Author: admin

Rocktober 7, 2019

* Currencies try to rally but it gets stalled out!

* Chuck takes issue with elected officials, so what else is new? 

Good Day… And a Marvelous Monday to you! A good weekend for yours truly, event wise, unfortunately though, not so good for my beloved Cardinals, who are down to the cheese that binds this afternoon in their playoff series. If they lose, it was good morning, good afternoon, and good night. If they somehow figure out how to hit the ball, and win, then they’ll play a winner take the series 5th game on Wednesday… My Missouri Tigers won, but their quarterback took a very cheap hit and had to leave the game… I sure hope he’s going to be OK… But that player that committed that cheap hit should have been ejected from the game and the season! The New Radicals greet me this morning with their song: You Get What You Give….

Well, I really blew that call on last Wednesday didn’t I? I had so many emails telling me I was wrong, etc. about the NL Wild Card Game ending… I made a big mistake and didn’t check the score that morning as I was rushed to get out the door, early… I thought that once the Brewers’ big time reliever, Hader came in it was like when Bruce Sutter used to pitch for the Cardinals, the other team would start packing up their bats! For the game was about to be over… But that’s wasn’t the case, so all I had said about the game was wrong…. I apologize for that if I got anyone’s dander up!

The Jobs Jamboree on Friday was a real disappointment, but only to me, I guess… As the markets just shrugged it off once again…. Only 136,000 jobs were created in September, and… believe it or don’t, but the BLS took away 71,000 jobs… How’d that happen? Beats me… But for once in blue moon, the BLS too jobs away instead of adding them…. So… maybe that’s why the markets didn’t get all loopy when the jobs number came out, but if that’s the case, then every month when the BLS adds numbers they should be taking issue with that too! So, I’m doubting that the BLS’s hedonic adjustments had anything to do with the markets… The markets are so much like being able to count the cards at a 21 table in Vegas, without anyone noticing, you just keep winning…

So, the currencies tried to rally, but they were stalled… Gold tried to rally, but it too stalled out… The Bond boys kept the pressure on yields though, and the price of Oil spent another day getting marked down. I have a real issue with the currency traders… Don’t they see that the economy is grinding to a halt? Or, maybe they won’t allow themselves to think that way, for this so-called expansion just keeps going like the Energizer Bunny…So, to them, why would that all end?  Dolts, all of them, eh? 

In the overnight markets, Gold is getting sold and is back below $1,500 …  Wait! What? You mean to tell me that the U.S. economy is grinding to a halt, and Gold is getting sold?  That makes about as much sense as… Well, fill in whatever is stupid to you there…  Because if I say something it won’t be nice! Gold getting sold with the U.S. economy grinding to a halt, while all other countries, sans Russia, seem to be already have grinded to a halt…

But why on earth am I getting all worked up over this selling of Gold this morning?  Wasn’t it me that said that $1,500 was the new $1,300 a month or so ago? So, listen to yourself Chuck!  And not that devilish guy on your left shoulder, who tells you all the time that you need to rail about price manipulators…  OK, so in essence this is just normal trading right now, because we are set to watch Gold go past $1,500 and then slide back below it until…. drum roll please…..  until it doesn’t any  longer!  See, what a genius I am? HAHAHAHAHAHA!  

Well, today, I’m going to take issue with our elected officials… This is not a political hack at them, just strictly, a “what in the hell are you thinking question to them”…. OK, this all stems from an email I received from the GATA folks, who quoted Russ and Pam Martens saying, “Yesterday the House Financial Services Committee released its hearing schedule for October. There is not a peep about holding a hearing on the unprecedented hundreds of billions of dollars that the Federal Reserve Bank of New York is pumping into unnamed banks on Wall Street at a time when there is no public acknowledgement of any kind of financial crisis taking place.” – Russ and Pam Martens from wall street on parade

Wait! What? You mean to tell me that no one except the Fed, and the banks receiving the cash flows, know who is getting it? And the politicians, who we voted for, and put into office to make sure they protected us against this kind of thing, are going to do nothing? OMG! That’s it! I’m giving up on these boys and girls… I used to have that Polly Anna viewpoint that by contacting your representative you could effect change… But that idea has been shot down… Like the April Wine song of the 70’s…. Shot Down!

Now, you can tell me that this kind of stuff doesn’t bother you, because you no longer allow things you have no control over to bother you… And that’s fine… I wish I could accept that idea for myself, but I can’t! I can’t because that’s not who I am! So, in the “it doesn’t bother me world”, You’re ok that the Fed is pumping newly created money, which in essence should debase the current stock of money, and you’re OK with that, because you still have your pocket full of dead presidents and they still buy you gas, groceries and giggles… Geez, I wish I could take that kind of laisse fair attitude…

Just the other day, I heard a young woman say, that she got back her DNA test, and that she’s 10% this and that and so on, and I just had to speak to it… I said, “ OK, but now the government knows more about you than you do.” And she replied, “So, I haven’t done anything wrong”… To which I replied, “Well, when your civil liberties have all been taken away, don’t come crying to me”…. See? I can’t keep my mouth shut!

In a quick trip around the world, I see that there’s not much in data or events this week that would help the currencies gain a bid.  On Wednesday, we’ll see a whole truck load of data prints from Japan…  But Japan is a basket case, and I don’t care about their data any longer!  Thursday, will bring a European Central Bank (ECB) meeting… This will be ECB President, Mario Draghi’s, last meeting…  Look for him to leave with both guns blazin’…   which won’t be good for the euro, of course…  And then the rest of the week has some prints from various places, that we’ll talk about when we get there… 

The U.S. Data Cupboard last week had a bad week, what with the ISM falling below 50, and Factory Orders for August printing negative at -0.1%, and the rally in wages, seeing a real hit to the solarplexes, as they were flat in September, and then the icing on the cake was the very disappointing Jobs number for September…

This week’s Cupboard gets a reprieve of sorts, as there’s not a whole heck of a lot to speak of on the docket… There is Consumer Credit (read debt) for August that prints this morning. And then on Wednesday the Fed’s FOMC Meeting Minutes will print from their last meeting when they cut rates… And then there are a bunch of non-market-moving prints to fill in the rest of the week.

And finally, the Trade War negotiations will begin again this week, as a high ranking Chinese diplomat will arrive in the U.S.  I would look for two things this week here…. 1. that the Chinese renminbi would drift stronger as the week goes on, just as window dressing if you will, and 2. that the negotiators get nowhere… 

To recap…  The jobs Jamboree last Friday was very dissapointing, but the markets shrugged it off and went about their daily chores… The dollar didn’t get sold, Gold was flat, Oil got sold, and Bond gave away more yield, which means they were rallying…  Chuck has an issue with the elected officials, what else is new?  

For What It’s Worth… I’ve been telling you all for some time now that Russia and China are trying to rid themselves of dollars and to do this, they’ll stop trading in dollars… this article from the Russia Times, talks about how Russia’s largest Oil Company is doing just that… And it can be found here: https://www.rt.com/business/470192-russia-dumps-dollar-oil/amp/
Or, here’s your snippet: “Russia’s largest oil company Rosneft has set the euro as the default currency for all new exports of crude oil and refined products.

As of September, Rosneft is seeking euros as the default option of payment for its crude oil and products, Reuters reported on Thursday, quoting tender documents the Russian firm has published.

“Rosneft has recently adjusted all the new contracts for export supplies to euros,” a trader at a company that regularly procures oil from Rosneft told Reuters, adding that buyers have already been notified of the change.

The United States has not ruled out imposing sanctions on Rosneft over its involvement in trading oil from Venezuela. Rosneft has been reselling the oil from the Latin American country to buyers in China and India and thus helping buyers hesitant to approach Venezuela and its state oil firm PDVSA because of the U.S. sanctions on Caracas, and, at the same time, helping Venezuela to continue selling its oil despite stricter U.S. sanctions.

Rosneft’s move was seen by traders and analysts as a future hedge against potential new U.S. sanctions on Russia and/or its oil industry.”

Chuck Again…. I always told my audiences after 2010, that with China adding country after country to their roster of countries that do currency swap agreements with them, that it wouldn’t take that much to add the Oil producing countries and when they took the dollar away from Oil trading, it would be bye bye dollar… Well, this is not the Chinese swap agreement, but it’s the same thing. Now, we just sit and watch as oil producing country after oil producing country drops settling in dollars…. I’m just saying…. Oh, and Got Gold?

Currencies today 10/7/19 American Style: A$.6738, kiwi .6290, C$ .7511, euro 1.0981, sterling 1.2328, Swiss $1.0052, European Style: rand 15.1430, krone 9.1355, SEK 9.9152, forint 303.77, zloty 3.9439,  koruna 23.4745, RUB 64.62, yen 106.85, sing 1.3805, HKD 7.8443, INR 70.83, China 7.1475, peso 19.57, BRL 4.0537, Dollar Index 98.84, Oil $53.37, 10-year 1.54%, Silver $17.45, Platinum $877.26, Palladium $1,662.07, and Gold…. $1,499.10

That’s it for today…  Ok, since last Wednesday, I went to see the wound center and they went crazy over the looks of the wound on my leg… I spent over 2 hours there, and they think they have the magic potions to heal it… I hope so….  On Saturday, a group of friends got togher for a bite to eat and then go enjoy the music and fireworks of our City’s celebration…  Fun times for sure, and our Blues won on Saturday night!  So, let’s hope the Cardinals find their bats today, and that there is a game 5 on Wednesday, eh?  Stevie, guitar, Miller, and the Steve Miller band takes us to the finish line today with their song: Serenade…    A great chords riff to start that song….  I hope you have a Marvelous Monday, and please Be Good To Yourself! 

Chuck Butler

 

 

 

Rocktober 2, 2019

*dollar gets sold, gold gains, bonds rally… 

* RBA cuts rate below 1% for first time in history! 

Good Day… And a Wonderful Wednesday to you! I would bet that the good money was on the Washington Nationals last night to win the wild card game… And they would be out a lot of money this morning, as the Brewers won the game, and head to Los Angeles to play the powerful Dodgers… I half watched the game and half read throughout the night… This will be short-n-sweet this morning due to me having an appt. early today. No biggie… Just a lot of sitting around waiting! One of my all-time fave songs from one of my all-time fave groups greets me this morning, as Chicago sings their song: Hard Habit To Break…

Well… the dollar bugs finally backed off yesterday, and being a longtime reader you know that I don’t like going to the Data Cupboard right from the get-go, but…. Today we’ll do things differently…

Well, looky there, once again I have proven that even a blind squirrel can find an acorn… Recall yesterday I said that I thought the ISM (manufacturing index) would continue its monthly decline? Well that’s exactly what it did, but first there was a revision to the August number which originally printed at 50.5. It was revised downward to 49.1… (Below 50!) And the September number printed at 47.8… I also said yesterday that I wondered when Europe’s manufacturing slowdown was going to come to our shores… Well, like the 60’s movie: The Russians are coming… This was like the European manufacturing slowdown is coming!

Well… so… the data brought the dollar bugs to red carpet and scolded them for being so strong with the dollar… And the currencies, led by the euro rallied…  But…  In the overnight markets we received some news that sobered up the currencies….  The Reserve Bank of Australia (RBA) surprised the markets with a rate cut of their own, and this time is quite significant, as Australia’s official cash rate has fallen below 1.0%  for the first time in history with some economists saying it will stay down for at least another two years.

And the RBA wasn’t mincing words, when they talked about the need for further rate cuts…  This news sent the Aussie dollar to the woodshed early this morning…   I do want to mention though that Kiwi didn’t see any sympathy selling, yet, that is…  

Gold even got an opportunity to get back on the positive side of the ledger… It’s still China’s Golden Week Holiday, so keep that in mind for the rest of this week’s opportunities to buy Gold… The shiny metal gained $7 on the day, but remained below the $1,500 figure once again.

The price of Oil slid further downward in the past 24 hours and this morning is trading with a $53 handle…  I would have to think that the lack of demand is really causing this downward slide…  The lack of demand will continue to get worse, if you asked me, due to the Consumers being tapped out, with no disposable income to spend on a trip to the Grand Canyon… 

The Three Blind Mice, Ahem, I mean, The Fed was out trying to smooth the edges on its tarnished reputation yesterday, when the St. Louis Fed issued a paper on Countercyclical Capital Buffers… Sounds pretty intriguing, eh? Well, it wasn’t… it was just fluff that explained the role of Banking reserve requirements…. But then it did get interesting when the Fed decided that they has taken too many hits lately on their monetary policy… And went on to describe the mess the Bank of Japan and the European Central Banks are in… Thus making them look better, if you will… I can see them saying, “Mirror, mirror, on the wall, who’s the best central bank of all?” And if I were the mirror, I would answer…. “Certainly not you!”

Yesterday, Canada printed a better than expected Industrial Production number. The August IP was up +0.2% VS the negative -0.3% in July… So, a nice improvement there, and we saw loonie traders reward the currency with a small increase in its value. I have to say, and knowing all too well, that whenever I do this, it’s usually a signal that the kiss of death has been laid on the currency, but… It’s resiliency IS the story right now in the currencies, so I have to take the chance that maybe this time I won’t kill the currency’s rally…

But the loonie has been quite resilient in the past few months, remaining above 75-cents and inching higher from time to time… The price of Oil has slipped by a lot, and the other Petrol Currencies are taking a hit to the abs… But not the loonie… And one reason is the fact that Bank of Canada hasn’t gone down the road of keeping up with the Joneses, or the Fed per se… It took so long for the Bank of Canada (BOC) to react to the housing bubbles in Toronto and Vancouver, that they just can’t see themselves cutting rates so soon… Eventually though, with the rest of the world having a debase the currency with a rate cut party, they’ll have to join in…

An interesting article on Zerohedge.com yesterday had the World Trade Order (WTO) talking about the global slowdown, so much so, they had to lower their global growth outlooks for this year and next year…  And then they threw this grenade from left field…. check this out… “WTO confirms that the economic rebound or “green shoots” Wall Street was predicting for 2H19 is fake news. A growth scare for stocks is nearing; determining the trigger for the next stock market plunge is currently what every concerned money manager is trying to figure out.” – WTO

OK, after yesterday’s debacle at the Data Cupboard (ISM’s print) we come back today to see the color of the ADP Employment Report for September, which last month showed 195,000 new jobs in August…  I doubt this month’s figure will be so stout… September just seemed to be digging deeper into a hole, to me… I’m just saying…

To recap… The U.S. recession train just keeps rolling into the station and we go a real glimpse of it yesterday, when the ISM for August was revised downward to below the 50 figure, and the September figure was 47.8, just slip sliding away…  That sent shock waves through the markets, and the dollar got sold, Gold gained, Bonds rallied, and the price of Oil slid further downward…  And Chuck thinks it’s all due to a lack of demand…   The RBA cut their official rate below 1% for the first time in their history!  And sounded like there could be more coming…  

For What It’s Worth…. Well, for the longest time now I’ve said over and over again, that a recession is coming and when it does it’s going to be a doozy… The folks at the Telegraph in the U.K. see it for what it will be and have this article to talk about it… And it can be found here: https://www.telegraph.co.uk/business/2019/09/29/helicopter-money-may-weapon-confront-next-recession/

Or, here’s your snippet: “A radical world of helicopter money – where central banks fund government spending – is inevitable as policymakers run out of ammunition ahead of the next recession, top economists have warned.

Central banks are likely to explore more unconventional policies in the next downturn and blur the lines between fiscal and monetary policy with radical new tools, such as monetary financing, Deutsche Bank argued.

Recession fears are mounting but central banks have very little firepower remaining with traditional monetary policy — the control of the money supply and interest rates — blunted.

Helicopter money to stimulate the economy therefore “seems inevitable over the medium to longer term,” said Jim Reid, a Deutsche analyst. He argued that central banks “effectively invited governments to experiment with more unconventional policies” with ultra-low interest rates on debt.

Helicopter money is when central banks finance government spending through money printing but can also refer to cash transfers into individuals’ bank accounts and haircuts to debt already held by central banks.

“If the post global financial crisis decade has all been about printing money to buy financial assets, we think the next decade will be more about printing money and injecting it into the real economy,” Mr. Reid said.

The German bank’s analysis found that the world is already drenched in debt in the wake of the financial crisis. Total debt has tripled since the turn of the century to $247 trillion while government debt as a percentage of GDP in advanced economies is at a record peacetime high”

Chuck Again…. A not so very long time ago, but some time at least, I used to have a presentation slide that showed former Fed Chairman Ben Bernanke hanging out of a helicopter throwing wads of cash to the skies… Of course this was all fun and games as I took exception to his helicopter money quote … Eventually, “they” made me take that slide out of my presentation… I replaced it by getting everyone in Vancouver at the Agora Symposium, to sing Lemon Tree with me… You should have been there, we had some fun!

Currencies today 10/2/19 American Style: A$.6682, kiwi .6240, C$ .7551, euro 1.0928, sterling 1.2269, Swiss $1.0001, European Style: rand 15.2505, krone 9.1372, SEK 9.9013, forint 305.65, zloty 3.9977,  koruna 23.5525, RUB 65.07, yen 107.55, sing 1.3853, HKD 7.8416, INR 71.07, China 7.1449, peso 19.82, BRL 4.1583, Dollar Index 99.22, Oil $53.87, 10-year 1.62%, Silver $17.28, Platinum $880.10, Palladium $1,666.90, and Gold… $1,486.19

That’s it for today, and this week… Recall I have an early doctor’s appt tomorrow morning, as I’m finally going to a wound center for my leg! Next Monday I’ll be all lathered up to talk about the Sept. Jobs Jamboree…  And next Monday, I’ll have a good grasp on what’s going on with my beloved Cardinals in their playoff series…. And tonight…. Tonight marks the opening game for the defending Stanley Cup Champions, St. Louis Blues! Yes, the hockey season is here…  So, here we go again, Let’s Go Blues! And finally my beloved Missouri Tigers come off their bye week, and play this Saturday again… Go Tigers!   The Cure takes us to the finish line today with their song: Just Like Heaven…    I hope you have a wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

Rocktober 1, 2019

* Currencies get sold again in the overnight markets… 

* Apparently Investors don’t really like negative yielding bonds! 

 

Good Day… And a Tom Terrific Tuesday to you!  And welcome to Rocktober! No baseball for me last night, so I read, but not research stuff, I’m currently in the middle of the last of the existing Jack Reacher books, (I’ve preordered the new one out for delivery, later this month) and it had my attention for most of the night. I even skipped dinner, because I was captivated… Well, my choice for Cy Young winner in the NL this year is Jack Flaherty, of the Cardinals, and yesterday he was named pitcher of the month of Sept. You may recall that he was also named pitcher of the month in August! And .091 ERA since the All-Star break, folks… I haven’t seen pitching dominance like this since Bob Gibson… And don’t get me wrong I’m not comparing him to the Great Bob Gibson! OK… It’s Indian summer here in the Midwest, as temps will be hot again today, but the cooling off is coming… And Jimmy Cliff greets me this morning with his song: Hello Sunshine… not familiar with that one? It’s a catchy tune, for sure!

OK, before we get into the goings on in the markets this morning, what a year it’s been for Deutsche Bank (DB) they were raided for a second time this year, just last week… And as I put on my conspiracy hat… And think back to what was going on last week… The banks weren’t lending to each other, and the Fed has to step in with cash liquidity… But… if we look under the hood, here would we find that the banks just weren’t lending to DB? A couple of years ago, in the old defunct, Review & Focus, I spent a whole month’s work on talking about DB’s problems… bad loans, derivatives, etc. etc. Old customers of the now defunct EverBank might still have that copy hanging around… I would reprint it be I wasn’t allowed to take any of that stuff with me when I “retired”….

OK… conspiracy hat is off… but I guess you can read what you want into what I just discussed… The dollar bugs took a breather the rest of Monday after pulling an all-nighter on Sunday night into Monday morning… The euro crept back to the 1.09 handle, and then lost it again in the overnight moves… What’s up with these overnight moves? Or do I say… no, wait! I don’t want to say that, oh, yes you do Chuck, you just don’t know how to say it politely! OK, here’s goes, bluntly as usual because I have no bedside manner…. While things around the world don’t look very stable economically wise, they do seem to be more stable than the currency traders are giving them credit for… And quite frankly, I truly believe that the Plunge Protection Team (PPT) is working the sidelines and sending in plays, to beef up the dollar’s value, ahead of the coming dark clouds for the economy…

So, call what you will… But the dollar bugs sure have had their way with the currencies in the last month… And Henry Kissinger is getting his wish that he made back in 1971, when he warned people in the Nixon administration of the fear of Gold becoming more popular than the dollar… This is in a Wikileaks memo on State Dept letterhead folks… I don’t, and haven’t made this stuff up!

Gold closed down $25 yesterday, and is down another $4 this morning… I don’t want to spoil your appetite for the FWIW article today, which will help explain what’s going on in Gold these past few days… So, I’ll just give you a teaser…  Did you know it’s Golden Week in China?  And besides Russia, who among the major countries in the world has been buying physical Gold by the boat loads?   That’s right, it’s China!  And that’s I’ll I’m going to say, for now about that, but you be thinking about how those two things go together, and then when you get to the FWIW article you’ll give yourself a head slap and say, Wow! I could’ve had a V-8! HA!

OK…  Well, Japan held a bond auction overnight, and well, it didn’t go to well, and that send bond’s around the world down, thus raising the yields and stopping the bond rally that had brought bond yields to their recent lows. I don’t think this will continue and be the absolute end of the bond rally, for the bond boys & girls here in the U.S. are hell bound and whiskey bent to show the stock jockeys that a recession is coming…  But so far, the stock jockeys have their hands in the air and just don’t care! 

In the Eurozone this morning, we saw the September print of their PMI (manufacturing Index) actually moved upward during the month VS August… The move was miniscule, and doesn’t prove anything other than the Eurozone manufacturing is contracting….  For those of you keeping score at home today, the Sept PMI was 45.7, and the August PMI was 45.6…

The Eurozone also saw their core Consumer Inflation figure bump higher by a smidgen too. September Core Inflation was 1.0% VS an August print of 0.9%…   This too doesn’t prove anything other than the fact remains that all the negative interest rates, and bond buying isn’t spurring any inflation here, so why go through all those gyrations?  

I had a dear reader ask me a question the other day, that I thought I would discuss here…  He asked me why the dollar isn’t considered a Petrol Currency, since they now produce so much Oil?   Hmmm, I thought… and thought, and finally came to an answer…  The U.S. shale fracking producers are relatively new to the Oil production game… And the countries that are considered Petrol Currencies have been doing this a long time…  But given the fact that the U.S. does produce more Oil these days, although given my recent claims that shale producers are drying up, and it could be added at some point in the future… 

Later this morning, we’ll finally see some data from our neighbors to the north, Canada…  Canadian GDP for July, will print today…  And here’s where I believe we could see a crack in the 75-cent plus armor that the loonie is wearing these days… I don’t expect the GDP print to be anything to get all lathered up about, and therefore it will bring questions of when the Bank of Canada is going to follow the Fed and cut rates again… That kind of talk won’t be good for the loonie…  But then the loonie has been quite resilient lately… So, it should be interesting today… 

The U.S. Data Cupboard will also have our form of a manufacturing index, which we call the ISM, print today for September… Recall that August saw the multi-month fall of this index number come to rest at 51, just a shade over the line in the sand figure of 50…  So, will the multi-month fall of the number continue in September?  The Eurozone’s index number is 45.7, and they’re in a heap of trouble there, when does that heap of trouble come to our shores?  This month? could be check back tomorrow, for a recap I guess… 

To recap…  Gold is getting hammered this week, while China is on holiday, more on that in the FWIW coming up next! The currencies keep getting sold in the overnight markets, and Chuck thinks that somethings going on there that doesn’t smell right…  Japan held a bond auction overnight that didn’t go to well, apparently investors don’t want negative yielding bonds…  And that caused some worries abroad, but Chuck doesn’t think that the bond rally in the U.S. is over, as the bond boys & girls are attempting to show the stock jockeys that a recession is coming…. 

For What It’s Worth… Well, thanks to the folks at GATA for sending me this link to an article on Zerohedge.com that talks about how China is on it’s Golden Week holiday, which could be the reason the price manipulators are going guns a blazin’ on Gold & Silver… The article can be found here: https://www.zerohedge.com/commodities/gold-prices-plunge-right-cue-china-golden-week-begins

Or, here’s your snippet: “ight on cue, as we detailed here, precious metals prices have been pummeled as China Golden Week begins…
Silver futures have accelerated lower since losing $18… as of today, China will be on vacation for its Golden Week National Holiday and this weakness appears to be traders front-running the traditional chaos that the rest of the world plays when China leaves the playing field.

China will be back in business on October 9th, and that means the Shanghai Gold Exchange, which opened in 2015 to counter Western manipulation of precious metals, will likely help re-balance prices to where they were before this recent takedown.

We could be wrong, but something tells us gold and silver prices won’t stay this low for much longer and that they could well see a complete turnaround when China reopens on October 9th.”

Chuck again… yes in the website article you can see each year the downward movement in the price of Gold during the Chinese Golden Week holiday… So, it makes sense that this is the week to look to buy more or an new position in Gold… I’m just saying…

Currencies today 10/1/19 American Style: A$.6699, kiwi .6225, C$ .7535, euro 1.0905, sterling 1.2280, Swiss $1.0008, European Style: rand 15.2870, krone 9.1160, SEK 9.9040, forint 306.84, zloty 4.0140, koruna 23.6093, RUB 64.77, yen 108.28, sing 1.3860, HKD 7.8403, INR 70.87, China 7.1359, peso 19.77, BRL 4.1567, Dollar Index 99.43, Oil $54.73, 10-year 1.73%, Silver $17.13, Platinum $886.73, Palladium $1,665.70, and Gold… $1,468.53

That’s it for today… This is going to be a short week for me, as I will be heading to the wound center bright and early on Thursday morning, which means there won’t be a Pfennig that day…  No biggie… A few years ago, the tumor in my mouth was so bad, that I contemplated going to Mexico for treatment, for they used the hyperbaric treatment. They’ve come a long way here in the U.S. with the use of hyperbaric treatments for wounds. I’m hoping that this is what’s used on my leg… It’s just been to damn long! sorry for the swear word, but I wanted to emphasize just how long it’s been!  Well, it’s Rocktober…  The air will begin to cool down, and it’ll be time to get the woolies out, and we’ll begin to smell the aromas of bonfires…  Fall is the best weather we have here in the St. Louis area, and Rocktober is the pick month of the fall!  Ok, Neil Young takes us to the finish line today with his song: Out On The Weekend…  It’s from the great Harvest album from the early 70’s…   I hope you have a Tom Terrific Tuesday and please Be Good To Yourself!

Chuck Butler

 

 

 

September 30, 2019

* Currencies and Gold get sold in the overnight markets

* Will the Administration put a choke hold on Capital Flows to China? 

Good Day…. And a Marvelous Monday to you… A Monday that brings us the new Central Division Champions in the NL this year…. My beloved St. Louis Cardinals… They may not make it very much further, although I think they will, but they’ll be forever loved for winning the division on the last day of the season, in style, with a 9-0 win… I sat outside to watch the game on TV, with my neighbor Paul, who was very interested in what was going on… He’s a tennis buff, but still follows the game of baseball, when he’s with me! I smoked some, hand made rub, rubbed Pork Tenderloins yesterday, that I have to say were the absolute best ones I’ve ever made! Everyone wanted my recipe for the rub! I said it has a little bit of this, and a little bit of that, and so on… The Marshall Tucker Band greets me this morning with their song: Searching For A Rainbow… Back in the 70’s, I only loved 2 other bands more than the Marshall Tucker Band…

Well, I have a question for everyone today, so bear with me here… But I want to know, does the rule of law really matter any longer? It sure seems to me that it’s a rule by the seat of our pants kind of situation, and that’s all I’m going to say about that!

The currencies flattened out VS the dollar on Friday… The U.S. data didn’t give the dollar bugs any additional fuel to fire their assault on the currencies… So, they traded in a very tight range on Friday. But… last night was a different story!

Throughout last night, in the overnight markets, the currencies led by the Big Dog, euro, got beaten down by large amounts… But why?  The dollar bugs have no reason to party any longer, folks… The data on Friday was interesting, with Personal Income up 0.4% in August, but Personal Spending was down from 0.5% in July to 0.1% in August… Durable Goods Orders were unchanged from July, but Capital Goods (CAPEX) was negative once again -0.2%… I’m telling you this for the umpteenth time folks… Capital spending is the lifeblood of an economy… Why would I say that I hear you asking? Well, if Corporations aren’t spending money on expanding their businesses with furniture, computers, quarters, etc. then they don’t think the economy is going to be strong enough to support their moves in the future…

A couple of years ago, I made a big deal out of how CAPEX was trending downward, which wasn’t a good sign for the economy, and I had a longtime colleague, Jack Stapleton, yell to me across the trade desk, that I need to keep harping on CAPEX because I was absolutely right!

Stocks were down here in the U.S. on Friday, as they see the writing on the wall too… At least I think they do… Remember, most of the buying in the stock market these past few years has been Corporations doing buy backs of their stock… Well, guess what I read last week? The buybacks have slowed to a snail’s pace… Uh-0h!

But I’m not stock jockey, so I’ll move on… Just wanted to point that out… Gold was only able to eke out a 70-cent gain on Friday… and spent the weekend trading below its 50-day moving avg.  And in the early trading this morning it’s not so good, as the shiny metal is down $13 as I write…

So, the week of engineered takedowns were successful for the price manipulators, but… as I always point out, they are doing procrastinators a favor, but bringing the price back to a cheaper level to buy! So? What are you waiting for?

OK… the week ahead ought to be a really doozy… We have the Impeachment proceedings going on… On the Butler Patio, I would tell you what I think of all this… But not here, sorry…. But I can’t see any of this enticing investors to buy dollars, do you? I’m just saying…

On the Trade War front… have you heard the latest idea to hurt China? The Administration is thinking of limiting investments in China… In other words they would really put the vise grips on capital flows into China, and that WOULD be far worse that any tariffs, folks…  This could be a game changer, and I sure hope the boys and girls that make these decisions think this one out all the way through…  I’m just saying… 

Well, last week, European Central Bank President (outgoing!) (ECB) Mario Draghi, gave a farewell speech if you will, as his reign ends at the end of Rocktober… Which starts tomorrow!    And last week I told you prior to his speech, what I thought he might talk about… And lo and behold, that’s what he did…  Check out this quote from his speech…. 

“At the start of my term in 2011, Europe was still dealing with the aftermath of the global financial crisis. Other financial stability risks – notably those associated with the sovereign debt crisis – were also crystallising. The costs to society from the crisis were substantial.1 By 2013, unemployment had risen by 10 million and EU GDP was some 13% below its pre-crisis trend.” – Mario Draghi, 9/26/19

So, he really went through his term and pointed out the highlights and left the problems, like the continuing systemic risk in the markets, negative rates and bond buying on the sidelines, only mentioning them slightly… 

I have to say that I do believe that Claude Trichet was a better steward for the Eurozone economy than was Draghi… And now the new President will be former IMF head, Christine Le Garde…  Given what I know about how the IMF basically kills a country’s economy when they arrive to help, this can’t be a good thing for the Eurozone economy… But then she hasn’t even sat in “the chair” yet… So, I guess I’ll give her a pass for now, but that background of the IMF will forever hang over her like the Sword of Damocles! 

OK… have you been watching the Chinese renminbi lately… About a month ago, when the Trade War negotiations were hot and heavy, the renminbi was allowed to appreciate, and stop the daily beatings it took previously… But since those negotiations stopped being so hot and heavy, the Chinese have gone back to the daily beatings of the renminbi…  

Of course longtime readers here know that I said that this would be the case as the Chinese attempt to offset the Trade War tariffs.  I didn’t say I thought it was the best idea, and it sure does hurt the other currencies in the Asian region… The Singapore dollar, for instance, is so tied to the performance of the renminbi, that a month ago the Sing dollar was on the rally tracks, and now, it’s been derailed once again…  

The Aussie and kiwi dollars get all caught up in what happens in China too, and their currencies are sinking long with renminbi… 

The price of Oil has really slipped in the last 10 days, and this morning it is trading with a $55 handle… That has really knocked the stuffing out of the Petrol Currencies, folks…  Even the Steady Eddie Russian ruble has seen some weakness in the past week…  The Norwegian krone is back above the 9 handle, and that’s not a good thing, either!  

But… as I always say…. When the dollar bugs take a big bite out of the currencies’ values, that this just allows you to buy more of the currency at a cheaper price!  And there are always investors out there, that realize that they need to diversify their investment portfolios, with currencies and metals, and will look back at their entry points and smile like the Cheshire Cat… 

The U.S. Data Cupboard gets busy this week, with the monthly ISM (manufacturing index) for Sept. tomorrow… Recall that in August this data fell below the line in the sand 50…  So, it will be interesting to see if the index number continues to fall, or, if by some “miracle” it rises back above 50…   On Wednesday we’ll see August Factory Orders, and on Thursday the ADP Employment Report, and finishing up the week with the Jobs Jamboree for September on Friday…   

I spent a lot of time last week talking about the perils the Fed was undertaking in injecting funds into the repo market… I had a dear reader ask me how the repo rate could be higher than the Fed Funds rate? Easily… stay with me here… You see a repo is a loan of funds… The lender can charge whatever he feels is the market rate for the funds… When funds are in short supply, the rate will go up, and vice versa when it’s not… With repo rates hitting 10% at one point, the Fed felt they needed to step in, because, well they know best, right? …. And I saw this written this weekend:

The third quarter ends Monday. So, for the past two days, the New York Fed has run $100 billion overnight repo operations — bigger than the $75 billion daily liquidity injections that began early last week — plus separate 14-day operations. Neither of Friday’s actions were fully subscribed and short-term lending rates are well below the peak seen last week, a sign order has been restored for now.

