Author: admin

March 6, 2019 

* U.S. ISM jumps higher and the dollar bugs celebrate… 

* U.S. Budget Deficit sees reductions in receipts… uh-oh! 

Good Day… And a Wonderful Wednesday to you! Spring has come to S. Florida, as the temps have dipped and will only be in the 60’s today… but spring won’t last long, as the sunny and 80’s will be back in a day or two… The new hitting coach for my beloved Cardinals has received a rude awakening to the major leagues, as his batters can’t seem to find a groove early in spring training… UGH! One of these days I would love to put together a lineup for a major league baseball game… Now, that would be a hoot! I’m going to attempt to be upbeat today, but with what’s going on with the currencies and metals, it will be difficult at best! Jethro Tull greets me this morning with their song: Locomotive Breath… Old Charley stole the handle and the train it won’t stop going no it won’t slow down…

That’s basically how it feels for the currencies and metals these days, as if someone stole the handle, and they’re on a runaway train going south… UGH! The euro fell below 1.30 yesterday, In Australia they reported softer growth numbers, and the Aussie dollar, (A$) got whacked… And Gold.. eked out a small gain, but in reality, these small gains should be much larger… But they aren’t, and the old saying about it is what it is, holds true here…

Speaking of Gold… and Silver, of course… I read where the COMEX and the LBMA are out of physical metals… The paper trades should be drying up soon, folks… I’ve always told you that when enough physical Gold & Silver was being bought by the masses, that the paper trades would be squelched, and it looks like we could be heading there… That is if the communique from the GATA folks, is bang on with their call…

So, yesterday, the dollar rallied because the ISM Manufacturing Index rose after a few months of slippage… The reading was for January, which is pretty stale in my books, but traders found the data to be of their liking, and rewarded the dollar for the stronger print… I find the print questionable at best… All the data from late November though today, has been weak and getting weaker all the time… Shoot Rudy, the CAPEX (Capital Expenditures) have been negative 4 of the last 5 months… So, doesn’t that make this report on manufacturing suspicious? I’m just saying…

The Bond guys didn’t fall for the old (pump up the data trick) and bond yields dipped a few basis points yesterday. I keep telling you that I learned very early in my career to pay attention to what the bond guys are telling us… Hint, hint… 

On a note where it will lead to another brick in the wall… The Bank of International Settlements, issued a warning yesterday regarding Corporate debt… The FT.com reported this… “Under reasonable assumptions, a return to 2009 downgrade rates could force portfolio rebalancing in excess of daily turnover in corporate bond markets.” – BIS

What they’re saying here folks, is that with the debt pile up that the Corporations have made that downgrading their bonds could lead to a HUGE selling by funds, etc. that need to hold higher rated bonds in their respective portfolios…

I’ve ben talking about these leveraged loans that Corporations have made into bonds, and it’s quite scary, especially if such bonds begin to get downgraded… 

But apparently, only a handful of analysts, including myself, are worried about this developing into the snowflakes that would cause an avalanche on the U.S. economy… The markets don’t care, traders don’t care, investors don’t care, they are all wearing rose colored glasses, and allowing the bad data prints to roll off their backs…  And that’s what makes this all so scary folks… Like I said, only a handful of people are looking at this and placing it on the worry wall, so that when the avalanche occurs, all those people that didn’t pay attention to this snowflake, will be hurt financially…  I sure hope I’m wrong on that one…  It is just my opinion, folks, and I have been wrong before, but usually I’m right, eventually… 

Well, the Trade Talks continue, and now there are things being leaked about the agreement that don’t sound like China took too big of a hit… I’m so pessimistic about these Trade Talks, folks, that I get jaded about them… Maybe they’ll be everything the U.S wanted, and more…  Maybe… But I doubt it, and in fact, I’m going to go out on a limb here and say that the 200 pound gorilla in the corner of the Trade Talks room is “Intellectual Property”, of which is the main reason we’ve gone down this rabbit hole of a Trade War…  And here where I go out on the limb, so pay attention… Intellectual Property won’t be a part of the agreement… 

OK… remember the first summit between the two leaders of the U.S. and N. Korea ended with a verbal agreement to shut down N. Korea’s nuclear facilities, and I made a BIG Deal about how nothing was signed? That it was just a verbal agreement?  Well, here we are some months after the summit, and guess what I read yesterday?  That N. Korea was rebuilding their nuclear facilities…   I’m not one to say, I told you so… but I did tell you so!

But this news failed to get Gold on a roll, as it should have, and the shiny metal was only able to eke out a 90-cent gain on the day.  So, after over 215,000 contracts were traded, and the sawdust fell on the floor, Gold eked out 90-cents for the day…  

The U.S. Data Cupboard will have a delayed report from January, in Factory Orders, the December Trade Deficit, and the ADP Employment Report, which lately, because of no fault of theirs, hasn’t been the indicator to the BLS jobs report that it’s supposed to be… I say no fault of the ADP folks, because The BLS has so many hedonic adjustments to the surveys they take that the BLS jobs report doesn’t look anything like what people expect… 

I told you, dear readers, months ago that I was giving up on the BLS jobs report, and that I didn’t care about it any longer, it was dead to me…  So, I’m glad I don’t get all involved in the BLS jobs report any longer, I smile more often now… HA!

To Recap…  The ISM report surprised investors with a jump higher after months of losing ground, and that got the dollar bugs to come out of the wall boards in bunches, and the currencies got sold, VS dollars on the day. The BIS issued a ratings warning on Corporate Debt, that’s very scary to Chuck, but apparently not everyone else…  And Gold was able to eke out a 90-cent gain on the day… Big Whoop, right? 

For What It’s Worth…  Another Brick in the Wall was added yesterday in the form of the U.S. Budget Deficit…  and this report from Zerohedge.com has it for you today, and can be found here: https://www.zerohedge.com/news/2019-03-05/us-budget-deficit-soars-77-interest-expense-hits-record-high

Or, here’s your snippet: “Another month, another frightening jump in the U.S. budget deficit.

According to the latest Treasury data, the U.S. budget surplus in January – traditionally one of the few surplus months of the year due to tax receipts vs refunds timing – was only $9 billion, badly missing the $25 billion surplus expected, and far below the $49 billion surplus recorded last January; it was the smallest January gain since 2015.

As a result, the budget deficit for the first four months of the fiscal year, widened to $310 billion, a whopping 77% higher than the $175.7 billion reported for the same period last year, largely the result of the revenue hit from Trump’s tax cuts and the increase in government spending. The deficit was the result of a 2% drop in fiscal YTD receipts to $1.1 trillion, while spending jumped 9% to $1.4 trillion.

The jump in the deficit was despite the bump in customs duties, which almost doubled to about $24.5 billion this fiscal year from $12.6 billion a year ago, reflecting the Trump administration’s tariffs on Chinese imports.

What was more concerning perhaps is that rolling 12 month receipts declined 1.5% Y/Y, after posting a 0.4% drop last month which marked the first decline since March 2017. Worse, the absolute drop in tax receipts, which declined for both corporations and individuals, was the biggest since the financial crisis; and, every time that receipts have posted an annual decline, a recession either followed shortly or had already arrived.”

Chuck again… Let me emphasize something from that report here for you… So get a fresh cup of coffee, and you might want to add some Bailey’s to it to get through this…  No? Ok, but put away the sharp objects, please…   “Worse, the absolute drop in tax receipts, which declined for both corporations and individuals, was the biggest since the financial crisis; and,  every time that receipts have posted an annual decline, a recession either followed shortly or had already arrived.”  

Currencies today 3/6/19 American Style: A$.7030, kiwi .6775, C$ .7476, euro 1.1305, sterling 1.3143, Swiss $.9955, European Style: rand 14.1894, krone 8.6884, SEK 9.3310, forint 278.99, zloty 3.8030, koruna 22.6405, RUB 65.73, yen 111.87, sing 1.3575, HKD 7.8497, INR 70.20, China 6.7022, peso 19.26, BRL 3.7757, Dollar Index 96.91, Oil $56.00, 10-year 2.71%, Silver $15.11, Platinum $831.56, Palladium $1,513.64, and Gold… $1,285.64

That’s it for today… The sun just rose above the clouds on the ocean, and is shining brightly in my eye right now… Where are my shades? I love mornings here… While I was on vacation, we finished our construction project, and moved… It sure took much longer to complete than I thought it would…  OK… I know I’m early, but… this will happen on the weekend, so… Happy Birthday to my good friend, Rick…  I used to buy him a veggie pizza to split on his birthday and we would eat it in my old office… I sure hope you have a grand day, Rick!   And with that, Donnie Iris takes us to the finish line with his song: Ah! Leah!  I hope you continue to Be Good To Yourself!

Chuck Butler

 

 

March 5, 2019

* Currencies and metals get sold again on Monday

* Eurozone Retail Sales beat expectations! 

Good Day… And a Tom Terrific Tuesday to you! Well, day one back in the saddle didn’t have too much excitement for me… I did received quite a few emails welcoming me back, and for that I’m truly appreciative… I do believe my beloved Cardinals are going to have to make a Big Trade by the end of Spring Training this year, to shore up their lack of hitting… And if management truly believes that our pitching rotation is set this year, then I have some swamp land they need to buy! The Cardinals have a plethora of young pitchers that need to grow up fast, and it looks as though, to me, so far that is, that some have and some have not… The great Stevie Wonder greets me this morning with his song: My Cherie Amour… What a beautiful song!

OK, another day, another day of hearing that the Trade talks are near an end, and that everyone is going to be pleased as punch with the agreement… But after the rest of the world sees what kind of deal it is that the U.S. and China agreed to, won’t they too want the same deal? I’m just asking…

And it was another day of currencies trading in very tight ranges, and not moving much, and another day of selling  Gold & Silver … Don’t get me wrong here, the slippage is noticeable in the currencies and metals, and is not what I would expect with what’s going on… 

The Data here in the U.S. continues to be very weak… and when I saw some of the prints yesterday, I quickly turned to famous economist, David Rosenberg, who had a few things on Twitter to say, that I think I’ll highlight here:

“By my estimation, the Fed took the funds rate 75 bps above neutral, caused several parts of the yield curve to invert and real M1 growth to completely vanish. Recession odds this year are at 80% “ (I’m not stopping here, there’s more from David Rosenberg!)

“Fed took the funds rate to 2.5%. Economy can’t handle it – even with tax cuts!! China tried to slow down the debt treadmill – economy can’t handle it. All ECB did was stop QE, and its economy can’t handle it. What a bullish global backdrop!!”

“A global recession without the USA? That’s what I’m hearing. Reminds me of the clowns who were talking about decoupling back in 2008. No such thing. Sorry to be the one to tell you.” – David Rosenberg from his Twitter handle…

Chuck again… Well, I consider David Rosenberg to be a guy that has his finger on the pulse of the economy, and when he says stuff like that, you, me and the guy down the street that cuts the grass with his shirt off, need to stop and listen… Sort of like those old E.F. Hutton TV commercials…

But the sheeple don’t know any better, and continue to think that the U.S. / China Trade talks will be the cure to all that ails the U.S. economy… Here’s something for you to put in your pipe to smoke…

Fed rate movements take about 6 months, maybe longer before they begin to filter through to the economy… So, if the Fed is talking about pausing and maybe even cutting rates next year, that’s NOT going to stop the U.S. economy from its appointed rounds with a recession! And again thinking about the lag in time from Fed rate movement to economic reaction, All these weak economic reports are a result of the Fed’s first hikes, 3 years ago… Imagine how slow the economy will be when the Fed’s rate hikes of from just last year enter into the economy… I’m just saying…

Longtime reader, Bob, sent me a note yesterday that had a headline title that read: 465 store closures here in the U.S. took place in 48 hours last week…  I’ve got the full story for you in the FWIW section today, so stay tuned, for that!

Well, it’s not all gloom and doom for the Eurozone economy just yet… According to the bean counters, Eurozone Retail Sales for January were up 2.2%, beating the estimate for the month of 1.9%…  and China announced that they were forecasting GDP for 2019 at 6% to 6.5%…   For all of the problems that everyone seems to think that China has, they are still growing their economy 3 times faster than here in the U.S. and 6 times that of Japan and the Eurozone…  I guess when you’re the lead dog, everyone tries to find weak spots in your armor…  It’s always been that way… 

If you think about it in a sports-wise scenario… in the late 90’s and early in the new century, the Yankees were disliked by fans everywhere but NYC, because they won very often. From 2004 to 2016, my beloved Cardinals had darts thrown at them for winning consistently, and don’t forget those Patriots, I even fall into the mix in not liking them because they win very often… 

So, what’s up with Gold’s latest round of selling? Wasn’t it just a couple of weeks ago that we were seeing Gold nearing the $1,350, level? And now it struggles each day and has fallen to $1,285… UGH!  I was very leery of Gold’s move higher weeks ago, because every time it has gotten close to $1,350, it gets whacked, and this time was no different, as much as we all would have liked to believe that this time would be different… (I totally dislike that saying, but it sure does tell it like it is with Gold, eh?) 

All I would say to those of you who think the end is near for Gold… Hogwash! And in my humble opinion, which could be wrong, but I’ll give it anyway… I think this latest slippage in the Gold price is flashing a blue light special to everyone, bargain prices here…  

OK, switching gears here…Longtime readers will recall me saying over and over again, years ago, that We’re turning Japanese, yes, I really think so… Well, nothing’s changed, except time… So, let me bring you up to date… The U.S. reached $22 Trillion in National Debt a couple of weeks ago… Now, longtime readers know that I’ve explained before that the U.S. finances its debt by selling U.S. Treasury bonds… Well, I read last night that foreigners sold U.S. Treasuries at a record pace in December… Foreigners sold $77.35 billion in U.S. Treasuries in the month, after net sales of $13.2 billion in November. December’s outflow was the largest since the U.S. government agency started recording Treasury debt transactions in January 1978…. Uh-oh…

So, while we have been tracking the Japanese with regards to debt accumulation, and economic slowdown (we’ve averaged just 2.2% GPD since 2008, VS 3.2% avg.) But… for the most part that’s where we split up… The Japanese, for the most part own their debt… While the U.S. farms it out to foreigners, for the most part… So, when the foreigners start to dump Treasuries like they did in December, or back away from the auction window, then Houston, we have a problem here in the U.S….

Now, to keep this from imploding the economy and the financial system, the Fed, in all their mental genius, will begin to just print millions and millions of dollars to pay for the Treasuries that are issued, and we’ll be back to Quantitative Easing… You know that this would be bad for the dollar, in more than one way, folks…

To recap…  The currencies continue to trade in tight ranges, but the slippage Vs the dollar is noticeable, and has Chuck scratching his balding head…  The talk about the Trade War nearing an end continues to drag on, and hold the carrot on a string in front of traders and investors… The Eurozone economy isn’t quite dead in the water just yet, as Retail Sales in January beat expectations, and China anted up and placed a bet on their GDP for 2019 at 6-6.5%… 

For What It’s Worth… Well, I did tease you with this earlier in the letter today, so with no further delay, here is the Retail Armageddon article I promised you… It can be found here: http://www.fox5ny.com/news/gap-jcpenney-victoria-s-secret-foot-locker-465-store-closures-in-48-hours

Or, here’s your snippet: “ 

The ‘retail apocalypse’ is alive and well this week with major chains such as Gap, JCPenney, Victoria’s Secret and Foot Locker all announcing massive closures, totaling the death of more than 465 stores over the last 48 hours.

All four companies reported its fourth quarter results this week during the critical holiday period, with three of them (Gap, JCPenney and Victoria’s Secret) reporting declining in same-store sales, while Foot Locker reported growth that more than doubled expectations.

Still, despite the good news. Foot Locker announced Friday that it plans to close around 165 stores across the country, during its investor call.

That comes less than 24 hours after Gap announced it would close 230 of its namesake stores over the course of the next two years after the brand’s same-store sales fell 7 percent during the holiday quarter. It also announced that it will separate its sister company Old Navy into its own publicly-traded company and create a new firm to house its remaining brands.”

Chuck Again…  Tell me again, Fed Heads, how the economy is so strong and robust… I love fish stories! HA!

Currencies today 3/5/2019 American Style: A$.7080, kiwi .6796, C$ .7492, euro 1.1325, sterling 1.3165, Swiss $.9992, European style: rand 14.1387, krone 8.6625, SEK 9.3337, forint 278.54, zloty 3.7972,  koruna 22.6112, RUB 65.73, yen 1111.95, sing 1.3552, HKD 7.8499, INR 70.44, China 6.7001, peso 19.28, BRL 3.7721, Dollar Index 96.75, Oil $56.31, 10-year 2.73%, Silver $15.11, Platinum $838.19, Palladium $1,514.82, and Gold. … $1,284.64

That’s it for today…  It’s a cloudy day here, so no sunrise to be seen yet… You’ve got to have days like this, to make the beautiful days even more enjoyable…  Things here are back to normal, with the return of my wife on Saturday…  On Sunday night, I had a hankering for some chicken fried rice, and so that’s what I had! Strange fare for me down here, where seafood is the norm… I seem to be doing OK… I get beat down easily, and I mean easily… but when you take chemo every day, those things happen…  OK… The Five Americans take us to the finish line today with their song: Western Union… Bet that one takes you back!  I hope you have a Tom Terrific Tuesday, and continue to Be Good To Yourself!

Chuck Butler

 

 

March 4, 2019

* Currencies trade in tight ranges for a week!

* Gold stumbles, but Palladium runs with the ball! 

Good day… And a Marvelous Monday to you! Well, I’m back! I wasn’t ready to come back, but the calendar said 3/4 and I told you would return on 3/4, so here I am… Welcome to March too! One of my fave months, because prior to last year, March was the beginning of Spring Training… I heard that a deadly tornado ripped through Alabama this weekend… So sad, that Mother Nature, takes lives… ☹… Well, did you miss me? I sure had more fun than a barrel of monkeys… I watched 5 baseball games in 5 days with my friends, and 2 more over the weekend by myself… Apparently, back in St. Louis, a winter storm hit there this past weekend… It was sunny and 85 here… I’m just saying… My good friend Kevin (Webbie) asked to hear a Nilsson song this past week, and I forgot to play it for him, and guess what comes up as the song to greet me this morning is? Nilsson, sings his song: Without You…

Well, the old saying that the folks on the trading desk used to say, that “When Chuck’s away, the currencies rally” didn’t hold true… And much like all my securities licenses that will expire in June, because no one has picked them up for 2 years… The old saying will too be retired… The euro is basically trading in the same clothes as when I left 10 days ago… The Trade Negotiations to date, have gone nowhere, the President’s summit with the N. Korean leader went bust… The National Debt keeps rolling along at an unprecedented speed… And guess what’s coming up on the horizon?

The Debt Ceiling was passed this last Saturday, and it wasn’t scheduled to be passed, for a couple more months! When will the finger pointing and blame game begin?

I read on the RT this past weekend that Russia had posted a $212 Billion Trade Surplus for 2018… That’s right I said Trade Surplus! Both the Budget and the Current Account Surpluses are at record levels, folks… I don’t see how currency guys and girls can ignore that fact much longer… But I guess when the major media is blaming everything on Russia these days, it clouds the sunny skies shining over Russia right now…

China has a HUGE Trade Surplus, but has a Current Account Deficit… The Eurozone has a Trade Surplus, but a major Current Account Deficit, and here in the U.S. we have both sitting in the red, and have been for some time now…

I had a reader once ask me, why it seemed I was always negative about the dollar… And I think I responded that the U.S. has the largest economy in the world, and was supposed to keep the dollar strong, so that other countries that took them in didn’t have to worry about holding them. But we’ve done a p&p job of keeping the dollar strong through the years… And since the dollar was removed from the Gold standard in August 1971, the weak dollar trends have caused larger losses for the dollar’s value than the strong dollar trends have recovered…

We’re the U.S. of A! And we should not be dealing with debt ceilings, and $22 Trillion in national debt, and we should not have had years of corp. corruption, and Politics that that can’t seem to agree on the time of day! And there’s so much more than I can even shake a stick at!  I look at what values currencies, and in my book, none of these things, plus, dozens of other things, add up to the value that is placed on the dollar right now. And that, my friends, is a good enough reason to bang on the dollar as any… 

OK… back to the regularly scheduled programming… Gold hasn’t had a good week while I was gone either… Gold is back below $1,300… And as Ed Steer of edsteergoldandsilver.com , said last week, “Da Boyz Were Out And About On Tuesday”… In layman’s terms… The price manipulators were sending the price of Gold downward on Tuesday… In fact he could have titled every letter he wrote last week the same! 

But Palladium is the cat’s meow of precious metals these days, as it has traded over $1,500 !!!!   That’s amazing to me, as all of the move to these lofty grounds for Palladium has come from what traders call a “shortage” of the metal, VS the demand…  There’s no question that this is how it’s supposed to be in the world, but… when does the curtain come down on this trade?  Palladium has proven a thought that my dad used to tell me all the time… There’s no such thing as a shortage of an item, the item is only in need of a price adjustment…   And Palladium has seen its price adjustment for sure!

This week, the Data reports will be flying in from all over the world, and here in the U.S. the Data Cupboard doesn’t have much today, but it builds a crescendo that comes on Friday with the Jobs Jamboree…  I have to say that in the past it made sense to report on the data of countries because it held a very important place among the things traders used to value a currency, but these days it’s just not the same…   For instance, look at all the weak and negative data reports we’ve seen here in the U.S. but did it hurt the dollar?  And look at all the bright shiny economic data reports we’ve seen print in Russia, and has it helped the ruble?  See, what I’m talking about? 

I just can’t get my arms around this article that came across Bloomberg this morning, that in the U.K. PM  May, paid for BREXIT votes…  I don’t know she escapes that one, unless it’s not true… You know, false news, and all…  

President Trump was dissing the dollar again this past week, saying that the strong dollar was hurting exports, and causing the large Trade Deficit…  He banged on Fed Chairman Powell, not by name, but by saying, “we have a Fed that… ” and so on…  I think the Fed should be banged on, as they’ve done an awful job of shepherding the economy and forward…  Beginning a rate hike cycle so late in an economic expansion, was their first mistake this go-round, and their 2nd mistake was deciding to reduce their balance sheet at the same time they were hiking rates…  They HAD to know that combining those two would be like hiking rates on steroids, and that would hurt the economy, eventually, didn’t they?  They DO have tons of economists that work for them, and one of them had to have come up with this idea don’t you think? 

