Author: admin

September 6, 2018  

* Currencies rally on Wednesday

* Gold has a two day rally going! 

Good Day… And a Tub Thumpin’ Thursday to you! While I’m tired, I’m still feeling pretty good, given that it’s been over a week since I last took Chemo… That all ends today, as a new dosage / shipment is being delivered to me today… But that’s not going to stop me from doing some Tub Thumpin’! My day of travel went as planned no hiccups, so that’s always a good thing. I’m back down South, where it’s still summer, for sure! I was sad to remind oldest son Andrew last Saturday, that I would be gone this coming weekend, when he asked me to attend the Missouri / Wyoming game … UGH! Missouri and Illinois used to play their first games of the year in St. Louis, which was a must see game for me and by boys each year, and even Kathy went with us sometimes! But that contract ran out, which was a good thing for Illinois, because my Missouri Tigers beat them every year! I know, because I was there! The Gin blossoms greet me this morning with their song: Until I Fall Away…

The old saying on the trading desk was “when Chuck’s away, the currencies rally”… Well, that held trud yesterday, as the currencies fought back and won back most of the ground they had lost the previous day… No real direction here folks… I would suggest that we stay on the sidelines and wait for a sign that there is real direction…

In the overnight markets there wasn’t much movement… I was looking at the currency screen this morning and when I came across the Japanese yen, I thought… “It’s been 111 something, for what seems like a long time… The euro gets whacked by the dollar bugs, but yen remains 111 something… 

The other currency that caught my eye this morning is the Swiss franc… The franc has very quietly, and stealthlike, moved higher inch by inch for the last month, and this morning it has gained to the $1.03+ level. So, when you put the franc alongside the yen, you sort of get the picture that currency traders are fearful of what’s going on in the world, and are clinging to so-called safe havens… 

 To that end… Yesterday, both Citibank, and Goldman were sending out warnings about lower earnings that in their opinion were on their way… But to add to that, Well, it’s not just me that sees dark clouds ahead for the U.S. economy… Apple and Samsung are experiencing inventory stockpiles not seen since before the 2008 Financial meltdown… That was a Bloomberg story on Tuesday, that caught my eye, and made me think back ten years… Did you know we’re coming up on the 10 year anniversary of the shut down of Lehman Brothers? That shut down is pointed to as the snowflake that started the avalanche… Albeit being a rather large snowflake, don’t you think? But then again IT WAS a rather large avalanche, wasn’t it?

As Paul sang to Paulette…. Are you ready? And she replied: yes, I’m ready… Which would mean that she’s placed current stop loss orders on stocks, bought Gold & or Silver, and are ready for the coming tide…

Every day, a longtime reader of mine, Bob, sends me lots of stories to read, and I eventually get to all of them and some of them end up being FWIW section articles. But yesterday, Bob sent me (Thanks by the way!) a very good article that will be featured in the FWIW section today, but as just a teaser I thought I would give you a line from the article: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.—“

People around the world are beginning to realize that there just too much debt in the world, and at this point most believe the majority of this debt will never be repaid… Defaults will be the new trending word going viral, folks… And then you’ll thank me that you bought some Gold or Silver… I’m just saying…

One of my fave economists, Danielle Di Martino Booth, has been pointing out that inflation is getting ready to go on a moon shot ( my words), And the Fed Chairman Jerome Powell is doing the right thing by hiking rates now… I don’t know if I agree with that thought 100%, but… she used to be an insider at the Fed, and knows more about this stuff than I can claim to know! What I do know is that if she’s correct, then buying Gold at these current levels seems like an obvious thing to do, no? 

Speaking of the shiny metal… Gold gained $5 yesterday, and it up $8 in the early morning trading today.  There comes a time in a person’s life when they feel like the whole world is crashing down on top of them… They soon realize that it’s not going to happen and they work out whatever was the problem that caused them to feel that way.  But with our problem, which is too much debt in the world, the problem is never going to get “worked out”! 

Well, I’m full of you know what and vinegar this morning, now, aren’t I?  REO Speedwagon sang a song years ago, with words that went like this… I can’t stop this feeling any longer…  Well, that’s me in a nutshell… I’ve been talking about debt problems for so long now that I’m sure you dear longtime readers have become comfortably numb when I go on a debt rant…  But…

With every day that passes, the Debt loads get larger and larger… Debt with the government, States, and consumers… And where does the foundation of this debt pyramid begin to crack? When consumers begin to default on their loans…   Uh-Oh…  net bank chargeoffs for bad credit card debts have soared 16% year-on-year!   

So, get your journals out, and record this day as the first day that I said that the cracks in the debt foundation, are beginning to form… 

Yes, most of the world has debt up to their collective eyeballs, and I worry about that, but I’m more worried about my homeland debt…  It’s growing like an unattended weed, and it’s only going to get worse…  Please hear my warnings on this folks…  

The U.S. Data Cupboard begins to get everyone ready for the Jobs Jamboree tomorrow, with the ADP Jobs report for August on the docket to print today.  You know, something slipped my mind last week when Durable Goods printed…  Durable Goods Orders have printed negative 3 of the last 4 months!  Doesn’t anyone at the Fed or the White House look at this and say, “something is wrong here?” 

Before I head to the Big Finish today, I have this little ditty for us to share today… I found this on Reuters… “Pricing practices within American Express Co’s foreign-exchange unit is being probed by the Federal Bureau of Investigation (FBI), the Wall Street Journal reported, citing people familiar with the matter.

The investigation is in its early stages and is focused on whether the foreign-exchange international payments department misrepresented pricing to clients in order to win their business.” 

To recap… The currencies fought back to win back most of the ground they lost earlier this week. I just don’t see any conviction by traders to take currencies in one direction for longer than it takes to drink a cup of hot coffee! Chuck is having an adverse reaction to all the debt in the world, especially here at home…  You’ve just got to wonder when it all comes crashing down on us…. 

For What It’s Worth…  Well, I advertised this article up top to be a good one, so hopefully it doesn’t disappoint…  The article is about global debt and can be found here: http://www.savannahnow.com/news/20180903/global-debt-soars-along-with-fears-of-crisis-ahead

Or, here’s your snippet: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.

The loss of investor confidence in the Turkish lira, which has surrendered more than 40 percent of its value this year, is only a preview of debt problems that could engulf countries such as Brazil, South Africa, Russia and Indonesia, some economists say.

“Turkey is not the last one,” said Sebnem Kalemli-Ozcan, an economics professor at the University of Maryland. “Turkey is the beginning.”
For now, few experts think that a broader crisis is imminent, though Argentina this week asked the International Monetary Fund to accelerate a planned $50 billion rescue as the peso crashed to a historic low. But the danger of a financial contagion that could hit Americans by crushing U.S. exports and sending the stock market plunging should be taken more seriously in light of a massive increase in global debt since the 2008 downturn, the economists said.

Total debt is a whopping $169 trillion, up from $97 trillion on the eve of the Great Recession, according to the McKinsey Global Institute.

While previous debt crises involved U.S. households and, later, profligate European governments such as Greece, this time the concern centers on companies in emerging markets that borrowed heavily in dollars and euros.”

Chuck Again… Well, if you read it, you’ll know why I was so hyped up about debt this morning…  It only takes one default to beget another, and then another… I’m just saying… 

Currencies today 9/6/18… American Style: A$ .7188, kiwi .6590, C$ .7588, euro 1.1625, sterling 1.2933, Swiss $ 1.0316, European Style: rand 15.3515, krone 8.4023, SEK 9.0990, forint 281.00, zloty 3.7183, koruna 22.1268, RUB 68.22, yen 111.28, sing 1.3753, HKD 7.8494, INR 71.90, China 6.8303, peso 19.29, BRL 4.1521, Dollar Index 95.13, Oil $68.77, 10-year 2.90%, Silver $14.30, Platinum $789.62, Palladium $986.23, and Gold… $1,205.25

That’s it for today…  I think I’ve finally recovered from the Holiday Weekend! I’ve been dragging the line every day this week, but today seems better…  Man, those pesky Nationals… They just wouldn’t give up, and kept coming back each game my beloved Cardinals played them. The Cardinals took 2 of 3 from the Nats, but it was like pulling teeth!  Lots of home runs by the Cardinals in this series… Hmmm…  The wishful love of my life, Stevie Nicks takes us to the finish line today with Fleetwood Mac’s iconic rock song: Landslide…  I hope you can get out and make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler

September 4, 2018 

* Dollar rallies in the overnight trading!

* Trade Talks heat up… 

Good Day… And a Tom Terrific Tuesday to you! WOW! What a great Holiday Weekend for yours truly! Not so much for my beloved Cardinals, but for me personally… WOW! It all began last Thursday when I had lunch with former colleagues, Jennifer and Christine. Then Friday was consumed with cooking all day, but a trip to my fave watering hole for HAPPY Hour yielded visits from more former colleagues, Aaron, Danielle, and Peter! And then Saturday was just fantabulous! At one point I think there were about 70 people in my backyard! And the food was great, the company was great, and we did see our Missouri Tigers win their first game easily, as they should have! I absolutely love that weekend, because of our Annual Butler Labor Day BBQ & Pool Party… I love when people say, “That pulled pork, or Turkey breast was great!”

As I left you on Thursday morning, the euro was bumping up against the 1.17 figure, and Gold was $1,204… But on Friday, they both led their respective asset classes downward, as the Trade War talks kind of went in the background, and traders knew of no other thing to do but to go long dollars ahead of the 3-day weekend.

Yesterday, while the U.S. was on their last summer holiday, the currencies and metals kind of drifted, with no conviction by traders to go long or short, without their comrades in arms in the U.S. But in the overnight markets, the dollar was bought like it was the only currency on earth, and this morning we are seeing the currencies down by a large margin, and Gold following suit. 

The only anti-dollar asset that’s rallying is Oil. The price of Oil this morning is basically $71 because of a tropical storm that’s heading toward the Gulf that will disrupt Oil production. These types of rallies aren’t normally the kind that have lasting strength, but Oil has strength in price right now, and that’s all that matters to most traders. 

I have to say that the long weekend lent itself to lots of reading by me about what’s going on in the world… And most of what I read confirmed what I’ve been talking about on several fronts… Like how the U.S. is nearing a recession… and how the world is turning on the U.S…. And how none of this is good for the dollar!

So, first let’s talk about how not only guys like me, and the great economist, David Rosenberg, have been pointing out the cracks in the economies foundation and warning of a recession, but now the Fed itself is doing that too! Wait, What? Yessirree Bob! I read this past weekend that the Fed San Francisco had two economists put together a report, and well, the report pointed to a recession in the near future… Seriously, you don’t think I make this stuff up do you? Well if you do, then you need to check out this article that can be found here: https://www.reuters.com/article/us-usa-fed-recession/markets-may-be-signaling-rising-recession-risk-fed-study-idUSKCN1LC1VO

And then there was this… How the world is turning on the U.S. and the dollar… I’ll borrow this paragraph from the article I read so you get the whole gist of what I’m talking about. This was from Zerohedge.com: “Trump’s America waging economic warfare against most of the world and 2 billion people with a combined GDP of more than $15 trillion
– Targeted nations include China, Russia, Iran, Venezuela, Pakistan, Turkey, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others…“

So, basically, what they are talking about is that we as a country have targeted these countries with some kind of embargoes, economic sanctions, and anything else that can make their livelihood difficult, and their response is going to be to shun the dollar… Now, I’ve been writing about the different payments systems outside of the dollar, and when they’re all up and running, guess who’s going to first in line to use them? Any of the countries above, that’s who… And more will then follow, and the dollar will no longer be used by countries in the terms of trade, that is unless they are trading with the U.S. And since the Trade Deficit here in the U.S. is astronomical in size each month, you would have to think that the “net” trade balances won’t be to settle in dollars!

I’ve said this before, but longtime readers know that when I say something once, I’m going to probably repeat it like a broken record, over and over again until it reaches everyone! So, here goes… We did this to ourselves folks… decades of easy credit, led to an every growing National Debt, which is now 105% of GDP, and growing leaps and bounds each year going forward. We as a country didn’t have the intestinal fortitude to buckle down, and take some small hits… You don’t get reelected if you allow small hits during your watch! So, this is all our leaders fault… But, we as consumers with votes, allowed them to act so irresponsibly… And that’s all I’m saying about that!

So… What’s on your mind? I wish I could know, or hear about it, but the Pfennig Replies site is still not working, and I just don’t know what to do about it!

I’ve told you what’s on my mind, as usual that is…

Friday and yesterday, Gold was able to hold the line… love isn’t isn’t always on time… No wait! Gold held the line at $1,200 through Monday, but in the early trading this morning the shiny metal has dropped nearly $6, to bring Gold’s spot price to $1,195.56 as I write… UGH!  

Well, it’s September, a month that will bring us another Fed rate hike, according to just about everyone that follows these things. I do believe this to be true also, but… that leaves major risk for the Fed meeting. What if they don’t hike rates at this meeting, and further discuss their dovish stance at the Jackson Hole boondoggle? Now that would throw the markets for a loop!  So, that’s the risk of the meeting… But the smart money is on a rate hike, so we’ll have to go with that scenario, until we know for sure in a couple of weeks.  Yes, the Fed’s FOMC Meeting won’t take place until September 25 & 26… 

Which means we’re going to see nearly a month of hems and haws about rate hikes. The Trade talks with Canada are still going on, along with trade talks with China, so those hold some risk to the dollar’s rally… In fact, Trump’s additional Tariff to be placed on $200 Billion of Chinese exports to the U.S. could be announced this week! UGH! 

I don’t know if the Chinese know this or not, I’m assuming they do, because they make sure they know everything that’s going on in the world, but in case they don’t, they need to understand that Trump is using this $200 Billion in tariffs threat as his bargaining tool… He’s using it to put pressure on the Chinese Trade Talks… “if you don’t agree to these changes, I’ll smack you with $200 Billion in additional tariffs”… 

The U.S. Data Cupboard will be busy this week, starting today with the ISM for August. This is the manufacturing index, that all other countries call the PMI… Tomorrow we’ll see the Trade Deficit, for August. We’ll get to see if any of the first tariffs have reduced the Trade Deficit…  And then as the week goes along more data will print, leading to the Jobs Jamboree for August…  

To recap… The currencies and metals held the line on Friday of last week and through Monday’s holiday, but in the overnight markets last night, the currencies and metals got whacked! The only anti-dollar asset to rally was Oil, and Chuck’s not to hip on Oil’s ability to retain those gains after the Tropical Storm heading to the Gulf area ends.  There’s plenty of data in the U.S. Data Cupboard this week, and we have the Fed’s FOMC Meeting hanging over us like the Sword of Damocles! 

For What It’s Worth…  Well, I saw this article this weekend, and couldn’t believe what I was reading, well then, I take that back, I could believe it, but it was still shocking…  India is selling their Treasuries and buying Gold..  it’s all right here: https://economictimes.indiatimes.com/markets/commodities/news/rbi-buys-gold-for-first-time-in-nearly-a-decade/articleshow/65651133.cms

Or, here’s your snippet: “The Reserve Bank of India (RBI) has bought gold for the first time in nearly a decade, signalling that the metal could be in demand as a store of value when returns and capital values of fixed-income bonds are declining in a rising rate environment.

The RBI added 8.46 metric tonnes of gold to its stock of holdings during the financial year 2017-18 that ended June 30, taking the level of gold reserves to 566.23 metric tonnes, according to its latest annual report.

It last bought Gold in 2009… “

Chuck Again…  Yes, when the blue light special is flashing it’s supposed to be attracting buyers, and that’s exactly what happened here, with India stepping to the plate to buy Gold…  

Currencies today 9/4/18… American Style: A$ .7180, kiwi .6550, C$ .7606, euro 1.1560, sterling 1.2826, Swiss $1.0269, European Style: rand 15.2357, krone 8.4044, SEK 9.1378, forint 283.36, zloty 3.7265, koruna 22.2690, RUB 67.90, yen 111.35, sing 1.3760, HKD 7.8491, INR 71.51, China 6.8240, peso 19.42, BRL 4.0960, Dollar Index 95.57, Oil $70.99, 10-year 2.87%, Silver $14.27, Platinum $775.10, Palladium $963.66, and Gold… $1,195.56

That’s it for today… And well, tomorrow too… Tomorrow is a travel day with a very early flight for yours truly. So, I’ll pick this back up on Thursday… Well, my beloved Cardinals had a fabulous month of August, and since then it has seen the wheels fall off the bandwagon everyone was jumping on. I sure liked the way my Missouri Tigers looked on Saturday, things will get more difficult each week for them. Keep it Going Tigers!  Boy the heat sure ratcheted up this weekend, but that was better than a rainout! I’m heading south again tomorrow, and hope that the bad weather stays away while I’m there!  Supertramp takes us to the finish line this morning with their song: Even In The Quietest Moments… Which is kind of like the house when I begin to write each day!   I hope you have a Tom Terrific Tuesday, and remember to Be Good To Yourself! 

Chuck Butler

 

August 30, 2018

* Currencies are in a tight trading range

* A Day for Data here in the U.S… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m still dragging the line a bit, but… I already feel a bit more human being off my chemo medicine for two days now. I was doing some writing yesterday, and went to send it out, and it was lost… Nowhere to be found, and believe me I searched every nook and cranny in my laptop, but it was as if I never wrote the piece! UGH! So, I took a nap, woke up and rewrote it, this time I saved it throughout the piece, and the second time was a charm… I’ve been treated to two songs from Neil Young’s Harvest album… Out on a Weekend, and Words… And that’s how I was greeted today! My beloved Cardinals couldn’t find their bats last night, and lost 2-0… UGH!

Another day, another day of rhetoric regarding trade tariffs. I’m really growing very tired of all this talk… But yesterday, the talk was about how with a “tentative deal with Mexico” now, the hopes for successful talks between the U.S. and China have faded… I don’t like the sound of that, as I had held out hope that a trade deal could be worked out before too much damage was done to both the U.S. and China’s respective economies…

I told you yesterday, that the hoopla over the “tentative deal with Mexico” was beginning to wane, and so it did further throughout yesterday, thus returning the dollar to a defensive position on the ropes, doing the rope-a-dope… And that meant the euro climbed back above 1.17, and Gold added back $6 of the $10 it lost on Tuesday… One step forward, two backward, it seems for Gold these days…

In the overnight markets, the euro slipped back below 1.17, and Gold is down $2…  All-in-all, a very tight trading range for the currencies the last couple of days. As if the currency traders are waiting for something BIG.. 

The early morning news is that a deal with Canada might still be had before the deadline, and that’s good news…  I’ll cross my fingers that this gets done, for the U.S. economy can’t handle more hits to it from trade problems. 

Speaking of Canada, they will print their 2nd QTR  GDP this morning… I expect it to be around 3%, probably better than that figure when all is said and done. I’m thinking that Canada’s 2nd QTR GDP is going to be a lot like the U.S.’s 2nd QTR GDP… A bright light that is about to get dim… 

I was reading James Rickard’s latest letter, and he describes something he’s seeing , and that is Gold is being tied to SDR’s… And of course the Chinese and the IMF are involved… It’s all pretty convoluted but makes sense to me… So Gold has that either going for it or not going for it, considering what direction SDR’s are moving… For those of you that are either new to class, or have forgotten the whole explanation of SDR’s, here you go… SDR’s are short for Special Drawing Rights, and they are like a basket of reserve currencies, that includes the Chinese renminbi. These SDR’s are used by the IMF to provide liquidity for member countries. There’s nothing to stop the IMF from turning the printing presses on and printing as many SDR’s as they feel like printing. But again, if you’re not a Central Bank, you can’t buy or own SDR’s…

There’s an actual breakdown within SDR’s that goes like this: A SDR is based on a basket of five currencies—the U.S. dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound. With the U.S. dollar having the largest weighting.

Might I suggest something for those of you who are interested in the diversification in currencies… Why not buy each of the SDR components? You can’t buy an actual SDR, but you can buy the components, right? Seems to me like plan… And I love a plan! 

OK, enough of that! Gold has so many hands in its cookie jar that it’s a wonder to me how it ever rallies. But one day, a major reset of the currency system that we now know will change, and when it does I truly believe that Gold will hold a very important place in the new system whatever it is, and so that leads me to ask this QUESTION…. Got Gold?

The piece I was writing yesterday is for an interview with good friend Dennis Miller, the Retirementor, who writes an excellent piece every week, and it’s free! If you haven’t signed up for it yet, you’ll have to , to read what I’m saying about Central Banks and Central Bankers! go here to get that done: www.milleronthemoney.com 

By the way, I talk about guys like Dennis Miller, because I believe in what he’s talking about. And… I have no financial deal with him, so I endorse his letter free of any conflict of interest… 

Tom Petty is singing a song right now on the iPod, I Won’t Back Down… And that’s pretty much me in a nutshell… I won’t back down from all the scenarios I’ve talked about… I’m a big man, so it takes a bit to move me off my position… HA!  Things can look as bleak as the Hindenburg blowing up, but I’ll still be there with my thoughts on the economy, Central Banks, Debts, dolts, and the fate of the dollar…

In early data printed in Europe this morning, the Eurozone Consumer Confidence remained at a negative -1.9 in August, same as July… So, there aren’t all the Happy Days are here again crowds in the Eurozone like there are here… In addition to that report, we also saw Business Sentiment from the European Commission, that showed some slippage in the current month.

I would think all these reports for the Eurozone would turn on a dime if the European Central Bank (ECB) would get off their duffs and start to dismantle their stimulus policies…

The U.S. Data Cupboard is chock-full-o-data today with the two most important prints being Personal Income and Spending for July…  Right now the so-called experts are calling for Income to rise 0.3% and Spending to rise 0.4%…  I’m thinking we could see some weakness here in the Spending component, as everything else we’ve seen from a July standpoint, has been weaker than expected.

We’ll also see Core Inflation for July, which is expected to rise just 0.1%, and that has to be on the Fed Head’s collective minds, don’t you believe?  As I’ve said for 3 years now, going back to when the Fed first hike rates and said they wanted inflation to rise… “that’s an you know what backwards statement if you ask me… You don’t hike rates to allow inflation to rise, you hike rates to squash rising inflation!  And from all accounts of inflation lately, it looks like the interest rate hikes are beginning to take a toll on inflation… I’m just saying…

To Recap… The currencies and metals rally and then get sold off, it’s all a very tight trading range that we’re seeing these days, as if Traders are waiting for something BIG… Hmmm…   Canada comes to the negotiations and appears to have come to an agreement on Trade, and that’s a good thing in Chuck’s eye!  Chuck goes through a long discussion about SDR’s, and  an investment idea…  

For What It’s Worth…  I saw this article and it caught my eye for sure! And since it’s the end of the week for me, I thought we could have a little fun with the FWIW piece… And this one is about how beer revolutionized math… and probably saved the world!  My good friends know that I have a thirst for a nice cold beer every now and then, so this one’s right up my alley, so to speak, and it can be found here: https://agfundernews.com/beer-revolutionized-math-just-might-save-humanity.html

Or, here’s your snippet:Amazon, Google, Microsoft, and every other firm heavily invested in big data all owe their success to beer. The pioneering work of Irish brewers a century ago made today’s big data and artificial intelligence gold rush possible. And the advances in genetics, technology, and mathematics may well be the key to humanity’s survival.

Back in 1899, William Sealy Gosset would have no idea how important his work would prove to be. He turned up on the doorstep of the Dublin headquarters of Guinness one day in 1899, hoping to secure an apprenticeship. As a newly graduated Oxford University chemist, Gosset was a natural. He began what turned out to be a 38-year career devoted to perfecting a pint of stout. Brewing, agriculture, and the entire field of statistics would never be the same again.

Gosset began with a singularly practical mission: finding a way to achieve a consistently high-quality beer at a lower overall cost. This was no small task at the world’s largest brewery, which at the time pumped out 100 million gallons of beer annually.

The basics of beer are simple. The flavor and aroma come from yeast, malt, and hops, the ingredients responsible for the difference between a Belgian ale or an American wheat, a Munich lager or an English stout. Guinness knew that it could use breeding techniques to improve its ingredients, but it would have to conduct tests to know how well or poorly newly-developed hybrid barley varieties performed. “

Chuck again… a little fun on a Tub Thumpin’ Thursday! Why not get the weekend started early? HA!

Currencies today 8/30/18… American Style: A$ .73, kiwi .6662, C$ .7737, euro 1.1692, sterling 1.3015, Swiss $1.0305, European Style: rand 14.6065, krone 8.3223, SEK  9.1150, forint 278.88, zloty 3.6670, koruna 22.0310, RUB 67.97, yen 111.50, sing 1.3660, HKD 7.8489, INR 70.80, China 6.8175, peso 19.03, BRL 4.1286, Dollar Index 94.61, Oil $69.92, 10-year 2.88%, Silver $14.66, Platinum $794.16, Palladium $982.85, and Gold… $1,204.07

That’s it for today… and this week of course… I have a big treat coming my way today, as I’m going to meet up with two of my fave people in the world for lunch today…  And then tomorrow is “cooking day”, as my Big Green Egg will be working overtime! A Big weekend for me… I hope you have Big plans too, as this is the last holiday of the summer… Soon we’ll be getting the woolies out, and standing around bonfires… and while that’s nice, I prefer to get my warmth from the sun and not a fire!  Man! the injury bug has been turned loose on my beloved Cardinals… 3/4’s of the infield was missing last night!  Next man up!  And finally, College Football begins this weekend, with lots of good first games on tap… Go Tigers! The Allman Brothers takes us to the finish line with my fave Allman Bros. song: Melissa…  Now, let’s get out there and make this a Tub Thumpin’ Thursday! And remember to Be Good To Yourself!

Chuck Butler

 

August 29, 2018 

* Currencies see slippage on Tuesday

* Increased contracts see Gold fall on the day… 

Good Day… And a Wonderful Wednesday to you! Well… I was right about my oncologist “being a stickler about staying the course”… She did allow me to stop taking the chemo until the new dosage that she lowered arrives. So probably about the time I start to feel human again, the drug will show up at the door! Oh well… I tried… and feel as though she “compromised with me”… So I have that going for me! My beloved Cardinals remained on a roll last night. I felt so comfortable with a win that I went to bed before the end of the game! Paul Revere and the Raiders greet me this morning with their song: Kicks…

Well, the currencies and metals took a breather yesterday from their nearly 10 day run VS the dollar, and the euro slipped along with Gold on the day. Not exactly a good way to start the week, but then it’s not every day that the stupid Consumer Confidence Index prints a record high number… I told you yesterday that we could probably see that given the stock market’s setting of a new record level late last week.

And that my friends, is why there was slippage in the currencies and metals… The people that were surveyed, must have been singing “happy days are here again, the skies above are clear again, Happy Days are here again!”

And to that I would retort a Beatles song… It wont’ be long, yeah, it won’t be long, yeah… But let ‘em sing their song, it won’t be long before they’re singing a different tune…

In other data, the Case/ Shiller Home Price Index for June printed and showed a slippage in home prices as the index fell to 6.2 from 6.4… 

Yesterday I talked about another country, Germany, that’s looking into a payments system, ala SWIFT, that’s outside of the U.S.’s control… And then I saw that France was joining up with Germany on this… In the aftermath of a report that Germany was working on a global payment system that is independent of the US and SWIFT, on Monday Germany and France said they’re working on financing solutions to sidestep U.S. sanctions against countries such as Iran, including a possible role for central banks.

China was first… Then Russia… now Germany and France… Pretty soon, the writing will be on the wall for the dollar… But then I’ve always thought that President Trump was a low interest rates, weaker dollar kind of guy… So, he won’t be upset if the dollar gets weaker because of the ability of Central Banks around the world, to deplete their dollar reserves…

The euro, which was so close to 1.17 yesterday morning that it could spit in 1.17’s back yard, gave back some gains yesterday, but remained in the 1.16 level. But I get it… As long as the European Central Bank (ECB) continues to provide stimulus the euro will struggle to garner a lot of interest from buyers… But, the thing is… you want to buy something when the price is cheap, and you know something is about to change… In this case, we know that the ECB will unwind their stimulus, we just don’t know when…

But we live in an instant gratification world… Patience? That’s for doctors! HA!  Seriously though, most investors are looking for the quick buck and hitting the jackpot on any asset they buy within 2 weeks! 

Each day I spend an enormous amount of time reading and doing research for this letter and my DTL pieces. And what I’ve been reading the past couple of days is something that makes me smile… The rest of the world of writers and economists, analysts, etc. are coming around to my thought I had long before the 2nd QTR GDP first printed… 

People are beginning to notice what I told was going to happen… And that is that the 2nd QTR GDP would be like a star burning out, and be the brightest right before it happens… And that the data would begin to show cracks in the 3rd QTR…  Well, I told you the other day that the data is doing just that, with most not meeting expectations, and some even printing negative results for July…   And now, I’m reading reports that are talking about that scenario…  As if they read the Pfennig! 

Speaking of 2nd QTR GDP, the 2nd print / revision of the data will print today, and with the first print at 4.1%, I would think it would slip a tiny bit to 4%… Nothing to write home about yet… 

The U.S. Data Cupboard also has the Pending Home Sales for July for us to see today, but this is a non-market moving piece of data, but I wanted to get it out there to clear the Cupboard and get ready for Personal Income and Spending tomorrow. 

Well, did you hear about the extension of time that the BREXIT negotiators are asking for? Yes, the deadline for final negotiations was approaching, and seeing that they were nowhere near the end, the negotiators requested an extension…  This has got to unnerve those that were hoping for a good outcome here for the U.K. and  pound sterling. 

The much heralded tentative agreement with Mexico has taken a beating since first being announced and thought to be a good thing for the U.S….  It appears to be nothing but smoke and mirrors, and isn’t going to give the economy the boost it was thought to have in its tank…  But that’s not stopping Canada from saying that they’ll now join the negotiations… I just shake my head and wonder who’s in charge of these negotiations, is it a carnival barker? Or how about PT Barnum?  The circus is coming to town, the circus is coming to town! 

Come on Chuck, don’t be so negative toward this process and those that are working so diligently to achieve a goal…   Sorry…  But I’m still going to say that the whole thing reminds me a three ring circus!

And just when it appeared that it was safe to get back in the short Gold paper infested waters, they returned to take Gold down $10 yesterday, and stopping short of driving the price below $1,200…   Yesterday I told you there had been only 211,000 contracts traded on Monday. Well, Tuesday saw 288,000 contracts traded… The difference?  Short Gold paper trades…  Gold is up $2 in the early trading today, so maybe the shiny metal can push back? 

To recap… Apparently, consumers are dancing in the streets and singing Happy Days are here again… The Consumer Confidence Index rose to a record level in July, and the dollar fought to gain back some of its losses in recent days. The euro was ever so close to 1.17, but fell short and now has slipped downward as the dollar fought back. Canada was feeling left out, and decided to join the negotiations on trade… And the scenario I painted for you dear readers a couple of months ago, is beginning to be talked about in the markets…  See there? Even a blind squirrel can find an acorn! HA!

For What It’s Worth… Since I talked about how many article I’ve been reading that are picking up my scenario for the economy, earlier this morning, I have one of those articles for you! And it can be found here: https://www.fxstreet.com/analysis/has-the-us-economy-peaking-out-too-many-indicators-are-going-in-the-wrong-direction-201808241259

Or, here’s your snippet: “After an excellent second quarter, data for the third quarter begin to disappoint.
The circus around Trump diverts attention from the data.
The Fed may begin noticing it soon and this may hurt the US Dollar.

The US economy grew at an annual pace of 4.1% in Q2 2018 according to the initial read. President Donald Trump took a victory lap on the fastest growth rate in four years. Some had noted that the accelerated pace in Q2 might be related to a front-running of the tariffs on China.

Once the rush is gone, we may see some moderation. And with these duties serving as a tax on consumers. There is nothing wrong in a sub 4% quarter. But this may be somewhat worse than that.

Tariff-related or not, the data released in mid-August are not so promising.”

Chuck again…  And it all starts today with a revision of 2nd QTR GDP… 

Currencies today 8/29/18… American Style: A$ .73, kiwi .67, C$ .7762, euro 1.1665, sterling 1.2885, Swiss $1.0237,…  European Style: rand 14.3787, krone 8.36, SEK 9.1720, forint 278.28, zloty 3.6730, koruna 22.0755, RUB 67.58, yen 111.28, sing 1.3675, HKD 7.8492, INR 70.62, China 6.8050, peso 19.13, BRL 4.1014, Dollar Index 94.84, Oil $68.96, 10-year 2.88%, Silver $14.70, Platinum $790.05, Palladium $944.62, and Gold… $1,202.92

That’s all for today…  I’m really dragging the line this morning…  My lobbying for a break in the taking of chemo didn’t exactly work out my way, but there was a compromise I guess… Stop taking it for now, and wait for a lower dosage of the medicine to arrive. Ok, I guess I can live with that! Maybe with the lower dosage, the damage to my skin will cease, and I will be able to stay awake all day!  Alex has moved back home for the last two years of his studies/ Grad School… So, I have someone moving around here in the morning… I’m not used to that! I asked him if he wanted to sit down and add something to the Pfennig, like he used to do 20 years ago! One of my fave Chicago songs, Hard Habit To Break, takes us to the finish line today… So, please go out and make this a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler

August 28, 2018

* Currencies & metals continue to gain VS the dollar!

* U.S. & Mexico reach a “tentative agreement”… 

Good Day… And a Tom Terrific Tuesday to you! Well, I hit the proverbial wall yesterday, and all I could do was sleep the day away… The chemo I’m on is making me lethargic and has me dragging the line most days. I meet with my oncologist today, and I’m going to lobby for a break… I told my good friend, Dennis Miller, yesterday that I like her a lot, but… she’s a stickler for staying the course, which means I doubt my request is going to be met with approval, but I’m going to try anyway! No baseball last night for me, so I spent the night getting caught up with the new season of Suits… Cheap Trick greets me this morning with their song: The Flame…

The currencies and metals continued to move positively VS the dollar yesterday with the euro moving higher and closing in on a return to 1.17, and Gold adding $5 on the day. The BIG NEWS yesterday was about the “tentative agreement” with Mexico… But here’s something that seems to be a reoccurring theme… There was no signed agreement… And Where’s Canada with this “tentative agreement”? Is this “NAFTA Light”?

But the media was excited to report the agreement, and make it sound like it was in a signed agreement, but we now know that it wasn’t… But a country’s word is supposed to mean something, right? I just can’t help but think that this goes the way of N. Korea’s denuclearization… Recall that was an agreement by N. Korea to denuclearize but nothing was ever signed… And have we heard any word about this denuclearization since the meeting of the leaders from the U.S. and N. Korea in Singapore earlier this year? I’m just saying…

But let’s just say the agreement is in stone, and the U.S. is good with it. That means the U.S. received some wins in trade… And that’s a good thing, right?

So, getting back to the currencies and metals, the traders of these asset classes didn’t seem to care what was happening, and continued to focus on Fed Chairman Jerome Powell’s Jackson Hole speech where he turned from a hawk to a dove… Well, at least he sounded dovish, and that was all the traders needed to change their sentiment from buying dollars to selling dollars.

The Dollar Index, fell to a level that it hadn’t seen in 3 weeks, and hit it’s 50 day moving avg. (DMA),,, Will we ever see a long trading trend again? As I’ve explained many times in the past, but will do so again here for new readers… Currencies, historically, traded in long sweeping trends… for instance when Nixon took the dollar off the Gold standard in August 1971, the dollar began a weak trend that lasted 7 years, and then a strong dollar trend began, and ended with the Plaza Accord in 1985. And so on… The last strong dollar trend began with the uncovering of debts in Greece in 2011, and appeared to have ended last June when the currencies began to put together an impressive move VS the dollar..

That led me to believe that a new weak dollar trend was beginning, which would have meant that the dollar would be weak for anywhere from 7 to 10 years… Now, a trend can have volatility, and that’s what I thought we were seeing a couple of months ago, but historically these bouts of volatility never lasted for more than a few weeks… And then the weak underlying trend would return. There was one exception, but it had extenuating circumstances. In 2002, a weak dollar trend began, but in 2005, there was a tax amnesty signed that allowed U.S. corporations doing business overseas to return their profits at a reduced tax rate, and that supported a dollar rebound that last the whole year, but once the deadline for the tax amnesty ended on 12/31/05, the dollar strength ended, and the dollar returned to the underlying weak trend that lasted until 2011…

Well, that was how things went… the dollar would enter a trend based on a FUNDAMENTAL reason, and wouldn’t end the trend until the FUNDAMENTAL reason was corrected, or there was a sea change of events… So, I don’t believe I can be blamed for calling for a weak dollar trend last year, when FUNDAMENTALS no longer are used in determining trends… Not that I’m afraid to say I was wrong… I’m wrong a lot… But… oh well, you get what I’m saying here, right?

Now that was a long-winded explanation of what I’m talking about when I say when I say that FUNDAMENTALS are by-products of currency evaluation these days, it’s all about trader sentiment… with some Fundamentals thrown in to help explain their sentiment…

Over in Singapore this morning, the Monetary Authority of Singapore (MAS) has signaled a stronger Singapore dollar (S$) because inflation is rising.  Singapore is one of the countries I have always liked especially because of the way they deal with fighting inflation. They use their currency. You see, currency strength goes a long way toward calming rising inflation, and I admire the MAS for their work in keeping price stability in their country! 

And looky there! The Bank of England (BOE)has extended an invitation to BOE Gov. Mark Carney to extend his contract one year. I’m not sure I get what they see in this guy to run a central bank, but then that’s just me, and I’ve watched him do his thing at the Bank of Canada, and now the BOE, and quite frankly, I’m not impressed… But the folks at the BOE are, and so the U.K. economy can continue to have the Mark Carney and his bag-o-promises at the helm for another year.

The pound sterling has gained VS the dollar the last two days, but it’s not because of the BOE’s announcement. The gains have more to do with the dollar sell off that I’ve talked about…

Gold was allowed to gain $5.50 yesterday, and is up another $4 in the early morning trading today.  There hasn’t been a boat load of contracts traded in recent days, which tells me the short Gold paper traders aren’t generating another takedown of Gold.  Contracts traded yesterday was 211,000… A strong number, but not the 300,000 plus we see on days when the price movement is greater.

I saw an article come across my screen that talked about Russia using Gold to back their ruble, thus making it the most attractive currency on the earth. Now, this is the scenario I’ve always imagined China pulling off, but if Russia wants to go first, be my guest, be my guest, put our service to the test… HA!

The ruble sure could use some help these days, as the economic sanctions on anything Russian, has begun to weigh on the ruble… That and the overall drop in Emerging Markets Currencies that we saw begin last month with the Tariff war going on between the two largest countries, economy size-wise, haven’t been kind to the ruble..

Remember a week or so ago, I told you about the political turmoil going on in Australia? Well, it came to a head in the last couple of days, and last night a new Prime Minister was named. Now, maybe the Aussie dollar (A$) can join in with the other currencies rising VS the green/peachback…

And in China overnight, the renminbi saw the first mark down in over a week. I guess the Chinese were feeling Left Out since the U.S. and Mexico came to a “tentative agreement” on trade, and the discussions between the U.S. and China have gone nowhere. Basically, I don’t believe in my heart of hearts that the U.S. wants a trade agreement with China… I believe they want to push China to the brink of collapse, to teach them a lesson about intellectual property theft…  This won’t be good for China, but it also won’t be good for the U.S.  nobody wins, folks… I’m just saying… 

The U.S. Data Cupboard will see something in the way of a data today, when the Case/Shiller Home Price Index prints for June… In addition, we’ll also see the color of the stupid Consumer Confidence Index. With the U.S. stock market reaching new heights and setting new records for length of time in a bull market, I doubt we’ll see Consumer Confidence wane…

To recap…  The currencies and metals continue to move positively VS the dollar with the euro nearing 1.17 and Gold back above $1,200. Yesterday’s BIG NEWS was all about the “tentative agreement” with Mexico that will replace NAFTA… Nothing was signed, and that’s all I’m saying about that! Singapore’s MAS sees inflation rising, so the S$ will also be allowed to rise.  Australia has a new Prime Minister, and China’s consecutive days of appreciation in the renminbi came to an end last night. 

For What It’s Worth…  The GATA folks sent me this article and it talks about how the anti-dollar awakening could come sooner than most realize and can be found here: https://www.cnbc.com/2018/08/27/the-anti-dollar-awakening-could-be-ruder-and-sooner-than-most-economists-predict.html

Or, here’s your snippet: “The United States is currently waging economic warfare against one tenth of the world’s countries with cumulative population of nearly 2 billion people and combined gross domestic product (GDP) of more than $15 trillion.

These include Russia, Iran, Venezuela, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others on which Washington has imposed sanctions over the years, but also countries like China, Pakistan and Turkey which are not under full sanctions but rather targets of other punitive economic measures.

From a U.S. perspective, each one of the economic entities is targeted for a good reason be it human rights violations, terrorism, crime, nuclear trade, corruption or in the case of China, unfair trade practices and intellectual property theft.

But in recent months it seems that America’s unwavering commitment to fight all of the world’s scourges has brought all those governments and the wealthy individuals who support them to a critical mass, joining forces to create a parallel financial system which would be out of reach of America’s long arm. Should they succeed, the impact on America’s global posture would be transformational.”

Chuck Again… Yes, those payment systems that are outside the control of the U.S. are the rage these days… I dove deep into that subject of this week’s DTL piece.. 

Currencies today 8/28/18…  American Style: A$ .7350, kiwi .6708, C$ .7755, euro 1.1698, sterling 1.2896, Swiss $1.0242,   European Style: rand 14.1668, krone 8.3160, SEK 9.1135, forint 276.72, zloty 3.6515, koruna 21.9860,  RUB  67.29, yen 111.06, sing 1.3627, HKD 7.8497, INR 70.12, China 6.8132, peso 18.75, BRL 4.0902, Dollar Index 94.66, Oil $68.97, 10-year 2.85%, Silver $ 15.05, Platinum $806.42, Palladium $950.67, and Gold… $1,213.33

That’s it for today… Looks like we’re going to get rained on for the next few days… As long as it stops before Saturday! It doesn’t appear that we’ll have as many folks this year for the BBQ, but no worries on my part, that just means more leftovers! Good friend, Duane, always lends a hand in the cooking and that’s much appreciated, and the folks that come bring a dish, and there’s more food than you can imagine… I always say, that’s enough food to feed a boat family! Alrighty then, my Cardinals get back on the field tonight… Gotta keep winning… Remember what I said back in April and May when they were losing so many games? Games you win in the spring are games that you don’t HAVE to win down the stretch… But they didn’t win in the spring, and so, now the HAVE to win to remain in the playoff race…  Soft Cell takes us to the finish line today with their song: Tainted Love…  Another 80’s song for Rick!  I hope you have a Tom Terrific Tuesday and remember to Be Good To Yourself!

Chuck Butler

August 27, 2018

* Powell sound dovish at Jackson Hole

* Russia talks about retaliatory measures… 

Good Day… And a Marvelous Monday to you! Whew! A whirlwind weekend of a little car traveling, and some time with friends.. Thanks to good friends, Lisa and Kevin for their hospitality! I know I left you last Wednesday with some ominous words… Something along the line of. “we have some serious things to talk about next week”… But… I’ve decided to push that back another week, as there are some balls still up in the air… As Johnny Rivers sang in Summer Rain, Let tomorrow be… I have a busy week, that leads into a day and a half of cooking ahead of our Annual Butler Labor Day BBQ this coming weekend. Donnie Iris greets me this morning with his song: Ah! Leah! It’s a read good one, for those of you that don’t recognize that song or artist!

Well, the currencies continued to fight back VS the dollar as we went into the weekend last week, and with little to no data during the week, it left the dollar vulnerable, and that vulnerability came to a front, when the markets got a whiff of what Fed Chairman Jerome Powell was saying at the Fed’s annual boondoggle in Jackson Hole, Wy. First, though, remember a couple of weeks ago, when Powell was asked about interest rate hikes and he sounded a bit dovish about them? Well, this time he was certainly sounding a lot dovish with his comments about rate hikes being gradual…

Now, that doesn’t mean that he’s put his tail between his legs after being called out by President Trump a couple of times in recent tweets, and the rate hikes are going to stall… It just means that I don’t think the markets can bank on a rate hikes every 3 months like they’ve been being made.

The euro moved above the 1.16 handle and the other currencies fell in behing the Big Dog… The Chinese renminbi was the best performing currency last week, as they turned the tables on their daily whacking of the currency, to a daily celebration of the currency! The Chinese have me confused as to what it is they are attempting to do with the renminbi. I pride myself on being able to pinpoint what the Chinese are up to, usually, (it’s easy, just don’t listen to everyone’s else’s opinion on China!) But this has me scratching my bald head… But, as long as the Chinese keep their hands out of Gold’s cookie jar, they can do whatever it is that floats their boat with the renminbi…

While we’re on the dollar… Remember when I said that I was surprised that Russia hadn’t announced any retaliatory measures against the U.S. after the U.S. had placed even more sanctions on anything that’s Russian? Well, I’m no longer waiting for those retaliatory measures… Just last week it was reported in the RT that Deputy Foreign Minister Sergei Ryabkov, had this to say:

“The time has come when we need to go from words to actions, and get rid of the dollar as a means of mutual settlements, and look for other alternatives,” he said in an interview with International Affairs magazine.

Wasn’t it just last week that I highlighted an article that talked about Germany wanting to create their own payments system outside of U.S. control? Why, yes, Chuck, it was just last week, so it now appears that China has a new payment system, Russia is working on one, and Germany is in the planning stages of one… Eventually, these countries will no longer need as many dollars in their reserves!

As I’ve said over and over again, this dance is gonna be a drag, no wait… What I’ve said before is that this is all our own fault with a deficit spending and debt accumulation… Get this… The President’s new $1.3 Trillion spending bill has passed…

A jaw-dropping $100 million will be paid out every hour of every day – for the next year. And that’s just the beginning of more $1 Trillion plus annual deficits, folks… And the Fed is still unloading their Treasuries, while more and more Treasuries will need to be issued to finance these rising deficits… Does anyone else see where this is not going to turn out just peachy?

Meanwhile, back at the ranch… The economic data from around the world last week, was very upbeat… While here at home, we printed just one piece of economic data… The Durables… And Durable Goods Orders for July were a NEGATIVE -1.7%!!! This 3rd QTR for the economy is digging itself a hole, folks… I’m just saying…

This week’s U.S Data Cupboard will be off and on with data prints with the highlights coming on Tuesday with the Case/Shiller Home Price Index from June… Wednesday we’ll see a revision to the 2nd QTR GDP… And Thursday two of my fave prints… Personal Income and Spending… this time for July… I don’t believe that these data prints will be anything to upset the dollar selling applecart this week, so we should continue to see the dollar under pressure… Like Queen used to sing… Under Pressure…

After seeing a sell off on Thursday in Gold… Friday reversed that sell off and added some rising over $20 on the day, to close at $,205… You gotta love it when the physical Gold buyers out bid the short Gold paper traders…

A couple of years ago, I wrote in the now defunct, Review & Focus, that there were reports of a shortage in physical Silver, and with the new focus on solar panels, that use Silver, that Silver should be looking upward and onward, as my old boss and good friend Frank Trotter used to say. 

But the paper short trades have kept that shortage from pushing the price of Silver higher. In Ed Steer’s Saturday letter (www.edsteergoldsilver.com) he points out that it would take 181 days of physical Silver production to match the total amount of short positions that are out there… 181 freakin days folks! Doesn’t that get your dander up?  Move along here Chuck, no need to get your blood pressure rising!

It’s a holiday in the U.K. today, as they celebrate their Summer Holiday… And in Germany, I’m waiting for the color of the latest IFO Business Sentiment results…   While in the U.S. Data Cupboard, we don’t have much in the way of data today, but the U.S. will be auctioning a boat load of Treasuries with 3&6 month T-Bills and 2-year Notes for sale at the auction window today… 

It will be interesting to see just how much interest there is in these auctions…  Hey! I’ve been talking about how the U.S. Treasury yield curve has been flattening out, right? Well get this… the U.S. yield curve has tumbled back below the Japanese yield curve for the first time since Nov 2007… And the yield spread between 2 year notes and 10-year notes is now in the teens… What’s this telling us? 

It’s telling us that the bond guys don’t believe in this economy, and don’t believe the Fed is going to be able to increase interest rates as much as they say they will. It’s that simple folks… And as I’ve said for many a year, the bond guys “know”…   

The price of Oil has recovered some lost ground from last month, and trades with a $68 handle this morning… The latest news from the U.S. producers is that Oil rig counts have dropped at the fastest rate here in the U.S. since 2016.. Hmmm…. 

Commodities sure did take a hit in the past month, as China drove the price of Gold down, and that meant that the Commodity Currencies like the Aussie dollar (A$) and kiwi  have had a difficult time in recent weeks… But as I said last week, the Chinese contend they have not done any dirty deeds to Commodities, so maybe that will take the heat from Commodity currencies… 

One currency that just keeps exposing more rot on its vine is the Brazilian real… The real has really dropped like a rock from a cliff in the past couple of months, and this morning is trading with a 4 handle! Ouch! Now that’s going to leave a mark!  Political turmoil, started the real on this ride on the Slippery Slope, and now, just about every and any thing that the markets can nit pick on, they do, and that just feeds the selling in the real…  At some point it will makes sense to swim against the tide here, but not yet, doing so now would be like catching a falling knife! 

To recap…  It was a good week for the currencies and metals, as the dollar has had to deal with 1. Trump dissing the Fed and rate hikes, and 2. Jerome Powell talking dovish at the Jackson Hole Boondoggle. Gold is back above $1,200 and Chuck wants to know why the shortage in physical Silver hasn’t helped the metal to higher levels?  

For What It’s Worth…  Well, I’ve long said that the 2nd QTR GDP print of 4.1% would be a one and done, and so far the July data prints are bearing that out to be the case… But I saw this on the Daily Reckoning, and thought it’s good for people to hear other minds talk about this besides just me all the time… And so this is an article by Nomi Prins is about just that, and it can be found here: https://dailyreckoning.com/the-fed-will-not-give-up-dark-money/

Or, here’s your snippet: “Also concerning is the record amount of household debt. Consumers are using it to spend and that is partially responsible for that 4.1% GDP growth, as I noted on Fox Business recently. But it’s not sustainable.

Add it all up and there’s considerable reason to believe that the 4.1% growth rate is only temporary.

It will not represent the full GDP growth figure over all of 2018, nor will it be the growth figure in 2019 or 2020. Even the Fed admits growth will slacken over the next couple of years.

I don’t often agree with the Fed. But on this point, I agree with the Fed’s forecast for slower growth to come. That outlook presents options for the Fed to create more credit, or what I call dark money to support the markets, to confront inevitable periods of volatility ahead.”

Chuck Again… It’s a good article and goes into explaining “dark money”… so take some time to get through it if you can… 

Currencies today 8/27/18… American Style: A$ .7315, kiwi .6675, C$.7660, euro 1.1618, sterling 1.2850, Swiss $1.0172, … European Style: rand 14.3113, krone 8.3502, SEK 9.1270, forint 278.72, zloty 3.6784, koruna 22.1650, RUB 67.14, yen 111.10, sing 1.3660, HKD 7.8497, INR 70.11, China 6.8039, peso 18.80, BRL 4.1025, Dollar Index 95.23, Oil $68.40, 10-year 2.82%, Silver $14.84, Platinum $789.01, Palladium $938.62, and Gold… $1,204.26

That’s it for today… Well, my beloved Cardinals are still on a roll having won 9 consecutive series, and finishing a road trip out west at 5-1… But the Cubs are winning now too, so we haven’t been able to make up any ground against them… UGH! I’m very busy this week, and that’s a good thing, compared to my time in S. Florida, where I’ll be heading again next week, but that’s next week! College Football begins in earnest this coming weekend, and my beloved Missouri Tigers will take the field on Saturday! Good luck to the Tigers!  Jimmy Buffett takes us to the finish line today with a very apropos song… Come Monday…  Alrighty then, I hope you have a Marvelous Monday, and remember to Be Good To Yourself!

Chuck Butler

August 22, 2018

* Currencies & metals have another day in the sun!

* July data prints continue to underwhelm… 

Good Day… And a Wonderful Wednesday to you! Another win out in LA for my beloved Cardinals last night. Good stuff…  There will not be a Pfennig tomorrow, as it is a travel day for me, and early in the morning I’ll be on my way to the airport. Which reminds me that I need to get all packed tonight, so I’m ready to go, and no sleeping past the alarm tomorrow! When I make these travel plans, I normally find that the best flights are early morning, and I think, that’s Ok, I’m usually up, but then when it comes time to execute the travel plan, I wonder, what I was thinking! HA! Another 80’s song is greeting me this morning, so cue it up Rick! Madness greets me this morning with their song: Our House… 

Well, I spent a good part of yesterday’s letter telling you about the President’s attempt to quash the Fed Rate Hikes… And today I’m changing gears to currency manipulation…  I told you that President Trump wants a cheaper dollar so that U.S. exports were more competitive. And now it appears that seeing that criticizing the Fed isn’t getting him anywhere, I’m thinking that Trump, who has called out China and the Eurozone for currency manipulation, is going to start pressuring the Treasury and whomever else he can to get the dollar weaker…  

I think currency traders and investors are feeling this too, and that’s what has the dollar on the run for 3 consecutive days now. The currencies and metals all enjoyed another day in the sun yesterday, and in the overnight markets… The Big Dog euro, continues it’s climb out of the cellar and is within spittin distance of 1.16… 

The biggest mover  Vs the dollar has been the Chinese renminbi, as the Chinese attempt to reverse the mark downs they had put on the currency earlier this month. Ever since they made the remark that “We’re not doing what we were doing to the renminbi” the currency has reversed its path. And with the revival of the renminbi, is Gold… 

Gold added another $5 to its price yesterday, and is closing in on $1,200 again…  I’m still leery of any gains in Gold, that the price manipulators could be lurking around the corner, waiting for an opportunity to strike! But so far so good…  I was talking to my good friend Dennis Miller of www.milleronthemoney.com the other day about Gold… and we agreed that there are ways to have a “Gold affect” in stocks that pay dividends, but react along with Gold…  It’s an interesting concept, but for me, I’m an old stick in the mud, and prefer to own the shiny metal… 

The price movements of Gold & Silver are no Big Deal to me… Because I’m not looking to sell my Gold & Silver! As I told Dennis, I plan to leave these stores of wealth to my grandkids…  And one day my grandkids will say, “man, that guy was sure smart”… 

OK… let’s get back to the markets… The U.S. Data Cupboard finally gets restocked today, and will have Existing Home Sales for July and the Fed’s Meeting Minutes from their last meeting… But like I said on Monday, we’ll have to wait until Friday for any real economic data, when Durable and Capital Goods orders will print for July…  I won’t be around on Friday, but I can tell you this… In my humble opinion I can’t believe that Durable & Capital Goods Orders in July will be good for those that believe the economy is “strong and robust”…  The July prints have all been pretty underwhelming, not meeting expectations with some printing negative, as I believe Durables will print on Friday… 

So far, the economy is doing exactly what I said it would do, a few months ago, when I first told you about how the 2nd QTR GDP would be north of 4%, but that it would be like the star that burns brightest before it flames out. And the July data prints have all played along with my thoughts on the economy…  

Just too much debt folks… too much effort that’s needed to deal with the debt, to allow an economy to put together consecutive periods of good growth… Longtime Readers will recall me always talking about how the U.S. was turning Japanese…  The U.S. is turning Japanese, yes, I really think so!  (thanks to the Vapors!)  But think about that for a minute… Hasn’t Japan through the years seen these short periods when everything looked like it could turnaround for them, only to see that fade over and over again? Too much debt…   And now the U.S. is going to enter that phase, as it follows Japan down this debt road to disaster… 

But I’m not going to go any further into that discussion, because… I don’t want to be a gloom and doom guy… I also don’t want to be the boy who cried wolf… I just want to point out things that could affect your investment portfolio and lead you to the diversification trough… 

And having the President start down the road to currency manipulation is something that you should know about, and you won’t hear about it on the evening cable news until the dollar is down 20% and things are looking pretty iffy for the currency.. But then it will be too late for investors attempting to diversify… I’m just saying… 

And when I say diversify, I mean to allocate a portion of your investment portfolio with currencies and metals…  Look… I’m no longer associated with a trade desk, so I don’t have a dog in this hunt any longer, and I’m still telling you to diversify with currencies and metals…  I don’t know any other way to get this message across to you… 

To recap… The currencies and metals enjoyed another day in the sun yesterday, and in the overnight markets,  booking small gains VS the dollar for the 3rd consecutive day. Chuck believes that the focus has moved from the President criticizing the Fed to the President wanting to manipulate the dollar weaker to effect trade.  If that’s truly the case here, then you had better be backing up the truck to the currencies and metals dock… I’m just saying… 

For What It’s Worth…  Well, I’ve told you about how China has developed a payment system outside of the U.S.’s control, and now this call from Germany… it sure does seem like the dollars hegemony is beginning to weaken, doesn’t it?  This article can be found here: https://www.zerohedge.com/news/2018-08-21/germany-calls-global-payment-system-independent-us

Or, here’s your snippet: “Germany’s foreign minister has called for the creation of a new payments system independent of the United States as a means of rescuing the nuclear deal between Iran and the west that Donald Trump withdrew from in May.

Writing in the German daily Handelsblatt, Heiko Maas said Europe should not allow the United States to act “over our heads and at our expense.”

“For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the U.S., creating a European Monetary Fund and building up an independent Swift system,” he wrote.”

Chuck Again… I’ve said all I’ve got to say about this… But remember, we as a country brought this on ourselves with all our debt and getting into people’s business…  

Currencies today 8/22/18… American Style: A$ .7355, kiwi .67, C$ .7685, euro 1.1592, sterling 1.2889, Swiss $1.0173, European style: rand 14.2248, krone 8.3669, SEK 9.0746, forint 278.48, zloty 3.6950, koruna 22.1990, RUB 67.18, yen 110.33, sing 1.3663, HKD 7.8497, INR 69.86, China 6.8431, peso 18.85, BRL 3.9876, Dollar Index 95.13, Oil $66.69, 10-year 2.82%, Silver $14.79, Platinum $794.83, Palladium $919.55, and Gold… $1,197.04

That’s it for today, and this week… And, I’m not sure about Monday, if I’ll be back home or not, as I’m leaving Friday for a weekend get away. But if I am back home, you’ll receive a Pfennig! And if I’m not, you won’t!  And then next week, we’ve got some serious things to talk about, but I’ll leave for that next week…  I’m so pleased with the turnaround in the Cardinals play… And it’s not just the winning… But better baseball, good pitching, good defense, baserunning, situational hitting, fundamentals… Win or lose it’s fun to watch my team again… Welcome back, I’ve missed you! The band Styx takes us to the finish line today with their song; Crystal Ball…  I hope you have a Wonderful Wednesday, and for goodness sakes, please remember to Be Good To Yourself!

Chuck Butler

August 21, 2018  

* Currencies & metals turnaround continues

* Political turmoil in Australia… 

Good day… And a Tom Terrific Tuesday to you! Well, how about that? My beloved Cardinals go to LA and win in the 9th inning VS the best closer in the National league… Baseball is a strange game sometimes, and goes places you would never have imagined…  I didn’t hear from my darling daughter Dawn yesterday, so I’m thinking that she had a grand birthday! I have a treat for good friend Rick today… The Group A-ha greets me this morning with their song: Take Me On…  If know Rick like I think I do, right now he’s searching his music roster to find that song to play it because now it’s in his head! HA!  

I was putting the finishing touches on my Dow Theory Letters piece for this week last night, and in it  wrote about how it appears that the bottoms have been put in for the currencies and metals, but that we had seen so many false dawns lately, that it would take a week to be sure. Well, Day two of the turnaround was a good one for the euro and Gold…  And longtime Pfennig Readers know that what’s good for the goose is good for the gander, when it comes to the currencies… If the Big Dog euro is off the porch chasing the dollar down the street, the little dogs (the other currencies) are right behind!  

And a quick look around the world confirms that thought once again with currencies from Singapore to Canada all looking better this morning. The Chinese renminbi has had two consecutive nights of fixings that have allowed appreciation, and the renminbi is looking much better this morning than a couple of days ago, when it looked like the it was going to take CPR to get the renminbi off the canvas.  

Gold added $5 to its value yesterday, after adding $10.90 on Friday, and this morning the shiny metal is already up $2 in the early morning trading.  And I have to say that even though its not a “huge amount” of difference, $1,193 sure looks better than the $1,178 it was trading at last Thursday. 

So, what’s causing this turnaround, that’s causing the dollar bugs to scatter and crawl back into the wallboards? Well, from everything I’ve read, it sure appears that the President has caused this turnaround… How? I hear you asking… Ahhh Grasshopper, come, sit, and listen…  A couple of weeks ago, I wrote about how the President had broken the trend of sitting Presidents to not talk in public about the Fed…  And there was some wobbling of the dollar… But last Friday, Trump went full bore on the Fed, talking about how their rate hikes were hurting the economy, and he wished they would stop hiking rates. 

It does appear to me, that the markets are taking this comment as a sign that the Fed will cower to the President and stop hiking rates… To that, I say Poppycock!  But then yesterday, Trump had more to say about the Fed… He said that he was going to continue to criticize the Fed if they continue to hike rates…  Look, the President isn’t unlike most people these days, they have to find someone to blame, for nothing could be their fault! 

it’s all connected folks… Trump wants a cheaper dollar to help with the exports that are getting tariffs added to them… But that wasn’t happening because of the Fed Rate Hikes. So, Trump attacks the Fed..   So, that’s what’s behind the turnaround… That and the simple fact that the dollar had been overbought…   And at this point, I would like to tell the President… “Hey, I didn’t hire him… you did!” (in reference to Jerome Powell the Fed chairman)  

The Aussie dollar (A$) is participating in the currency rally, which is surprising to me, in that there is political turmoil in Australia, and normally currency traders want no part of any political turmoil.  Yesterday the PM Turnbull had to hold off a leadership challenge, and barely won… This is the kind of stuff that usually knocks the snot out of a currency, but the A$ just soldiers onward… 

The A$’s kissin cousin across the Tasman, the New Zealand dollar/ kiwi is playing follow the leader with the A$. I always liked that song from the Peter Pan story… We’re following the leader, the leader, the leader, we’re following the leader, wherever he may go…   But, on the serious side… We’ll see the color of the 2nd QTR Retail Sales in New Zealand later today… I expect the report will show growth in Retail Sales during the 2nd QTR, that was above the 1st QTR’s output of 0.6%… 

In the old days of valuing currencies strictly on fundamentals, a stronger Retail Sales report would have sent kiwi on a moon shot…  But these days, it’s a combination of fundamentals and Trader Sentiment, with Trader Sentiment being the main ingredient…   

Ok, I just mentioned the main ingredient…  For the win… who can name the hit song from the 70’s from The Main Ingredient? No Googling the answer! The answer will be in the Big Finish… 

Ok… that was fun!  Hey! Fun is my middle name!  If I’m not having fun, then I don’t want to do whatever it is! Having fun keeps you alive! Years ago after my second go-around with cancer, someone sent me a note and told me how sorry they were, and asked me what I was going to do… I replied… Have fun! 

So, the currencies are back on the rally tracks, and taking Gold with them for the ride. and there’s nothing but dust in the U.S. Data Cupboard today…  Which means that we should continue to see more dollar selling today, as there’s nothing to stop the selling and only one voice causing the selling… And that one voice happens to be the most powerful man in the world… 

Well, the Trade War continues to cause problems and here in the U.S. is what we care about right? Why would we care if Holland is having problems with their Trade Balance because of the Trade War? Over in Germany, they’re not having any problems with the Trade War… Yesterday it was reported that for 2018, Germany will continue to be the world’s leader in Current Account Surplus… Germany’s current account surplus – which measures the flow of goods, services and investments – will remain the world’s largest for the third year running in 2018 at $299 Billion, followed by Japan with $200 Billion, according to IFO (A Think Tank in Germany)  estimates.

You would think that China would be near the top in that category, but China has seen a surge of imports… So, it’s Germany… I’ve said this for years, and it remains as true today as it was the first time I said it, and that is that I would love to be able to just buy Germany’s currency… But the German mark went the way of the dodo bird back in 1999, when the euro came into existence… 

To Recap… The currency and metals turnaround continued on Monday in the overnight markets last night, with the euro climbing back to a 1.15 handle and Gold having two consecutive days of gains. And apparently President Trump is at ground zero of what’s causing this turnaround. Apparently, the President has decided to go toe to toe with the Fed Chairman and his rat hikes… Currency Traders seem to think that this will cause the Fed to rethink their rate hike path… Chuck says poppycock! 

For What It’s Worth… Well, when you’ve backed a dog into a corner, expect it to come out fighting, and when you think you’ve backed a country into a corner, if they’re any good, they’ll find a way to get out… And that brings us to China, who found a way to continue to receive Iranian Oil, which is against the sanctions placed on Iran by the U.S.  This article can be found here: https://www.reuters.com/article/us-china-iran-oil-shipping/exclusive-china-shifts-to-iranian-tankers-to-keep-oil-flowing-amid-u-s-sanctions-sources-idUSKCN1L50RZ

Or, here’s your snippet: “Chinese buyers of Iranian oil are starting to shift their cargoes to vessels owned by National Iranian Tanker Co (NITC) for nearly all of their imports to keep supply flowing amid the re-imposition of economic sanctions by the United States.

The shift demonstrates that China, Iran’s biggest oil customer, wants to keep buying Iranian crude despite the sanctions, which were put back after the United States withdrew in May from a 2015 agreement to halt Iran’s nuclear program.

The United States is trying to halt Iranian oil exports to force the country to negotiate a new nuclear agreement and to curb its influence in the Middle East. China has said it is opposed to any unilateral sanctions and has defended its commercial ties with Iran.

To safeguard their supplies, state oil trader Zhuhai Zhenrong Corp and Sinopec Group, Asia’s biggest refiner, have activated a clause in its long-term supply agreements with National Iranian Oil Corp (NIOC) that allows them to use NITC-operated tankers, according to four sources with direct knowledge of the matter.”

Chuck again… The world has grown up, and is finding ways to go around the orders of the U.S. And if we didn’t owe the world Huge sums of money (debt) we would be able to continue to direct the world… But we gave that ability up when we decided to go down this “debt doesn’t matter road”… 

Currencies today 8/21/18…  American Style: A$ .7358, kiwi .6666, C$ .7678, euro 1.1520, sterling 1.2830, Swiss $1.0128,… European Style; rand 14.4257, krone 8.4330, SEK 9.1330, forint 280.48, zloty 3.7388, koruna 22.3411, RUB 67.12, yen 110.25, sing 1.3672, HKD 7.8495, INR 69.87, China 6.8564, peso 18.95, BRL 3.9319, Dollar Index 95.55, Oil $66.92, 10-year 2.84%, Silver $14.78, Platinum $800.30, Palladium $917.19, and Gold… $1,192.97

That’s it for today… well, my time here in S. Florida is coming to an end… I had to bring all the patio furniture in yesterday, as it is hurricane season, and I won’t be back for two weeks. Well, I see this morning that my beloved Cardinals found a way to win in the 9th inning last night, after blowing a lead earlier in the game. The Cardinals will put their three young pitchers up against the mighty Dodgers in this series… Should be interesting, too bad the game doesn’t start until its 10 pm here… UGH! Well, one of my all-time fave songs is taking us to the finish line today… The Blue Jays sing their song: I Dreamed Last Night…   Now… it’s your mission should you decide to accept it, to go out and make this a Tom Terrific Tuesday, and to Be Good To Yourself!

Chuck Butler

 

 

 

August 20, 2018 

* Currencies & metals rally on Friday

* MAERSK says U.S. economy will be hurt from Trade War! 

Good Day… And a Marvelous Monday to you! What a way to turn the season around by my beloved Cardinals, coming home and playing winning baseball in front of the home crowd, has been something so lacking these last couple of years, but that ended last week with a 7-game home stand seeing 5 winners! And just as important, they’ve won 7 series VS teams in a row! That’s how you get to the playoffs… Ok… Today is my beautiful daughter’s birthday… Happy Birthday Dawn! Dawn is a kindergarten teacher, and ever since she was a young girl, the little kids just flocked to her… So, she picked the correct vocation, eh? When she was a little girl, I called her Boo Boo, then Dawnie boo, and then she grew up… I tried like hell to keep her from doing that… But it didn’t work… And now I’m hoping that Dawn’s daughter, my little d (Delaney Grace) never grows up! Dawn always takes the time to call me when I’m alone and see how I’m doing, or if I need anything. That’s my Dawnie boo! Foghat greets me this morning with their song: Take It Or Leave It…

Front and center… I wanted to remind everyone that the Pfennig Replies site crashed, and they haven’t been able to resurrect it yet, so if you respond to the Pfennig, I’ll not see it… and that’s why you haven’t’ received a response… it’s not a case of me just deleting them… I haven’t been getting them!

OK… That’s out of the way… Something strange happened on Friday… The dollar got sold! It was a good day for the currencies and metals… I sure would like to say that was the turnaround, but I get this feeling that it was a day of rest for the market participants that have driven the dollar to near the 97 level of the Dollar Index. I was zapped out most of Friday, so I had to look up what went on… And I found out that the dollar bugs were sent back into the wall boards by a better than expected CPI (consumer inflation) report from the Eurozone… CPI in July was 2.1%… So, all the stoplights have turned green for the European Central Bank (ECB) to begin to unwind their stimulus…

On top of the good CPI report (Good for the markets, no inflation is good with me!) The Eurozone Current Account Surplus widened to EUR 23.5 Billion! This report came with red lights flashing, warning the Eurozone that U.S. President Trump will be coming for some of that EUR 23.5 Billion surplus! And I’m being serious about that folks! The Trade War might have taken a bit of a break in the latter part of the week, but that won’t last long, and I truly expect the Trade War saber rattling will begin again as this week gets started…

Have you ever been to a port city? Or the Panama Canal? The reason I ask, is that if you have you would be very familiar with the company name MAERSK… It’s on just about every ship or container in the port or canal! Well the folks at MAERSK decided to throw their two cents into the comments about the Trade War… And they said that in their opinion, which to me carries a lot of weight, given their business, that the Trade War will hurt the U.S. economy the most. 

I thought long about this comment from MAERSK, and have to say that the U.S. is a country of spenders… But if prices rise too much, first we flock to Walmart, and if prices keep rising, we then stay home. I was doing some research this past weekend, and read a report that highlighted what I just wrote about Walmart…  That when things get hairy in the U.S. economy, Walmart sees increased sales, and when things are looking smooth, they see decreased sales… Interesting don’t you think?  So, keep an eye on Walmart, if the parking lots are filled to the brim… the economy is already well on its way to recessionville. 

I’ll let you all in on a little secret… come in close here so I don’t have to say it too loudly… Ready? Ok, here we go… The Bond guys don’t think much of the Trade War, and what it’s going to do to the economy… In case you haven’t been paying attention, the yield on the 10-year Treasury remains below 3%, at 2.86% this morning… Basically, as you look at this bond maturity, you have to see that the bond guys don’t believe the economy is going to be better than 2.86% can’t handle… think about that for a minute and then come back with questions… HA!

Well, Gold got off the canvas and dusted itself off to gain $10.90 on Friday! It was beginning to look as if Gold was going to stay down for the count last week, but on Friday, it pulled itself up, and the referee waived off the count… China must have thought that enough was enough, eh? Or maybe the Chinese really meant it when they said, “We’re not doing what we’re doing to the renminbi” Remember that one? I was laughing until my side hurt… But maybe they should have said, “We’re finished doing what we’re doing to the renminbi”

Gold is up another $4 in the early morning trading today, so hopefully it can put together consecutive days of gains, and not have Friday be a one and done… 

As I said above, the currencies rallied on Friday, the Big Dog, euro traded up from 1.1370 on Thursday to 1.1444 on Friday… There was a little profit taking in the overnight markets, or selling by the ECB, take your pick, either way the euro has backed off a bit in the overnight markets… 

The Aussie and New Zealand dollars both saw nice recoveries on Friday that held through the overnight trading last night.  On Friday, the Peoples Bank of China (PBOC) allowed a nice appreciation in the renminbi, and again last night… So that makes sense that the A$ and kiwi were on the rally tracks given their biggest customer stopped with the Armageddon actions with their currency…  

It’s going to be a week chock-full-o-data and stuff from around the world… Like Japan will print their latest CPI… The Eurozone will print their latest PMI’s… Canada will chime in with a data print of their own with June Retail Sales (seems a little stale don’t you agree?) and New Zealand will print their 2nd QTR Retail Sales on Tuesday, IWed for us)… there are lots of other prints from the countries around the world taking place this week, but these are the major ones…

Last Friday, Russia printed two very interesting pieces of data. I say that because these data reports from Russia continue to amaze me with how resilient they are in the face of economic sanctions on just about anything that’s Russian. Retail Sales for july were up 2.5%… pretty darn good, eh? And Russian GDP for July Year on year, was up 1.8% from 1.1% the previous month. The Soccer or FIFA World Cup games surely had a positive effect on the Russian economy this summer I would think, so now after the games are over, what happens? And that’s what I’ll be watching… You can bet your sweet bippie on that!

So, Since we’re talking about economic data… The U.S. Data Cupboard is so worn out from last week’s deluge of data, that it’s taking Monday and Tuesday off this week! Yes, no data to speak of… Only the Fed’s Meeting Minutes from the last meeting will print tomorrow. In fact, we won’t see a piece of real economic data until Friday, when Durable and Capital Goods Orders print for July…

Whenever we have a week such as the one we’re about to have here in the U.S. with little or no data for a number of days, the dollar usually gets lost in the shuffle… Oh, but wait! I almost completely forgot, the Fed’s Jackson Hole Boondoggle begins this week! OMG, what was I thinking? Most years, this boondoggle of finance ministers, central bank govs. And others, don’t bring about much movement in the markets… But a few years ago, St. Louis Fed President, James Bullard broke the news about another round of QE was needed… And well, that, my friends was a piece of market making news!

So… I’m not of the opinion that much will shake from the trees at this meeting, but we never know, now do we?

To Recap…  The currencies and metals rallied on Friday, after some strong economic prints from around the world, sending the dollar bugs back to the wall boards… It looks like there was either some profit taking or more  ECB selling of the euro in the overnight markets, but the Big Dog has held a good piece of its gains on Friday…  Gold gained $10.90 on Friday, and is up $4 in the early morning trading today… And Chuck let’s his dear Pfennig Readers in on a little secret… 

For What It’s Worth…  With the U.S. ratcheting up the debt machine and making it have steam coming out of it from working so much, the issuance of Treasuries is astronomical… But there’s a problem… Who’s buying them? The Fed… no… Russia… no… China… maybe… Japan… no… Uh-oh… Well this article talks about that and more and can be found here: https://wolfstreet.com/2018/08/15/who-bought-the-1-36-trillion-of-new-us-national-debt-over-the-past-12-months/ 

Or, here’s your snippet: ““Official” foreign investors – this would be central banks, governments, etc. – and private-sector foreign investors held $6.21 trillion of US Treasury Securities at the end of June, up by $61 billion from a year earlier, according to the Treasury Department’s TIC data released Wednesday afternoon.

But over the same period, the US gross national debt, fired up by a stupendous spending binge, soared by a breath-taking $1.36 trillion. So who bought this $1.36 trillion in new debt?

The largest holder of marketable Treasury securities remains China, whose holdings in June fell by $4.4 billion from May to $1.18 trillion, within the same range since August 2017, despite escalating threats and counter-threats over trade.

But Japan has been systematically reducing its Treasury holdings. They’d peaked at the end of 2014 at $1.24 trillion. In June, its holdings dropped by $18.4 billion from May, to $1.03 trillion, the lowest since October 2011:”

Chuck again… I’ve said this before that the Fed was like Steve McCrocskey from the original Airplane movie… The Fed picked the wrong time to begin to unwind their balance sheet! 

Currencies today 8/20/18… American Style: A$ .7310, kiwi .6618, C$ .7650, euro 1.1415, sterling 1.2742, Swiss $1.0042, European Style; rand 14.5065, krone 8.4605, SEK 9.1834, forint 283.81, zloty 3.7683, koruna 22.5306, RUB 66.99, yen 110.65, sing 1.3717, HKD 7.8495, INR 69.74, China 6.8752, peso 18.89, BRL 3.9100, Dollar Index 96.30, Oil $65.88, 10-year 2.86%, Silver $14.77, Platinum $779.40, Palladium $917.29, and Gold… $1.188.09

That’s it for today…  I can’t believe my daughter is turning… No, I won’t tell you that number, I know better than that… Let’s just say, she’s making me feel old! I’m told by my beautiful bride all the time that I am old… So, that settles that!  I started sending out the invites to the Annual Butler Labor Day BBQ this past week…  I love that weekend, the last of the summer, the start of college football, a gathering of friends and family… And the Big Green Egg working overtime! I’ve done this Labor Day BBQ for almost 20 years now… it’s a Big Deal to me!  Cardinals go to LA tonight I won’t be catching that game on TV, for it will come on at my bed time! UGH! And with that the Beatles take us to the finish line today with their song: I Feel Fine…  I hope you have a Marvelous Monday, and Be Good To Yourself!

Chuck Butler

August 16, 2018  

* U.S. Data Continues to not impress… 

* China & the U.S. meet on trade… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m ready for some Tub Thumpin’, I’ll tell you that! I received a call from good friend Dennis Miller, the retirementor, yesterday. He informed me that he had picked up quite a few new readers after I told you dear Pfennig readers that you should sign up for his letter! I told him that it was good to talk to someone, other than myself! The Hooters greet me this morning with their song: All You Zombies… 

When I hear that song, I’m reminded of the great publisher and writer, Bill Bonner, who refers to things as “zombie”…  I sure with the price manipulators in the metals would go zombie on us!  Yesterday 382,000 contracts were traded in Gold with most of them directing Gold lower by $19 on the day… Whoa! $19? Yes, $19…  Three Dog Night is singing a song on the iPod right now, and they are asking the question, “how can people be so heartless?”  Gold is up $4.25 in the early morning trading this morning though, so maybe it can gain back some of that $19 loss yesterday in today’s trading.  It certainly has been a rough time for Gold enthusiasts like me, these last two months… 

I just can’t get my arms around what’s going on with the dollar bugs… They continue to dance in the streets, while Rome is burning behind them, and they just don’t seem to notice it… Yesterday, the U.S. Data Cupboard was chock-full-o-data and while Retail Sales for July were OK, they weren’t great, and the rest of the data showed more cracks in the economy’s foundation.

The news from the Eurozone has been centered on the Italian bond spreads that we talked about on Monday… The spread between Italian Gov’t bonds and German Gov’t bonds is wide enough to drive a Mack Truck through…  Too bad investors can finally find some yield in a Gov’t bond, only to find out the bond is issued by Italy…  As a reminder of what I said on Monday… The European Central Bank (ECB) is ending their bond buying program, and have already tapered the amount they buy each month, which included many an Italian Gov’t bond… Without the ECB’s support the lower yields of these bonds, the yield will go where it’s supposed to go… higher, to reflect the Italian economy… 

Yesterday, President Trump made a statement that I have to call him out on… He said that the U.S. had always had tariffs… I’m sure he meant since there was trade with other countries and there was a currency to place a tariff on…  I am optimistic about a developing story that could be good for ending this stupid Trade War with China… China is sending Vice Commerce Minister Wang Shouwen to the U.S. later this month for low-level talks. If it goes ahead, it will be the first official engagement since negotiations broke down two months ago.   Bloomberg reported this news and added that the Chinese currency rallied the most in 6 months on the news… 

I’m not sure where they got their info… Yesterday morning, the renminbi was 6.8822, this morning the renminbi is 6.9145…  With the renminbi being a European priced currency, the move from 6.8822 to 6.9145 is a loss folks… I’m just saying… 

Australia printed some data overnight that should lead to a stronger A$… Front and Center is Consumer inflation Expectations which edged higher to 4.0% this month… They also printed their Employment data for July, which saw their Unemployment Rate fall to 5.3% from 5.4%…  Stronger employment, and rising inflation should equal a rate hike…

In the U.K. this morning they saw a stronger Retail Sales report in July than June’s negative -0.2%, with July’s figure printing at 0.7%… That beat the expectations of a 0.2%… So, that’s a good one for the U.K., which hadn’t seen much good data with all the problems of BREXIT still hanging over the economy like the Sword of Damocles. 

The price of Oil continues to slide further down the slippery slope… Oil has a price handle of $65 this morning, and on Monday this week it had a price handle of $67…  I think the price of Oil has gotten caught up in all the price smashing of Commodities, from the Trade War between the world’s two biggest economies. 

Inflation around the world, (well probably not in Japan!) is rising, and Commodities should be rising too, but aren’t. That leads me to believe that there could be a huge explosion of upward prices in commodities once the Trade War gets worked out or ends…  And IF that were to happen the Commodity Currencies of Australia, New Zealand, Canada, Russia, Brazil, S. Africa, etc. should respond accordingly. 

And finally, the stupid productivity report printed in the U.S. yesterday for July, and it showed a gain of 2.9%, which gets highlighted because productivity has averaged 2.6% for the last 10 years…  But I wouldn’t put too much into this increase, for it’s just one month… 

To recap… The currencies continue to be under the spell of the dollar, and the paper short Gold trade were in abundance yesterday as Gold got whacked $19 on the day. Rome is burning, and the dollar bugs don’t care, or haven’t noticed yet…  Good data in Australia, and the U.K. overnight should be pushing these currencies higher, but that’s not happening… UGH!

For What It’s Worth… I want to thank longtime reader Bob, for sending this along, as this is a true FWIW article! it’s about how Gov’t agencies are going to be allowed to alter reports (I thought they already did that! HA!) and it can be found here: https://fas.org/blogs/secrecy/ 

Or, here’s your snippet: ” In an apparent departure from “generally accepted accounting principles,” federal agencies will be permitted to publish financial statements that are altered so as to protect information on classified spending from disclosure.

The new policy was developed by the government’s Federal Accounting Standards Advisory Board (FASAB) in response to concerns raised by the Department of Defense and others that a rigorous audit of agency financial statements could lead to unauthorized disclosure of classified information.

In order to prevent disclosure of classified information in a public financial statement, FASAB said that agencies may amend or obscure certain spending information. “An entity may modify information required by other [accounting] standards if the effect of the modification does not change the net results of operations or net position.”

Agencies may also shift accounts around in a potentially misleading way. “A component reporting entity is allowed to be excluded from one reporting entity and consolidated into another reporting entity. The effect of the modifications may change the net results of operations and/or net position.” See Statement of Federal Financial Accounting Standards 56, FASAB, July 5, 2018 (final draft for sponsor review).”

Chuck again… gotta protect sensitive data right?    I shake my head in total disgust… 

Currencies today 8/16/18… American Style: A$ .7272, kiwi .6587, C$ .7620, euro 1.1370, sterling 1.2699, Swiss $1.0063, European Style: rand 14.4745, krone 8.4625, SEK 9.1966, forint 284.65, zloty 3.7905, koruna 22.5980, RUB 66.98, yen 110.91, sing 1.3762, HKD 7.8493, INR 70.28, China 6.9145, peso 19.02, BRL 3.8837, Dollar Index 96.57, Oil $65.01, 10-year 2.88%, Silver $14.60, Platinum $780.25, Palladium $863.50, and Gold… $1,179.11

That’s it for today…  I received a text yesterday from my former colleague and friend, April Showers… She sends me a text every now and then asking how I am… That’s so sweet of her to do… Thank you April Showers! How about those Cardinals? 8 in a row! If the front office had only listened to me and made the changes they made last month earlier this year…  I’m just saying…  In 1964 it was a young Lou Brock, in 1982 it was a young Willie McGee, in 1985 it was a young Vince Coleman, and this year it will be a young Harrison Bader that leads the team to great heights! Chris Stapleton takes us to the finish line today with his song: Tennessee Whiskey…  And it’s time to say goodbye for today and this week… I hope you have a Tum Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler