Author: admin

September 17, 3019 

* It’s all about the dollar again this week… 

* Is the Fed about to disappoint the markets? 

Good Day… And a Tom Terrific Tuesday to you! My beloved Cardinals got back on the winning side last night, but the problem remains the same… They don’t hit very much! 12 games to go in the regulars season… And The Cards have only a 2 game lead on the Cubs… with 7 of our last 12 games VS the Cubs, it’ll be a showdown at OK Corral! I promise that today’s letter won’t be as long as yesterday’s, as I had woken up around 4 am, took my chemo, as usual, and instead of going back to sleep for a couple of hours, found I couldn’t sleep, so I went downstairs to write… And write I did, my poor fat fingers were plum tired! HA! Golden Earring greets me this morning with their song: Radar Love… Which happened to be one of the best driving songs there is! But if it come on, while driving, make sure you set the cruise, otherwise you might find yourself going way too fast!

The currencies didn’t have a very good day VS the dollar yesterday, and neither did Gold, as it couldn’t hold the $1,500 figure once again…  We started the day with Gold up $20, then it slipped to $16 while I was writing, and then to end the day it held only a $10 gain…  Back and forth, back and forth, Gold goes… The price manipulators are feeling the heat these days with more charges being brought on JPMorgan traders for price fixing and manipulation, more on that in the FWIW section today, but that’s not stopping them from their brazen attacks on Gold & Silver on a daily basis… I love seeing the stories being printed about price fixing and manipulation being handled by the courts… But as I told a dear reader who emailed me: “These findings and fines on the price manipulators aren’t going to stop them… Not until somebody goes to jail, will a dirty trader think twice about what he’s about to do…”

Throw them all in Jail, as far as I’m concerned! I would be a very mean judge, folks… You did the savers wrong? Go to jail!, you lied to investors?, Go to Jail, you tried to make other people look bad, for your own leverage? Go to jail! I’m telling you, the Gov’t would have to build new jails, because these guys wouldn’t be going to The Hilton! No about 50 years of hard labor will make them think twice about all the money they cost investors over the years!

OK… I’m back now… sorry, but got all up in my craw, about these price manipulators! Again, I have a good article on the latest developments for you in the FWIW section today, so don’t skip through it! That is unless you’re one of those naysayers that still say there’s no price manipulation going on in the metals…

Recall yesterday, I said that there were reports that the Saudi’s had asked the U.S. for some of their Oil reserves to make deliveries after their Oil supply took a hit late last week by drone attacks. Well, President Trump has allowed the Saudis to tap the reserves, to even out the price of Oil, but instead, the price of Oil continued to rise throughout the day. The dollar got it’s wings from this announcement that the Saudis would have to buy U.S. Oil… And that’s what sent the currencies to the woodshed yesterday…

The only Petrol Currency to keep the Oil Price jump rally for its respective currency is the Russian ruble…  The ruble went below the 64 figure last night. Again, this is still a far way from the 35 it used to trade with, but baby steps are what’s called for… I’m just saying… 

I read an article from a guy last week who wasn’t as big of a fan of Elvira Nabiullina, the CBR’s Gov. His biggest complaint was that she was keeping rates too high, and holding back the economy… Even though she’s been behind all the rate cuts that took rates from 10%, down to 5%… (retail rates) He just wasn’t happy with her… I quickly deleted the article, and thought, well to each their own opinion, but I would much rather have a Central Bank that didn’t debase their currency with rates cuts that go to zero!

Yesterday, I gave my usual epistle on the euro being the offset currency to the dollar… And a recent report from the BIS (Bank for International Settlements) (you know the guys that do all the Gold swaps that hurt Gold’s price too!) , and the euro remains the number 2 traded currency, with the dollar holding on most of the percentage numbers… The yen came in 3rd… But I’ll give you a gold star if you can tell who came in 10th place! Give up? It’s kiwi… WOW! I said when I read the report… Little old New Zealand, playing on the same field as the BIG Boys in the world! And then I thought, it’s too bad that kiwi doesn’t have a strong & prudent Central Bank like it used to have… Those days are long gone, along with every other Central Bank in the world, except…. The CBR… Central Bank of Russia… And I’m just saying…

In the foreign markets… The economic data continues to dribble in a piece here and a piece there, but we will see the latest Confidence reports from the think tank ZEW today, and in New Zealand, later they will print their Current Account Balance… Should be good!

So, once again this week, we’re looking at it all being about the dollar… The Fed meets on Wednesday, and it’s all centered on where rates will go, and what the dollar bugs will do when the announcement is made… I said yesterday, that I’m not of the belief that the Fed will go back-to-back, belly-to-belly, with rate cuts… But then you never know, right? Jerome Powell’s press conference following the rate announcement will have the most attention paid to it, on the day…

The U.S. Data Cupboard today will have the August prints of Industrial Production and Capacity Utilization, both on my list of real economic data…  You may recall that July’s prints for these two were not good, with IP printing negative -0.2%, and CAPU falling…  The bear in me says that these two will remain disappointing at best… But I doubt the markets will pay much attention to them, as they are all grearing up for the Fed’s FOMC meeting tomorrow… 

Further on… I read where the GM employees are going on strike…  We have a spike in the price of Oil…   What is this 1973?  I laugh, because in 1973, I was starting out my career in the investment arena… Leisure suits, and bell bottoms were the rage, so, I’m hoping that the Oil price spike and the GM strike are the only two things that come back from the 70’s! HA! 

To recap… Gold rallied then got sold… the price of Oil rose some more… And the currencies lost ground to the dollar on the day… The President said the Saudis can tap the Oil reserves, and that got the dollar bugs all lathered up… And then there’s some other stuff that Chuck talked about today, but that’s the gist of today’s letter!

For What It’s Worth… OK, as promised here’s an article about 3 more JPMorgan metals traders being brought to court to face charges of price fixing and manipulation… And it can be found here: https://www.cnn.com/2019/09/16/investing/jpmorgan-precious-metals-price-manipulation/index.html

Or, here’s your snippet: “Three JPMorgan Chase traders in gold and other precious metals have been charged with alleged market manipulation by the US Department of Justice.

The alleged conduct spanned eight years, the Justice Department said Monday.

The government charged Gregg Smith, an executive director, and Michael Nowak, a managing director and head of the bank’s global precious metals desk. Both were current employees as of Monday morning, government officials said.

The third person charged is Christopher Jordan, a former JPMorgan employee.

JPMorgan declined to comment on Monday. Instead it referred to a previous public filing in which it said it “is responding to and cooperating with these investigations.”

Between 2008 and 2016, Smith, Nowak and Jordan allegedly manipulated prices of gold, silver, platinum and palladium futures traded on the New York Mercantile Exchange and the CME Commodity Exchange.

“Smith, Nowak, Jordan, and their co-conspirators allegedly engaged in a complex scheme to trade precious metals in a way that negatively affected the natural balance of supply-and-demand,” William F. Sweeney Jr., FBI assistant director in charge of the FBI’s New York field office, said in a statement.

The government claims the defendants engaged in “widespread spoofing, market manipulation and fraud” by placing trade orders they planned to cancel before executing them, according to a Justice Department statement. The aim “was to trick” other traders into buying and selling futures contracts at prices and at times they wouldn’t have otherwise done, the Justice Department alleges.

“We will follow the facts wherever they lead, whether further up in the banks or to other institutions,” said Assistant Attorney General Brian A. Benczkowski in a call with reporters.

The US Commodity Futures Trading Commission also filed a civil enforcement action against Smith and Nowak on Monday.”

Chuck again… Yeah, of course they are innocent until proven guilty, but like I said, until someone goes to jail this will all continue…

Currencies today 9/17/19 American Style: A$ .6840, kiwi .6330, C$ .7542, euro 1.1023, sterling 1.2417, Swiss $1.0055, European Style: rand 14.7652, krone 8.9567, SEK 9.7075, forint 302.84, zloty 3.9375, koruna 23.4976, RUB 63.93, yen 108.12, sing 1.3760, HKD 7.8234, INR 71.72, China 7.0677, peso 19.48, BRL 4.0841, Dollar Index 98.59, Oil $62.05, 10-year 1.81%, Silver $17.88, Platinum $935.41, Palladium $1,596.57, and Gold… $1,504.37

That’s it for today… See? I can keep a promise to keep today’s letter shorter! Good luck to my darling granddaughter, Delaney Grace, who is in the final 7 in the audtions for Madeline, the play…  Daughter Dawn sent me a picture of her all dressed up for the school dance team last week… I can’t for the life of me believe that she’s in middle school !  I must be getting older than Methuselah! Can you believe that hockey has started their exhibition games schedule? Didn’t we just have a parade here for the Stanley Cup Champion Blues?  Or did I dream that?  HA!  Firefall takes us to the finish line today with their song: Just Remember I Love You…  Something that you should say to your loved ones every day!  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

September 16, 2019

* Saudi Oil supplies take a hit from a drone attack!

* Oil soars, the Petrol Currencies follow, and Gold soars… 

Good day… And a Marvelous Monday to you! What started out to be a great weekend for my beloved Cardinals turned into a dud… UGH! But the weather here was absolutely fantabulous, with plenty of warm sunshine to go around to everyone! My Missouri Tigers won their 2nd of 3 games so far this year on Saturday, with a win over an early season cupcake… The BIG News from this weekend, is the report from Saudi Arabia that drones attacked their pipeline and knocked out a huge chunk of the Saudi’s Oil supply… So, more on that, and other things as we start the week today with the Allman Brothers greeting me with their song: Ramblin’ Man… This was the Allman Brothers first hit song, that got played on the radio… Of course FM listeners like I was back then had heard plenty of Allman Brothers songs by the time this song was a hit!

OK… Well, I can tell you that there are lots of blame fingers being pointed at the perpetrators of the drone attack… I can also tell you that the Saudi’s are thinking about asking the U.S. to release some of their reserves so that the Saudi’s can make deliveries… So, it’s a BIG deal folks… And the price of Oil has soared to a $61 handle, after trading last Thursday morning with a $55 handle! Now, the Saudi’s calmed things down a bit, by saying they could have their production back on line by Monday, and the price of Oil slide back to a $59 handle, but still a strong move since last week! 

And the thing that I really care about, is the Petrol Currencies, led by the Russian ruble and followed up the ladder by the Norwegian krone, Brazilian real, and a few more… The Canadian dollar/ loonie didn’t see any gains on the day Friday, as the recent data from Canada is beginning to become iffy…

But I don’t see how this jump in the price of Oil won’t eventually help all the Petrol Currencies gains VS the dollar… I just don’t’ see it as something that won’t happen… Not with the price of Oil spiking, and fears of an all out war in the Middle East, that could disrupt Oil production , could come of all of this… I did say “could come” Maybe calmer heads will prevail… But since when does that get in the way of a reason to fire guns, drop bombs, etc. ?    Got Gold? 

I left you last Thursday morning, right after Mario Draghi, European Central Bank (ECB) President made his announcement that the ECB was going deeper into negative rates, and opening up the coffers once again to buy bonds… Boy, did he tick off the Germans with these announcements! I have a good article on the reaction by the Germans in the FWIW section today, so you won’t want to miss that!

After all that on last Thursday, the euro rallied… Wait! What? Oh, yeah, the euro traders began to mark up the euro as soon as Draghi announced that more stimulus would be needed for the Eurozone economy. I don’t get it… and probably never will, why a currency would rally when their interest rate has been debased into negative territory, and the bond buying program you ended at the end of 2018, is back on the table… But, it is what it is…

You know the Fed is going down the same road is the ECB… First the Fed announced their Quantitative Tightening (QT) And even laid out how much they would be allowing to mature each month and not replace the bonds that matured… But then, things got sticky… And they, just like their kissin cousins over at the ECB, stopped the QT…. You, me, and guy down the street know that the next step, folks is for the Fed to announce they were back in the bond business too…

Now this won’t come until we hit the recession that’s looming… But I do believe in my heart of hearts that interest rates will go back to zero, and maybe even negative, and QE, or bond buying will resume… Talk about losing the rest of the credibility that the Fed has when this happens!