I do…  and much like in the book by Danielle Di Martino Booth, Fed Up, when she would explain how the regional presidents would receive recommendations from his advisors, to present to the board…  

I read this morning that the U.S. and China are nearing an end of their Trade Talks, and will have an agreement in the end…  The stock jockeys should be happy about that… I’m just saying… 

I’m sitting here, looking straight out at the ocean, and the sun is rising over the ocean this morning, and it’s quite beautiful, and just exudes peace, and brotherhood…  Too bad that all gets lost on everyone… 

To recap…  The currencies haven’t rallied while Chuck was away, and so like all good theories die off… so does this one…   The currencies are basically in the same clothes as they wore when I went on vacation, and Gold got whacked a few times by the price manipulators, while Palladium continued to rally by large margins each day.  President Trump banged on the dollar and the Fed, and Chuck explains why he bangs on the dollar… 

For What It’s Worth…  Well, while I was away, my good friend, the Retirementor, Dennis Miller printed an interview he did with me, a couple of weeks ago… I had given you the heads up on this printing last week, before I went on vacation… But since Ed Steer printed it, I thought, I would too! Blow my own horn if you will…  So, this can be found here: https://milleronthemoney.com/dont-get-caught-in-the-fed-trap-again/

Or, here’s your snippet: “The Government surprised the world in 2008 when the Fed bailed out the banks at the expense of seniors and savers.
The Fed dropped interest rates to historic lows while buying U.S. treasuries and bad loans through their Quantitative Easing (QE) program. Seniors and savers lost over $4 trillion in interest income they would have normally received.

The stock market tanked. Investors, desperately searching for yield, redeployed their money into the market and higher risk bonds. Retirees had to take on more risk in order to survive.

Former Fed Chair Ben Bernanke called the consequences “collateral damage”. Seniors and baby boomers called it “catastrophic damage” as they downsized and altered their retirement plans.

Since the 2016 election the Fed raised rates 8 times. In January 2019 they held rates, but continue to sell off mortgages and treasuries. It appears the Fed is starting a U-Turn and we could soon see more QE.”

Chuck Again…  I hope you get an opportunity to read the whole interview, you’ll probably hear a thing or two that you hadn’t heard before…  and while you’re there, I would suggest you sign up for Dennis’ letter!

Currencies today 3/4/19 American Style: A$.7085, kiwi .6806, C$ .7568, euro 1.1340, sterling 1.3216, Swiss $1.0009, European Style: rand 14.2470, krone 8.6110, SEK 9.2980, forint 278.62, zloty 3.7910, koruna 22.6020, RUB 65.85, yen 110.85, sing 1.3545, HKD 7.8491, INR 70.81, China 6.7044, peso 19.35, BRL 3.7717, Dollar Index 96.59, Oil $56.29, 10-year 2.74%, Silver $15.14, Platinum $845.36, Palladium $1,546.54, and Gold… $1,287.23

That’s it for today…  Well, my beloved Cardinals don’t look good so far, but then it’s early in spring training… Pitching is good, hitting is bad, and fielding still needs work… I sit across the aisle from the Cardinals GM and the President of operations, and they get to hear my comments about plays all game long… I get in trouble at times from my wife when I say things… But when I’m alone like I’ve been the past two games… Watch out! I’m not one to hide my feelings or thoughts!  OK… lots of things going on this week here in S. Florida for me, with visitors, ballgames, inspections and so on, so I had better button this up and get going… I hope you have a Marvelous Monday, and remember to Be Good To Yourself!

Chuck Butler

 

February 21, 2019 

* Currencies can’t find a bid on Wednesday… 

* Palladium sees major profit taking… 

Good Day… And a Tub Thumpin’ Thursday to you! What a beautiful moon last night on the ocean! WOW! I sat out there in amazement at the beauty in our world, when you put all the other stuff on the back burner, and just concentrate on the beauty in our world. I had a great dinner with good friends at the oldest steakhouse in Florida… The Okeechobee Steakhouse… If you’re ever in this neck of the woods, you should try it! America greets me this morning with their song: Tin Man… Oh, Oz never did nothing for the Tin Man, that he didn’t already have…

Well, the march the currencies went on VS the dollar during Tuesday, didn’t continue on Wednesday, in light of the Fed sounding very dovish in their meeting minutes… I’ll get into the Fed’s meeting minutes in the FWIW section, so stay tuned for that!  It made no sense to me that traders didn’t take the meeting minutes for what they were… and sell dollars… But… I can’t have everything…

The euro traded in a very tight range on Wednesday, and in the overnight markets it was much of the same. And what did I tell you yesterday about those BREXIT talks? That they weren’t going well, right? Late yesterday, it was reported that the pound was weakening on news that some negotiators have quit the BREXIT talks… Don’t ask me how I knew these talks weren’t going well, I just knew… had that 6th sense, if you will…

Palladium saw some profit taking yesterday, and closed down $15 and change on the day… I guess reaching $1,500 was just too juicy of a price to not take profits, eh? Oh, and a longtime commodities guy, sent me a note yesterday, and told me that Palladium had never reached $1,500… And asked me where I got my prices… Well, I get my prices on Bloomberg.com… And I don’t use futures prices, they are the “spot” prices for precious metal that I report each day.

I don’t try to paint pretty pictures for currencies and metals in the currency roundup, they are what Bloomberg says they are, and that’s that! And from the looks of trading so far this morning, Palladium is off another  $24 in the early trading, so maybe the bloom is off the rose, here?

In Australia last night, some good labor reports, showed that 65,400 jobs were created in January, VS a negative 3,000 in December… So, a very nice rebound, eh? The Aussie Unemployment Rate remained at 5% in January, same as December. But with the euro being tightly traded in a narrow range yesterday, the Aussie dollar (A$) couldn’t find any terra firma to rally on these employment numbers… Hmmm….

What the hell was on Trader’s collective minds yesterday? The Fed sounds dovish, and talks about the idea that no new rate cuts will be needed in 2019, and the Australian Employment numbers are very good, and neither currency found a bid all day… What gives?

OK… I won’t get any answers here… So, I’ll have to wait to see if any of them  (traders) are interviewed so I can hear their excuses…

The U.S. Data Cupboard has some old “delayed” economic prints for us today… First we’ll see Durable Goods Order for December… I’m sure that by now, the boys and girls that do these dirty deeds done cheap, have had plenty of time to massage the numbers, so I won’t be surprised to see them stronger that what we would expect, given the nature of other December prints… And Capital Good Orders for December will also print… We may see a negative number here, only because those same boys and girls that are going to massage the Durables, think that most people don’t know what CAPEX is… But you… Dear Pfennig Reader, know all too well, what CAPEX is… and if it does print negative, that’s a bad sign, and another brick in the wall…

Dirty deeds, done dirt cheap… (AC/DC) that’s the boys and girls that massage the numbers before allowing the world to see them…

The price of Oil jumped to a $57 handle in the past 24 hours…  Supply and Demand, they are supposed to reveal price, right?  Well, with the price of Oil, it sure seems to be in play, at least right now, as our friends (NOT!) at OPEC are apparently going through with their production cuts, thus reducing supply… And demand is still strong for fossil fuels, so there you go! 

Just what U.S. consumers need right now, is a higher price for the gas they put in their monstrous SUVs…   Or whatever Beemer, Audi or Benzie they drive!   Down here I drive a Honda…  And it takes regular gas, and they like to charge more for gas down here than in Missouri, so this bump up in price will only hurt me a little bit… 

The U.S. Data Cupboard yesterday had a third tier data print that almost got past me…  The U of Michigan does a confidence report, and they also do an inflation report, and their inflation report for January hit an all-time low!    I sure hope the Fed Heads get this data in front of them…  As I understand, from Danielle Di Martino Booth’s book, Fed Up, these Regional Fed Presidents get a lot of their data from the economists that they employ…  So… let’s hope that somebody with an ounce a gray matter decides to put this data in front of his boss!

An old friend, not that he’s old, but our friendship is old, Steve Sjuggerud, is all over the internet these days with his latest call on stocks… Steve believes that the stock market bubble will pop, but before it does, he believes stocks are going to hog wild on the upside (my words not his) And looking at stock performances it appears that he may be correct… 

But the Bond Boys are having nothing to do with this stock market talk, as the yield of the 10 year Treasury remains around 2.65%, and apparently is well bid at that level…  I have to admit that I tend to agree with the Bond guys… 

To recap… The currencies rally of Tuesday, couldn’t be repeated on Wednesday, and they look pretty much like they’ll trade in the same clothes today too…  The Fed’s Meeting Minutes were quite interesting, in that they sounded pretty dovish, for a group of people that hiked rates at the same meeting in December… And Australia printed a strong Employment report, but none of these things could get the dollar bugs to give an inch on the day… 

For What It’s Worth… Bloomberg had a good article on the Fed’s Meeting Minutes last night, and I pulled it so everyone could see what was on the Fed Head’s collective minds, back in December… Remember the FOMC hiked rates 25 Basis Point (1/4%) at that meeting but has since done the old two steps backward, and here are the 5 takes on what the Fed Heads had to say, and I found it on www.bloomberg.com

1. Or, here’s your snippet: “There was widespread agreement for the FOMC to end shrinkage of the $4 trillion balance sheet by the end of the year. The timetable ends uncertainty over whether shedding assets would further tighten financial conditions.
2. The FOMC essentially said it is throwing out the December forecasts for two rate hikes this year, and instead “many” on the committee were unsure whether any adjustments would be needed.
3. The committee is taking a patient approach in light of increasing downside risks, notably slowing global growth and turmoil in financial markets. Some FOMC participants were cutting their estimates for 2019 U.S. growth.
4. The Fed was becoming more dovish in its view on inflation, noting the outlook had become more muted compared to last year even though the U.S. labor market has been tightening.
5. U.S. stocks were mixed, while Treasuries edged lower after release of the minutes, indicating not a big surprise from investors.

Chuck again… Well, it’s all coming back to me now said the blind man as he spit into the wind… The Fed is turning dovish, and choking on their previous statement of how the economy was strong and robust! But traders didn’t see this as a reason to sell dollars? Strange, eh?

Currencies today 2/21/19 American Style: A$.7110, kiwi .6817, C$ .7580, euro 1.1345, sterling 1.3070, Swiss $1.0015, European Style: rand 13.9050, krone 8.6215, SEK 9.3468, forint 279.67, zloty 3.8190, koruna 22.6213, RUB 65.69, yen 110.75, sing 1.3525, HKD 7.8476, INR 71.11, China 6.7212, peso 19.21, BRL 3.7198, Dollar Index 96.54, Oil $57.34, 10-year 2.66%, Silver $15.86, Platinum $823.70, Palladium $1,438.10, and Gold… $1,338.40

That’s it for today, tomorrow, and next week! Yes, for all of you who have not paid attention this week, I’m going on my annual spring vacation starting tomorrow, and won’t be back in the saddle until 3/4…   My first Spring Training Game is Sunday… Every year when I walk into the stadium and see the field for the first time, I get chills, and tear in my eye, because, if cancer had had its way with me, I would no longer be able to enjoy these trips to heaven on earth…   Our Blues go for their 12th win in a row tonight in Dallas… Let’s Go Blues!  Cardinals already reported a pitcher with arm problems… Every year, it’s something at spring training!  I would go on about how this shouldn’t have happened to this pitcher, but you don’t want to hear that, so that’s all I’ll say about that!  R.E.M. takes us to the finish line today with their song: Drive….  I hope you have a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!  bye~

Chuck Butler

 

February 20, 2019

* Currencies trade stronger on Tuesday VS the dollar

* Gold has a good day, but gets outshone by Palladium… 

Good Day… and a Wonderful Wednesday to you… We have an early morning appoint with a lawyer this morning to close on our condo unit that we just sold… Great stuff for me, that we didn’t own two Condos too long… And a great thing for my retirement account too! HA! I got an opportunity to watch our Blues on TV last night…  And they won their 11th game in a row! Man have I been a dolt lately, reporting their winning streak, and each time cutting them short a win! Billy Joe Royal greets me this morning with his song: I Knew You When… Ahhh… The 60’s… what a great decade of music…

The currencies, led by the Big Dog euro, continued their march forward yesterday, after spending a couple of days, dawdling, and waiting for the U.S. trading desks to be fully manned. More and more I’m seeing reports from economists around the world saying that the dollar’s days as the king of the hill are numbered… I love it when “other economists” get on my bandwagon… Of course my bandwagon has hit a pot hole or two along the way, lost a wheel a couple of times, and had to have lead horses changed, but eventually the trend will catch up with the dollar, and when it does, you’ll rarely see the dollar bugs running around when the lights get turned on…

I also refer to a couple of economists that always seem to have a data report in their back pocket for slow days, and yesterday was no different for economist David Rosenberg, (one of my faves!) who had this little ditty for his Twitter followers: Restaurant sales have declined in four of the past five months and at a pace we haven’t seen in 25 years. That means worse than the depths of the 2001 and 2007-09 recessions. Remember — they are a leading indicator.

Chuck Again… All in all, it’s just another Brick in the wall…

If you’re new to class or have been living under a rock for the last week, I sing that song by Pink Floyd every time we see a data print here in the U.S. that tells us the recession I keep talking about is on its way… with each weak or bad report being “another brick in the wall”…

And Gold had another good day gaining $11, and is up another $4 in the early morning trading today… But the show horse of the precious metals is Palladium, which found a way to add another $18 to its price yesterday, and was within spitting distance to $1,500  at the end of the day yesterday, and has gone over that figure in the early morning trading today…  

Palladium traders claim that there is a shortage of the metal and that’s why the prices are soaring every day…  Hmmm… but what about the shortage in Silver?  I told you yesterday about the problems for Silver in that there are just too many short positions on the books… But… Silver did climb above $16 last night, and that in itself is a major move for the Silver… 

Oh, and I was a day early with my thought yesterday, that the Fed’s Meeting Minutes would print on Tuesday, when it’s really a Wednesday afternoon thing… So, we have that going for us today, eh? I also made a faux pas yesterday adding up the ticket costs to my spring training buddies, and giving them some bad numbers! It just wasn’t my day to be smart… HA!

The Fed’s about face about two weeks ago, with Jerome Powell, sounding very dovish, has been the catalyst for the currency rebound, and now Treasury yields are continuing their decline, and that is really going to add problems for the dollar going forward… Right now, you can center on a handful of currencies jumping on the rally tracks VS the dollar, but more will join them once a clear weak dollar trend is evident to the markets. Currencies like the Swedish krona, which is still having to deal with negative deposit rates in Sweden, is having problems garnering any interest from investors to buy the krona…

And while the pound sterling is enjoying another bump up in price, because traders are wearing rose colored glasses and think that the BREXIT plans are going nicely… Well, I have news for them, they aren’t going well… and this brief bump in the pound, will be short-lived… at least in my humble opinion, which could be wrong!

Even with the Reserve Bank of Australia (RBA) doing their best Eeyore imitation about 10 days ago, the Aussie dollar (A$), is joining the euro on the rally tracks VS the dollar, and dragging the A$’s kissing cousin across the Tasman, kiwi along for the ride… At least the Reserve Bank of New Zealand (RBNZ) wasn’t following the RBA down the “oh woe is me” rabbit hole, last week when they met… but they also didn’t hike rates… UGH!

My publishers, Mary Anne and Pamela Aden asked me about 10 days ago, if I thought the yen would be the key currency in a run VS the dollar… And I said no… I don’t like yen, and haven’t for a long time… I don’t get the “safe haven currency” claims, and I don’t get why currency traders don’t take the demographics problem in Japan seriously… For if they did yen would be nowhere near 110, and it would be more like 120! Ok, I know, I’m a little hard on the beaver there, but June… the beaver should have known not to spread its wings! HA!

That was not to say that Mary Anne & Pam were of a different opinion than me, they just thought they would ask which currency will be the lead dog in a weak dollar trend… And they asked, me! I was honored to answer their question for them! But the 2nd most traded currency in the world is the euro… The offset currency to the dollar is the euro… and even if things aren’t all peachy in the Eurozone, it won’t matter, if the dollar is deeply entrenched in a weak dollar trend…

Of course I’m talking about what happened in the last weak dollar trend, and I see no reason to believe it won’t happen again in the next weak dollar trend!

You know, things like I’m going to talk about don’t make me happy to have to talk about them,….  I read a report last night that said the President (Trump) was telling the Chinese to keep their currency stable…  Wait, wait, What?  Yes, now we’re telling countries how to manage their currencies, as if we had a clue how to manage our own, for if we did, the dollar wouldn’t be, on an overall basis, 90-something percent lower in value than when the Fed was forced down our throats by that awful president Woodrow Wilson, in 1913… 

The housing reports that were supposed to print today will be delayed, and the only thing the U.S. Data Cupboard has to offer us is the Fed’s Meeting Minutes…  Given the abrupt turnaround that Jerome Powell made since that last meeting in December, when rates were hiked, I would think that the minutes will reveal some real sawdust left on the floor… 

To recap…  The trading desks are back to normal and the currencies took this as a sign to move forward with their march on the dollar yesterday. The thought that interest rate hikes are a thing of the past here in the U.S. and Treasury yields continuing to decline, has economists lining up to give their two -cents worth, and talk about how the dollar’s days are numbered…  We add another brick in the wall today… 

For What It’s Worth…  These kinds of articles/ stories really get to me folks… It’s just not right, and that’s all I’ll say about that…   This is a report that talks about the amount of tax that Amazon will pay this year and it can be found here: https://www.blacklistednews.com/article/71112/amazon-will-pay-0-in-taxes-on-11200000000-in-profit-for.html

Or, here’s your snippet: “While some people have received some surprise tax bills when filing their returns, corporations continue to avoid paying tax — thanks to a cocktail of tax credits, loopholes, and exemptions.
According to a report from the Institute on Taxation and Economic Policy (ITEP), Amazon (AMZN) will pay nothing in federal income taxes for the second year in a row.

Thanks to the new Tax Cuts and Jobs Act (TCJA), Amazon’s federal tax responsibility is 21% (down from 35% in previous years). But with the help of tax breaks, according to corporate filings, Amazon won’t be paying a dime to Uncle Sam despite posting more than $11.2 billion in profits in 2018.

How is that possible?

“It’s hard to know exactly what they’re doing,” said Steve Wamhoff, ITEP’s Director of Federal Tax Policy. “In their public documents they don’t lay out their tax strategy. So it’s unclear exactly which breaks [the company is taking advantage of]. They vaguely say tax credits. One could think of many different ways a corporation could do this, like the depreciation breaks which were expanded under TCJA.”

Chuck Again… thanks to longtime reader Bob, for sending me that link… 

Currencies today 2/20/19 American Style: A$.7156, kiwi .6867, C$.7585, euro 1.1345, sterling 1.3033, Swiss $.9991, European Style: rand 14.1235, krone 8.5797, SEK 9.3052, forint 280.02, zloty 3.8267, koruna 22.6365, RUB 66.05, yen 110.76, sing 1.3514, HKD 7.8489, INR 71.09, China 6.7626, peso 19.18, BRL 3.7245, Dollar Index 96.54, Oil $55.88, 10-year 2.63%, Silver $16.07, Platinum $824.82, Platinum $1,501.66, and Gold… $1,344.99

That’s it for today… 11 in row! WOW! And I got to see the Blues play last night VS the Maple Leafs! Looks like rain outside, I heard last night that early morning rain wouldn’t last, and the sun would make an appearance mid-morning! YAHOO! Well, we’re getting down to the day I take my traditional spring vacation… And it will start on Friday this week, and I won’t be back in your hair until 3/4…  I know, I know, you’ll miss me, and I’ll miss you… But I have to have these times to recharge…   While I’m out on vacation, my good friend, the Retirementor, Dennis Miller at www.milleronthemoney.com  will run an interview with me… so, if you’re having withdrawal pains from not reading me, there you go!   Besides, if you’re not signed up with Dennis’s letter, you aughtta! My St. Louis friends will get a kick out of that line, since it’s an old TV commercial…  Sly and the family Stone take us to the finish line today with their song: If You Want Me To Stay…  I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

February 19, 2019

* December Retail Sales print negative… 

* Currencies rally on the bad data in the U.S. … 

Good Day… And a Tom Terrific Tuesday to you! What a great weekend here in S. Florida, weather-wise, and perfect for a 4 day weekend for yours truly! There were tons of data releases on last Friday, so we’ve got to talk about those, the National Emergency , and more bricks in the wall… All that and more in today’s Pfennig! Our Blues are really playing some very good hockey these days, having won 9 in a row, and haven’t lost in February, so far! I’m thinking that it could be a case of getting hot, too early, and I sure hope I’m wrong, but the playoffs don’t start until the second week of April… I’m just saying… Not that I’m complaining about their winning streak! Bob Marley greets me this morning with his song: Three Little Birds…. People don’t worry, about a thing, cause every-little-thing is gonna be alright…

Sounds like some of the economists, that keep saying that debt doesn’t matter… Last week, the President announced a National Emergency as the border situation got worse. I’m wondering what happened to calling a National Emergency on the debt… We have reached $22 Trillion and it took only 10 months to gain the last $1 Trillion… And if you ask me… we have 2 National Emergencies… But since Trump has added to the debt party, he can’t be excluded from the former presidents that added to the debt in a Big Way, and failed to call if a National Emergency… That’s all I have to say about that today, for I’ve been beating the drum, and calling out the National Debt as a problem for a long time… Oh, and now there are something like 16 states trying to block the President’s National Emergency… Didn’t I tell you a couple of months ago, that nothing was going to get done in the next two years? I’m just saying…

The currencies on Friday, held on to the moves they had made on Thursday, and with the U.S. out yesterday, the currency market was thinly traded, with little movement. So, the majority of the move by the currencies against the dollar, came on Thursday, the day that December Retail Sales finally saw the light of day, and they were as bad as the BHI had indicated they would be, with Core Retail Sales down -1.8%….. In December… in the month that we shop till we drop… Retail Sales were a negative -1.8%… When you add in car sales they got better, but not by much, falling -1.2%…

All in all, it’s just another brick in the wall…

And to add insult to injury for the dollar bugs….. Our friends at OPEC (NOT!) have cut production of Oil again, and those curbs on production, has pushed the price of Oil above $56…

So, there’s been a ton of data in the past few days, And we’ve added quite a few bricks to the wall of bricks that represent economic data reports that are pointing to a recession in the future… We might as well go through them… First of all on Thursday, PPI (wholesale inflation) printed for January was -0.1%… So, no increase of inflation in the pipeline, which should be on the Fed Head’s minds as they prepare to shut down the rate hikes next month…

On Friday, it was more of the same, and more bricks in the wall… Industrial Production in January printed negative -0.6%… The decline was driven by an 8.8 percent decline in motor vehicles and parts, with assemblies falling from the best pace in more than two years to the weakest reading since May. The year has started out in the red as far as economic data is concerned and the markets are beginning to notice… (a note to them from me… Hi guys, glad you could join in the discussion)

For all those that keep saying this is nothing, it’s going to get better, and this is the best time…I have this to say… What we have here is a failure to understand… To not see the trees in the forest, and to have drank the Kool-Aid…

Gold had a good day on Friday gaining more than $9, and yesterday even without the price manipulators at their desks, Gold gained $3 more dollars on the day…  And is up another $3 in the early trading this morning…

Speaking of Gold… Last week I highlighted an article in which metals company, Johnson-Matthey commented on the supply and demand of Platinum and Palladium as being the reason they’ve done well…. I then received an email from a dear reader asking to ask Johnson – Matthey to also comment on Gold & Silver… Well, I guess if I had their email address I would… But to put it to the test on the number of short trades on the books, Silver continues to be the number 1 metal that has the most short sales, so much so, that it would take 185 days of Silver production to match the number of ounces of Silver that have been sold short…

Palladium continues to soar higher and higher each day… Friday, it was up $25 and yesterday it was up $24, and is working up a sweat in the early morning trading today… Heavens to Betsy, what on earth has gotten into Palladium traders?  Palladium has outperformed everything in the past two years… Everything! stocks, bonds, commodities, other precious metals, cryptocurrencies, and whatever investment invention that the propeller heads have come up with now…  I guess, I should have listened to myself, when I wrote about how I agreed with a metals company CEO, who said that Palladium was going to bypass Platinum… It has done that, and much, much more!

Well, the U.S. / China trade talks continue past last Friday’s original deadline, as an extension was granted, and there were “leaks” from the negotiators, that things were going smoothly..  Hmmm… I’d say hogwash! If things were so hunky dory, why did you need an extension of time?  All these bad economic reports from January and late last year, are showing that I was correct in saying that the Trade War would hurt both countries, the U.S. and China…  

And over in the U.K. BREXIT talks continued, but there’s nothing here to report, as I doubt little progress has been make… This is going nowhere folks, and pretty soon, there will be calls to end it all, and go back to the way things were before the BREXIT vote… At least that’s how I see it happening… 

But, pound sterling is held hostage to the BREXIT happenings, so if I see the whole thing collapsing, then I would steer clear of pound sterling, but that’s just me… 

I had a dear reader ask me to talk about the Singapore dollar (S$), so I would be happy to do so, as I’ve not mentioned it in a long time… My bad, I guess…  As I’ve talked about in the past, the S$, moves in tandem with the Chinese renminbi, as the two respective countries compete for exports, and neither country can afford to allow their currency to get out of whack with the other…   

Keeping that thought in mind… The Chinese renminbi has actually been better in recent weeks, which means the S$ is also performing better VS the dollar…  I’ve talked about this in the past, but for new readers… In Singapore they do something that I believe all countries should adopt… Their Monetary Authority of Singapore (MAS) uses a band that the currency trades in that’s tied to inflation… The only move the currency’s trading  range in the band if inflation moves…    They use the currency’s strength to fight inflations, an not willy nilly interest rate moves! 

There’s not much in the U.S. Data Cupboard today, except for the Fed’s Meeting Minutes (FMM) from their last meeting that will print this afternoon…  In December, the Fed hiked rates, and ever since they talk as if they were sorry they did so… And the Data reports from the last quarter of 2018, and into 2019, have reflected that there is a problem, Houston…  So, it will be interesting to see if the Fed Heads were talking about these problems last month when they hiked rates, or if they were still looking at the economy though rose colored glasses…  I’m thinking that they still ahd their fashionable rose colored glasses on in December, and the FMM will show that to be the case…  

• To Recap…  The currencies rebounded last Thursday, and have been trading in a tight range since, as the markets have been thinly traded since… But all that changes today, and the only piece of data today is the Fed’s Meeting Minutes.  Last week, December Retail Sales were negative -1.8%… Yes, that’s in December…  That’s not a good thing folks, and Industrial Production fell out of bed in January!  Our wall of bricks that represent bad economic data reports, received quite a few bricks in the past week…  

For What It’s Worth…   I received this email from the GATA folks over the weekend, and then Ed Steer highlighted it, so the double shot of this report was enough for me to make it my FWIW article today. It’s about how since Glass Stegal was abolished, Banks are falling by the wayside, and can be found here: http://wallstreetonparade.com/2019/02/4823-u-s-banks-have-disappeared-since-1999/

Or, here’s your snippet: “At the end of 1999, the year that President Bill Clinton and his Treasury Secretary Robert Rubin brokered the deal to repeal the Glass-Steagall Act of 1933 and allow the casino investment banks on Wall Street to gobble up deposit-taking banks, there were 10,220 federally insured banks and savings institutions in the United States. Today, that number stands at 5,397, a decline of 47 percent according to the Federal Deposit Insurance Corporation (FDIC). What exactly happened to those disappeared banks?

We examined FDIC data to see if the sharp falloff in bank numbers was from failures or mergers. We found that the vast majority of the decline resulted from banks being absorbed in mergers. By the end of 2005, six years after the repeal of Glass-Steagall, the U.S. still had 8,832 federally insured banking institutions. But in just that year alone, 315 banks were lost to mergers. By 2010, the number of U.S. banking institutions had dropped to 7,657 with 197 institutions absorbed that year through mergers. In years 2015, 2016 and 2017, there were a total of 786 federally insured banking institutions absorbed through mergers.

The loss of competition in banking services has unleashed an unprecedented concentration of the life savings of Americans being held as deposits at a handful of behemoth Wall Street banks which simultaneously engage in high risk securities and derivatives trading – the very combination that led to the epic Wall Street banking collapses in 2008 and the 1930s.”

Chuck Again….  Well, let’s see… I’ve worked at 4 banks in my life and none of the 4 are still in business…  Maybe I was to blame? HA! As if…  I know the last place I worked, I was responsible for keeping the lights on in 2008…  But that’s all in the past…  in other words, nobody remembers, or cares… 

Currencies today 2/19/19 American Style: A$.7117, kiwi .6826, C$ .7550, euro 1.1310, sterling 1.2932, Swiss $.9960, European Style: rand 14.1573, krone 8.6152, SEK 9.3627, forint 281.50, zloty 3.8300, koruna 22.7467, RUB 66.20, yen 110.80, sing 1.3563, HKD 7.8485, INR 71.40, China 6.7638, peso 19.25, BRL 3.7161, Dollar Index 96.88, Oil $56.13, 10-year 2.66%, Silver $15.83, Platinum $811.81, Palladium $1,483.46, and Gold… $1,330.19

That’s it for today…  Just watched the sunrise over the ocean with a cloudless sky… simply beautiful…  We’re in our new digs here, but the window coverings haven’t arrived yet, so the sun shines through…   I’m going to head over to Roger Dean stadium today, to watch some spring training drills by my beloved Cardinals… You would be surprised to see how many people will be there… I guess there are more baseball nuts like me around!  Dave Loggins takes us to the finish line today with his 70’s song: Please Come To Boston…   I hope you have a Tom Terrific Tuesday, and continue to Be Good To Yourself!

Chuck Butler

February 14, 2019

* Currencies get sold on Wednesday… 

* Gold can’t find a bid, but Palladium keeps going higher… 

Good Day… And a Tub Thumpin’ Thursday to you! And Happy Valentine’s Day to all of you in love with someone! Oh, why limit that, Chuck? Happy Valentine’s Day to everyone… I certainly don’t want to leave out any Charlie Browns….  I doubt that the  “can’t hurt anyone feelings” schools don’t have Valentine’s Day parties any longer, where Valentine cards are exchanged, and you always saved the best and sappiest card in the ones you bought to give out, for your favorite girl… or boy…  You always sat with anticipation, and hope that you were going to get 1. a lot of cards, and 2. that one of them would be from your secret sweetheart…  Great memories there, that kids today, no longer get to experience… That’s a shame…  The Rev. Al Green greets me this morning with this song: Love and Happiness… 

Well… It appears that we’re back to the trading pattern that gives us one day up and the next day down… I can’t stand this volatility, there’s no direction, no trend, no sense in the currency markets and metals…  Monday was the dollar’s day to dance, Tuesday belonged to the currencies, and Wednesday went back to the dollar… That would mean today, the currencies should rebound… I’m not seeing that just yet, but there’s always the December Retail Sales data to shoot holes in the dollar later this morning… 

I’m surprised, no wait, no you’re not Chuck, this is typical for the major media these days… What I’m talking about is the fact that the U.S. national Debt is now above $22 Trillion… And nary a word on TV cable news about it… Have they all been given the “shh sign”?  It certainly appears that way, to me…  But not to worry, you always have little old me to remind everyone the national debt figures! And we, as a country, have now gone over $22 Trillion, in just about 10 months time, we went from $21 to $22 Trillion… UGH!  

Since I’m going down this road I might as well keep going, right?  OK, well, yesterday, I told you about the Brick in the Wall stuff I’m watching… And I have another brick in the wall of data reports that spell recession, to add to to the wall today… Check this out… 

According to a new report from the Federal Reserve Bank of New York, more than 7 million Americans have reached serious delinquency status on their auto loans, meaning they’re at least 90 days behind on payments.

All in all, it’s just another brick in the wall…    Yes, and guess who the majority of these delinquent folks are? They’re the under 30 crowd that bought their beemer or Audi, or Infinity car with bad credit, which made their auto loan, “subprime”, and longtime readers will recall me talking about this in the past and how I thought this was going to end up in tears, and look where we’re going now… We’re heading to the crying room… 

Again, nary a word of this coming disaster on the cable TV news…  I shake my head in disgust…  One has to scour their sources to find these pieces of news that tell a story about the economy, and I don’t mind doing it, in fact I love doing it, but… would like for everyone that doesn’t read the Pfennig to have access to these items, so they can make informed decisions about investing…  That… or, get them to sign up for the Pfennig!  HA! 

There’s not much going on abroad in the data print section… The Eurozone did print 4th QTR GDP this morning… Wait, What? they’re just not printing 2018 4th QTR GDP? That sure seems to me to be very backward looking…  Anyway, it was not anything to write home about, nor was it earth shattering the other way either… Eurozone 4th QTR GDP on a year on year basis was up 1.2%, same as the 3rd QTR in 2018… So, no sing of a pending recession there, at that time… But things for the Eurozone sure have changed in the 6 weeks since the end of the year… At least that’s how the dollar bugs would have you see it… For me, I’m still on the fence, and agree that things are looking weaker in the Eurozone, but it could just be a beginning of the year slowdown, and not a trending recession, but then it might not be either…

So, more time and data is required before we make the call here…  But remember what I’ve always told you… That the euro is the offset currency to the dollar… And IF a weak dollar trend begins in earnest, the Eurozone’s data won’t bother the euro, as it will be the main beneficiary of the dollar weakness…  

Of course, the euro could find more room to rally VS the dollar if the Eurozone economy isn’t in a recession too!   During the last weak dollar trend, I recall talking to my former colleague, Chris Gaffney, and talking about how the Eurozone economy was growing, and now I was able to give additional reasons to buy euros, and not just because the U.S. was doing badly…  

Gold couldn’t find a bid yesterday, and fell $4 and change on the day…  I keep looking at the price of Palladium in wonderment… Palladium, which is used in the making of catalytic converters for gas powered automobiles, is trading above $1,400 an ounce, and I keep saying, “this can’t continue, this can’t continue” and yet it does…  I just think that given the rot on the U.S. economic vine, that the coming recession could knock the stuffing out of Palladium… But that doesn’t mean it should be ignored now, eh? 

And everyday, I get ready to record the prices for the currency roundup and get to Silver and automatically write down $15 and then look to see the change…  I’ve grown very impatient with the Silver’s ability to rally given the shortages that I’ve been talking about…    I was reading an interview on silverseek.com , with Silver guru, Ted Butler (no relation I know of)  and he had this to say… “Silver has never been more necessary. It is a vital component of just about every modern product. Production of silver has been flat for years. Quite simply, there will not be enough silver to go around and price rationing will be required.”

OK… I agree, but when’s “sooner” going to be? 

As previously stated, the U.S. Data Cupboard will finally have the December Retail Sales this morning, and given that December’s Retail Sales should be stronger than Charles Atlas, (remember him?) I’ve told you already this week, earlier, that the BHI (Butler Household Index) indicated to me that this will NOT be the strong Retail Sales report the market was anticipating a month ago, when it should have printed originally… 

Yesterday… The Data Cupboard had the stupid CPI, which showed no increase to inflation…  Now, if the Fed Heads watch this data, and I doubt they do, given the way it’s been hedonically adjusted for over 30 years, they would certainly entertain the idea of no more rate hikes are needed… 

I really don’t have much else to talk about, this morning…  I’m all twisted and turned on everything that’s going on here in the U.S.  So, I’d rather not go down one of those rabbit holes this morning… It’s Valentine’s Day, we’re all supposed to be feeling amorous, not shooting holes in thoughts and ideals!  But wait, wasn’t there major shooting of holes in the St. Valentine’s Day massacre?  So, I guess those guys weren’t feeling so “amorous” eh? HA!

To recap…  It’s one day up the next day down for the currencies these days, which would have them rebounding today, but no sign of that just yet this morning…  Retail Sales from December finally gets printed today, and could push the dollar down, if all things are created equal, that is…  Gold couldn’t find a bid yesterday, but Palladium continues to gain in price, and Chuck is getting quite impatient with Silver…  

For What It’s Worth…  Since I mentioned it earlier, I though that this article on Reuters.com was quite apropos. It’s about Palladium’s rise, and can be found here:  https://www.reuters.com/article/platinum-palladium-johnson-matthey/update-1-palladium-supply-shortfall-will-worsen-this-year-johnson-matthey-idUSL5N2084XX

Or, here’s your snippet: “A deficit in the palladium market that has driven prices of the autocatalyst metal to record highs will widen dramatically this year, specialist materials company Johnson Matthey said in a report on Wednesday.

The company, a leading auto catalyst manufacturer, said the shortfall in the roughly 10 million ounce-a-year palladium market narrowed in 2018 to 29,000 ounces from 787,000 ounces in 2017, its widest in three years.
But it said stricter emissions standards would increase demand for palladium for catalytic converters, and despite an increase in recycling, supply would struggle to keep up.

The rate of growth in secondary supplies is likely to be lower than in 2018, while primary shipments (of newly mined metal) are expected to be flat,” the report said.

Palladium-backed exchange-traded funds (ETFs) would no longer be able to bridge the gap between supply and demand by returning metal to the market, it added.

ETF holdings have fallen to around 750,000 ounces from more than 2.5 million ounces in 2015.

Palladium prices have surged by around 70 percent in the last six months to record highs above $1,400 an ounce, while platinum, once the most expensive of the major precious metals, is stuck near 10-year lows around $800 an ounce.
For platinum, Johnson Matthey said the roughly 8 million ounce-a-year market was oversupplied by 498,000 ounces last year, up from 176,000 ounces in 2017, and another surplus was expected this year. “

Chuck Again…  It’s all very interesting folks… the rise of Palladium, which longtime readers will recall me talking about over a year ago, that a mining president said that 2018 was going to be the year the Palladium passed up Platinum, and he was bang on… 

Currencies today 2/14/19: American Style: A$.7105, kiwi .6833, C$ .7540, euro 1.1275, sterling 1.2838, Swiss $1.0088, European Style: rand 14.1020, krone 8.6498, SEK 9.2700, forint 282.60, zloty 3.8443, koruna 22.8640, RUB 65.88, yen 111.05, sing 1.3582, HKD 7.8479, INR 71.07, China 6.7585, peso 19.41, BRL 3.7266, Dollar Index 97.13, Oil $54.40, 10-year 2.69%, Silver $15.58, Platinum $785.68, Palladium $1,408.18, and Gold… $1,306.00

That’s it for today, and tomorrow, and Monday, which is the President’s Day holiday! A 4-day weekend for yours truly, and after this past week, one that is well deserved, if I may say so myself! HA!  Well, did you do good with your Valentine’s Day gift for your loved one?  I have been instructed that I should not waste money on cards, flowers, candy, and a whole list of other things… So, a kiss is all I have to offer today…  I hope you do better than that!   HA!   I smell bacon being cooked, I guess I’m getting a big breakfast for Valentine’s Day! YAHOO!  The first day of Spring Training was shortened by the rain that fell here all day yesterday… Beginning tomorrow, we should be back to normal, sunny and 80, each day… Uriah Heep takes us to the finish line today with their classic rock song: July Morning…  I used to have an 8-track player in my car, and had an 8-track recording of Uriah Heep Live, and I along with my good friend, Preston, would play that at high volumes over and over again…   I hope you have a Tub Thumpin’ Thursday, Fantastico Friday, Marvelous Monday, and an amorous Valentine’s Day… And remember to Be Good To Yourself!

Chuck Butler

 

 

 

February 13, 2019 

* Trade talks at an impasse… again!

* RBNZ & Riksbank don’t follow the Fed’s script… 

 

Good Day… And a Wonderful Wednesday to you! Another beautiful day here yesterday, saw me outside reading a new (for me) Jack Reacher book… Harry Bosch, Alex Cross, and other similar books all keep my attention longer… But I in no means is someone that says, “the book was so good I couldn’t put it down to go to sleep”! For me… When it’s time to go to sleep, it’s time, period! The currencies rebounded yesterday, as I was beginning to think that their rebound of two weeks ago, was going to be another of those false dawns we’ve seen in the past year… So, that and a few more things are what’s on today’s docket… The Atlanta Rhythm Section (ARS) greets me this morning with their song: Imaginary Lover…

OK… I’m still seething about the new Green Deal that the socialists are trying to get people to like…. It’s all a bunch of nonsense to me, with no ability to pay for any of it, and things stated that a 5th grade math wiz would be able to point out as ridiculous… And that’s all I’m going to say about that today… Like I said, no politics, except when it comes to the idea that this country would be better off as a socialist country, I just wont’ let that slide…

And it IS my letter, with no upper management interference in what I say, so hopefully you don’t get so upset with me that you unsubscribe… For if you did, you would rue the day, you did so, because then, who’s going to tell you, for free, the truth, and all the other stuff I tell you?

Well, like I said in the opening the currencies, led by the Big Dog euro, rebounded yesterday, and through the overnight markets… The euro bounced off the matt, and got back up swinging left hooks, and uppercuts to the dollar bugs… Soon the dollar bugs were retreating to their homes in the wall boards…

Somebody asked me why I use the term dollar bugs, and instead of dollar bulls, and I replied, well, they call people like me “Gold bugs”… So I just return the favor!

So, what led the way for a currency rebound… Well this was in Reuters.com last night, “The dollar edged lower against its peers on Wednesday, as rising expectations of a breakthrough in the trade impasse between United States and China led investors to put money into the euro and Asian currencies.”

Oh, no… another trade talk impasse? Just when everyone thought these talks were going to come out like seashells and balloons… They don’t, and everyone goes home with their collective tails between their legs….

And here’s another thing that was going around the internet yesterday, and it rang so true to what I was saying yesterday morning about the new “Tentattive deal to avert a Gov’t shutdown”… President Trump doesn’t like it… Even though some in the conservative party are asking him to reconsider, he’s sticking to his guns… so far… and that led many traders to believe a Gov’t shutdown will happen this Friday…

However, the reports this morning is that Trump is “coming around” to the tentative agreement… 

So, the old one-two, to the body and then the chin of the dollar yesterday… Just to show in broadstrokes if you will the hit the dollar took yesterday… The dollar index yesterday morning was 97.05, and by the end of the day it was 96.65… Now, the question is whether or not the currencies can more forward from here… I think they can, I think they can, I think they can…… Or better said, I think they should, I think they should, I think they should…

Well, we’ve had two Central Bank meetings since yesterday… First, overnight, the Reserve Bank of New Zealand (RBNZ) left rates unchanged, and did the Riksbank of Sweden this morning… But both had a different tone to them than what we’ve hear lately, from the likes of the Fed, and the Reserve Bank of Australia(RBA)…   both the RBNZ and Riksbank weren’t exactly bubbly about their respective economies outlooks, but, as one observer pointed out, they certainly didn’t share the Fed’s pivot from the last two weeks….  So, both currencies have joined the euro in the rebound VS the dollar. 

Do you know Pink Floyd’s song: Another Brick In The Wall? Who would have thought I could take a song released in 1979, and probably played on all FM radios over and over again in the early 80’s, and make it work with economic data? Well, I did… And for all of you who don’t have any idea of what I’m referring to… Think of it as a wall that’s being built with all the data prints that show were heading to a recession… And with each one, you sing… All, in all, it’s just another brick in the wall…

Well, one of my other fave economists was on twitter last night… Danielle Di Martino Booth, had this to say… “Those that Expect a Better Economy is down to 6% from 16%. It was 34% six months ago. There were also notable declines in those that Expect Higher Sales and it’s a Good Time to Expand.” – Danielle Di Martino Booth on Twitter

Chuck again… Just another brick in the wall… The wall that’s being built of bad economic data that’s pointing us to a recession… All in all it’s just another brick in the wall…

OK… The U.S. Data Cupboard come back today with the stupid Consumer Price Index (CPI)…  I don’t like this data because it’s been so hedonically adjusted for more than 30 years now that it does not resemble the old staid basket of goods one iota any longer! But… It’s data… and it’s going to print today, and getting data prints out has been like pulling teeth with a pair of tweezers! So, I’ll take it, but, am far more interested in tomorrow’s print of December Retail Sales, of which I’ve already told you what the BHI indicated to me! 

And finally… Gold…  There just doesn’t seem to be a whole of interest in the shiny metal these days… The number of contracts traded each day have dropped to around 135-150,000, and the moves are small in Gold. Yesterday, for instance Gold was only able to eke out a gain of $2.60, and this morning it’s basically flat…  

There was news last night that China got back into the Gold buying saddle…  The reports are that China added 11.8 Tonnes of physical Gold in January, to their reserves…  Between China and Russia, they certainly seem to be on a mission from God, to corner the physical Gold market…  This January purchase followed December’s purchase of more than 10 Tonnes of Physical Gold…  So, it’s not just a one and done deal, here folks… 

To recap… The currencies bounced back yesterday, led by the euro, and news that the China / U.S. trade talks were at an impasse, and news that President Trump wasn’t happy with the tentative deal to avert a shutdown…  He’s since said to be “coming around” to the deal, but for now, it’s a no-go in my opinion.   The RBNZ and Riksbank both left their rates unchanged, but both were not gloom and doom in their statements, and that has boosted these two currencies this morning.   And China is back to buying boat loads of physical Gold…. I’m just saying… 

For What It’s Worth…  Well, we finally topped $22 Trillion in national debt yesterday…  That only took about 10 months…  So, later this year before we turn the page on 2019, we should be looking at $23 Trillion… UGH!  This article was sent to me by longtime reader, Bob… who I thank very much… and can be found here: https://www.usatoday.com/story/news/politics/2019/02/12/national-debt-tops-22-trillion-first-time-ever/2849978002/

Or, here’s your snippet: “The national debt surpassed $22 trillion for the first time on Tuesday, a milestone that experts warned is further proof the country is on an unsustainable financial path that could jeopardize the economic security of every American.

The Treasury Department reported the debt hit $22.012 trillion, a jump of more than $30 billion in just this month.

The national debt has been rising at a faster rate following the passage of President Donald Trump’s $1.5 trillion tax-cut package a little more than a year ago and as the result of congressional efforts to increase spending on domestic and military programs. The nation has added more than $1 trillion in debt in the last 11 months alone.

“Reaching this unfortunate milestone so rapidly is the latest sign that our fiscal situation is not only unsustainable but accelerating,” said Michael A. Peterson, chief executive officer of the Peter G. Peterson Foundation, a nonpartisan organization working to address the country’s long-term fiscal challenges.

For Americans, the growing debt should be a concern, experts said, because over time it can push up interest rates for consumers and businesses. The higher rates can ripple through the economy, nudging up rates for mortgages, corporate bonds and other types of consumer and business loans.”

Chuck Again…  I feel like this is a Chinese water torture folks… Watching the debt rise again and again… in 2010, the debt was $10 Trillion and I thought that was bad!  Look where we’ve gone in 8+ years…  Unbelievable, and unsustainable in the long run, folks…  Got Gold?

Currencies today 2/13/19 American Style: A$.7118, kiwi .6823, C$ .7560, euro 1.1330, sterling 1.2958, Swiss $1.0044, European Style: rand 13.8585, krone 8.6155, SEK 9.1830, forint 280.65, zloty 3.8190, koruna 22.7955, RUB 65.72, yen 110.60, sing 1.3558, HKD 7.8482, INR 70.80, China 6.7774, peso 19.30, BRL 3.7356, Dollar Index 96.81, Oil $53.72, 10-year 2.68%, Silver $15.69, Platinum $791.30, Palladium $1,410.77, and Gold… $1,311.05

That’s it for today, except to say a Great Big Happy Birthday to my very good friend Duane!  I’ll be seeing him at the end of next week, so I’ll save my singing Happy Birthday to him for when he arrives!  But until then, Happy Birthday!  Our Blues won again last night for 6 in a row… Duane is a huge Blues fan, so they won for his birthday!  And my beloved Missouri Tigers won a basketball game last night VS Arkansas! WOW!  Thanks to all who’ve sent remedies for the gout to me… I couldn’t begin to use all them! I just know that the gout is freakin’ painful! And I’m glad that has subsided…  Tyrone Davis takes us to the finish line today with his song: Can I Change My Mind…  Don’t know that one? YouTube it or Google it… I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

 

 

 

February 12, 2019 

* The dollar climbs to a two-month high… 

* Pitchers & Catchers report today! 

Good Day… And a Tom Terrific Tuesday to you! Another day on steroids and I’m almost out of the woods with regards to pain in my left elbow from the gout. Only two more to go, and then I should be pain free, which would be a good thing, because the steroids will have run out! I really thought I would stir up a hornet’s nest yesterday with my rant on the socialists growing in this country… But, so far, so good in the Pfennig Replies box. I did have multiple back and forth emails with my former boss from Mark Twain Bank Days, Ed Bonawitz, who wanted to impart some of his thoughts on me… I returned the favor to him! Big Head Todd and the Monsters greet me this morning with their song: Tomorrow Never Comes…

Well, news last night that the U.S. lawmakers might be able to avert another Gov’t shutdown, had the overnight markets all excited as school girls, when the idol comes to town! The dollar bugs continued to come out of the wall boards, and buy dollars, and what looked to be a good run in the coming for the euro just two weeks ago, when it was trading over 1.15, has gone bad, and the euro is now trading below 1.13! And all the other currencies are following the Big Dog down the slippery slope having traded places with the dollar, that was on the slippery slope just two weeks ago!

And now yesterday, the International Monetary Fund (MF) had decided that their outlook for Global Growth needed to be brought backwards, for these reasons: trade tensions and tariff escalations, financial tightening, uncertainty related to (the) Brexit outcome and spillover impact and an accelerated slowdown of the Chinese economy… Now let me see how many of these I’ve talked about already for months now…

1. Readers of the Aden Research that were Dow Theory Letters subscribers saw my cartoon about tariffs months ago, and what I thought they would end up doing to the U.S. economy… And of course, I told you dear Pfennig readers so many times, I’ve sounded like a broken record!
2. I’ve been warning about the BREXIT stuff for months now…
3. Fed rate hikes have been a target of mine since the first one that came down the pike 3 years ago…
4. And a Chinese slowdown… Well, if trade tariffs were going to hurt the U.S. economy, they sure were going to do the same for the Chinese economy… This is a case of what’s good for the goose is good for the gander, folks…

So, all 4 boxes have been checked, Chuck… Looks like you were months ahead of all those highly paid economists at the IMF! Well, I would pat myself on the back, but I don’t want my gout getting inflamed again!

About 10 days ago, I talked about how it appeared but it wasn’t certain that the Eurozone economy was heading back to recession, and that the Chinese economy was too, and that those two would drag the U.S. economy into a recession faster than most think it will hit the U.S.

I do believe however, that we’ve seen the last of the Fed rate hikes for now… There won’t be one in March, and it’s my belief that Fed Chairman Powell, is ruing they day that he hiked rates in December… One of my fave economists, David Rosenberg, had this to say on his Twitter page last night… “Pundits are comparing today to 1998. Greenspan cut rates aggressively in the summer and fall that year. Powell has done what exactly except admit verbally he made a mistake last December?” – David Rosenberg on Twitter…

And I also believe that it would be prudent thing to do for Powell and the other Fed heads to stop, hey, what’s that sound, everybody knows what’s going down… For What It’s Worth – Buffalo Springfield…

Well, all this talk about this stuff sure puts a guy in a gloomy mood… But I won’t let it get me down, it’s only castles burning, and besides… Pitchers and Catchers report to Spring Training today! YAHOO! I read where the entire projected infield have already been in camp and practicing, which I would think was a prudent thing to do, given the Cardinals led the league in errors last year! And that’s NOT Cardinals baseball, folks… My spring training tickets are one row and aisle away from the President and GM’s seats… And I let them know last year that I wasn’t happy with the defensive play, and that was in Spring Training! They acted like they didn’t hear me, but… as my wife says, I have a voice that carries and probably the left fielder bleachers heard me!

One time, I had to give a presentation without a microphone, as it had gone on the fritz… I spoke to a room of 250 without going hoarse!

Ok, back to regular programming… Gold didn’t lose any more ground yesterday after losing $9 in the early morning trading,  and did manage to come back to close down $6 on the day… and this morning Gold has just about gained back that $6 loss with a more than $5 gain in the early trading… Up one day, down the next, this is driving me to my wit’s end!

Here’s some good news for Gold though… The battle to end taxation of constitutional money has reached the federal level as U.S. Representative Alex Mooney (R-WV) today re-introduced sound money legislation to remove all federal income taxation from gold and silver coins and bullion.
The Monetary Metals Tax Neutrality Act (H.R. 1089) backed by the Sound Money Defense League and free-market activists – would clarify that the sale or exchange of precious metals bullion and coins are not to be included in capital gains, losses, or any other type of federal income calculation.
“My view, which is backed up by language in the U.S. Constitution, is that gold and silver coins are money and are legal tender,” Rep. Mooney said.”

I pulled that from LinkedIn last night… and now it’s all over the internet… so have fun with that Mr. Mooney… Let’s see if the hamburger that’s been thrown at the wall, ends up sticking to it! Yes, that good old Constitution… I guess somebody in D.C. still reads it, and knows what it says! HA! I still keep my portable Constitution with me that  was given to me by the good folks at Hillsdale College, where the Constitution is still taught!

Ok… more to talk about here… It’s not all gloom and doom for every currency as the dollar bugs have their way with the euro and others… The Russian ruble has gained more than 3% VS the dollar this year so far… That’s only 6 weeks into the new year, so if we do some algebra, that would mean the ruble would be up more than 25% in a year! Well, calm down here Chuck! Currencies don’t normally move in a linear fashion… So, let’s just stick to the ruble is up so far this year, and things are looking good for this to continue…

OK, before we head off into the sunrise…  The tentative deal to avert a Gov’t Shutdown is NOT the deal that the President wanted to see, so this is going to be sticky folks… and for that I can’t believe the dollar bugs are so excited about it…  What happens if the President sticks to his guns and says no to the deal?  All this excitement turns to disappointment, and well, I would think that all this dollar buying that has brought the dollar to a two-month high, would be reversed…  Just a thought from the cheap seats… 

The Data Cupboards around the world are busy with all kinds of non important data prints…  But there is an ECOFIN meeting in the Eurozone today,  I don’t expect any grenades from left field here… but thought I would mention that it’s going on…  

Here in the U.S. the Data Cupboard is back on board today, after yesterday’s vacation. But the only thing I see for us today that would move markets is a speech by Fed Chairman Jerome Powell, which will be gone through with a fine tooth comb to see if he still shows and says dovish things… 

To Recap…  The dollar bugs are as excited as school girls when the teen idol comes to town, as there is a report that there could be a tentative deal to avert a government shutdown… It’s not the deal that the President wanted, so this is going to be interesting folks… hold onto your hats!  In the meantime the dollar bugs are buying dollars by the truck load, and the dollar is at a two-month high…   The IMF downgrades its global growth outlook, and Gold goes up one day down another… 

For What It’s Worth… I’ve been following this trial regarding price fixing in Gold, and the GATA folks sent me a note last night telling me that Deutsche Bank had been told to pay $60 Million to settle the price fixing case… You can read it all here : https://www.reuters.com/article/us-deutsche-bank-settlement-gold-idUSKBN13R2N1

Or, here’s your snippet: “Deutsche Bank AG has agreed to pay $60 million to settle private U.S. antitrust litigation by traders and other investors who accused the German bank of conspiring to manipulate gold prices at their expense.

Deutsche Bank denied wrongdoing. The bank in October agreed to pay $38 million to settle similar litigation over alleged silver price manipulation.
Amanda Williams, a spokeswoman for the bank, declined to comment. Lawyers for the plaintiffs did not immediately respond to requests for comment.

The case is one of many in the Manhattan court in which investors accused banks of conspiring to rig rates and prices in financial and commodities markets.

Chuck again… Well, as I’ve always said, these fines are nice, but they are just looked at as a “cost of business” for the firm paying the fine… Nothing will ever change, until people start getting sent to jail for these crimes!

Currencies today 2/12/19 American Style: A$.7087, kiwi .6735, C$ .7557, euro 1.1276, sterling 1.2853, Swiss $1.0088, European Style: rand 13.7783, krone 8.6872, SEK 9.2716, forint 282.06, zloty 3.8370, koruna 22.9222, RUB 65.64, yen 110.55, sing 1.3575, HKD 7.8480, INR 70.70, China 6.7764, peso 19.26, BRL 3.7363, Dollar Index 97.05, Oil $53.26, 1o-year 2.68%, Silver $15.82, Platinum $790.38, Palladium $1,391.07, and Gold… $1,313.53

That’s it for today…  well, today is Lincoln’s Birthday… And it was also the birthday of my oldest sister, Brenda, who passed away way too young from cancer. I think of Brenda a lot especially when February comes along… Or when I hear a song that used to play when she was teaching me to slow dance…  OK, Pitchers and Catchers report today…  And by Friday the whole squad will be in camp! YAHOO!  Our Blues play the Devils tonight in St. Louis and attempt to keep their winning streak going…  OK… Foghat takes us to the finish ling today with their classic rock song: Slow Ride…   I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself! 

Chuck Butler

 

 

 

February 11, 2019 

* Dollar continues to hammer the currencies…

* Will Gold’s Maginot line of $1,350 be taken out soon? 

Good Day… And a Marvelous Monday to you! I can tell you right now that I’m looking forward to this coming weekend, when it’ll be another 4-day weekend for yours truly… And that would mean that it would only be one more week till my spring training buddies arrive and we start attending baseball games! The month of January always seemed to be the longest month to me, and the month of February always seems to fly by, which is good, because March follows! I’m really in a foul mood this morning though, having gone through the latest report from the socialists… And no I’m not talking about the Russians, or the Chinese, or even Greece… I’m talking about here in these United States of America… Now, longtime readers know I don’t like to talk politics here, so before I go further down that rabbit hole, let me just repeat something that I used to have on a presentation slide… It’s a Quote from Margaret Thatcher, who said, “The problem with socialism, is that eventually you run out of other people’s money”… There, that’s as far as I’ll go down that rabbit hole, but you should have heard me on the Juno Beach patio yesterday! 10cc greets me today wit their song: The Things We Do For Love… Like walking in the rain and the snow when there’s nowhere to go, and you feel like a part of you is dying…

OK… Well, I sure love my steaks… And peaceful settings… But that’s not what You came to read about in this letter today… So, we’ll talk about the currency markets, economies, and some other things as we go through today’s letter… Ready? Let’s go!

On Friday, last week, we had no data prints on the docket, but the dollar buying that began on Wednesday last week continued through to the weekend…  And continued to continue through the overnight trading too, bringing the currencies down even further VS the dollar… You know, what? I see where the dollar bugs are thinking that this is the right thing to do, because, it sure looks to me, as I stated last week, that the Eurozone is heading to a recession, and China is heading to a recession… And then along came Mary… I mean along came Australia, who had their Central Bank come out and lower the growth forecast, and then talk about the possible need for a rate cut…  

What we have here is a case of not being able to look at oneself in the mirror… The dollar bugs can’t bring themselves to look in the mirror, and everyone else’s problems get the spotlight, but theirs do not… I’m just saying… 

There’s one economy in the world right now, that is kicking tail and taking names later, and it’s Russia… Tass reported this past weekend that the ratings agency Moody’s has upgraded Russia’s Global rating and placed their economic outlook at “stable”… The Russian ruble rallied on the news, but is still being handled with kid gloves, if you will, by traders and investors, hedge funds, etc. These guys can’t seem to figure out how Russia is doing this with the economic sanctions still in place on their economy. I think these guys all think that Russia is doing it with smoke and mirrors…

When the smoke and mirrors are what’s in play here in the U.S. Just one economic report after another, save for the trumped up jobs report, is pointing toward a recession here in the U.S. And when this one comes, it will have pent up frustrations of not being able to run the course and clean out the excesses of previous recessions… So, the Fed had better act quickly, or they will be behind the recession 8-ball, and if that happens, everyone will be waiting for the Fed to “Scratch”, and lose the game, for as I’ve told you before, historically, at the start of a recession interest rates on average have been above 6%, and the total rate cuts administered during a recession have averaged 400 Basis Points or 4%… And where are rates right here, right now, as Jesus Jones sang in the 90’s? Well, by Joe they’re at 250 Basis Points or 2.5%… There sure won’t be enough rate to cut to stop the recession in its tracks, now will there?

That’s when, I believe we’ll see another round of Quantitative Easing, (QE), and or negative deposit rates… I told you last week that the Fed propeller heads had come up with a report that said that if the U.S. had opted for negative interest rates in 2009, instead of QE, that the economy would be further long in the growth cycle… Of, course being the smart Alec that I am… Yes, negative despost rates have done wonders for Japan, Sweden, the Eurozone, and Switzerland, haven’t they?

So, it would be a case of: What fails there, can’t possibly fail here, because we’ll do it better… Now where have I heard that line before… You that’s right, never mind…

This week we will see a lot of small economic reports, both here in the U.S. and abroad… With the Reserve Bank of New Zealand (RBNZ) meeting on Wednesday probably the biggest item on the docket this week, abroad, that is… Here in the U.S., we’ll finally get to see the color of December Retail Sales! This report was delayed because of the Gov’t shutdown, but then once the shutdown was over, it was delayed more… And last week, I mentioned or questioned, if you will, what the report was going to show us, and if the Gov’t was attempting to put it out under the cover of darkness because it was so bad? We’ll finally get to see this report on Thursday this week, and I’m betting a dollar to a Krispy Kreme, that the report will be awful… show no growth in the month that houses the Christmas shopping season, and when they take out auto sales, it will be negative…

I can’t wait to hear what the Spin Doctors, and not the ones that sang Two Princes, spin this report to the public, because they’ll have some explanin’ to do Lucy!

Ok.. The BREXIT Negotiations are begun again… Back to the drawing board as they used to say… Then it was a “white board”, then it was a template on the computer screen… now it’s probably housed on somebody’s watch… This is Dick Tracy… I just don’t see how this is going to get done with the U.K. coming out smelling like roses… So, I would steer clear of pound sterling until we know just what’s the negotiators sleeves…

Gold was able to gain a bit on Friday, with a move higher by $4.20… I saw a line on Twitter yesterday that talked about how the Central Banks that have been buying Gold ahead of a Global shutdown, are looking pretty, while the Central Banks that have not been buying Gold, will be doing the crying… Well, it’s crying time again, you’re gonna leave me… I can see that far away look in your eyes…

And skipping backwards today, to Russia… I firmly believe that this is one of the reasons that they have been on the recovery tracks while everyone else is fumbling, bumbling, stumbling along… They increased their buying of Gold using foreign currencies that they took in that would normally have sat in their foreign exchange reserves…. So, while Rome burns, Russia, China Turkey, Brazil, India, all play the fiddle…

The GATA folks sent me a note last night from Swiss Gold guru, Egon Von Greyerz, who believes that what he calls the Maginot line of $1,350 that Gold has been held under for 5.5 years, will be taken out soon… Well, soon doesn’t mean today, because in the early morning trading Gold is getting sold  and is down $9…    

Greyerz believes that, “the West is almost out of metal, having sent much of it to Asia, and Greyerz predicts that $1,350 will be penetrated soon, upending the financial system.”   

Chuck again… I have to think that he’s correct, but then I’ve been saying this since the end of spring last year… UGH!  

Can you tell I’m hopping mad this morning, or just more upbeat than I was Wednesday and Thursday last week? I’ve had the gout before in my big toe joint… Very painful and lasts about 10 days, steroids can shorten that time… But last week, I began noticing swelling in my left elbow and soon after, sharp piercing pain shooting in my elbow when I tried to move my arm… I finally broke down on Friday and went to see a doctor about it, and they confirmed it to be gout in my left elbow… Hello, am I on the air? Ok, I’m a first time caller, and want to say that gout in the elbow was the first I had heard of that, I’ll hang up and listen to your answer… Yes, it’s very common…

The U.S. Data Cupboard is empty again today, no data reports, even small ones are on the docket today, bu when we come back to the Cupboard tomorrow, things will be different…  You know, I used to say that when there was no data that it would probably be bad for the dollar, but these days with one data report after another pointing to a recession, the days without data are good for the dollar, because the rot on the economy’s vine isn’t being expose for everyone to see… 

Oh, and the elephant in the room this morning is the return of the Gov’t shutdown that doesn’t appear to be going in a direction that would lead one to believe that it could be averted… UGH! 

To Recap…  The dollar bugs have the conn and don’t want to look in the mirror… Russia’s credit rating was upgraded by Moody’s along with their economic outlook…  Is Russia doing this with smoke and mirrors? Chuck doesn’t think so, but apparently the rest of the world’s investors do…  The economic data prints here and abroad pick up steam this week, with the RBNZ rate decision on Wednesday a highlight for sure, along with the double-delayed December Retail Sales here in the U.S. 

For What It’s Worth…  Well…  Debt is everywhere folks… Gov’t, Corp and individual debt levels are unprecedented, but don’t just take my word for it… The folks at zerohedge.com Did a great job of explaining it all,  with graphs and everything and that can be found here: https://www.zerohedge.com/news/2019-02-10/debt-trifecta-all-time-highs-billionaires-panic

Or, here’s your snippet, sans graphs!: “The “trifecta” of national, corporate, and consumer debt has reached all-time highs, and could prove to be catastrophic if a recession hits.  

In just the short decade since 2008, the debt has jumped from $10.6 trillion to $22 trillion. It also comes with a deficit that’s currently over $1 trillion currently. The interest payments alone may be forming a “black hole” from which the U.S. may never escape.

These facts alone should raise concern in any interested observer.  

The total amount of corporate debt has never stopped rising since 1950. Corporations have taken on a record level of debt since 2007. One of the main problems with this type of debt, aside from getting repaid, is that some corporations are using it to buy back shares of stock. Instead of this “sleight of hand,” you’d think that they should be using it to fund growth and create jobs.

But one thing is certain, the piper will need to be paid at some point. When that happens, who knows what can happen to the economy.

 Total consumer debt is near $4 trillion, and has been rising steadily since 1975. But it has risen a staggering 47%since 2008, and shows no signs of stopping. “

Chuck again, and the one thing that is like kryptonite to large debt loads is rising interest rates, which is exactly the scenario that has been in place for the last 3 years, albeit a very slow Chinese water torture drip-like… None of this is going to end up with Sunshine, lollipops and rainbows, folks… I’m just saying… Got Gold? 

Currencies today 2/11/19 American Style: A$ .7085, kiwi .6750, C$ .7534, euro 1.1310, sterling 1.2927, Swiss $.9973, European Style: rand 13.7917, krone 8.6818, SEK 9.2686, forint 2822.64, zloty 3.8175, koruna 22.8306, RUB 65.41, yen 110.18, sing 1.3582, HKD 7.8476, INR 71.12, China 6.7431, peso 19.12, BRL 3.7272, Dollar Index 96.79, Oil $52.28, 10-year 2.64%, Silver $15.73, Platinum $792.20, Palladium $1,395.10, and Gold,,, $1,307.48

That’s it for today…  A little longer than usual but that’s OK…  Not a good weekend on the hardwood floors for both Mizzou and St.Louis U this past weekend… UGH! I mentioned last week that our Blues had seemed to have found something… And they won their 5th consecutive game over the weekend with back to back wins over Nashville… Skate boys, skate!  A beautiful weekend, weather-wise here…  I had better button this up here as I’ve talked way too much today!  The Eagles take us to the finish line today with their version of the song: Seven Bridges Road…   And with that, I hope you have a Marvelous Monday, and continue to Be Good To Yourself!

Chuck Butler