infected…  that can’t be good, folks…  So, I have an article in the FWIW section that explains this today… 

To recap… The dollar moved onward in its march to higher ground yesterday, but the move was small in nature. The dollar bugs must have been giddy over the narrowing of the Trade Deficit, of which Chuck shows us the other side of that narrowing…   Precious metals got whacked yesterday with Palladium leading the way, seeing a fall of over $90 on the day… And finally, a 4th QTR GDP revision will print today, we should see a significant downward revision. 

For What It’s Worth…. OK, I teased you above about the infected shale Oil getting turned away by Asian importers, and here’s where the article I reviewed can be found: https://www.deccanchronicle.com/business/in-other-news/280319/infected-us-shale-oil-faces-rejection-in-asia.html

Or, here’s your snippet: “Two refiners in South Korea—the top buyer of US seaborne supply— have rejected cargoes in recent months due to contamination that makes processing difficult. Growing North American output from dozens of fields pushes everything from highly-volatile oil to sticky residue through shared tributaries and trunk pipes. Smaller carriers then take cargoes from shallow-water ports to giant super tankers in the Gulf of Mexico for hauling to far-away buyers.

Throughout its transit from pipes to tanks and onto vessels, foreign compounds from other fuel or chemicals for cleaning tanks or stabilizing material can leach into the supply and foul up refining equipment. While crude passes through a similar chain in the Middle East too, the risk of impurities is lower because each oil variety typically has its own designated infrastructure.

In the case of American condensates, a type of ultra-light oil pumped in shale fields, cargoes can get pollutants such as “oxygenates, metals and cleaning agents,” said Sebastien Bariller, Senior Vice President at South Korea’s Hanwha Total Petrochemical Co. That’s causing uncertainty around US oil quality, unlike purchases from the Middle East, where quality is stable, he said.”

Chuck again… This is the kind of thing that can spread, and cause major ripples in the Oil Shale exports… 

Currencies today 3/28/19 American Style: A$ .7093, kiwi .6810, C$ .7450, euro 1.1250, sterling 1.3145, Swiss $1.0046, European Style: rand 14.6540, krone 8.6450, SEK 9.2615, forint 284.53, zloty 3.8195, koruna 22.9282, RUB 64.65, yen 110.30, sing 1.3556, HKD 7.8498, INR 69.05, China 6.7198, peso 19.38, BRL 3.9133, Dollar Index 96.96, Oil $59.25, 10-year 2.38%, Silver $15.24, Platinum $851.78, Palladium $1,425.90, and Gold… $1,307.76

That’s it for today, tomorrow and this week! It was an ugly night out, as I was awoken a couple of times with the rain coming down so violently. The ocean is angry this morning, and the wind is howling… Not a good day here for sure, but it’s days like this that make the pretty ones every prettier!  I already have a problem with Cardinals’ Manager’s lineup… Baseball tradition says your best hitter hits 3rd…  We just made Paul Goldschmidt the highest paid Cardinal of all time, which in my mind makes him the best hitter on the team, so why’s he hitting 2nd?  UGH! Albert Pujols in his prime, always hit 3rd… I’m just saying…   That’s one of the great things about baseball… the discussions that can take place about something like that, and go on for hours at a time!  Baseball is back! YAHOO! The Kinks takes us to the finish line today with their song: Sunny Afternoon…  which looks like won’t happen here today!  I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday tomorrow, and a Wonderful Weekend… Monday is April Fool’s Day!  Be Good To Yourself! 

Chuck Butler

 

March 27, 2019 

* Currencies finally move, but go downward… 

* It appears that the bloom is off Palladium’s rose… 

Good Day… And a Wonderful Wednesday to you! I watched the movie Hidden Figures last night, and it sure was a good one! I love it when history is told the way it actually happened… It went late last night, so… I’m dragging the line today… I’m currently reading Tom Woods’ book the Politically Incorrect history of the U.S. It make me feel like I’m back in history while these things happened! I’m being rocked out this morning, as Humble Pie greets me with their rock legend song: I Don’t Need No Doctor…

We finally saw some movement in the currencies yesterday, but unfortunately, they went the opposite way of what I’m thinking they should be going, given the Fed’s about face, Treasury Bond yields continuing to decline, and the mounting evidence of an economic problem here in the U.S. sooner than later… Oh, and let’s not forget the stupid Consumer Confidence Index which actually showed a drop from 131.4 to 124.1… That’s the largest one-month drop since 2008… Traders just aren’t seeing the writing on the wall, that the bond guys are putting up there as warning signs…

And my fave topic (not!) The Federal Budget Deficit just set a record and now the it appears the border wall is going to go through, so more deficit spending on the way… Way back in the 90’s when I began writing a daily letter, I wrote about debt accumulation and how we weren’t paying any of it back, and probably wouldn’t be… I talked yesterday about how the cost of such deficit accumulation was increasing… This is something that everyone should be wary of, folks… Even if the currency traders aren’t making themselves aware of it… You should!

Last night, the Reserve Bank of New Zealand (RBNZ) met, and left their OCR (official Cash Rate) unchanged… The RBNZ acknowledged that employment was strong, and in fact, they said, “Employment is near its maximum sustainable level”… But wage inflation isn’t gearing up and their core “key” inflation rate of 2% isn’t being challenged… So, the OCR remained the same… UGH! And just like I said yesterday when I talked about how kiwi had popped above a significant level but I worried that it wouldn’t be able to hold it… And it wasn’t able… and lost almost 1 full cent… UGH!

In the U.K., PM May admitted yesterday that she doesn’t think she has the votes to get her BREXIT Deal passed… Sterling took it on the chin after hearing this news… I read this morning that in the dark smoke filled rooms that if she wants to get this BREXIT plan passed, she might have to fall on a sword…   And that would take us back to our old thought that currency traders don’t like “unknowns”…  

The euro took some heat yesterday, when the think tank IFO issued their consumer confidence report and it showed a big decline… I would have thought that by now fundamentals would be back in charge of currency direction but nooooooooo! Currency direction is still ruled by trader sentiment… And right now Traders are turning a blind eye on the U.S.’s warts… and only concentrating on those around the world… 

The old thought of the dollar being the cleanest shirt in the dirty laundry basket, just doesn’t hold water with me…. for there are currencies out there with cleaner shirts, than the one dollar is sporting…  Currencies like the Russian ruble, Swiss franc, and so on… 

Well… Gold started the day yesterday down nearly $8, and ended the day down $6…  But today, in the early morning trading, Gold is back to being bought, and is up a couple shekels…   China has come back to the Gold window in a BIG way, Russia has been a constant there the past 5 years, and other foreign Central Banks are getting in on the Gold accumulation, instead of dollars…  This fact alone should be worth a couple hundred dollars of gains in my humble opinion… But for now, the price manipulators are still flexing their muscles… For how much longer, is the $64 question… 

The other day I pointed out that maybe the correction in Palladium was beginning and since then its been 3 down days for the metal, and just like when it was gaping higher, the drops are large… 

The U.S. Data Cupboard yesterday had the Case/Shiller Home Price Index (HPI) for January, and yesterday, I told you that it would be interesting to see if the recent trend of falling home prices continued… And it did, with the HPI falling to 4.3% from 4.6%…  That represents a 6.5-year low folks, so we’re going backward with home prices… Actually, that could be a good thing if it doesn’t get out of hand, as home prices had gotten ridiculously high, and didn’t represent value… The problem with these prices swings though is that the pendulum always goes too far the other direction when correcting, thus causing problems…  

Today’s Data Cupboard has the January Trade Deficit, which should be interesting, given the tariffs and such going on… And we’ll also see the 4th QTR Current Account Deficit…   In the 3rd QTR the data showed it at 2.4% of GDP…  2.5% is the line in the sane folks…  Back in 2001, when I wrote the white paper, Decline of the dollar, I explained that the U.S. Current Account Deficit has exceeded 2.5%, and historically speaking, any country that reached that level of indebtedness experiences a currency crisis…  

And sure as the sun rises in the East, that’s what the dollar began to experience in 2002, and lasted until 2011…   So, watch for this data to see if we are on the brink of a dollar crisis…  

On a sidebar…  I have a very interesting FWIW this morning, that talks about what the U.S. should do to alleviate their debt load…  I think you’ll not want to miss this one!

To Recap… The movement in currencies finally took place yesterday, but they went in a different direction that Chuck was thinking was in their future, as currency traders continue to turn a blind eye toward the warts the U.S. is showing…  Yesterday, it was Consumer Confidence falling with the largest one-month drop since 2008… Remember 2008?  It was not a good year, financially… I’m just saying…   Gold lost $6 yesterday, as the price manipulators continue to keep Gold under wraps… for now that is… And UK PM May, may have a BREXIT plan that gets passed, but will she have to fall on a sword to get passed? 

For What It’s Worth…  I wonder how many people recall or read about how FDR devalued the dollar back when things were getting pretty ugly here in the U.S?  First FDR confiscated Gold from the people at $25 an ounce and then once he had it all, he repriced Gold to $35 an ounce, thus devaluing the dollar…  Well, that old thought is behind this article that the GATA folks sent me and can be found here: https://www.foxbusiness.com/economy/the-federal-government-should-default-on-its-debt

Or, here’s your snippet: “Dramatically hiking taxes, or drastically cutting Social Security and Medicare benefits in the late 2020s or early 2030s when entitlement trust funds run dry, would send the economy into a depression. Ignoring the debt and indefinitely printing more money, as proponents of “modern monetary theory” effectively advocate, would lead to uncontrolled hyperinflation.

Our leaders have dug us into a hole. And the best way out is a “soft” default on the national debt.

A hard default, where the government simply refuses to pay its debts, would cause a global economic meltdown. Dollar-denominated Treasuries and federal reserve notes are the lifeblood of the global financial system. But a soft default — a one-time devaluation of the dollar which enables the government to pay back its debts in full, albeit at a lower intrinsic value — needn’t be catastrophic.

Here’s how a soft default would work.

The Treasury would peg the dollar to gold, oil Opens a New Window.
, natural gas or silver — or perhaps a basket of those commodities. By choosing a weak valuation, for instance, $10,000 per ounce of gold, compared to the current market price of roughly $1,290 per ounce, much of the debt could be paid down thanks to a much weaker dollar.”

Chuck Again… Well, it’s not that too far fetched, as I explained above, it’s happened before… And it could very well happen again…  

Currencies today 3/27/19 American Style: A$.7098, kiwi .6810, C$ .7463, euro 1.1285, sterling 1.3210, Swiss $1.0080, European Style: rand 14.5370, krone 8.5763, SEK 9.2417, forint 283.75, zloty 3.8085, koruna 22.8380, RUB 64.21, yen 110.35, sing 1.3538, HKD 7.8491, INR 68.94, China 6.7111, peso 19.22, BRL 3.8604, Dollar Index 96.73, Oil $59.49, 10-year 2.37%, Silver $15.46, Platinum $862.67, Palladium $1,517.28, and Gold… $1,318.57

That’s it for today…  The ocean looks so calm this morning… But apparently that won’t last too much longer given the cold front that’s supposed to move through here this afternoon, and bring a very windy day…   Another day passed by, where I questioned where it had gone at the end of the day, yesterday… UGH!  Tomorrow is Opening Day for baseball… I contend that it should be a national holiday, and one day I hope to see that happen!  Good luck to my beloved Cardinals…  OK. the Cure takes us to the finish line today with their song: Close To Me…  I hope you have a Wonderful Wednesday, and continue to Be Good To Yourself! 

Chuck Butler