Gold got sold by $10.80 on Friday, but is up almost $16 in the overnight trading… And it’s back to being above $1,500… Of course now the question arises and asks when do the price manipulators show up with an armful of short Gold paper trades again? It was fun while it lasted this summer as Gold ratcheted higher and higher every day, without any interference from the boys in the band… But all that stopped being so lovey, dovey, pumpkin pie, smoochie, smoochie, once Gold traded past $1,500… I don’t know what it’s going to take for Gold to move forward to $1,600, but I do believe it will be there before year-end… 

Usually the key to a good move in Gold is geopolitical problems, like we have in the middleeast right now…  I heard that U.S. President Trump told reporters that, “the U.S. is locked and loaded, if it was Iran behind the Saudi Oil attacks”… YIKES! , but as I asked above and will also do here for it does seem appropriate! Got Gold? 

So, the Eurozone is already in recession… it’s not official yet, but trust me on this one, they are in a recession… But as I’ve explained many times in the past… It matters, not too much, what the Eurozone does… It matters what the dollar’s doing… We can go back to the turn of the century, when the euro was introduced at 51.14, and it traded as high as $1.17, and then fell through the floor all the way down to 92-cents… but then problems with the U.S. and the dollar began to take shape, the euro rebounded… while they were in a recession, no less!  And didn’t stop until it reached $1.50 a few years later… The euro is the offset currency to the dollar, so when the dollar gets sold, the euro will benefit from those dollar sales… It’s just the way it is, folks…

Negative rates around the world seem to be the “thing to do” for central banks… And they’re probably on their way here too… Negative yielding Gov’t Bonds… Negative yielding mortgages… It’s all the rage… You see, these inept gov’t officials just don’t get it… Taking your yield curve into negative territory is NOT the way to get people to spend money… You see, the people are smarter than you think they are… And if you as a Central Bank are taking rates negative, it tells the people that things are really bad, and we had better hunker down…

If negative rates were so darn good, why then is Japan, who’s had them for several years now, is still mired in an economic abyss? And why hasn’t the Swedes gotten their economic growth going again? Or the Swiss?  And negative rates aren’t helping the Eurozone econmy either, so what does Draghi do? He goes deeper!  What’s the old saying about digging a ditch? 

The writing is on the wall folks… So, let’s hope and cross our fingers that the U.S. Fed doesn’t go this route… I doubt seriously if that’s going to stop them, but Shoot Rudy! It’s worth a try! And this just in… The Japanese want to play a game of “How Low Can You Go?” and are contemplating going even deeper negative with rates!

Damn the savers! Right? That’s what a Central Bank is telling people like me that have saved all my life and now get little to no income from those savings… to hell with the savers! They’ve punished the Senior circuit of savers for years now, and now they’re punishing the likes of me! But they can’t make me spend, I don’t care how badly, the rates go negative!

Now, here’s where the rubber meets the road folks… IF the U.S. implements negative rates, they most likey would institute a penalty for withdrawing cash… And if that didn’t work, they would then outlaw cash! I wrote a very long article on the coming cashless society here in the U.S., for the now defunct, Dow Theory Letters a year or so ago… One of these days I should pull that out and post it as a Pfennig article… It’s scary, and If I do decide to print it again, I’ll give you a warning up front to remove all the sharp objects from your reading area!

The U.S. Data Cupboard last Friday had a better than the average bear August Retail Sales print… U.S. August Retail Sales were up 0.5% and like I had told you last week, there had to be some more back to school sales in there for the states that wait until after Labor Day to go back to school.  After looking under the hood here, I came away with two thoughts…  1. When you took out the vehicle sales, Retail Sales were flat, with no growth at all, and 2. now this gets really technical so stay with me here…  Dining out… Restaruants showed a decline in August of -1.2%, which brought the Year on year figure to a cycle low… This indicator is usually a Bellweather for disposable income spending…  Doesn’t look too good for this does it? 

Now that’s a completely different spin on the Retail Sales than what you heard or read about isn’t it? Well, as usual, you can depend on me to show you the real numbers…   

What the heck happened to the bond rally? One day it looked like bond yields were going to keep falling toward their record lows, and then the next day they weren’t falling any longer, and now are rising again…  Stranger than fiction, is this bond market folks…  but let’s not get too upset here the 10-year Treasury’s yield is still well below 2% at 1.83%… 

The bond guys are still telling us that the economy is in bad shape, they’re just not so sure of it being so bad right now!  Of course this Wednesday, the Fed’s FOMC will meet to discuss rates…  I was previously on board with the idea that while rates would get cut again this year, that a back-to-back rate cut wouldn’t be in the cards…  And I’m still of that opinion, while I think that there’s more of a chance of another rate cut than I had previously thought…   

Fed Chairman, Jerome Powell, the guy that no one wishes they were in his shoes, will hold a press conference after the rate announcement, whatever it may be… And the markets will have their collective ears on the ground, hoping to hear news of more rate cuts…  The markets are wierd folks…  but then if savers have nowhere else to go to earn a little yield, then they will be forced to resort to buying stocks with hopes of more upward movement in stocks…  And that’s why the markets want to see more rate cuts… 

The U.S. Data Cupboard has more for us this week than it did last week, with Industrial Production and Capacity Utilization on the docket for tomorrow, to highlight the week, for me that is…  I’m not going to be sitting by the radio or my laptop on Wednesday afternoon, to check what the Fed did… In fact, I’ll be at the ballpark on Wednesday afternoon!  The last “businessman’s special” And I’ll be with some of my best buds! And the last thing on my mind will be what the hell the Fed is doing!  HA! 

To recap… The Saudi Oil supplies took a BIG hit from a drone attack late last week, and the price of Oil is soaring, while the Petrol Currencies react favorably. Gold is also soaring once again on this geopolitical news, which isn’t good folks.. It could be the snowflake that causes WWIII, or it could be dealt with by calmer heads… But just in case… Got Gold?   

OK, here’s the aforementioned article about how the Germans aren’t too happy with outgoing ECB President Mario Draghi… I love the name the Germans have for him, so with no further adieu… 

For What It’s Worth… Well, I got the title for today’s Pfennig, from this article that showed up on Zerohedge.com, late last week… The Germans are not too enamored with outgoing European Central Bank (ECB) President, Mario Draghi… The Germans, for the record book, experienced runaway inflation in their history, and each generation since has pledged to be inflation hawks… What Mario Draghi introduced last week wasn’t even in the ballpark’s parking lot of an inflation hawk… So, here’s the article: https://www.zerohedge.com/economics/count-draghila-furious-germany-reacts-draghis-monetary-horror

Or, here’s your snippet: “When it comes to Mario Draghi’s relationship with Germany’s notoriously fiscally (and monetarily) conservative public, it tends to be a love-hate affair. Actually, scrap the love part.
Back in March 2016, when the ECB cut rates and expanded its QE (in an operation that just like Thursday left market’s underwhelmed, and sent the EUR surging), Germany’s press responded not too kindly to Draghi’s monetary largesse with Handelsblatt, in an article titled “The dangerous game with the money of the German savers”

Fast forward three and a half years later, when Mario Draghi, one foot out of the ECB’s Frankfurt HQ on his way to retirement, doubled down in what appeared to be the final push in European monetary policy, when the central banker cut interest rates deeper into negative territory and promised bond purchases with no end-date to push borrowing costs even lower.

The fact that it was left open-ended (or until the ECB starts raising rates) was perhaps the biggest takeaway, and as Deutsche Bank’s Jim Reid noted “QE infinity is back if that’s not an oxymoron.” That said, there were some complications when Bloomberg reported that Europe’s top central bankers – the French, German and Dutch governors – all opposed more QE, as did Coeure and Lautenschlaeger and a couple of others. “So this was a contentious move and rightly so.”

But an even bigger surprise was Draghi’s veiled admission that the ECB is now out of ammo and that to boost the economy, Europe will need fiscal stimulus, i.e., issue more debt.

Specifically, Draghi referred being “very concerned about the pension industry” and also suggested that the answer to speeding up positive side effects was fiscal policy. As Reid concluded, “it’s hard to therefore get away from feeling that even the ECB feel we’re nearing the end game in terms of the limits of monetary policy. Something that has been obvious to the outside world for sometime.”

And nowhere was this mood represented better than by Germany’s most popular tabloid, Bild, which on Friday accused Draghi of “sucking dry” the bank accounts of Germany’s savers, a day after the ECB cut interest rates deeper into negative territory. Next to a Dracula photomontage of Draghi, Bild’s headline read: “Count Draghila is sucking our accounts dry.”

“The horror for German savers goes on and on,” Bild wrote.”

Chuck Again… Like I said last Thursday… Don’t laugh at these shenanigans that the ECB is pulling once again, for the U.S. Fed is right behind them… They’ve been greasing the tracks for negative rates for sometime now, even drafting Big Al Greenspan to say that negative rates is no big deal… The next recession, will bring them about folks… Remember I’ve said this many times, but to make sure you hear me now and listen to me later… Historically, in the U.S., the Fed Funds rate was 6% when we entered a recession, and it would take at least 4% of rate cuts to end the recession… Our current Fed Funds rate is 2.25%… See where that’s going to lead us? I’m just saying…

Currencies today 9/16/19 American Style: A$.6880, kiwi .6385, C$ .7540, euro 1.1050, sterling 1.2455, Swiss $1.0095, European Style: rand 14.6617, krone 8.9775, SEK 9.6509, forint 300.45, zloty 3.9176, koruna 23.4295, RUB 64.34, yen 107.75, sing 1.3735, HKD 7.8206, INR 71.46, China 7.0785, peso 19.43, BRL 4.0804, Dollar Index 98.32, Oil $59.45, 10-year 1.83%, Silver $17.85, Platinum $1,627.10, Palladium $1,627.10, and Gold… $1,503.85

That’s it for today… Well some sad news came across the screens yesterday, when it was announced that Rick Ocasek, the former lead singer for the Cars had died at 75…  There was a period in the 80’s when the Cars were HUGE… OK..  Things have settled down here, after the Big Labor Day BBQ, and it’s about time to start thinking about closing the pool for the year… When the trees start dropping leaves by the boat load, it’s time to close the pool… UGH!, I just don’t like the cover on the pool!  Robert Plant takes us to the finish line today with his song: Big Log….  a really haunting guitar lick to start the song is really good…  I hope you have a Marvelous Monday, and please Be Good To Yourself!  Whew! that was a long one today! 

Chuck Butler

 

 

September 12, 2019 

* Currencies remain in tight ranges…  

* Trump & Xi decide to not go all-in with tariffs… right now that is! 

Good Day… And a Tub Thumpin’ Thursday to you! I’m not going to participate today in any Tub Thumpin’, so I hope you help pick up the slack. In fact, I feel like death warmed over this morning, and I can’t believe I got up to write! I should just “mail it in” and live for another day… But I won’t, that’s not who I am… I’ve never given up in a fight in my life… And the Good Lord knows I’ve had my share of not only fisticuffs, and health fights to last 10 people’s lifetimes! Maybe I’m down and out in Beverly Hills today because my beloved Cardinals lost again in Colorado last night! UGH! Go ahead and give the Cy Young (best pitcher) to the Rockies rotation, for they’ve held the Cardinals to two runs in two games in Coor’s Field! That’s unheard of! Well, until now… UGH! The Rascals greet me this morning with their song: A Beautiful Morning… I hope it turns out to be just that!

Today’s the day… the day the European Central Bank (ECB) will meet and  ECB President, Mario Draghi’s, last “real meeting”. Yesterday, I explained what would go on next month at his official last meeting… I told you yesterday that I thought the euro traders were frontrunning the ECB… And the evidence is there for us to see… During the Asian session there was no movement, during the European session, the euro got sold, and after Europe closed, the selling stopped…

So, for the euro’s sake, let’s hope that it’s a case of sell the rumor buy the fact… But with the dollar bugs in control, I doubt that will happen…

Remember when politicians (recall Dick Cheney?) said that deficits don’t matter? Well, I wonder if he has the same opinion these days, when after over a decade since the financial meltdown, the U.S. annual GDP has averaged 2.1%… Little to no growth, when you take out the Government spending… But to make matters worse, the OMB (Budget office which is non-partisan) says that we’ll see our debt rise to 125% of GDP in the next ten years… Really? I don’t believe we’ve ever had that much debt before… Even after WWII… But here’s a different way of looking at it from the folks at Misis…

“So what is the national debt as a percentage of the federal governments income? Income, in this case is the federal government’s tax revenue. And it turns out by this measure, we’re in uncharted waters.

In fact, the national debt is now eleven times annual federal revenue. And as far as I can tell, that’s the highest it’s ever been. (In 1945, the national debt was $251 billion, and tax receipts were $45 billion, meaning the national debt was 5.6 times tax revenue that year.)”

Chuck again… Thanks to longtime reader Bob for sending me this info…
So, the national debt continues to go higher and higher, and so does Corporate, Sate, and individual… One of these days, Alice…. One of these days, this debt foundation house of cards is going to come crashing down upon us…   But eleven times income? OMG!  Got Gold?

Speaking of Gold… The shiny metal eked out an $11 gain yesterday,  and is up $7 in the early trading today…  Ed Steer said it best this morning when he said, “The Gold price was on it’s way above $1,500 in the after markets, but was kept from doing that by the “da boyz”… The price manipulators seem to have put a line in the sand at $1,500, like they did at $1,300. Of course the line at $1,300 finally fell to all the demand for physical Gold, and that’s what it’s going to take once again to get us past this $1,500 level for good… Tons of physical Gold buying, and not just from the usual suspects of Russia and China, and even India… I mean the moms and pops of the world need to step and make their first purchases of physical Gold… Are you ready? Alright then, go do your stuff!

The markets are all waiting for Draghi, to come out of the ECB meeting, so I’ll stay on line until that happens so I can be sure to see what he has on his mind… I’ll play mind reader here and say that he goes deeper into negative deposit rates, and says the ECB will begin bond buying again… 

The Asian markets were in a good mood last night, as there seems to be a crack in the tough-guy act of both Trump and Xi. As both have backed off plans to go all-in on tariffs, in the Trade War. It’s nice to see the both of them playing nicely in sand box, eh?  Actually, I had thought that it would never come to all-in tariffs… I really didn’t think the two of them would be that dense to do that… I respect both of them for what they’ve done, but that respect only goes so far because of this stupid Trade War…  I’m just saying… 

OK… looks like my mind reading was bang on! For that’s what Bloomberg says Draghi just announced… Deeper negative rates, and a return to bond buying…  Talk about losing credibility for the ECB…  

But don’t laugh at them, for we’re next…  Especially if President Trump has anything to say about it…  Here are samples of two of his Tweets yesterday: “The Federal Reserve should get our interest rates down to ZERO, or less, and we should then start to refinance our debt. INTEREST COST COULD BE BROUGHT WAY DOWN, while at the same time substantially lengthening the term.”   

And…. “The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads.”

No inflation?  Really? Don’t be fooled by the  stupid CPI (consumer inflation)…. Maybe we have little to no wage inflation, but other than that inflation is all around us…  I had better stop there before I say something I’ll be sorry about later…  

In other data from the Eurozone…  Well, Industrial Production for July was negative -0.4%, but that was better than June’s -1.4%, and year on year was negative -2.0% but again it was better than June’s -2.4%… So, it’s bad news but not as bad as June… Which is why the euro was holding its own until Draghi just talked…   

I have no idea what’s on the minds of euro traders these days…  The euro is on the rally track after the rate and bond buying announcement! OK, there’s still the Draghi press conference, where he can throw the euro under a bus… so, hold on boys, it’s too soon…  

Speaking of the stupid CPI, that’s what’s on the docket to print today… The August stupid CPI will print today, and all the lemmings will point to it and say, “see there’s no inflation to speak of”…   We’ll also see the Federal Budget, which should be a doozy… maybe over $200 Billion for August… Let’s see do some simple math and you’ve got a $2.4 Trillion annual Deficit, that gets added to our National Debt that is already $22.556 Trillion…   And growing every minute…  

On a sidebar, have you ever just pulled up the Debt Clock at: https://www.usdebtclock.org/  and sat there for 10 minutes and watched the numbers?  It’s amazing folks… Really, to think that the debt per taxpayer is $183,137…   Hey, that’s chump change, right, just fire off a check to the Gov’t and hope they don’t cash it! 

Further down on the Debt Clock’s web site, they have something called: Personal Debt to Income…  OK, no biggie right? I mean we should be making more than we spend, right? Ahem… No actually the debt to income ration is 1.724…   And that’s the part that scares the bejeebers out of me, for it consumers can no longer go deeper into debt, then who’s going to support the economy?   

To recap… yes, I’ll finally give up on the debt talk, sorry for all that today! The currencies have pretty much been trading in a very tight range, for weeks now, and yesterday was no different. Gold finally had a good day, after about 5 bad ones…  Draghi announced that the ECB will cut rates and go deeper into negative rates, and reintroduce bond buying… Pretty much bang on, with what Chuck said he would do…  don’t laugh at the ECB, because the U.S. will follow them eventually… 

For What It’s Worth… I recall a conversation I had with a friend many years ago, and he asked me what the next big thing was going to be, and I told him… I thought that Lack of Liquidity was number one, and number two was the lack of funding the Corporate Pensions… And then yesterday, I saw this on Bloomberg, and well, it appears that my Number two is coming to a screen near you sooner than imagined, and it can be found here: https://www.bloomberg.com/news/articles/2019-09-09/corporate-pension-funding-moves-closer-to-worrisome-80-level

Or, here’s your snippet: “U.S. corporate pensions felt the pain of low bond yields in August.

The retirement funds for U.S. corporations had just 82% of the money they expect to need over time for pensioners as of August, down four percentage points from July, according to a statement from consulting firm Mercer on Monday. The steep drop stemmed from long-term bond yields plunging to record lows, which effectively increases the current value of companies’ future obligations. Declines in U.S. equities didn’t help either.

When companies have more than about 80% of the funding they expect to need for pensions, they tend to cut their investments in riskier assets like stocks and increase safer holdings like bonds to lock in gains and reduce risk. Companies closer to that level or below it are less likely to make those shifts, and more likely to contribute more of their cash flow toward their pensions, JPMorgan Chase & Co. strategists wrote last month.

The 1,500 publicly listed companies that Mercer looked at controlled around $2.05 trillion of pension assets at the end of August, compared with liabilities estimated at $2.51 trillion, and their investment decisions can have big impacts on markets. Their underfunded pensions could result in their buying fewer stocks and corporate bonds and more Treasuries.

“Funded status dropped sharply in August with interest rates now at their lowest point in modern history,” said Matt McDaniel, a partner in Mercer’s wealth business. “The current environment leaves us with a puzzling dilemma: where to invest when most asset classes look expensive.”

Chuck Again… You know that sometimes I don’t like to be right… Sort of like the old song, If loving you is wrong, I don’t wanna be right….

That’s it for today, and tomorrow…  Don’t forget that tomorrow the August Retail Sales will print…  With all this debt accumulation by consumers, I don’t see how that the report will be disappointing.  Talked to my good friend, Dennis Miller yesterday… He sounds better and better every time I talk to him…  Fingers crossed that he continues on that path! Well, what’s up with my beloved Cardinals… They can’t hit even in Coor’s Field? I was talking with Alex last night, and I told him the thing that’s the silver lining when the Cardinals lose, is that if the Cubs also lose, then it’s another game off the schedule of games left, which means 1 less game for them to catch us… But we had better get off the schnide quickly!  Heartsfield takes us to the finish line today with their song: Pass Me By… A great song, that I’m sure if you listened to it, you would say, “I remember that one!”   I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday, and please Be Good To Yourself!

Chuck Butler

 

 

 

September 11, 2019

* Currencies trade in tight range, except euros… 

* Russia believes that the Oil price will fall to $40… 

Good Day… And a Wonderful Wednesday to you…  Well, today is the we observe our 2nd day of infamy…  To this day, I still can’t believe we as a nation were attacked like that…  Not a good night for my Beloved Cardinals, who proved once again that they have problems hitting the ball when a runner is on third, and less than two outs… Got to get back on the rally tracks boys! Alex has completed 2 of his clinicals and has two left next spring, in the meantime, he’s back at home, going to class again. He’s on the docket to graduate with his doctorate in Physical Therapy, next May… It’s seems like an eternity to him, but I keep telling him that May will be here before he knows it! Cat Stevens greets me this morning with his song: Moonshadow… I’m being followed by a moonshadow, moonshadow, moonshadow… It basically means that the moon is shining on someone…

OK… Another dull day in the currencies folks… I know, I know, I’m beginning to sound like a broken record, of which I’m glad vinyl records are back in style, because for a while I had to amend that statement with I’m beginning to sound like a damaged digital recording… It just doesn’t sound the same, eh? OK, getting back to the currencies… A dull day is a good day, when were mired in the dregs of a strong dollar trend that refuses to give up the conn… But as sure as day follows night, and night follows day, the strong dollar trend will eventually end… I believe it will end in the next year…

But don’t set your watch on my calls… Yes, I’m right most of the time, but take the call I made in February 2010, at the Orlando Money Show, I told the audience that was overflowing, with people lined and standing against the wall, and people sitting in the main aisle on the floor… That the dollar would not be the reserve currency of the world by the end of the decade (2020) and that the Chinee renminbi would be the new reserve currency… Well, I got have of it right… The Chinese renminbi was added to the IMF Special Drawing Rights a couple of years ago, thus making it a “reserve currency” along with dollars, yen, and other currencies that make up the SDR’s… But I will end up being very wrong about the dollar… I realize the decade isn’t over just yet, but… Time waits for no one, and it won’t wait for the dollar’s strong trend to end!

As we went through the overnight markets, first Asia, there was little movement in the currencies, but as the books were handed over to Europe, the European traders began to sell euros. Maybe it’s going to be one of those sell the rumor buy the fact things, because most traders say they are frontrunning the European Central Bank (ECB).  

You see, the ECB meets tomorrow, in one of the last two ECB meetings that outgoing ECB President Mario Dragi, will make the final decisions…  And it is thought that Draghi will leave the ECB and the European Economy with a journey further into negative deposit rates, and a return of bond buying, as the Eurozone economy, as a whole, seems to be already in a recession.  And then there’s the presss conference following the meeting, and in these press conferences, in that past that is, Draghi, has not been kind to the euro… 

So, traders are frontrunning that whole scenario that tomorrow holds… And selling euros seems to be the trade du jour today…  Because, well, the final meeting before Draghi steps down and former IMF chief Christine Lagarde takes over at the ECB, will be full of back slaps for a job well done, a cake, cards, balloons, and a going away party… So, the real job will be done in tomorrow’s meeting… 

I read a report yesterday, that talked about how the writer believes that we are already in a recession here in the U.S. Of course we won’t know for sure until we get the wink and nod from the NBER the folks responsible for calling the recessions, which they normally do after the recession is about over! Can you believe they still have a job? HA!

Don’t forget that I’ve said that this next recession will be a doozy… for a number of reasons of which I’ve already talked about so I won’t go there again, I’m sure I’ll more chances to bore you later on in the letter! HA!

The price of Oil has been on a nice jump higher in price this past week, but the Russians don’t believe it will last. They cite the lack of demand, because of the slowing economies of the world. That’s good news for SUV drivers! Gas guzzlers was what they used to be called, but I’m sure that the car unions, got together, and decided that being called a Gas Guzzler was demeaning and hurt their feelings, so it became politically correct to not say gas guzzler… But then I’ve never been one to be politically correct, so gas guzzler, gas guzzler, gas guzzler!

But it won’t be good for the Russian economy who depends on Oil sales as a large part of their economy… But they’ve weathered the storm there before, and they’ll weather it again… They have little to no debt, and Their interest rates are higher than the rest of the world, and can be cut during a recession without have to worry about going into negative deposit rates…

It might put on hold the stronger moves in the ruble, but I trust the Bank of Russia’s Gov. and I’m sure she’ll do the right thing to keep their heads above water. And for now the ruble seems to be appreciating nicely each day… 

Gold had a decent day going, and then the price manipulators showed up at the COMEX and in the end Gold lost $13 on the day… I had to laugh yesterday when I saw a report that said that Citicorp, was calling for Gold to rally to $2,000… What have I always told you when these Big trading Banks and Brokerages make calls like this? That they are probably trading their book… In other words, they are long a large position in Gold, and need for it go higher, so they “ talk it up” … Now, I’m not saying that can’t happen… I’m just leery of these guys… and not just Citicorp… All of them! Remember I did say that I thought that Gold would revisit its previous higher of around $1,965… So, what’s $35 more?

The shiny metal and it’s kissin cousin, Silver, are trading upward early this morning, so Let’s see if that continues, or if they’ll be another showing at the COMEX by the Price manipulators…  I’ve got a great article on Gold manipulation in the FWIW section today, do you won’t want to miss that! 

The U.S. Data Cupboard is still bare of real economic reports… Yesterday we saw the median Income number for 2018, increase to $63,179, from $62,626 in 2017… This is so backward looking that you see why the markets don’t pay much attention to it…  

In other data news…. It was reported yesterday that the poverty rate in the U.S. fell last year… That’s the good news… The bad news is that the number of Americans without health insurance rose by nearly 2 Million people… OK, so when those uninsured people go to the hospital, who pays for their visit? Look in the mirror… 

To recap…  The currencies were stuck in the mud yesterday, but the overnight markets, in Europe that is, brought some selling in euros ahead of the ECB meeting tomorrow…  Because Chuck thinks that the final meeting in Rocktober will be a going away party for ECB President Draghi, so look for rockets at tomorrow’s meeting…  Gold got whipped around by the price manipulators yesterday, but is up $6 in the early trading, along with its kissin cousin, Silver, which is back above $18…  

For What It’s Worth… Well, this article came to me via my friends at GATA, so there is no link to an article for you today, but…. Since it’s about Gold and price manipulation, I thought I would include the entire article for you, so, here’s your snippet from GATA…

“U.S. Rep. Alex X. Mooney, R-West Virginia, is continuing his efforts to get answers from the U.S. Treasury Department, Federal Reserve, and Commodity Futures Trading Commission about surreptitious interventions by the U.S. government in the financial and commodity markets and particularly the gold and silver markets.
Mooney’s efforts began with letters sent to the Federal Reserve chairman and treasury secretary in April 2018:

In July 2018 the Fed and Treasury responded to Mooney but only incompletely, the Fed denying that it was trading in gold but refusing to say whether it is trading in other markets, the Treasury giving a partial denial of gold trading but failing to answer about the government’s policy toward gold:

In February this year Mooney asked the CFTC, as GATA already had done, if it has jurisdiction over manipulative trading undertaken by the U.S. government or brokers acting for the U.S. government, or if such manipulative trading is authorized by federal law:

The CFTC has never responded to GATA or to Mooney.

Summarizing the major questions that remain unanswered:
1) What is U.S. government policy toward gold? Is the policy still to drive gold out of the world financial system in favor of the U.S. dollar, as State Department records show the policy was in the 1970s?
2) Is the Treasury Department’s Exchange Stabilization Fund transacting in gold?
3) What markets are the Fed and Treasury trading in, through what mechanisms, and for what purposes?
4) Does the CFTC have jurisdiction over manipulative trading by the U.S. government or its agents?
5) Has the U.S. gold reserve ever been audited for any encumbrances? If so, what were the findings?

Of course the refusal of the Fed, Treasury, and CFTC to answer the congressman’s questions promptly and fully is strong evidence that the U.S. government is deeply and comprehensively involved in market manipulation.

If only mainstream financial news organizations and financial market analysts had the courage and integrity to pose Mooney’s questions on their own behalf. Then the world might enjoy some actual financial journalism — and the market rigging and the imperialism the rigging represents might be defeated and free and transparent markets restored along with limited and accountable government.”

Chuck Again…. Don’t you just love this guy Alex Mooney? His state has taken away the taxes on Gold & silver profits, and at the same time fires off letters asking for answers, that nobody, other than the usual suspects, lie the folks at GATA and Ted Butler have done! Maybe, one day, we’ll know the truth, the whole truth, and nothing but the truth… And don’t believe the Gov’t if they say, “you can’t handle the truth!”

Currencies today 9/11/19 American Style: A$.6866, kiwi .6417, C$ .7607, euro 1.1007, sterling 1.2352, Swiss $1.0082, European style: rand 14.6927, krone 8.9723, SEK 9.6867, forint 301.84, zloty 3.9366, koruna 23.4991, RUB 65.42, yen 107.71, sing 1.3784, HKD 7.8395, INR 71.63, China 7.1108, peso 19.51, BRL 4.0941, Dollar Index 98.57, Oil $58.02, 10-year 1.71%, Silver $18.10, Platinum $938.29, Palladium $1,562.11, and Gold… $1,491.97

That’s it for today… A somber day ahead, as we observe our 2nd day of infamy…  I recall the day after the 9/11 catastrophe, sitting in the office and trying to write something about the markets, which didn’t make much sense to me to do, but an astute pfennig reader sent me a note that day, telling me it was important that we attempt to continue as we did before the day…  And that turned me around! I came out of my funk, and began to write like I had before 9/11….   When baseball returned our adored announcer, Jack Buck, recited a poem, that you should Google, and read… The Jefferson Starship takes us to the finish line today with Marty Balin doing the lead singing of their song: Count On Me    I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

September 10, 2019

* It took a day, but rubles finally get bought! 

* Currencies trade in tight range yesterday, but slip overnight

Good Day… And a Tom Terrific Tuesday to you… No baseball for me last night, and I really don’t get excited any longer about watching an NFL football game… So, I turned the volume on whatever was on down low, and began to read… I really shouldn’t do that, because what it does is it gets me all riled up and yelling at the wall, and then I try to go to sleep… Doesn’t work! But anyway… It just keeps getting more difficult every day, to wake up… I have no idea what’s going on, I have always been a morning person, able to get up whenever, and be ready to take on the world… But not any longer… Is it age? Or years of accumulation of Chemo? Or do I know in the back of my mind that, in reality, I no longer HAVE to get up so early? Probably a bit of all three, don’t you think? Oh, well… I carry on despite my short comings! A St. Louis band, Mama’s Pride, greets me this morning with their song: Blue Mist…

Well, the price we pay for making sure our kids have everything they desire, because… You don’t want to upset them! Oh, the humanity if we did! That price I’m talking about is the run up of Consumer Debt… It’s crazy folks… But remember when the July Retail Sales were so strong, and I said that it was inflated with back-to-school sales, and wondered what the credit card bills would show when they arrived in the mail? Well, the report card is out, and here are the numbers, read ‘em and weep! For the month of July, consumer credit increased at a seasonally adjusted annual rate of 6.75%. Revolving credit, which are credit cards increased at an annual rate of 11.25% while non-revolving credit increased at an annual rate of 5.25%.

That’s over 11% increase in July from June in credit card debt…. What on earth are these people thinking about? Do they think they’ll come a day when all is forgiven, and the Gov’t will step up and take all their debts away? What was the old TV commercial? Calgon… take my troubles away… or something like that! I’m telling you now, so please make sure you listen to me later, but not too much later… That a situation like I just thought of, would be devastating to you and me… People that pay their taxes, save, and trying to invest… (I have a doozy for you on investing in 2020 in the FWIW section today) Because, who’s going to pay for all this debt forgiveness? Ahem… are you looking in a mirror?

Oh, and for those of you keeping score at home…. Longtime readers will recall me saying several times though the years, that debt levels like we have in the U.S. are hurting our economy’s ability to grow… And then I came across this yesterday, and thought… Hmmm, I wonder where they got this idea… Hmmm… “Debt owed by governments, businesses and households around the globe is up nearly 50% since before the financial crisis to $246.6 trillion at the beginning of March, according to the Institute of International Finance, an association of global financial firms. And the high debt levels are weighing heavily on economies….”

So, hopefully we don’t ever come to that… What we might be coming to however, is negative rates… and I read this past weekend that Big Al Greenspan said that negative rates were no big deal… Wait! What? Oh, brother, have we gone, no wait Chuck, don’t say it, for it wouldn’t be nice, and your mother always told you to hold your tongue if you didn’t have anything nice to say about someone…

Well, just as a sidebar… The University of Bath, did some research and found that negative interest rates aren’t doing what they were supposed to be doing… Look, at Japan… Their economy is still in the dumpster, and now Europe’s economy just headed into a recession… So, while I believe that’s where we will eventually be with negative rates, I certainly hope we don’t ever get there!

OK, I’ve started this morning off full of you know what and vinegar! The currencies on the other hand had little to no upward movement yesterday VS the dollar… Gold on the other hand was not able to hold to the early morning gains, and ended up in the red once again, falling almost $8 on the day, and closing below $1,500… I somewhat expected this to happen, as I explained a couple of weeks ago, I viewed the $1,500 level as the new $1,300 level… Recall how we would bump up higher over $1,300 and then get sold back below it again, and we played that game for over a year!

So, like I said yesterday, I would look to buy Gold on the dips… And anytime it falls under $1,500 would seem like a “dip” to me… I’m just saying…

In the overnight markets, the currencies have slipped a little (except the Russian ruble), and Gold is down another $6 in early trading.  The real BIG mover to the positive side yesterday was the price of Oil, which bumped up to trade with a $58 handle, and that got traders and investor excited about buying the leading Petrol Currency, the Russian ruble… The ruble saw a strong rally on the day, and in my opinion, it’s about time! I saw a blurb on the Bloomberg this morning that traders are questioning the size of the Oil reserves in Saudi Arabia… Uh-Oh…  this has the potential to be a very damaging piece of news, should it turn to be the truth… 

Sure, as I’ve been saying, the ruble was trading very steady Eddie for a long time, but after the news I brought to you yesterday, about how Russia’s economy was still growing, even after 5 years of economic sanctions, finally impressed someone, or group of someones…  You can still get an interest rate above 4.75% in Rubles, folks… I’m just pointing these things out, it’s up to you to do something! HA!

The Peoples Bank of China (PBOC) allowed another increase in the value of their currency, the renminbi, VS the dollar last night… That marks 3 days of allowing gains… What’s up with that?  Not that I’m complaining about this move in the renminbi, it’s just that it doesn’t make any sense… I guess the fact that there are still negotiations going on with regards to the Trade War with the U.S., there’s no reason to keep marking the renminbi down… 

Remember when I asked the question, and said that I was sure that some propeller heads in China probably had already figured out at what level the renminbi needed to fall in order to make up the losses from the Tariffs… Well, I guess they figured it out! HA! 

Well, the mess in politics in the U.K. continues… PM Boris Johnson failed once again to get his call for elections passed.  BREXIT looks like its dead in the water, and the deadline is looming… I believe it’s Rocktober 31st, which is also Halloween, will it be the bewitching hour for BREXIT? The U.K.? Boris Johnson?  I know it sounds far off, 10/31 that is, but it’ll be here before we know it, as time waits for no one and it won’t wait for the U.K. to come up with a BREXIT deal…  I’m just saying… 

I told you yesterday that the U.S. Data Cupboard was going to be a disappointment this week until we get to Friday, and Retail Sales prints… And so that means yesterday, we had the Consumer Credit data that we already talked about, and today we get the Median Household Income number… No biggie, but it will be interesting to see if we continue to lose ground with regards to wages… 

To recap… The currencies played in the mud yesterday, and are a little weaker in the overnight markets. Except the Russian ruble, and the Chinese renminbi, these two have rallied once again. There are rumors going around that the Oil reserves aren’t what they were thought to be in Saudi Arabia… Hmmm….  Gold lost $8 yesterday, and is down another $6 in the early trading today…  As I’ve already explained but repeated once again today, $1,500 is the new $1,300…   Got it? Get it! 

For What It’s Worth… I saw this article last night on MarketWatch, and thought, this is going to be a humdinger of an article… It’s about investing in 2020, and I’m sure you’ll want to take a look at it and if so, it can be found here: https://www.marketwatch.com/story/why-investors-risk-major-damage-ahead-of-the-most-volatile-year-in-history-2019-09-09?mod=MW_section_top_stories

Or, here’s your snippet: “Think 2019 has been hectic? You ain’t seen nothing yet.

According to our call of the day from John Mauldin of Mauldin Economics, 2020 “will be the most volatile year in history” for investors
“The last few weeks marked a turning point in the global economy. It’s more than the trade war. A sense of vulnerability is replacing the previous confidence — and with good reason,” he wrote in his latest market update. “We are vulnerable, and we’ll be lucky to get through the 2020s without major damage.”

Mauldin pointed to supply shocks, the trade war, interest rates, unproductive debt and Europe’s mess as some of the factors set to create the perfect storm, but it’s one volatility bomb, in particular, that could blow up best-laid plans.

“Remember when experts said to keep politics out of your investment strategy?” he asked. “We no longer have that choice. Political decisions and election results around the globe now have direct, immediate market consequences.”

Of course, the most consequential of all: The 2020 U.S. election. And Mauldin doesn’t sound too hopeful about any of the scenarios.

“None of the possible outcomes are particularly good. I think the best we can hope for is continued gridlock,” he said. “But between now and November 2020, none of us will know the outcome. Instead, a never-ending stream of poll results will show one side or the other has the upper hand.”

Markets will be a mess, bouncing up and down with each headline, Mauldin warned, and that will inspire politicians and central bankers to react. To “do something.” That something, he said, will probably be the wrong thing.”

Chuck Again… Yes… and it brings to my brain the question I keep asking…. Got Gold?

Currencies today 9/10/19 American Style: A$.6868, kiwi .6423, C$ .7587, euro 1.1037, sterling 1.2348, Swiss $.9916, European Style: rand 14.6770, krone 8.9784, SEK 9.7357, forint 300.32, zloty 3.9260, koruna 23.4322, RUB 65.53, yen 107.45, sing 1.3798, HKD 7.8406, INR 71.88, China 7.1217, peso 19.55, BRL 4.0737, Dollar Index 98.44, Oil $58.25, 10-year 1.64%, Silver $17.92, Platinum $940.50, Palladium $1,554.56, and Gold… $1,493.36

That’s it for today…  I just caught myself looking at one of the pictures I have on my wall at my writing desk, and while doing that I inadvertenly held down a key, and I had a whole page of that one key on my screen! What a dolt! OK, I got rid of all that…  the picture I was looking at, is a picture of me and my oldest sister, Brenda. She was battling cancer at that time and had wig on, but smile on her face, which is how I’ll always remember her…  My beloved Cardinals head out west for 3 games starting tonight, which will start later, because, well… they’re out west!  So, when I get up at 4 in the morning to take my chemo, I’ll be checking on the final scores….  Journey takes us to the finish line today with their song: Who’s Crying Now?  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

September 9, 2019

*China cuts reserve requirement ratio 50 basis points!

* U.K. surprises with a 0.3% GDP growth print for July! 

Good Day… And a Marvelous Monday to you… Well, my beloved Cardinals have taken over 1st place in the Central Division, and widened their lead with the Cubs all weekend long, thanks the the Brewers who beat the Cubs while the Cards won their games… I sure hope we can hang onto that 4.5 game lead with 19 games remaining… Another beautifully pitched game by Cardinals pitcher Jack Flaherty, and then it was onto to other things on my Sunday… I’m all alone again, for 4 more days… We had beautiful weather on Saturday, and my beloved Missouri Tigers won their home opener, at which Alex, Andrew and Grace were in attendance… Jimmy Buffett greets me this morning with this song: Boat Drinks… “The boys in the band ordered boat drinks”…

Well, the BIG news from this weekend as far as currencies are concerned came from Russia, where after 5 years of economic sanctions, the Russian economy continues to grow! Industrial output is on the rise, the Russians believe they will have a record harvest this year, their Current Account is in surplus by $500 Billion… and… Inflation, which has always been a bugaboo for the Russians, has been falling for the past couple of years, and while it was expected to fall to 4.3% this year, it appears that it will be more likely around 3%… With deposit rates still above inflation, that means that Russia, as opposed to most countries, the U.S. included, do not have real negative rates…

The currency, the ruble, rallied big time on the news… And I can say that I’m vindicated! I remember when I first wanted to offer the ruble… And the all the pushback I received… Well, the ruble still have a quite a ways to go to reach the levels it traded at back then, but it has slowly but surely, chopped away at the currency price that the ruble fell to after the conflict in Ukraine, now 5 years ago…

Coming in second place for the currency news was China’s announcement that they would cut their Reserve Ratio percentage by 50 Basis Points (1/2%). A Reserve Ration cut is akin to an interest rate cut, as it frees up more money to use to support the economy… This news was welcomed by the Asian and Pan Asian Currencies and followed by a rally in this region’s currencies. 

And just when it appeared that the Chinese renminbi would slip off the ledge and fall into a deep dark abyss, this reserve ratio cut allowed the renminbi to rally for what seems like the first time in month of Sundays! 

it’s not all gloom and doom news coming from the U.K. these days, although I do have to say that this one caught me by surprise… U.K. GDP saw a 0.3% growth print for July, after June’s 0.0% print, there were, and I among them, economists that thought the U.K. was already in recession… 

This news was welcomed in the European region, and allowed pound sterling to rally, but left the euro stuck in the mud…  

When we last talked I told you that the price of Oil had rallied nicely and that was helping the Petrol Currencies… Well, the price of Oil continues to trade with a $56 handle this morning, and the best performing Petrol Currency is the Ruble, followed by the Canadian dollar/ loonie, and the Norwegian krone… 

Well, it was not a good week for Gold, as the price manipulators took back the conn from the physical Gold buyers, and Gold lost a good chunk of its value late in the week… Maybe this week will be better, and it’s off to a good start in the early trading today… And along with the engineered price taken down in Gold, they also showed up at the COMEX with an armful of short Silver paper trades too!

Longtime readers already know what I’m about to say, right? Buy the dips in Gold… well, that would be what I should say… But it’s not advice I’m giving, it’s merely a thought… and to that thought lies another one so let’s go there!

Longtime friend, publishing guru, and writer extraordinaire, Bill Bonner said it best the other day in his diary writings… I’ll let Bill explain, “a very simple Capital Loss Avoidance System, which proved to be very effective for long-term capital preservation: Any time you can buy the Dow for less than 5 ounces of gold, you should buy all the stocks you can. Then, when the Dow goes over 15 ounces of gold, you should sell stocks, buy gold, and sit tight until stocks fall again.

The real beauty of it is that it doesn’t require any research or any pretense of knowledge.” – Bill Bonner
Chuck again…. OK… doing some simple math is all that’s required to know when to sell stocks and buy Gold… And using my trusty calculator on the iPhone, I see that it takes more than 17 ounces of Gold to buy the DOW these days… Hmmm…..

OK, I’m not saying that you could bet the farm on the sell the DOW buy Gold trade right now… But it certainly does make for some interesting conversation, doesn’t it? And why not give it whirl? As Bill says, it has been proven to be very effective for along-term capital preservation.

Here in the U.S. things were interesting last Friday… Well, looky there…. The Jobs Jamboree was a disappointment to the dollar bugs camp out! The BLS reported that only 130,000 jobs were created in August, and of the 130,000 what the BLS didn’t report was that they had added 93,000 jobs after the surveys were completed… Of course that wasn’t as bad as the previous month when the BLS reported 160,000 jobs created, but had added 148,000 after the surveys!

Remember about a month ago, when I told you that the BLS had to eat all those extra jobs that they had added in the past year? Well, not all of them, but most of them! Which goes to prove what I’ve been saying all along… The BLS is full of their name minus the “L”…. Their numbers are worthless! But yet the markets still react to them like they were words from the Bible! I just don’t get it, do you? They’ve been proven wrong, and yet, people still listen to them… One of these days, folks, someone with far greater gray matter than I, will come up with a way to count jobs correctly… Right now, I believe the ADP folks, who are responsible for setting up payroll systems for just about every company in the country, would have a better count of who’s getting a paycheck this month, that wasn’t getting one last month!

But does anyone in the markets listen to me? HAHAHAHAHAHAHAHAHAHAHAHAHA! Now that was worth a great big-o-belly laugh!

So, stocks rallied, the dollar rallied, on Friday, and the Jobs number wasn’t even close to the 170,000 that were forecast for the month…. Now you tell me, why that was? And I’ll give you a Gold star! OK, not really… but you get what I’m trying to say… It’s preposterous! A Royal Scam (sorry Steely Dan), and so forth… I had better go on to something else before I blow my top!

The U.S. Data Cupboard this week, will be a real bummer for those looking for data that really counts…. In fact, we won’t see anything “worthy” printing until Friday, when Retail sales will print… This will be from August, which might still have some residual back-to-school spending in it, as I guess not all states go back to school as early as we do in Missouri… But other than that, it should be disappointing, when it does get around to printing on Friday. Today we will see the color of the Consumer Credit (read debt) for July… But like I said, not too much to bank on the rest of the week…

Before I head to the Big Finish today… I wanted to share with you a cartoon… Well, it’s a link to a cartoon… My fave cartoon, Pearls Before Swine, this one really hit home with me, and explains our political system with humor… So here’s the link, click it if you want to : https://www.stltoday.com/entertainment/comics/go-comics/?amu=/pearlsbeforeswine

To Recap…  The Jobs Jamboree was a real big disappointment, but the markets didn’t care… Stranger than fiction… But China cut it’s reserve requirement ratio by 50 Basis Points, and allowed the renminbi to rally… The U.K. surprised the markets with a 0.3% growth in GDP for July, and it’s all coming up roses for Russia and the ruble… 

For What It’s Worth… Well, we all know, by now that is, that former Fed Chairman, Big Al Greenspan, was a Gold bug before he took over the reins at the Fed, and all the while he was there, nary a word about Gold was spoken by Big Al… But since he’s been retired from the Fed Reserve, he’s back to extolling the virtues of owning Gold…   And this article is Big Al talking about Gold, and it can be found here: https://www.zerohedge.com/news/2019-09-06/greenspan-rising-gold-price-shows-investors-want-hard-assets-will-increase-value

Or, here’s your snippet: “During a CNBC interview, former Federal Reserve Chairman Alan Greenspan said gold prices are surging because investors are looking for hard assets that they know will have value in 20 or 30 years.

Gold is up more than 21% on the year and is trading at levels not seen since 2013.

During the interview, Greenspan focused on an interesting fundamental he thinks is driving both the bond and gold markets – the aging population. He said there has been a shift in time preferences as people recognize they will likely live longer and they will need to finance those longer lives. This, he says, is increasing the demand for hard assets like gold.

“One of the reasons that the gold price is rising as fast as it is … that’s telling us essentially that people are hard resources which they know are going to have a value 20 years from now, or 30 years from now as they age, and they want to make sure they have the resources to keep themselves in place. That is a clearly fundamental force that is driving this.”

Historically, gold has served as an inflation hedge and a wealth preserver. It makes sense that investors concerned about maintaining their savings well into the future would turn to gold. This is especially true given the likelihood of increasing inflation as the Federal Reserve continues to try to prop up the economy with low interest rates and quantitative easing.”

Chuck again… Well there’s something there in the idea that Big Al is once again talking about owning Gold… Was he told to keep his trap shut about Gold while running the Fed Reserve? It sure appears to be the reason to me… 

Currencies today 9/9/19 American Style: A$.6866, kiwi .6438, C$ .7601, euro 1.1026, sterling 1.2365, Swiss $.9911, European Style: rand 14.6992, krone 8.9411, SEK 9.6620, forint 298.97, zloty 3.9335, koruna 23.4593, RUB 66.70, yen 106.99, sing 1.3795, HKD 7.8409, INR 71.64, China 7.1147, peso 19.53, BRL 4.0606, Dollar Index 98.37, Oil $56.94, 10-year 1.59%, Silver $18.18, Platinum $955.91, Palladium $1,552.53, and Gold… $1,509.74

That’s it for today… Things continue to be quite strange in the markets, to an old markets person that have been around them for 46 years… But, it is what it is… and I can’t do a thing to change it, so…   Well…  I treated myself to some great smoked chicken thighs yesterday… Son Andrew and his family (Rachel and Braden) joined me for dinner…  Good friend, Dennis Miller, is doing better these days, and he sent me a video of a guy giving his recipe for chicken thighs, and I responded to him saying “I already do that!”  So, we’re down to the proverbial cheese that binds with my beloved Cardinals… They’ve gotta keep the pedal to the metal…  The Blue Jays take us to the finish line today with their song: Maybe…. “maybe, I’m wrong” I do believe I’ve used that line many times through the years!  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

September 5, 2019

* The price of Oil jumps higher, delighting the Petrol Currencies!

* The BRICS GPD outpaces the combined GDP’s of the U.S. and Eurozone!

Good day… And a Tub Thumpin’ Thursday to you! I get to go to the day game at Busch Stadium today, so I’m geeked about that this morning… Man a crazy game last night, back and forth with lead changes, but in the end, my beloved Cardinals lost… UGH!  Have I got some articles for you today… I feel like I should stop writing and just provide articles to read… Nah, just kidding, but that’s what today is going to seem like… So, grab a cup of coffee, and let’s go! The Babys greet me this morning with their song: Back On My Feed Again… 

Well bust my buttons! The currencies stayed off the mat yesterday, and added to their small gains from Tuesday… Very interesting, eh? Has the dollar run its course? Or is this just a correction, and we’ll see the dollar bugs again soon enough?  Well, that’s always the question, you would think that a currency guy would be able to come to the right answer every now and then don’t you? HA!  It’s always an educated guess… that’s just the way it is…  And when you get caught up in Traders’ talk, they can steer you wrong, for sure! 

For us currency investors, I’m just happy that the currencies got up off the mat that they had been knocked to in recent weeks by the dollar bugs. For those of you keeping score at home, the Dollar Index has fallen from 99.28 on Tuesday morning, to 98.18 this morning… That pretty much tells you the dollar has been slipping… How long this will last, is the $64 question. I’m thinking that tomorrow’s Jobs Jamboree holds the key…  For the rate cut campers will be looking for a weak number that would help sway the Fed Heads to cut rates later this month, and that would not be good for the dollar…  A good strong print? that would turn this dollar weakness around on a dime… That’s my story and I’m sticking to it! 

The price of Oil has bumped higher to a $56 handle in the past 24 hours, and I think the move higher is tied to two things… 1. The U.S. announced additional sanctions on Iran, and 2. The Russians decided to join the Saudis and cut Oil production…  This move higher in the price of Oil has the Petrol Currencies looking perky this morning… 

OK, in the movie the Big Short, Michael Burry was the star investor who bet against the mortgage bubble, and won, in the end…  Well, he’s been pretty quiet lately, but this week he talked about what he feels is the next bubble to blow up, and that is the stock index funds…  Let’s listen to what Michael has to say about that, and this was taken from here: https://capital.com/michael-burry-compares-index-funds-to-subprime-cdos   

“passive investments such as index funds and exchange-traded funds are inflating stock and bond prices in a similar way debt obligations did for subprime mortgages more than 10 years ago.
The flows will reverse at some point, he said, and “it will be ugly” when they do.
“Like most bubbles, the longer it goes on, the worse the crash will be.” – Michael Burry  

Chuck again…  Wow! if you watched the movie the Big Short, you know how hard he worked and researched to come to his decision that the mortgage sector was a bubble… And he was correct, then… I’m just saying… 

Well, when they were formed, I knew in my heart of hearts that it wouldn’t take long for them to be bigger than most people thought they would be. And it’s with that, that I have for you today some news about the BRICS remember, the BRICS (Brazil, Russia, India, China, S. Africa)? Of course you do, for you are an astute person that reads the Pfennig! So, it happens to be that the BRICS combined GDP now outpaces the combined GDP of both the U.S. and Eurozone! WOW! And if things continue on path, they should be larger in GDP than the combined countries of G-7 by 2020! Who’da thunk?

OK, this thought came to mind when I read that yesterday… Remember when I told you that China suspended rare earth minerals to the U.S.? (we discussed then what rate earth minerals are used for), and caused the U.S. to find other sources… Like South Africa and Brazil…. What would happen, say, should the other countries of the BRICS vote and decide that S. Africa and Brazil cannot sent their rare earth minerals to the U.S. ?

• Just for fun… I feel like Wikipedia here, but here goes… here is a list of the rare minerals: Neodymium. This is used to make powerful magnets used in loudspeakers and computer hard drives to enable them to be smaller and more efficient. …
• Lanthanum. …
• Cerium. …
• Praseodymium. …
• Gadolinium. …
• Yttrium, terbium, europium.

And here his a list of things that use these rare earth minerals: many modern technologies, including consumer electronics, computers and networks, communications, clean energy, advanced transportation, health care, environmental mitigation, national defense, and you guessed it… that all important… many more!

Just food for thought on this Tub Thumpin’ Thursday…

Boy, I’m on a roll today… Better not stop me! He’s on a roll… better not stop him… It’s like when the German bombed Pearl Harbor! HAHAHAHA… That famous line from the Animal House movie, as been used by me several times through the years, and each time, I swear, I receive one or more emails informing me that the Germans didn’t bomb Pearl Harbor, the Japanese did!  Just shows to go ya that people read what they want to read, and pass over the other stuff… 

Gold had another wild and wacky day, with the price manipulators, but in the end it gained to $1,552 on the day… But this morning it’s starting out on the downside, with an $8 loss so far… That has time to correct, so let’s see how it unfolds today, eh? 

The U.S. Data Cupboard, yesterday, had the Fed’s Beige Book for the markets to read yesterday, and in it the majority of the Fed regions were reporting slower economic growth… the markets took this as an indication that the Fed will cut rates at the next meeting…  I’m not sure how they got that from what I read, but they’re on a roll, better not stop them!  

The U.S. Data Cupboard today, has some stupid prints, and a good one… July Factory Orders will print… I expect this print to be somewhat weak… which would go along with the Durable & Capital Goods Orders weakness that was reported previously… On Friday, the Jobs Jamboree for August will print…  Right now the so-called experts are calling for job growth at 170,000, Recall that June’s number was 164,000…  but those are BLS numbers, which are not worth a wooden nickel!  

To Recap…  The currencies stayed off the mat that had been knocked to in recent weeks by the dollar bugs, and added to their gains from Tuesday. Is this the end of the dollar’s run? or is just a correction?  The $64 question, for sure! Chuck highlights stories about stock index futures, and BRICS and poses a question that could lead to real problems… 

For What It’s Worth… Yesteday, I received a note from a longtime reader, Bernard, who sent me a link to an article on Wall Street On Parade, it’s written by Pam Martens, someone that I’ve long admired for her intellect, and ability to explain things to people… This week she was writing about how the 1-year Treasury Bill outperformed the DOW… And it can be found here: https://wallstreetonparade.com/2019/09/a-one-year-treasury-bill-beat-the-stock-market-over-the-past-year/

Or, here’s your snippet: “One year ago, investors could have purchased a one-year U.S. Treasury Bill with a yield of 2.47 percent. As of this past Friday’s closing price of the Dow Jones Industrial Average, the Treasury Bill would have beaten the performance of the Dow over the past year by more than three-quarters of a point (not taking into account dividends on the Dow stocks).

On Friday, August 31, 2018, the Dow closed at 25,964.82. This past Friday, August 30, 2019, the Dow closed at 26,403.28 That’s a gain of 438.46 points in a year or a return of 1.68 percent versus earning 2.47 percent on a T-bill.

You would have been saved yourself the agony of living through the 800-point market plunge on August 14 and the 3746-point rout in the Dow from the close of trading on November 30, 2018 until Christmas eve – marking the worst December performance since the Great Depression.”

Chuck again… And don’t forget, as Pam won’t let you in her article, that stock performances were aided by a HUGE tax cut, during that year! Oh, have I told you that publishing guru, and writer extraordinaire, Bill Bonner, has another trade for us? Buy Gold, sell the DOW… Hmmmm… Sounds like a good plan to me, and you know me, I love it when a plan comes together!

Currencies today 9/5/19 American Style: A$.6820, kiwi .6390, C$ .7577, euro 1.1060, sterling 1.2337, Swiss $.9834, European Style: rand 14.8060, krone 8.9787, SEK 9.6563, forint 297.86, zloty 3.9240, koruna 23.7438, RUB 66.38, yen 106.65, sing 1.3834, HKD 7.8392, INR 71.78, China 7.1546, peso 19.65, BRL 4.1366, Dollar Index 98.18, Oil $56.17, 10-year 1.50%, Silver $19.25, Platinum $981.94 (nice to see Platinum finally joining the metals rally, eh?) Palladium $1,558.67, and Gold…. $1,542.66

That’s it for today and this week…  Short week, but those things happen all the time, no biggie…  Cardinals need to get back on the winning track today, this is no time to go on a losing streak!  I was talking with my good friend Dennis Miller, a lifelong Cubs fan, the other day, and he was not happy that the Cubs had fallen 3 games back of the Cardinals… I told him, not to worry there were 7 games left between the two teams, plenty of games to make up the ground…  Not that I want to see that… But it’s possible! Hope for the best, plan for the worst!  AC/DC takes us to the finish line today with their song: Rock And Roll Ain’t Noise Pollution…  I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday, and please Be Good To Yourself!

Chuck Butler

September 4, 2019

* Currencies get up off the mat!

* Eurozone Retail Sales in July go negative! 

Good day… And a Wonderful Wednesday to you! Another near no-hitter was pitched by the Cardinals Jack Flaherty last night… he was sailing along, and one mistake pitch… It’s about the 3rd time in the past month that he’s come close to a no-hitter! He’ll get one yet… he’s only 22 years old! Cardinals win, but so do the Cubs, so our lead on the 2nd place Cubs remains at 3 games, with one less game on the schedule… Can’t everyone just get along with each other these days? Another shooting here in St. Louis… I have a novel idea… Stop reporting them in the paper, TV, radio, internet, and let’s see if that slows the shooters down… I’m just thinking out loud here… Shooting Star greets me this morning with their song: Last Chance… “to be good to yourself”… my kind of lyrics!

Well, the currencies had a small, minor-like bounce upward yesterday VS the dollar, and Gold finished the day up officially by $2, but from my number yesterday it was up $15 at $1,545… So, not a good day all round for the dollar bugs. Don’t you feel sorry for them? NOT! They’ve had the upper hand on the currencies (not Gold & Silver) for most of the summer, and all the kings men and all the kings horses will put the dollar back together again, because… Well, it’s still in a strong dollar trend… Remember, a trend my be your friend, but it’s not a ONE-WAY-STREET!

And if you thought Gold had a good day yesterday, on a percentage return basis, Silver out gained Gold and trades today with a $19 handle… I’ve been telling people for a couple of years now that there would come a time when Silver was in high demand, and the supply would be short… Well, it appears that we’re approaching that time… Yesterday, the GATA folks sent me a blurb that said, Swiss gold fund manager Egon von Greyerz says Silver to Gold ratio will narrow, and become more normal, and that there won’t be any metal available… WOW! OK, so it’s just one guy, but Shoot Rudy, I’ve been saying that for two years now! And it’s finally here! I don’t know if you’ve noticed or not, but Silver has been quite stealth in its upward move lately… I really do believe that Silver’s next stop is $20… I’m just saying…

I don’t see the dollar losing too much ground, because, yesterday, Fed Head, Eric Rosengren, talked about there being no need to cut rates… Now, Rosengren is not the last and final word on a rate movement folks, but… if he’s the only one speaking, like yesterday, he’s the only one being heard!

Well, over in the U.K. PM Johnson has made a mess of things… threatening to suspend parliament, and then losing a confidence vote… What did he think they would do, applaud him for wanting them to go home? It’s not they’re 6th graders folks… And now a snap election is probably going to be needed to clean up everything… That should put tremendous weight on the currency pound sterling… Because, I know you all know, why I’m saying that… Because…. Everyone sing along, or follow the bouncing ball… Traders don’t like unknowns! How many times through the years, have I told you that one? Plenty for sure! That’s why I thought for sure you would already know what I was going to say!

Well looky there! This proves that for once and for all, that even a blind squirrel can find an acorn…  Yesterday, I told you that I believed that the ISM Manufacturing Index would fall below 50 when reported later yesterday… And looky there! That’s exactly what happened as the ISM fell from 50.5 to 49.1 a pretty big drop as far as I’m concerned…  A little piece of history here folks, are you ready?  Back in the early days of my old place of business, I wrote something that caused a real stir amoung the management…  I pointed out that the PMI (that’s what it used to be called) had printed to consecutive months at 45, and that I was taught by Hy Minsky that when that happens the economy is in a recession. No matter what the officials that are in charge of calling recessions say, we’re in a recession…    

You see, there had been no mention of a recession in the media, economists were convinced that the U.S. economy would skate through recession gauntlet, but there was little old me, claiming that we were in a recession!  And then months later, when the NBRD, the folks responsible for calling recessions, actually said that the recession had started months earlier, thus proving me correct!  

Come to think of it, I really stirred the drink a bit at times at my former place of business… They were a mortgage company that had a bank, and in 2003, when I wrote a write paper about The Year of The Euro, I had a section in the paper that talked about how there was a housing bubble brewing in the U.S. and it would end up very ugly…   The mortgage guys had a hissy fit, with me saying that…  But a couple years later that too had to apologize for the things they said to me…    

And then there was the time… no wait! Chuck, we don’t have all day to spend talking about your calls that got you into trouble, that then worked out!  OK, but that was fun while it lasted, right?  

OK back to regular programming… The euro tried to get up off the mat yesterday, but was held back this morning by a rotten Retail Sales print for July from the Eurozone… Eurozone July Retail Sales were negative -0.6%, and the Year on year number fell to 2.2% VS 2.8% last year…  I’d say that a recession is in place in the Eurozone, folks… One that even the strong economy of Germany will pull the rest of the Union out of the red…   

Well, the protests that we talked about last month in Hong Kong continue to be a real problem for the country… Could this be the center point of a confrontation between the U.S. and China? I doubt it, but stranger things have caused wars… Remember what started World War I?  it was the assassination of the Archduke Franz Ferdinand of Austria and his pregnant wife Sophie.  So… strange things can happen folks… 

Protests are also happing in S. Africa…  That place is a real mess folks, and has been for years… I used to say that I wouldn’t touch the S. African rand with YOUR ten foot pole, and I think it’s even more appropriate now! 

Do you recall me talking about and old friend, Rob Vrhijof, and him saying that he thought the Swiss franc would do well in the coming months, and I questioned that based on the fact that Switzerland has negative deposit rates, but said if anyone knew, he did…    Well, I noticed that when the euro was dropping like a rock last week, the franc was bumping higher… Strange I thought at first, and then it hit me!  A real V8 face slap!  Of course…  The euro was once one of those so-called safe haven currencies, along with francs, and yen, and Gold…  But with the shenanigans of the European Central Bank  (ECB) the euro’s status as a safe haven currency was in trouble, which made the franc even more appealing…   Good call Rob!

The U.S. Data Cupboard yesterday, had the aforementioned ISM Index  and Construction Spending, which in July was negative, and in August only rose 0.1%, so this sector is not doing too well, right now folks…  There’s not much on the docket today, except the Beige Book fed writings…

To recap… The currencies got up off the mat yesterday, and rallied along with Gold for once in a blue moon… The euro’s move was held back by a negative print for July in Retail Sales. Chuck believes the Eurozone is in a recession already…  Chuck points out the steal-like move in Silver in the last week, with the next stop for Silver being $20.  And then we go back in time to talk about things that Chuck called out, and got in trouble for, only to be proved correct later…

For What It’s Worth….  Well, this has been a long time coming… U.S. Investors finally getting off their duffs and buying Gold… Well, they’re buying the Gold Index, which isn’t really Gold, but it does follow Gold’s price, and in essence, the fund has to buy the real Gold to match the index purchases by customers so in the end, it works out for Gold…  This article from Bloomberg tells us that the Gold Index fund is quite popular these days and it can be found here: https://www.bloomberg.com/news/articles/2019-09-02/gold-etfs-surge-more-than-100-tons-in-august-as-havens-in-vogue

Or, here’s your snippet: “Investors are going for gold in a big way. Inflows into bullion-backed exchange-traded funds topped 100 tons in August to hit the highest since February 2013 as the trade war worsened, risk assets took a knock, and central banks signaled looser monetary policy.

Holdings rose 101.9 tons, bringing total known assets to 2,453.4 tons as of Friday, according to data compiled by Bloomberg. It was the third straight monthly increase after the addition of a combined 154.1 tons in June and July.”

Chuck again… Yes, a real short-n-sweet article today, but the important part is that individual investors are finally seeing Gold as that safe haven investment… Too bad their broker told them the only way to own it was in an index… I’m just saying… 

Currencies today 9/4/19 American Style: A$.6790, kiwi .6352, C$ .7507, euro 1.1020, sterling 1.2195, Swiss $.9844, European Style: rand 14.8575, krone 9.0582, SEK 9.7565, forint 298.40, zloty 3.9373, koruna 23.4428, RUB 66.83, yen 106.24, sing 1.3858, HKD 7.8405, INR 72.01, China 7.1717, peso 19.82, BRL 4.1767, Dollar Index 98.59, Oil $54.84, 10-year 1.49%, Silver $19.41, Platinum $974.13, Palladium $1,5343.83, and Gold… $1,538.56

That’s it for today…  A little later than usual… sorry…  One of our friends that attended the BBQ last Saturday, that we hadn’t seen in a few years, stopped by my writing desk and looked over the pictures I have put up… She really liked one where Alex was about 3 or 4, and Andrew was in High School, and they are sitting next to each other eating popsicles, on a hot summer day… And Alex is looking up at Andrew with such admiration… I told her it was my favorite, and that’s why it’s smack dab in front of me! The Beatles take us to the finish line today with their song: Drive My Car…  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler 

 

 

September 3, 2019

* But dollar bugs won’t be distracted, they keep buying dollars!

* Chuck takes us back to his days as a cashier in Des Moines, Iowa! 

Good Day… And a Tom Terrific Tuesday to you! What a great weekend here in my home town… The rain stayed away for the BBQ on Saturday, after coming down in buckets on Friday night, and then Sunday and Monday were just absolutely beautiful… I know that’s not fair, to the folks in the SouthEast, getting hammered by wind and rain from the hurricane Dorian. But, as Annie sang… The sun will come out tomorrow… So, hang in there, be careful, and don’t take any chances with mother nature! We ended the week yesterday with our neighbors, Paul and Lenore, sitting out back watching the Cardinals win again, and then had a wonderful dinner out on the deck… Marvin Gaye greets me this morning with his song: Inner City Blues… “makes you wanna holler, the way they do my life”…

Well, another round of tariffs went through on Chinese goods this past weekend… They had had been held back awaiting for any signs of progress in the negotiations, but since that didn’t happen, the tariffs went into place, and the stock jockeys, who last week bought tons of stocks on the thought that the Trade War might end, are not so much thinking that today, as stock futures are down big this morning…

And through all of these gyrations with stocks, the dollar continues to be bought… The dollar has now pushed the euro down below the 1.10 level, and it’s falling fast folks… (my English teacher would be proud of me using that alliteration! ) But that’s not going to save the euro… And right now I don’t know what can, besides a fall in the dollar, which doesn’t appear to be on anyone’s docket right now…

Longtime readers know that when the euro is getting sold, there’s not a currency in the world that can survive not being sold too… The Chinese kept the renminbi steady Eddie during the 2007-2008 financial meltdown, but once the first round of Quantitative Easing was announced, in March 2009, the Chinese let the dogs out to run VS the dollar… And soon the dollar was getting sold like Funnel Cakes at a State Fair! But… that’s not happening now… so we have to live with a stronger dollar… And that’s bound to make the President madder than a we hen! But so far, the dollar bugs have given the President the deaf ear treatment…

In addition, longtime readers, know that I believe the next recession is going to be a doozy! The Fed normally cuts 5% in interest rate cuts during a recession… We’re not even 1/2 the way to 5%… So, where will the extra arrows come from to stop the recession this time? Negative rates? More Quantitative Easing? Or how about both? That’s what I’m betting a shiny quarter on… Both of those being used by the Fed to stop the recession… But, by the time the Fed gets around to admitting they were wrong about the economy, and begin to deal with the recession, it’ll be too late, baby, now, it’s too late, though we really did try and make it!

Will the recession come still this year, or will it come in 2020? I doubt that it’ll be stubborn and wait any longer than 2020… And at the end of last year, I told you that by the end of this year, we would be in a recession… So, I’m still keeping a light on for that forecast!

Oh, and don’t look now, but there are some glaring signs that a recession is closer than we think… 1. The Bond curve inverted, 2. GDP is shrinking, 3. Corporate Earnings growth has slowed to 2.3% (was above 7%) 4. Remember last month when I told you that the Manufacturing Index was very close to going below 50, which would mean manufacturing is contracting? Well, the August ISM (manufacturing index ) will print today, and I expect it to fall below 50 at 49.9… 5. About a month ago I told you that Cass Freight shipments were dropping like flies, well, May they were down 6%, June they were down 5.3%, and now July they were down another 5.9%… Do you see a trend here? I thought you would! 6. CAPEX (capital expenditures) are way down, folks… There’s no economic recovery without CAPEX rising… So, there you go… I’m sure there are more… like the economic data, even the data that’s hedonically adjusted, continues to look weaker with every print…

Not that I want to see another financial meltdown… But a recession is something that should be welcomed by economies, for they clear out the excesses, and allow economies to come back stronger than ever… But the Fed has insisted on making sure we all know that they are smarter than the rest of us, and have tried to limit the effects of a recession, before the excesses were cleared out, and we’ve kicked that can down the road, since the Big Al Greenspan days!

Well, I got to see former colleagues, Jen and Chris at the BBQ last Saturday, and we all agreed that this current situation is bad, and can’t keep going like it is… But does that mean the economy will collapse today? No! Tomorrow? No! Next week? No! I think you get the picture… There’s not one person on the God’s green earth that can pinpoint exactly when the economy will collapse… I call events that could lead to the beginning of a collapse, snowflakes… You know like a snowflake can be the final snowflake on a mountain of snow that causes an avalanche… We’ll have our “snowflake moment”, but by the time we wake up or come back to work one day after a 3-day weekend, or whatever, it’ll be too late… Sorry, game over, take your ball and go home, stuff… I’m just saying…

My neighbor asked me if he could still buy Gold… I said, why not? I asked him, does your bank pay you much on your deposits, whether they be demand deposits, savings deposits or CD’s? So, let’s look at it this way… At least with Gold, you may not receive interest, but… You have a store of wealth, that has never gone to zero! The dollar has lost 95% of its value since the Fed took over in 1913… I just thought I would throw that tidbit out there… to compare…

Gold was getting any love on Thursday and Friday last week, but it’s difficult to keep a good currency/ metal down… And It recovered by $7, yesterday, as the Trade War ratchets upward… Just so you know… Central Banks around the world, sans the U.S., U.K., Japan, and Europe, are buying physical Gold by the truck loads each month… Are the Central Banks in Russia and China smarter than those in the U.S, U.K. Japan and Europe? Well, I do believe they are! Sorry Jerome Powell, Mario Draghi, Mark Carney, and Mr. Kuroda, with all respect, I would have to put my money on the Central Bankers of Russia and China… But then I would think that most people that read this letter would know that by now!

While on the subject of Gold & silver, Ed Steer printed his latest graph showing the number of days of production it would take to equal the amount of ounces of Gold & silver that are sold short… The reason I bring this up, is that Silver has now moved to 200 days of production needed, and Gold 130 days… As these two metals rise, don’t you think things get a little hairy for those bullion banks holding all those short positions? I personally hope that it gets so hairy that a few of them have to go into receivership! That would teach them!

Wouldn’t that drive you crazy? knowing you held all these short positions while the asset was moving higher each week?  I’ll tell you a story that relates to this… A long time ago, I was working in a brokerage/ commodity house in Des Moines, Iowa, And we had broker that made huge bets with commodity trades on something I won’t talk about… I being the cashier, kept issuing his clients margin calls, but he persuaded the management team that he was right, and it would be be right on the night, eventually… Well, one Monday morning, I arrived to hear that the project had fallen through, and the broker had checked himself into a mental facility… I then had to make all these calls to the clients telling them their positions were being sold out, and they needed to supply additional funds…  

That led to SEC investigations and depositions being taken… I had an SEC regulator, take me into a hallway, and start poking me in the chest, and telling me to start remembering the events better…  I told him to keep his hands off me, and that I would never forget the events! And I still haven’t! 

So will we hear about some Bullion Bank traders checking themselves into mental facilities?  Now, that would make this whole thing go full circle wouldn’t it?  

OK, the U.S. Data Cupboard today has the ISM manufacturing index that I’ve said would go below 50…  Then we’ll go along through the week with some various data prints tht don’t mean too much, until we get to Friday’s Jobs Jamboree for August…   I had a little back and forth with a writer last week that sent me a note that said, Chuck, you’re wrong about the U.S. consumer being tapped out, did you see how strong Personal Spending was In July? (it printed last week) …  I responded it, Haven’t we already talked about this before? July Retail Sales were strong, because of the back-to-school sales, and therefore Personal Spending would also be strong in July for the sale reason!  Besides, it wasn’t cash being spent, it was for the most part credit card purchases! 

To Recap…  The Trade Ward kicking into a higher gear this past weekend, as a new round of tariffs began… The Southeast it getting whipped around by Hurricane Dorian.   The dollar continues to get bought, despite all the goings on…  Chuck talks about the next recession, and has a flashback to the 70’s and a situation in Des Moines… 

For What It’s Worth… Last week, I received an email from my longtime friend, and former boss, Frank Trotter… He sent me a link to an article that I think I could have written… It’s about the Budget Deficits and how no one seem to care about them any longer (except me of course!) and it an be found here: https://www.washingtonpost.com/opinions/were-making-a-high-stakes-gamble-on-the-deficit/2019/08/25/82b0494e-c5c5-11e9-b5e4-54aa56d5b7ce_story.html?noredirect=on

Or, here’s your snippet: “It’s getting harder and harder to write these budget columns, because it must be obvious to almost everyone by now that hardly anyone in Washington (or perhaps any place) cares about the budget deficits. The assumption is that we can raise spending and cut taxes forever — or until some crisis occurs that forces us to do involuntarily what we won’t do voluntarily.

There is a bipartisan consensus of sorts that the presumed discipline of balancing the budget — discarding the least useful programs and increasing the least burdensome taxes — has been overtaken by expediency. Why bother to curb budget deficits when there seem to have been few, if any, damaging consequences in letting them continue? Worse, deficit reduction now might raise the risk of recession.

Just for the record, it’s worth reciting the basic facts in the latest report from the Congressional Budget Office. It demonstrates the nonchalance with which the budget is now treated by both parties.

According to CBO estimates, massive deficits stretch as far as the eye can see. Between 2020 and 2029, the projected deficits total $12.2 trillion, which is nearly $1 trillion more than was estimated in May. In every year after 2020, the deficit exceeds $1 trillion and is more than 4 percent of gross domestic product (GDP). By 2028, the projected deficit will be 5 percent of GDP.”

Chuck, and here’s the important part… The writer goes on to say: “This is a high-stakes gamble. The possible ways in which a world sated with dollar securities could trigger a financial or economic crisis are many. The consequences of a run on the dollar — the currency most held by multinational firms, international banks, investors and traders — would clearly destabilize the world economy. A prudent society would recognize this and take preventive steps.

We are not prudent. We are just raising the risks, seemingly determined to learn how much we can test the bounds of our ignorance.”
W have become… Perfectly Numb… 

Currencies today 9/3/19 American Style: A$.6732, kiwi .6293, C$ .7483, euro 1.0933, sterling 1.2037, Swiss $.9906, European Style: rand 15.1340, krone 9.1554, SEK 9.8823, forint 302.55, zloty 3.9940, koruna 23.6838, RUB 66.71, yen 106.12, sing 1.3929, HKD 7.8435, INR 72.36, China 7.1666, peso 20.09, BRL 4.1567, Dollar Index 99.28, Oil $54.07, 10-year 1.48%, Silver $18.46, Platinum $940.06, Palladium $1,545.87, and Gold… $1,529.88

That’s it for today…  I really don’t want to place the kiss of death on my beloved Cardinals, so I’ll just say they had a good 3 day weekend of 5 games! We had a blast at the Annual Butler Labor Day BBQ & Pool Party! A great time was had by all (I think!) I guess I estimated the amount of meat to cook as there was very little leftover, after everyone had eaten…  Good job Chuck!  I really didn’t want to wake up this morning… But I did, and then I thought to myself… Chuck you don’t get any gold stars for waking up early! HA!   Emerson, Lake & Palmer (ELP) take us to the finish line today with their song: Lucky Man…    Hey! they must be talking about me! Whenever I meet a new nurse, who wants to know my medical history, even though she could look it up, I tell her the history, and then add… And my friends call me “Lucky”!  HAHAHAHAHA    I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

August 30, 2019

Good day… And a Fantastico Friday to you! This is out of the ordinary, me writing on a Friday, but I’m going to do very little of the writing. Instead, I have a special treat for you today… 

A very long time ago, my longtime good friend, and former boss, Frank Trotter, introduced me to one of his colleagues. His name…. Michael Checkan. Michael and I struck up a conversation, and he told me of sitting in audience in San Diego, and listening to me speak about currencies and metals, and was quite impressed, and wanted to meet me… I can’t tell you how embarrassed I was, but happy that I had done well… Through the years, we’ve stayed in touch, Michael is a cancer survivor too… So, we have a bond… When I was speaking a lot, we ran into each other all the time. Good times with Michael… He was the person that introduced me to Rob Vrijhof, of whom I spoke of two weeks ago…

Ok, now we have that background… Late last week, Michael sent me an email, and in it was a letter that he had written about Gold back in 2007… But it’s even more in touch with what’s going on today than ever! And he asked me to share it with my readers, and I’m so happy to do just that… Enjoy!

T H E T  TALE OF THE TAELS
By Michael Checkan

A Hard Lesson about Hard Money Gold protects wealth. This lesson isn’t new. But we do have to rediscover it from time to time. Back in 1975, I was a senior officer with the world’s oldest and largest dealer in precious metals and foreign currencies, Deak-Perera. I learned a lesson first-hand that taught me about the importance of the “barbaric relic” … GOLD! Deak-Perera was one of the few financial institutions in the U.S. with a combined expertise in precious metals, foreign currencies, and international banking. As a result of this knowledge, they were invited by the U.S. State Department in April 1975 to assist the South Vietnamese refugees that were being air-evacuated into Guam and the U.S. as Saigon fell. Deak-Perera would soon be catapulted into the national limelight. Their role was the exclusive “money changer” for all five of the Vietnamese Refugee Camps. Y ou m ay recall , it was only as of J a n u a r y 1 , 1 9 7 5 t h a t American c i t i z e n s w e r e o n c e a g a i n permitted to legally own bullion gold. It had bee n illegal to own gold since 1 9 3 3 w h e n P r e s i d e n t R o o s e v e l t t o o k t h e U.S. o f f t h e g o l d s t a n d a r d a n d c o n f i s c a t e d gold. Unaccustomed as we were to handling displaced persons, it was nonetheless clear that even the most prominent of these refugees would be arriving at the camps with little more than the clothes on their backs and whatever valuables they were able to carry. Who knew what those valuables would be … but one thing was certain, they wouldn’t be drawing checks on their local banks. All banks in that impoverished country had been nationalized along with the rest of the economy. The cruel joke you heard was that Vietnam was a true cash and carry economy.

A Day That Changed My life May 1975 found me at Eglin Air Force Base, Florida, one of the 5 refugee camps. Two particular families are burned in my mind … Wearing what had once been an expensively tailored suit was a middle-aged man, trim and well spoken. He obviously cared deeply about his bedraggled family. He had been a businessman in Vietnam, in fact, a banker. But now his family’s total fortune was contained in the small dingy canvas bag that he hung on to for dear life. Even through all the adversity he and his family had recently experienced, there was still a glimmer of hope in his eyes. Despite losing his job, his home and his country, what he gazed upon in that canvas bag caused an expression of relief on his face. It was his golden anchor! It was his key to a new life in a new country. I was about to learn the role of gold in a crisis. He poured the contents of the bag onto the table. There, gleaming in the sun, were 24Karat gold TAELs … a form of gold bullion indigenous to South East Asia. Each weighed 1.2 ounces. (37.5 grams) of pure .9999 fine gold. They looked like wafers … thin sheets delicately wrapped in paper. It was Deak-Perera’s job to buy the gold Taels from the refugees, and, with the proceeds, issue traveler’s checks.

Further back in line, there was another refugee who was less fortunate than the banker carrying gold Taels. Much like the banker, he was a successful businessman before being uprooted with his family by war. He approached my table with two suitcases in-hand. Like his countryman with the Taels, he had worked very hard, saved extremely well, and carried all his worldly wealth in those satchels. But, there was one major difference. His wealth was in the form of Piasters, paper money issued by the Republic of Vietnam. These paper promises of a government that no longer existed were worthless. Can you imagine … a lifetime of toil for two suitcases filled with worthless paper? Worthless as well were the U.S. issued Military Payment Certificates (MPC) which carried the likeness of movie stars. Other items, even valuable diamonds, jade and loose gems, were hard to exchange on the spot for a fair price. Only gold had a quick and ready market. Before that day, I always knew that precious metals were an important asset.

But, after looking into the eyes of these two men and their families, I knew first-hand the value of gold and other precious metals—they held their value when nothing else did. Is the TALE of the TAEL still relevant today?

Does gold in 2007 offer the same peace of mind and protection to Americans that it has through 5,000 years of history? Absolutely! As an American, there are many threats to your hard-earned wealth. The most insidious is not military in nature. It is the weakening of the U.S. dollar.

For the United States, the invoices are piling up. The costs of military conflicts, out-of-control government spending, rising healthcare, and entitlement programs for the vast number of emerging baby boomers add up to a number well in excess of revenue. The only politically acceptable
solution is to print more money and devalue the dollar. A good friend of mine, Don MackayCoghill, the “Father of the Krugerrand,” and respected figure in the precious metals industry for nearly half a century, recently had the following to say on the subject of the weakening dollar and the future of precious metals … “Because the action that needs to be taken to begin to turn the ship around is politically untenable, the only way out for the politicians on both sides of the house is the well worn track of devaluing the dollar by dramatically increasing the money supply—what used to be reported as M3. Having been fairly bearish on precious metal prices for a long period, I have over the past eighteen months turned into a full-blown bull. For the past five years or so the gold price has, in my opinion, simply reflected the weakness of the US dollar. Over the next five years the driver is going to revert to the same driver that pushed gold to $850 per ounce in January 1980—INFLATION—and this time around it is my view that the forthcoming bull run is going to dwarf anything that has gone before it. It is not going to happen overnight, but all the building blocks are in place, and I expect the fireworks to begin in the next three to five years.” So, when gold prices go to the moon, and the dollar falls off the abyss, which would you rather hold as a fair representation of a lifetime of toil? Would you rather be holding two suitcases full of dollar bills, or a canvas sack full of gold?

Chuck Again… I hope you enjoyed the Tale of Taels…  and I’ll leave you with one question…. Got Gold?   Have a Fantastico Friday, and a lovely Labor Day weekend!