But on Monday, that larger $100 billion size will be repeated and the overnight operation will run from 7:45 a.m. to 8 a.m. New York time, earlier than prior morning actions. Both signal the Fed is girding for rates to spike again.”

I saw that in an article that you can find it on Bloomberg.com with this heading: The Fed Is Girding for Repo Trouble Monday Even as Market Calms 

OK, before we head to the Big Finish today… I saw a cartoon that absolutely made me laugh so strongly that my ribs hurt! Yes, even someone my size can still feel my ribs! OK… The cartoon was of the 3 blind mice… All wearing shades ala Ray Charles, and each one had a shirt with a single letter on it… The First one was “F”, followed by “E” and then “D”… which spells… FED! Inferring that the Fed are the 3 blind mice! Talk about cracking me up! I sent it off to all the people on my old currency and metals desk. But talk about hitting the nail on the head! 

To recap… The currencies traded flat on Friday, but in the overnight markets they have been beaten down and big bite has been taken from their values by the dollar bugs… Gold has followed the currencies this time too, only gaining 70-cent on Friday, but trading down $13 this morning. The price of Oil has continued to slip causing major pains to the Petrol Currencies. And the Chinese are back to giving daily beatings to the renminbi, which isn’t good for the rest of the region’s currencies… UGH! 

For What It’s Worth… Longtime readers know my affection for publishing guru, and writer extraordinaire, Bill Bonner. Well, last week in his daily letter, he wrote about being ill, and thinking about what he should think about if this were his deathbed… I thought, this is very well written, and I want to highlight it here…. So, you can find the article here: https://bonnerandpartners.com/reflecting-on-our-legacy-before-we-die/

Or, here’s your snippet: “Some people believe there are things they should do before they die. Magazines offer lazy copy about how it is essential to visit the Taj Mahal or the Pyramids.

But what kind of life can be given real meaning by the travel industry? Who really cares whether you’ve been to the top of the Eiffel Tower? Nobody. Not even you.

And who wants to travel, anyway? It is tiring. And you end up in the company of other tourists, all hoping to snatch a peek at staged authenticity without ever really finding out what it is all about. (Unless you are traveling off the beaten path like our colleague Tom Dyson, who writes to you below.)

Or how about big public events? Should you go to the Olympics? The Venice Film Festival? The Rolling Stones’ last concert? Why not? But we doubt it is something you’ll recall on your deathbed.”

Chuck Again… Bill talks about his call back in 2000 when he told his readers to buy Gold and sell the Dow… What a call that was, eh? Well, he’s doing it again, in case you’ve missed class the day I talked about the Gold to the Dow ratio…. Guess you had better check out the archives at www.dailypfennig.com, eh?

Currencies today 9/30/19 American Style: A$ .6755, kiwi .6268, C$ .7548, euro 1.0890, sterling 1.2294, Swiss $1.0039, European Style: rand 15.1983, krone 9.0875, SEK 9.8234, forint 307.44, zloty 4.0195, koruna 23.7003, RUB 64.62, yen 108.00, sing 1.3828, HKD 7.8396, INR 70.61, China 7.1217, peso 19.70, BRL 4.1576, Dollar Index 99.28, Oil $55.40, 10-year 1.69%, Silver $17.24, Platinum $913.58, Palladium $1,692.59, and Gold… $1,485.03

That’s it for today…  A long one today, but I had plenty of stuff to talk about given the 3-day weekend, and really nothing else to do, except go to grandson Braden’s soccer game on Saturday… So, I read, and read, and read… which is a dangerous thing for me… and you I guess! HA! So, my beloved Cardinals head to Atlanta to play the 1st game of a best of 5 series with the Braves… What about our young pitcher, Jack Flaherty? Is he not worthy of the Cy Young this year? If not then you had better already scratch his name on the trophy for next year!  I’m just saying!  The band Live takes us to the finish line today with their song: Sellin’ The Drama… And with that I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

September 26, 2019

* The dollar climbs back into the lead chair… 

* Draghi to give farewell speech… One more chance to diss the euro! 

Good Day… And a Tub Thumpin’ Thursday to you! I did a 180 yesterday, and came back around to feeling human again… And just in time for the weekend, YAHOO! My beloved Cardinals are in a bind, with just 3 more games to play, they still haven’t tied up the National League Central Division… After the 19 inning marathon Tuesday night, into Wednesday morning, they didn’t have any pitchers that hadn’t been used the night before… and on top of that, it was a day game, not a night game with a few extra hours of rest! I’m not happy about this trip to Arizona… and I doubt the Cardinals are either! The Four Tops greet me this morning with their song: Reach Out, I’ll Be There…

So… with me feeling more alive yesterday, I got to do more reading… and researching… and looking under hoods, etc. I did see something, and wondered what caused it… I saw a blurb about how the markets are finally looking at the Fed’s injection of cash nearly every day now for a week, and their re-introducing term repos, as it should be looked at…. Like it’s a different form of Quantitative Easing…

So, lets’ see… In Quantitative Easing / QE, the Fed printed new money and bought bonds…. They did this, so they say, so that the banks would have ample liquidity to make loans, etc. and at the same time get rid of their bonds that had bad loans attached to them… Or just plain Treasuries… So, now let’s look at this repo thing… The Fed is printing new money again, and taking bonds for collateral in short term deals…. Not much different than QE, right? The thing that gets my goat is this…

Long ago, when currencies first were floating, it was thought, and rightly so, that when a country’s Central Bank printed new money to add to the existing money supply, they were diluting the existing money supply’s value… And that would hurt the value of the respective country’s currency… Remember a few years ago when the Fed was printing so much money that they sopped reporting was the money supply number was?

Now, why do you think they did that? Was it because they were narrowing the money supply? HA! So, why doesn’t all this money printing and adding to existing money supply not hurt the dollar? It should be but it’s not! Not one iota of dollar weakness has come about because of this explosion of money supply… You see, I don’t care if the Fed doesn’t report Money Supply numbers any longer… All I have to do is look at the daily injections of cash to the repo market, to know just how much the Fed has added in the last week!

Oh, by the way… The Fed has a $400 Billion plan to rescue the repo market… $400 Billion people! That a Billion with a Capital B, as Ronald Reagan used to say! Hey! I don’t make this stuff up folks! Go ahead and Google $400 Billion Fed plan to rescue the repo market and see what you get, if you think I’m making this stuff up!

So, what happens when they’ve spent all $400 Billion and the banks still need cash? Well, in the old days you would say, they’d just turn on the printing presses again… In today’s digital world, it’ll be numbers entered into a computer that says, Bank A, gets $100 Billion, and so on… The money supply will simply go parabolic, if you will!

OK, enough on that… The dollar still holds the conn over the currencies, but not the metals… The Bond boys are still keeping the 10-year’s yield very low… And oh, remember last week when I have you all that I know about the Oil sector? And I told you that the rig counts here in the U.S. had dropped dramatically? According to the Dallas Fed Reserve’s Oil survey… “Activity in the oil and gas sector declined in third quarter 2019, according to oil and gas executives responding to the Dallas Fed Energy Survey. The business activity index—the survey’s broadest measure of conditions facing Eleventh District energy firms—fell to -7.4 in the third quarter from -0.6 in the second quarter. Oilfield services firms drove the decline, with their business activity index slumping to -21.8 from 6.6.”

Hey partner! You don’t have to call me Mr. Tex… Just Tex will do just fine! HA And soon the price of Oil is going to be ratcheting higher, as the heating oil season draws nearer and nearer…

OK, I don’t want to stir up my bursitis so I’ll stop slapping myself on the back for seeing that one before everyone else did! See? Like I said, I did a 180 yesterday!

In another engineered take down of Gold yesterday, the price manipulators said, “neener, neener, neener, we don’t care what the Courts do to us we get a get out of jail free card as long as we keep the support for the dollar going” And they took Gold down by $27.90 on the day… Remember a couple of years ago, when I said I don’t care what the price manipulators do any longer, I’m sick of their blatant moves, and I’m just not going to give them the time of day any longer… For maybe if everyone stopped writing about them, they would stop!

Well, I’ve lost my way again, due to new developments with metals traders getting taken to court, and so on… I really don’t want to have to write about the price manipulation going on… trust me on that one!

I had to laugh this morning at two headlines for articles  One dated 9/24 said, “Impeachment talk sends dollar down”… Then on 9/25 the same site, said, “Impeachment causes safe haven flows to dollar”…    OK, which one should investors pay attention to?   Well, the first one is correct, but they should have said, the dollar should go down…   And the second is also correct in that there are safe haven flows, but there’s only one safe haven that’s being bought… It’s dollars…  

Shoot Rudy, not even U.S. Treasuries are being bought as safe havens, as witnessed by the jump in the 10-year’s yield yesterday from 1.65% on Wednesday morning to 1.72% today… Remember, with bonds, as the yield goes higher the price of the bond goes lower… representing selling… 

We have outgoing European Central Bank (ECB) President Mario Draghi on the speaker circuit today… I would bet a dollar to a Krispy Kreme that he gives us a historical look at his leadership of the ECB, and talk about how he guided the PIIGS through their darkets hours, and kept the light on for more growth from the other Eurozone countries not named Germany. I doubt he’ll talk about how every chance he got he threw the euro under a bus… Or anything else that went bad, choosing to point out his successes only… It’ll be a short speech, if that happens… if you get my drift… OK, Mario, one final chance to make amends with the euro? Can you do that?

The U.S. Data Cupboard doesn’t have much for us today, but what it does have will be interesting, in that the final revision of 2nd QTR GDP will print today… Recall that the last revision was downward, as was the revision prior to that… The most recent revision took 2nd QTR GDP down to 2.0%… Recall, that I said that I thought it should be more like 1.5%? Well, I guess we won’t see it down that low for the 2nd QTR, as it looks like this 2% level is about right… The 3rd QTR will be the one that will end up being 1.5% or lower…. That’s my thought on that!

To recap… The dollar is back with the conn over the currencies… And it makes no sense to Chuck, who once again, proves how old he is, with his take on money supply and the dollar… Gold got taken down by $28 on the day, not by any change in attitude about owning Gold, just a regular engineered take down by the price manipulators, who chanted taunts at the regulators and courts!

For What It’s Worth… Well, I’ve spent quite a bit of time this week talking about the Fed and their injecting liquidity (cash) into the repo market, and how what they are doing is very similar to QE…. Well, this article on Zerohedge.com talks about all that and thought it was FWIW worthy this mroning… You can find it here: https://www.zerohedge.com/economics/dollar-liquidity-crisis-accelerates-month-end-nears-record-92-billion-demand

Or, here’s your snippet: “Following the major ‘over-subscription’ for liquidity this morning, NYFed has decided to dramatically increase the scale of its bailout for both overnight and term repo:

The 14-day term repo operation will have an aggregate limit of $60b (prior similar operation Tuesday had a $30b limit).

The overnight repo operation will have an aggregate limit of $100b (most recent such operation Wednesday had a limit of $75b).

This big increase comes just minutes after Fed Governor Lael Brainard tried to clam nerves by claiming that the recent spike in overnight lending rates, which prompted the central bank to inject billions of dollars of liquidity into the market, was the result of a “simple imbalance” of supply and demand — and not a sign of deeper distress in credit markets.

“It may simply be that we’re close to the lowest level of reserves that are necessary for the conduct of monetary policy,” Brainard said Wednesday in testimony before the House Financial Services Subcommittee on Consumer Protection and Financial Institutions.

“It does pose questions about whether reserves in the system do need to be allowed to grow again.” — Lael Brainard.

In 2008, “counter parties pulled away fromeach other,” Brainard added. “Today we’re in a different environment.”   

As we noted previously, some banks appear to have been simply waiting to get closer to the quarter end before tipping their cards: after all, just like the Discount Window, the repo operation has become the modern “stigmatizing” equivalent, and if reporters or clients get a whiff that a bank is in a dire liquidity state, the consequences could be dramatic.

Never mind though, it’s probably all transitory.”

Chuck Again…  I loved that last line…  Yeah, according to Brainard we should just forget about it and move long for these are not the droids we’re looking for…   And her making that statement just makes me worry about this liquidity crunch even more! 

Currencies today 9/26/19 American Style: A$ .6762, kiwi .6308 , C$.7543, euro 1.0930, sterling 1.2338, Swiss $1.0058, European Style: rand 14.9791, krone 9.0763, SEK 9.7538, forint 305.95, zloty 4.0130, koruna 23.6487, RUB 64.12, yen 107.67, sing 1.3812, HKD 7.8382, INR 70.71, China 7.1233, peso 19.55, BRL 4.1638, Dollar Index 99.08, Oil $56.41, 10-year 1.72%, Silver $17.91, Platinum $931.01, Palladium $1,658.26, and Gold… $1,507.26

That’s it for today…  and tomorrow…  The Cardinals are in a very tight race, so tight, Tupperware would be proud!  Only 3 games to go… Can they hold on?  The next time we talk on Monday we should know!  Ok, I saw my regular doctor yesterday, and he told me that I must have done something right in my life because I have lived for 12 years with Stage 4 cancer… I told him that he wouldn’t believe the number of people throughout the world that pray for me…  and  then  I cracked him up when I said, “I call it better living through chemistry”…  I’ll be seeing a wound specialist in two weeks, for my leg… Finally!  Billy Paul takes us to the finish line today with his great song: Me & Mrs. Jones…  I hope you have a Tub Thumpin’ Thursday today and Fantastico Friday tomorrow, and please Be Good To YOURSELF! 

Chuck Butler

September 25, 2019

* RBNZ leaves rates unchanged… 

* Russian ruble isn’t intimidated by the dollar bugs… 

 

Good Day… And a Wonderful Wednesday to you… Still a bit under the weather yesterday, and ended up sleeping most of the day… I really don’t like wasting days like that, but when the body needs to sleep. You have to let it sleep! I have no answer as to why, suddenly, I’m having trouble dealing with my chemo… But, it’ll have to change soon, or else, it’ll become another search for a new chemo… I had a reader send me a note the other day, and say, that he was unaware that I had cancer… I put that down to being a new reader, and I thank him for his concern… But I’ve been dealing with my Stage 4 metastatic cancer for over 12 years now… I’m proud of myself for conducting myself in a strong willed, manner, to beat back this dreadful disease, but as I grow older, I do believe all the years of taking one form of chemo after another has mad me age faster than I want to… Oh, well, it is what it is, no time to sit and wonder… right? Elton John greets me this morning with a song from his early career, when I thought his music was great… Mona Lisas and Mad Hatters…

Well, it was another non-eventful day for the currencies yesterday, as try as they might to fight back VS the dollar, they just couldn’t get out of the mud they’re stuck in. Gold was back on the rally tracks following Friday’s big gain with a $9.90 gain on Monday. The Dow to Gold ratio that I told you about a couple of weeks ago, is still at more than 17 ounces of Gold to buy the Dow… That means there’s still time to buy before the explosive phase in price that is, begins to work for Gold & Silver… I’m stepping out on a limb here, no worries, a big fat one to support me, and say that when we look back on the Gold & Silver rally, we’ll see that Silver outperformed Gold on a percentage basis…

In the overnight markets, the currencies have lost  a little ground to the dollar, but the Russian ruble remains steady at the wheel, and is not intimidated by the dollar bugs…  You’ve gotta like that in a currency! 

I keep reading about Silver mines shutting down, and the supply for Silver waning, and I keep thinking that one morning I’ll wake up and turn on the laptop, and go to the metals pricing screen, and see that Silver has gapped up to $25… And from there, it continues to soar… Because doesn’t a lack of supply equal a higher price? Don’t tell me that even this adage that has been around since the dawn of time, doesn’t matter any longer! No! I won’t hear about that! Crazy traders that no longer use fundamentals to value assets… What on earth are they smoking?

Whoa, there Partner! You had better slow down here… You were THAT CLOSE to saying something you shouldn’t! I certainly don’t want strangers showing up at my door, asking me to get the car with them and go for a ride!

OK… Well the Reserve Bank of New Zealand (RBNZ ) left their OCR (official cash rate) at 1% yesterday, and in doing so they commented about how Employment is around its maximum sustainable level, and inflation remains within their target range but below the 2 percent mid-point.
Global trade and other political tensions remain elevated and continue to subdue the global growth outlook, dampening demand for New Zealand’s goods and services.

Well… I’m still mad at the RBNZ for their switcheroo on their monetary policy last year, but as time goes on doesn’t all wounds heal? I have one that won’t heal, if that tells you anything! 

Well, it looks as though we’re going to go through the 90’s once again… Remember back then Slick Willy Clinton was our president, and Congress tried to impeach him… but they didn’t have the votes, and now President Trump is going to face an impeachment vote… I doubt that the votes are there to impeach him, but if they are, it would throw the U.S. into political calamity, and currency markets don’t like Political Calamity, just check the most recent bout of this in the U.K. when the people voted for BREXIT, and the PM resigned, and so on… I’m just saying…

OK I’m no political writer, but, this thing seems to be screaming to me that it won’t be good for the dollar… And so I mentioned it…  Other than that, I tap out on political talk… 

The U.S. Data Cupboard today is completely emptied out… Not even a 3rd tier piece of data to offer us today. But yesterday the Markit PMI’s (manufacturing Index) report finally printed, and showed that in August the index rose to 51, from 50.3 in July… I really expected this to show that it dipped below the line in the sand figure of 50, but I guess not… Consumer Confidence also printed and showed a drop from 134.1 to 125.4…  This is for September, so it’s current…   

I’m not one to get all lathered up or sad about what the stupid Consumer Confidence report shows each month, due to the fact that it’s really a check on the pulse of the stock market…  The people they check with to see if they are confident or not, are so hung up on the stock market that if they’ve experienced stock losses, they report that they aren’t confident… 

To recap…  It was a non-eventful day in the currencies, but Gold added nearly $10 to its figure, that’s becoming quite shapely! HA  Chuck goes all high-0 Silver on us this morning. The RBNZ left rates the unchanged, which surprised no one, for they are only 1%…  In the overnight markets the currencies have lost a little ground, but the Russian ruble stands strong against the dollar bulls… 

For What it’s Worth… You know me folks, I’m not going to let these problems for JPMorgan be swept under a rug… The U.S. Regulators called their metals desk “A Criminal Enterprise”… And yet the major media outlets don’t report on this? Tell me why? Oh, I know why, and that’s what this FWIS article is all about today, and it can be found here: https://www.rt.com/business/469340-jp-morgan-spoofing-keiser/

Or, here’s your snippet: “The U.S. authorities were aware that three JP Morgan traders were manipulating precious metals markets from the start and intentionally “looked the other way,” Max Keiser believes.

“Eric Holder, who was attorney general under [former US President Barack] Obama when this first came to light, said that market manipulation and fraud were important for the American economy and that he, as the attorney general, could not prosecute,” the host of RT’s Keiser Report says, calling the JP Morgan fraudsters and the likes “too big to jail.”

“And that too-big-to-jail was part of the legal landscape for America, and bankers were getting a green light to commit massive fraud.”

The fact that precious metals traders at JP Morgan made millions through fraudulent trades, operating a criminal conspiracy to manipulate prices called ‘spoofing’, has been an open secret for years, with Max himself describing the scheme back in 2011.

However, not until this week did the Justice Department charge the traders with fraud, as well as “conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity” – a charge normally reserved for members of an organized crime ring. Max Keiser says the near decade of neglect towards this major case has actually been somewhat of an official agenda for the authorities.

“That was the message from the Justice Department – commit all the fraud you need as long as you support the U.S. dollar.”

“If you need to manipulate the markets and break laws, then we’re going to look the other way because the Justice Department believes that defrauding the markets is sacrosanct with the American way.” Keiser believes the U.S. authorities have always “equated Americanism and capitalism with fraud.”

Chuck again… I know, I know it’s a long FWIW snippet today, but I really wanted to print even more of it! But I think I got the message across… and that is, the message that I wrote about all those years ago, regarding how the price manipulation works, is all coming to roost… I wonder what all those people that doubted me are thinking now? 

Currencies today 9/25/19 American Style: A$ .6763, kiwi .6298, C$ .7532, euro 1.0981, sterling 1.2381, Swiss $1.0131, European Style: rand 15.0258, krone 9.0419, SEK 9.7274, forint 304.94, zloty 3.9991, koruna 23.5513, RUB 63.79, yen 107.44, sing 1.3778, HKD 7.8361, INR 70.89, China 7.1118, peso 19.58, BRL 4.1640, Dollar Index 98.76, Oil $56.21, 10-year 1.65%, Silver $18.49, Platinum $951.42, Palladium $1,662.50, and Gold… $1,526.83

That’s it for today… Still not a good night and morning for yours truly, but I do feel that I’m turning the corner today… I do go see my regular doctor today about my leg… Something’s got to change, this is ridiculous!  What a heartbreaking loss last night for my beloved Cardinals! Their pitcher nearly had a no-hitter, but when that didn’t happen, the game ended up going 19 innings! A marathon game, and then they have to turn around and play a day game today… That’ll be shown on YOUTUBE!  UGH!  I guess I had better get used to this kind of stuff, as streaming games on other outlets seems to be the method of delivery that’s trending upward… Three Dog Night takes us to the finish line today with their song: Mama Told Me Not To Come…   A song that explains what parties were like in the 70’s… I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

September 24, 2019

* Currencies and metals are little moved today

*Chinese give out waivers to U.S. soybean importers… 

Good day… And a Tom Terrific Tuesday to you! I do believe that the Pfennig today will be short-n-sweet, as I spent yesterday, in a shell, as it was one of those days where the chemo gets a hold of me wrings me out. So, I slept a lot to keep from having to face the day!  I think I’m better today, but I really just want to go back to sleep…  Just win baby! The famous line by the Oakland Raiders owner, has been adopted by my beloved Cardinals…  Which is a good thing for them considering the Brewers have adopted it too!  James Brown greets me this morning with his song: Get Up ….  This is a typical James Brown song with great music and a lot of Agggggghhhhh!  

Well, after a quick perusal of the currencies and metals this morning and any corresponding stories, I’ve quickly come to the conclusion that today there’s little going on, no real movement in the currencies and metals, no data, and very little to talk about… That is unless you want me to reiterate what I’ve already said about things…  I know no one wants that, so … short-n-sweet it is! 

My quick perusal of the currencies and metals tells me that the there’s little movement here… The currencies look a little perky, while Gold is down $2 bucks in the early trading…  And the news in the markets is all centered on 2 things…  1. The Chinese have decided to issue waivers to companies importing U.S. soybeans… It’s sort of a get out of jail free card, as they won’t have to pay the tariffs as long as they hold the waiver… 

The markets in Asia saw this as a sign that China may be backing off the full ahead on Tariff and the Trade War.  I guess if I stretch my imagination I can see that too…   

The other thing on the markets collective minds this morning is the news that U.K. PM Boris Johnson was told by the Supreme Court in the U.K. that his suspension of Parliament was done illegally…  Uh-Oh…  That really kicks you in the gut doesn’t it Boris? You just found out that the title of PM doesn’t mean dictator!   

Any-old-way, pound sterling , shrugged off the mess in Parliament, and gained a small amount VS the dollar…  I’m telling you this now, so you’ll listen to me later, the trading in currencies is so strange these days that what’s up is down, and what’s down is up…  There’s no fundamentals used in trading sentiment…  It’s a good thing I’m no longer in charge of a currency trading desk, because I don’t know what I would tell the boys and girls on the desk…  

I received an email from the folks at GATA yesterday that quoted metals guru Egon Von Greyerz, who said, “We have just entered the explosive phase in Gold & Silver”….  He’s talking about an upward move that would “explosive”… I hope he’s right…  I can see it happening, but then I see alot of things that don’t every come to be… 

Like me looking again like I’m 30 years old, and not crippled by Cancer… I dream about that all the time… What’s that telling me?  That I should have never gotten older?  HA!  

The U.S. Data Cupboard yesterday was supposed to yield the Markit PMI numbers but those didn’t print and I’m wondering why? Where they that bad that the propeller heads at Markit were told to “got back and sharpen their pencils?”  Oh well, whatever, it’ll print when it prints…  Today’s Data Cupboard has the July Case/ Shiller Home Price Index (HPI), which has shown price decreases in Homes month after month, and I can’t see how July will be any different… 

The HPI is nice to know, but it’s not a market moving piece of data, and so I truly expect the rest of the day to be like the first part… A non-event… 

To recap… The markets are stuck in the mud, with currencies and metals showing small moves, and nothing else going on…  The Chinese are issuing waivers to soybean importers to waive the tariffs, so good for them. And Boris Johnson found out that being PM isn’t like being a dictator…  The Data Cupboard failed to produce the Markit PMI’s yesterday, and Chuck has a snarky comment about that… 

For What It’s Worth…  I’ve been talking quite a bit about the Repo cash crunch that was going on last week… And so when I saw this article I knew it was FWIW worthy… it’s about The Fed’s Market Operations, and how Goldman believes bond buying is going to be reintroduced in November, and it can be found here: https://www.zerohedge.com/markets/liquidity-scramble-fed-announces-overnight-repos-every-day-next-week-introduces-term-repos

Or, here’s your snippet: “Yesterday we reported that Goldman now expects the Fed to restart Permanent Open Market Operations, i.e., bond purchases, i.e., QE some time in November. For those who missed it, Goldman assumes a roughly $15bn/month rate of permanent OMOs, “enough to support trend growth of the balance sheet plus some additional padding over the first two years to increase the size of the balance sheet by $150bn”, in the process restoring the reserve buffer and eliminating the current need for temporary OMOs.

That strategy would result in balance sheet growth of roughly $180bn/year and net UST purchases by the Fed of roughly $375bn/year over the next couple of years.

However, assuming Goldman is correct, there would be a little over a month before such POMO returned to permanently increase the size of the Fed’s balance sheet, potentially resulting in a continued liquidity shortage for the next 6 or so weeks.

Which probably explains why moments ago, the Fed surprised market watchers who were expecting the Fed to continue conducting only overnight repos, but announcing that not only would it conduct overnight $75 Billion repos every day from Monday until Thursday, October 10, but it would also introduce 2 week term repos with a total size of “at least $30 billion” for the first time since the financial crisis.”

Chuck again… Yes, the Fed is going to introduce 14 day repos and then eventually, they’ll be buying bonds again to give the banks the liquidity they supposedly need… 

Currencies today 9/24/19 American Style: A$ .6792, kiwi .6303, C$ .7542, euro 1.0998, sterling 1.2475, Swiss $1.0114, European Style: rand 14.8843, krone 9.0261, SEK 9.7189, forint 304.78, zloty 3.9872, koruna 23.5052, RUB 63.89, yen 107.70, sing 1.3767, HKD 7.8398, INR 70.77, China 7.1069, peso 19.43, BRL 4.1576, Dollar Index 98.59, Oil $58.09, 10-year 1.71%, Silver $18.54, Platinum $955.97, Palladium $1,658.28, and Gold… $1,520.64

That’s it for today…  I saw my oncologist yesterday, and I must have looked so weak and fragile that she felt sorry for me, and told me to change the way I take my chemo…  In how much, etc.   So, I’ve got that going for me, eh?  5 games to play and the magic number is down to 3, for my beloved Cardinals… Gotta keep going, no time to slack off now!   Head East takes us to the finish line today, with their song: Never Been Any Reason…  My good buddy, Duane, and I go to breakfast from time to time at the Olivette Diner, where the picture for the Album by Head East was taken… Just some cocktail trivia for you…  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

September 23, 2019 

*  Dollar bugs regain the conn on the currencies

* Chinese Trade Delegation cancels trip to the U.S. … 

Good Day… And a Marvelous Monday to you! Exciting weekend for yours truly, as my beloved Cardinals swept the Cubs in Wrigley, four games! All four games were 1-run victories, so a lot of hand wringing was done… Good thing good friend, Duane, came down to watch the games with me, who knows what I might have done without company! 6 regular season games to go, and their magic number to win the division is 4… The division win is the goal because you don’t want to have to play that one and done game for the Wild Card… Melvin and the Blue Notes greet me this morning with their song: if You don’t know me by now….. I few years ago, Dane Moody, a young guy on the currency desk said, “I think I’ve got you stumped on this one Chuck, who sang If You don’t know me by now?” And I replied, “Melvin and the Blue Notes”… He was shocked! He thought he had stumped me! Little did he know that it was one of the many songs on my iPod!

OK… The currencies didn’t have a good day on Friday, and couldn’t hold their small gains they had garnered throughout the week, but Gold showed them how it was done, and gained $18 on the day… I continue to find it quite interesting that even with the dollar gaining ground, it’s basically getting sold to buy Gold… 

Gold’s rise began when it was learned that a Chinese trade delegation cancelled a visit to the U.S. So… just when the markets thought everything was hunky dory regarding the Trade War, they have this thrown at them from left field… Gold is still well bid this morning and has added an additional $2.50 to the $18 it gained on Friday. 

Speaking of Gold… I realized late last week that I had been pretty tough on the Beaver, I mean JPMorgan last week, as the prosecutors called their metals desk was “A Criminal Enterprise”… Well, so that I’m not put down as a JPM hater, let’s just say that they aren’t the only one to blame for Price fixing and manipulation… How about the metals exchanges? They allowed these traders to blatantly rig the metals markets for how long? How about the regulators? The CFTC continually said they saw no sign of price manipulation or fixing…. But remember former CFTC head, Bart Chilton, on his deathbed said that the CFTC did find things, but couldn’t nail down one person responsible… Trust me on this one, JPM was not the only pawn in this chess game to keep the dollar A-number-one in investor’s minds… And that’s all I have to say today about that!

What caused the turnaround in the dollar and currencies has got me a bit by the tail this morning.  All last week, the currencies would book small gains VS the dollar, and then when the Chinese announcement became news, the dollar bugs came out from their wall boards, and began scurrying across the floor, as if the lights were turned on…   

There is a very strange thing going on in the repo market folks, and just knowing this I would have thought that the dollar bugs would be hiding, not scurrying across the floor!  

The cash liquidity crunch continued throughout the week last week, as the Fed had to come to the rescue every day from Tuesday to Friday such is the liquidity squeeze being experienced. Wait! What? I thought that U.S. banks were supposed to be flush with cash? So, how in the world is it that the Fed has had to step in and provide cash liquidity in the repo market every day, except Monday, last week? Something’s rotten in Denmark, as they used to say… And I’m afraid that this isn’t going to turn out to be something that just runs off a duck back! 

Well, what do we have here? It appears that St. Louis Fed Reserve President, James Bullard, called for a deep rate cut last week, and told the local newspaper here, the Post-Dispatch, that to him, “it appears the manufacturing sector is already in recession”… Here’s the link to that article in case you want to read what else he had to say: https://www.stltoday.com/business/local/st-louis-fed-president-explaining-dissent-says-u-s-manufacturing/article_c941d06b-0f28-52a2-8b9c-465ba944e4b6.html#utm_source=stltoday.com&utm_campaign=BusinessNewsletter&utm_medium=PostUp&utm_content=a12874506a3b5805dded6c95af30d7173df7c77a

I have to wonder if Bullard is a Pfennig Reader? I mean, haven’t I already been saying that I think we could already be in a recession? Quite a few years ago now, I attended a breakfast meeting that the CFA people were sponsoring that featured a speech by James Bullard… I wanted to badly to ask him a question or two, but I had a problem with my throat, strep, I believe it was called, and could barely speak out loud, so I had to sit there like a lump on a log, and not participate… It was my one and only chance to confront a Fed Head, and once again my body didn’t allow that!

The price of Oil slipped from Friday, and this morning is trading with a $57 handle… The reason for the slippage is tied to the news that there’s just too many questions about the Saudi’s ability to restore their destroyed by drone attack, Oil production… The Saudi’s claim it’ll be no problem, and observers are saying otherwise…  I think I would side with the observers here… 

Well, things around the world, sans Russia, aren’t looking so bright economically either… This is unofficially PMI week… The week where most countries print their monthly PMI (manufacturing Index)… last night Australia was first to print and their monthly PMI fell below 50… Uh-oh! The Eurozone is next on the docket… Recall their PMI last month, fell below 50… I would expect this number to fall further… The U.S. and other countries will print their PMI’s as we go through the week, but other than that, it’s pretty darn quiet abroad and here in the U.S., that is until we get to Friday, when we’ll see a plethora of data here in the U.S. that really matters… Like Durable and Capital Goods Orders, Personal Income and Spending.

Friday’s U.S. Data Cupboard had the August Leading Indicators, and they weren’t good folks… They prints 0.0%, for not a good economic outlook… I’ve long said that this data and Capacity Utilization are the only forward pieces of data we get… So, we need to pay attention to these two… And both are telling us that things don’t look good going forward…

To Recap… the currencies week of small gains was wiped out in one fell swoop on Friday when the dollar bugs came scurrying out on the floor… The Chinese Trade delegation cancelled their trip to the U.S., and that got Gold on the rally tracks to gain $18 on the day…   Bullard says he wanted a 50 Basis Points rate cut, and that the manufacturing sector is already in recession, And Chuck points out that the goings on in the repo markets sure are strange… 

For What it’s Worth… Some time ago, I told you that the Russians were selling their Treasuries, and allowing them to mature without replacing them, right? Well, this is an article that talks about how they continue to rid themselves of U.S. debt… And you can find it here: https://www.rt.com/business/469064-russia-dumps-us-treasuries/amp/

Or, here’s your snippet: “Moscow has continued to sell off US Treasury securities, cutting its stockpile by $2.35 billion in July, according to the latest US Department of the Treasury data released on Tuesday.
Russia’s holdings of US state debt amounted to $8.5 billion in July, with long-term US Treasury securities standing at $6.2 billion and short-term at $2.2 billion. In June, Russian investment in Treasury bills was around $10.8 billion.

Japan remains the biggest holder of US Treasury securities for the second month in a row. In June, Tokyo held Treasury bills worth of $1.13 trillion, around 8 billion more than it had a month earlier. Japan is followed by China with $1.11 trillion.

Russia used to be one of the major holders of US Treasuries, but since last year it has been steadily cutting the investment in US debt in line with the nation’s de-dollarization policy. Russia is now on par with countries like Oman and New Zealand, which are at the bottom of the list of US Treasury holders.

As a matter of state policy, Moscow has also been diversifying its reserves, increasing bullion purchases to record levels and earning the title of the world’s most committed purchaser of gold. As of September, Russia held the fourth largest gold reserves in the world worth $109.5 billion, according to the country’s central bank.”

Chuck again… not earth shattering news, all stuff we already knew, but just a confirmation that it continues is all… But all you boys and girls new to class, let me explain that the deficit spending by the U.S. Congress has to be financed, and the financing tool they use is the distribution and sale of U.S. Treasuries…  In borrow a quote from Blanch DuBois, “We have always depended on the kindness of strangers”….   so, if there is a problem at the auction window when Treasuries are sold, and not enough buyers show up…  Then what we have here is a major breakdown of the financial system! so, think about that and then re-read the FWIW section again… 

Currencies today 9/23/19 American Style: A$.6772, kiwi .6271, ,C$ .7523, euro 1.0978, sterling 1.2443, Swiss $1.0085, European Style: rand 14.8884, krone 9.0796, SEK 9.7621, forint 304.84, zloty 3.9850, koruna 23. 5724, RUB 63.98, yen 107.47, sing 1.3732, HKD 7.8394, INR 70.78, China 7.0906, peso 19.40, BRL 4.1456, Dollar Index 98.72, Oil $57.89, 10-year 1.69%, Silver $18.40, Platinum $1958.11, Palladium $1,665.11, and Gold… $1,519.48

That’s it for today… A very strong win for my Missouri Tigers Vs S. Carolina on Saturday… Other than the hiccup in their very first game, they’ve looked good to me… Go Tigers! Saturday night I attended a community theater production of Oklahoma! Delaney Grace was a dancer and singer in the production, and she did great! Next for her is the Gateway Production of Matilda, for which she’s excited about doing! Oklahoma was always one of my faves… But, man did the production take forever to get to the end! It was near midnight when we got home! Can you believe the Blues are playing exhibition hockey games already? Pink Floyd takes us to the finish line today with their song: Mother…. I have a poster, that my former colleague, Danielle, bought for me that had a line from the song… Mother should we trust the government? I hope you have a Marvelous Monday and please Be Good To Yourself!

 

 

September 19, 2019

* Currencies continue to inch higher VS the dollar

* BOE meets today, but don’t expect any fireworks… 

Good day… And a Tub Thumpin’ Thursday to you! Well… I brought home a winner yesterday, as anyone that knew I was going to game instructed me to do! Not that I had anything to do with the Cardinals win in the day game yesterday! What a great day I had and all my buds that attended the game with me… We got to see a real pitcher’s duel, with Wainwright, VS Scherzer… You’ve got to love the little guys… The guys that everyone says are too small to play pro ball, no matter what sport. And then go out and prove everyone wrong! The Cardinals have two of those type players… Keep going boys!, keep going! Def Leopard greets me this morning with their song: Pour Some Sugar On Me… In the 80’s when people like me wanted to hear real rock-n-roll and not electric music that was so prevalent in the 80’s, there was Def Leopard, to fill the void!

Well, I was wrong, let’s just get that out there front and center… The Fed’s FOMC did cut rates 25 Basis Point (1/4%) yesterday, bringing our Fed Funds rate to 2%… The Fed then said that they were Not in a rate cut cycle… And that scared the bejeebers out of the stock jockeys, who not only saw the rate cut as a response to slower growth, but also maybe the last for a while… I have to say that I just didn’t think the Fed Heads had it in them to cut rates two consecutive months/ meetings…

But did lower rates hurt the dollar? Not yesterday, as both the currencies and metals couldn’t find a bid to drive their prices higher… Usually, when the Fed cuts rates, Gold would go on a strong rally, and the euro wouldn’t be far behind it… I don’t see why this didn’t happen this time, but… we always have to remember that the Plunge Protection Team (PPT) is always lurking in the hallways and could have been the reason the dollar remained in charge on the day…

So, the Fed is reacting to the weak economic data that I’ve been talking about, but is not going all-in on rate cuts going forward… What they heck do they need? An invitation! I just don’t have any faith in our Fed Reserve folks… they’ve been wrong more than you can shake a stick at, their economic policies are a laughing stock in the markets, and they just don’t seem to see the trees in the forest!

But what Central bank does these days?… Oh, that’s right, there is one… The Central Bank of Russia! And I don’t care what that writer talked about the other day as to why he doesn’t like Central Bank of Russia’s Gov. Elvira Nabiullina, I do like her and her policies, and that’s that!

I have to say right here, that I talk a lot about Russian rubles… and Gold… and just to set the bar straight, I own both… But I don’t talk about rubles because I own them… I talk about rubles because they have the best Central Bank, and current fundamentals of any one in the world… And I talk about Gold, because… well… Got Gold?

Even though the Fed injected newly printed dollars into the Repo market the other day, the lack of dollars continues to be a problem here… It’s a real credit crunch going on and will soon turn to an all-out Liquidity Crisis… The Fed could step in at any time and calm the markets, but other than injecting a large sum of dollars late last week, they haven’t done a thing… But they will… you can count the chickens on that thought, because the Fed always knows best, right? 

My old CFO used to say… “Liquidity is not a problem, until it is”… I think it’s become one folks… and once it sets in… it could very likely be the snowflake that causes an avalanche for the economy… I’m just saying…

Enough of that, eh? No reason to end the week for me on a sour note! So, with that on my mind…  The Bank of England (BOE) is meeting while I write this morning, but once again, I don’t see anything going on here… The data from the U.K. has been patchy… with a couple of better than the average bear prints, and mostly worse than expected prints…  But not enough bad ones to push the BOE to cut rates, which currently stand at 0.75%…  

The Aussie and kiwi dollars both have seen some selling this week, which doesn’t make sense… Sure their rates are still below the Fed’s 2%, but the difference has narrowed, and that should have given some love to the to antipodean currencies… Most of these two currencies weakness comes from the slowdown in China… Other than that, I would think that both have economies that are just muddling onward. Remember I’ve said that the Aussie dollar (A$) is the proxy currency for Global Growth, and the OECD just downgraded their forecast for Global Growth!  

Yes, a global recession seems to be in line, don’t you agree? And the point that I think most Fed Heads miss, here is that there’s no way the U.S. will avoid being pulled into the Global recession mess…   

OK… Gold was up then down, then sideways and then back down yesterday, and ended the day down $6… But it’s up more than $8 this morning, so we’ll have to wait-n-see if there are any more engineered take downs of Gold like yesterday’s….  But none of this surprises me… Remember….  I told you when Gold went over $1,500 that the $1,500 level was the “new $1,300” … And that we would see this back and forth, lathered, rinsed and repeated for some time, until that line broke, and we finished the year at $1,600…   

You know… I was really surprised to see that the Fed Chairman, Jerome Powell, didn’t mention the cash liquidity in the repo market, not once during his press conference following the rate announcement…  What’s up with that? This is a real problem folks, and he doesn’t even mention it? I shake my head in disbelief… 

The Chinese renminbi continues to inch stronger VS the dollar… A couple of weeks ago, it appeared that the renminbi was falling off a cliff, and today, it appears to be on terra firma, still weak, but not as weak… And that doesn’t get lost to the folks at the Monetary Authority of Singapore (MAS) who keep the Singapore dollar in line with the renminbi, as to not lose any competitive advantage in exports…  This has gone on since the renminbi began to be available to the world, I do believe it was 2003…  Or some time around then… I recall because we were the first U.S. bank to allow U.S. investors the opportunity to hold renminbi…  

The euro has been through the wringer lately, but is still standing, and this morning it’s trading a bit stronger VS the dollar…   The eurozone economy is a real mess folks… Shoot Rudy, even Germany is seeing problems, and that’s the largest economy in the Eurozone!  Too much debt in the Eurozone, folks… It’s a real problem for any country to deal with, and also find ways to promote growth… Japan had the problem first, then the U.S., then the U.K. and then the Eurozone… 

The U.S. Data Cupboard doesn’t have too much for us going into the weekend… Leading Indicators is about the only real piece of economic data that is on the docket for tomorrow…   There is one other piece that always catches my attention… and that is Household Debt…   This will be a revision of an earlier print of 2nd QTR Household Debt…  I’ve written a lot about Household debt, and am convinced its a house of cards that will come crashing down on those holding debt  that they can’t afford to have, at sometime in the future… 

To recap… The currencies continue to inch higher VS the dollar, Gold got sold by $6 yesterday, but is up more than $8 this morning.  The Fed failed to mention the cash crunch in the repo markets yesterday? Do you think that they did that on purpose?  I do…  

For What It’s Worth…  Well, I’ve talked a lot about the cash crunch that’s going on in the repo market, and then saw this article that explains what’s going on, and thought why not use it as my FWIW?  So, anyway, here’s the link to the article: https://www.economist.com/finance-and-economics/2019/09/18/why-the-fed-was-forced-to-intervene-in-short-term-money-markets?cid1=cust/dailypicks1/n/bl/n/20190918n/owned/n/n/dailypicks1/n/n/NA/310979/n

Or, here’s your snippet: “THE FEDERAL RESERVE had plenty to fret about as it prepared to discuss policy interest rates on September 17th and 18th. Trade tensions and wilting global growth have led businesses to cut back investment in the second quarter of the year. In manufacturing, production and capacity utilisation have been falling since the end of 2018.

Though the Fed has described jobs growth as “solid”, some analysts worry that the labour market is wobbling. As expected, these concerns prompted the central bank to lower rates for the second time this year, by 0.25 percentage points, to a target of 1.75-2%. But the meeting was overshadowed by turmoil in money markets.

On September 17th, for the first time in a decade, the Fed injected cash into the short-term money market. The intervention was needed after the federal funds rate, at which banks can borrow from each other, climbed above the level targeted by the Fed. It rose as the “repo” rate—the price at which high-quality securities such as American government bonds can be temporarily swapped for cash—hit an intra-day peak of over 10%. On September 17th the Fed offered $75bn-worth of overnight funding, of which banks took up $53bn. The following day it again offered $75bn-worth. The amount demanded by banks rose to $80bn.”

Chuck again…  liquidity is real Bear when it’s no longer present in a market…  And so far the Fed’s reaction is akin to having the same effect as removing a bucket of sand from a beach!

Currencies today 9/19/19 American Style: A$.6795, kiwi .6313, C$ .7531, euro 1.1070, sterling 1.2463, Swiss $1.0070, European Style: rand 14.6693, krone 8.9377, SEK 9.6885, forint 300.50, zloty 3.9208, koruna 23.3873, RUB 64.30, yen 107.95, sing 1.3770, HKD 7.8290, INR 71.17, China 7.0863, peso 19.38, BRL 4.0868, Dollar Index 98.26, Oil $59.15, 10-year 1.77%, Silver $17.87, Platinum $933.30, Palladium $1,591.85, and Gold… $1,502.16

That’s it for today and tomorrow, talk to you again on Monday… And we’ll begin the last week of September… What a pleasant surprise yesterday we sat in the shade all day at the stadium, so no sweating bullets for me!  It’ll be a wild and wacky weekend in Chicago starting tonight…  Just 10 games left in the regular season, and 7 of those games are with the Cubs! YIKES… Supertramp takes us to the finish line today with their song: Hide In Your Shell…   one of my all-time fave songs….  I hope you have a Tub Thumpin’ Thursday and a Fantastico Friday tomorrow, and please Be Good To Yourself! 

Chuck Butler

September 18, 2019 

*Currencies get off the mat, but the gains were small!

* Chuck dives into his knowledge of Oil…  (it won’t take long! HA!)

Good day… And a Wonderful Wednesday to you! Well, the team that can’t hit, proved once again last night that their lack of hitting causes losses! UGH!, But another day off the calendar, and my beloved Cardinals still hold a 2 game lead on both the Cubs and Brewers… The Cardinals, and their inability to hit the ball, will face St. Louis native, Max Scherzer in the day game today, of which I’m going to be in attendance, sweating pounds off me, because it’s been hotter than hades here the past week! But that’s OK with me, I’ll be at a day game, and longtime readers know I love day games! The Stone Temple Pilots greet me this morning with their song: Interstate Love Song…

Well, it was another day of ups and downs in Gold, the price of Oil slipped, and the currencies moved upward just a smidgen… Today is the day the Fed’s FOMC meets… I truly don’t believe the Fed heads have it in them to cut rates at two consecutive meetings, and so it’ll be up to them to prove me wrong! But like I’ve said a couple of times now, the important thing will be the Fed Chairman, Jerome Powell’s, press conference following the announcement… And since I did so good at mind reading what Mario Draghi was going to say last week, I’ll give Powell a shot here…. I think he’ll talk about how the economy is still strong in areas, and that the Fed just didn’t see the need to cut rates again, but will be watching for signs of weakness, and will be ready at the wheel, to cut rates if needed in the future…

If that’s basically what he says, then it won’t make the stock jockeys happy, or the bond boys happy, or the markets as a whole… It will make the dollar bugs happy though, as it should be enough to send the dollar higher… the dollar did see some selling, not much, but some yesterday, as we get closer to the Fed decision announcement. The Price of Oil slid a couple of bucks, as the Oil shock fears have subsided… And this I have to question… This attack on the Saudi Oil reserves is going to disrupt the supply line of Oil for a long time before it is restored to normal… And I’m telling you this now, so you can listen to me later… The U.S. Shale Oil Producers are hurting…

I do not vision myself as an expert on Oil… Folks, but I do read about it all the time, and think that Shale oil production has gone flat, the rig-count is down, companies are going bankrupt, and financing for these debt-dependent operations because, as you know, new banking regs require a loan to an entity to be repaid, and these entities are having a difficult time booking profits, much less paying back loans… . Add to that the fact that these Shale Oil fields dry up in about 2 years…

Then there’s a difference between Shale Oil and traditional Oil at the refineries, which is a long drawn out explanation, that for this letter is not going to happen, so just know that there are differences and causes Shale Oil to be more expensive to refine… 

So, inflation rising with higher gas prices could be in the future, as well as we are entering the heating Oil season… I’m just saying…

OK… Well, speaking of inflation… In the U.K. this morning their August retail price inflation figure was 2.6%, down from 2.8% in July, and that has the pound sterling trading sideways this morning…  Yesterday, the German business Confidence as measured by the think tank ZEW was better than expected  and experienced a sharp rise in September 2019, making up for the significant decline we saw in August…  

The Better than the average bear ZEW helped the euro off the matt yesterday, but today it too is trading sideways VS the dollar…  It’s funny, not funny ha-ha, that I keep seeing articles this morning that say the dollar is weaker going into the Fed’s FOMC meeting today… but you wouldn’t really know that to be the truth if you checked the Dollar Index, which today is trading at 98.42, and yesterday morning it was 98.59… So, weaker yes, but by a significant amount… I don’t think so! 

The price slippage in Oil pushed the Russian ruble weaker overnight and it is trading back over the 64 handle…   But I believe this move to be only temporary, folks… There’s just too many unknowns in the Oil sector right now, for this leading Petrol Currency to be sitting on the sidelines… 

Have you noticed in the currency roundup that the Swiss franc is back above parity with the dollar?  I go back once again to my conversation with Rob Vrhijof, last month when he said that he thought that going forward the franc would be a better currency than most…  You may recall that I questioned that thought because of the negative deposit rates in Switzerland, but lo and behold, the franc is pushing higher…  Go figure!

Here in the U.S. there’s been a BIG Problem going on in the Repo market…  For those of you not aware what REPO is, it’s simply the short version of the Repurchase market, where an entity, mostly banks, lend cash to another entity and the receiver of the cash , delivers U.S. Treasuries to the lender… It’s really a riskless business, unless, of course there isn’t enough cash, or Treasuries to accommodate the Repo Market…

Well, last week, the Repo market saw a spike in the repo rate of interest that’s paid for the loan..  As you would suspect, usually the Repo Market is in line with Fed Funds, with a little wiggle room… But last week rates spiked! The graph shows a straight line that seemed to go to the moon!

So, what’s going on here? Well, remember my conversation last week that I said years ago, a good friend asked me what the next problems were for the U.S. and I said, “1. liquidity crisis, and 2. Underfunded Pensions?  And what we have here is a good (really bad) old Liquidity problem…  There wasn’t enough cash around to accommodate the market… The Fed immediately saw this as a HUGE problem and stepped in with a cash infusion of $75 Billion…  

I have a problem with this action by the Fed… You see, where does the Fed get its money?  Oh, that’s right, it doesn’t have money, and when it needs money it prints it… OK, there’s no actual printing that goes on these days, it’s an entry on a computer, but we still say “print” because they produced dollars out of air…  Did they ask you, or me if we thought this was a good idea?  HAHAHAHAHAHAHA! As if!

The price of GOLD gained a measly $3 yesterday… It seems lately that in the overnight markets Gold rallies, and in the U.S. market it gets sold… Dare I say that this makes sense given the price manipulators are here in the U.S. ?  

Well, most of the articles on the internet this morning say that they expect the Fed to cut rates today…  I just don’t see that as something they are prepared to do…  Now, when the calendar turns over to 2020, there will be a few hawks leave the FOMC and a few doves will take their place…  This may seem like a no big deal, right? But… think about that… The recession will likely be in full metal in 2020, and the FOMC members will be mostly doves, who like to cut rates… Is this when we go negative?  YIKES!

 Speaking of the next recession (that may already be here!) I was reading yesterday and came across this quote… check this out…  I just loved the quote from publishing guru, and writer extraordinaire, Bill Bonner yesterday in his daily letter… “Many parts of America are already in recession. As for the country as a whole, the geriatric expansion is still dangerously tottering along – like a senile man with a valid driver’s license. We don’t know what ditch it will end up in… or when… but readers are cautioned to stay off the road.” – Bill Bonner

Many years ago, I used the phrase that the economy was like a car traveling on an icy road, the only question was not if but when was the car going to meet a guardrail…    I think that’s apropos now, eh? 

The U.S. Data Cupboard saw the August print of Industrial Production rise better than expected, which was a BIG surprise to me… But then this data can be volatile at times with Airplane purchases and stuff… So, I’ll just write this off as a blip, and get ready for another negative print in Sept.

Today’s Data Cupboar is really just about the FOMC Meeting… So, we have that going for us, eh?  

To recap, The BIG news today is that the Fed’s FOMC will meet and according to Chuck they’ll bypass a rate cut, but according to most pundits on the internet, the Fed will cut rates today…  So, what’s it gonna be boy? HA! Gold gained a measly $3 yesterday… The currencies got up off the mat VS the dollar, but the gains were very small, and the price of Oil slid downward, and Chuck has lots to say about Oil this morning… 

For What It’s Worth…  Yesterday, I told you about the 3 JPMorgan metals traders that were being charged with price fixing and manipulation of Gold & Silver…  And that news caused some people to think that JPMorgan CEO, Jamie Dimon might be in trouble…  And then the GAT folks sent me a note from Pam and Russ Martens about this, and I said, now that’s FWIW! So, here’s the article: https://wallstreetonparade.com/2019/09/will-jamie-dimon-finally-lose-his-job-over-racketeering-charges/

Or, here’s your snippet: “Yesterday, three traders at JPMorgan Chase, the bank headed by Jamie Dimon, got smacked with the same kind of criminal felony charge that was used to indict members of the Gambino crime family in 2017. The charge is racketeering and falls under the Racketeer Influenced and Corrupt Organizations Act or RICO. According to the Justice Department, the traders engaged in a pattern of rigging the gold, silver and other precious metals markets from approximately May 2008 to August 2016.

One of the traders, Michael Nowak, was actually a Managing Director at the bank and the head of its Global Precious Metals Desk. The other two traders are Gregg Smith and Christopher Jordan.

RICO is typically used to indict mobsters – which makes its use against employees of the largest bank in America a very disquieting event. But even more disquieting is that two trial lawyers compared JPMorgan Chase to the Gambino crime family five long years ago and recommended in their 2016 book that the bank’s officers be prosecuted under the RICO statute. “

Chuck Again… Wow!  Ok, yesterday, I made the point that until one of these guys goes to jail the dirty deeds will continue… but IF the head honcho got dragged into the proceedings, that would cause some major disruption in the price manipulation business, don’t you think? 

Currencies today 9/18/18 American Style: A$.6833, kiwi .6334, C$ .7540, euro 1.1046, sterling 1.2463, Swiss $1.0043, European Style: rand 14.6367, krone 8.9606, SEK 9.7123, forint 301.27, zloty 3.9277, koruna 23.4364, RUB 64.17, yen 108.20, sing 1.3744, HKD 7.8299, INR 71.14, China 7.0885, peso 19.35, BRL 4.0829, Dollar Index 98.42, Oil $59.00, 10-year 1.77%, Silver $17.85, Platinum $936.21, Palladium $1,597.32, and Gold… $1,501.55

That’s it for today…  Well, I’m excited to get to go to the day game today… I’ll be with some good friends, and if the sun doesn’t get to us, a grand time will be had by all! I just know it! OK… Yesterday, I made an error when I said that my darling granddaughter was in the final 7 for a the Madeline play, but it was the Matilda play! Hey! I don’t know these things, Madeline, Matilda, crazy!  I’ll go see her in a local production of Okalhoma this weekend…  So, I’m getting unindated with literature about Medicare and Medicare supplements… Crazy, like the credit card companies that are relentless when  kid turns 18, and so on…  I look forward to the process of choosing the right company…  And with that… The Who, takes us to the finsish line today with their song: Behind Blue Eyes…  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler