Author: admin

June 17, 2019

*Data in U.S. is so-so, certainly not great!

* Fed’s FOMC meets this week… get out the gameboards! 

Good Day… And a Marvelous Monday to you! Yesterday was Father’s Day… I hope all the Dads out there had a Grand Day… It looked like it was going to be a rain filled day here, but then the sun came out, I fired up the Big Green Egg and watched the Cardinals play the Metropolitans. A beautiful day! Son Andrew was in Indianapolis with his club water polo team qualifying for the Junior Olympics. Son Alex is still in Montgomery, Alabama, doing clinical work. From the pictures he’s sending home, he’s become quite the fisherman while away! Daughter Dawn was here, along with her family, and daughter Rachel was here… I always get a little misty eyed when it comes to Father’s Day, for it’s when I feel a deep pang and think about my dad… He’s been gone for 24 years now… Seems like an eternity to me… The Beatles greet me this morning with their song: A Day In The Life, from the Sgt. Pepper’s Album.

Well, last Friday wasn’t kind to the currencies… As the recent runup in the currencies VS the dollar has been all wiped away… it’s like it never happened, as the cleanup company’s crew advertises…  The dollar bugs used the currencies like a punching bag all day… The U.S. Data on Friday was interesting and looked like this: Retail Sales were up, but didn’t meet expectations, Industrial Production was up 0.4%, but all that did was recover the negative -0/4% in April, so flat for the last two months, And Consumer Sentiment lost 3 points to 97… But the dollar bugs figured it was all good enough, and went to work on buying dollars and selling non-dollars…

And of all things they took the uptick in Retail Sales and claimed it was strong print! See? These guys can take anything and put the spin on it to make it sound amazing… the Spin Doctors I call them, and not the ones that sang: Two Princes!  

After a good day on Thursday for Gold, when it climbed $8.80, it was subjected to a ton of short Gold paper trade on Friday, and lost 80-cents on the day… So, not as bad as it could have been, but certainly not as good as it should have been, without the short Gold paper trades. I had a different way of thinking about the price manipulating the other day… A dear reader sent me a note and said, “I don’t mind the price manipulation, while I’m buying Gold”… And I thought… Yes! The price manipulators are doing us a Big Favor, by giving investors one buying opportunity after another, and after another, and after another! So, now, I’m happy the price manipulators are there, because they’re keeping the price of Gold down for investors to buy in… For once you have your Gold, it’s there, it’s your store of wealth, and you’re not going to sell it… Like the old commercial used to say…. Set it and forget it… Well, with Gold, you buy it and forget it!

The shiny metal is getting sold this morning to the tune of down $5 in the early trading…  And the euro, which fell to 1.1205 on Friday, is attempting to recover some of its lost ground this morning…   The Big thing on the calendar this week is the Fed’s FOMC meeting on Wednesday…  Let’s face it, the dollar bugs don’t know what the Fed is going to do or say, but they went out on a limb and bought dollars like funnel cakes at a State Fair!  

Seems like putting cart before the horse…   Because while I don’t think the Fed will cut rates this week, they could very well, begin to grease the tracks for the next meeting to cut rates…  And that wording will be important to the markets, for like I said the other day… If the Fed hints at a future rate cut, it’s about as good as an actual rate cut… And then what are the dollar bugs going to do with all those dollars they bought on Friday? 

Speaking of the euro… last week President Trump said that the euro was undervalued. And I agree with him… But… let’s not stop there… The euro VS the dollar is over 22% undervalued, when you use the Purchasing power parity model that the OECD uses… For a very long time, years ago, people would use what they called: The Big Mac Index, which priced a Big Mac in every country’s currency, and compared the cost VS a dollar. Well, even using the Big Mac Index, the euro is still undervalued… not as much undervalued as the OECD model, but still about 15%…

So, just for grins… let’s take a price that somewhere between the two PPP models, and say the euro is undervalued by 20%… At 1.13 (round price) adding 20% to the price would move the euro to be around 1.35… now that would be more like it in my book! An old colleague of mine, used to use the Big Mac Index to help him forecast currency movements. The thinking here is that eventually a currency will rise to or fall to its purchasing Power Parity..

Well, as I’ve long said now (since 2009), that these kinds of fundamentals are no longer used to value currencies… These days, it’s all about Trader Sentiment… Now a trader might be leaning toward a currency and sees that it’s undervalued in PPP, and he might make a call for that currency, or he may not… What’s he really feeling?

Feelings… nothing more than feelings… no wonder everyone is so darn scared of hurting someone’s feelings these days! But I digress and need to move along to something else now… 

Well, the U.S. Data Cupboard doesn’t have much for us to see this week, a couple of Housing reports, is about it… So, the Fed’s FOMC Meeting on Wednesday will be the big Kahuna this week… It’s one of those two-day meetings, so the Fed Heads will have to open the closets and get out the board games to fill the time between Tuesday morning and Wednesday afternoon…  

To recap… The currencies got whacked on Friday…  And Chuck’s not seeing the reason for the whacking either! The dollar bugs pointed to a pick up in Retail Sales, but the actual print didn’t meet expectations, but that didn’t stop the dollar bugs from buying dollars!  Gold held onto to its gains from Thursday on Friday ending down just 80-cents, but the shiny metal is down $5 today so far…  The Fed’s FOMC meets this week… Get ready to listen to what they have to say!

For What It’s Worth….  Well, I was so glad to see this in my email box this weekend… It’s a note from MarketWatch.com about how the Bond Guy, Gundlach is buying Gold… and it can be found here: https://www.marketwatch.com/story/bond-king-jeffrey-gundlach-bets-on-gold-and-rings-the-alarm-bell-on-potential-us-recession-2019-06-14

Or, here’s your snippet:”Trade tensions are also one reason DoubleLine Capital Chief Executive Officer Jeffrey Gundlach now sees a bigger chance of a recession hitting U.S. shores in the not-too-distant future.

Providing our call of the day, Gundlach predicted a 40% to 50% chance of a U.S. recession within the next six months and a 65% chance of that happening in the next 12 months, in a webcast to clients late Thursday, according to a roundup of his comments from Reuters and other media outlets. He said signs of a slowdown on the global economic front are also a worry.

No doubt, the calls for the Federal Reserve to head off a downturn are growing louder by the day. Gundlach is not expecting an interest-rate cut when the Fed meets next week. Instead, he notes the bond market is tipping two or three cuts by the end of the year.

As for where Gundlach is putting his money, he said he is “certainly long gold,” given expectations the dollar, which stands to take a hit if the Fed lowers interest rates, will close the year weaker.”

Chuck Again… Good call Mr. Gundlach!  But I’m putting higher percentages on the recession calls…  That’s all… 

Currencies today 6/17/19 American Style: A$.6870, kiwi .6508, C$ .7457, euro 1.1233, sterling 1.2591, Swiss $.9984, European Style: rand 14.8105, krone 8.7178, SEK 9.4797, forint 286.91, zloty 3.7929, koruna 22.7560, RUB 64.35, yen 108.68, sing 1.3705, HKD 7.8294, INR 69.91, China 6.9244, peso 19.16, BRL 3.8971, Dollar Index 97.46, Oil $51.94, 10-year 2.09%, Silver $14.80, Platinum $794.03, Palladium $1,455.69, and Gold… $1,336.40

That’s it for today…  Well, that was some turnout for the parade to honor the Stanley Cup Champion Blues on Saturday… Everywhere the camera spanned it was full of people…  I had this thought the other day about the Blues players… “It feels good to wake up a champion, doesn’t it?”
Perhaps the best part is realizing it was not a dream.  Cardinals come home after 10-game road trip 5-5, which isn’t bad. My dad told me as a young man that if a team plays .500 on the road, and .750 at home they should be near the top of the standings…  So, OK, the Cardinals were .500 on the road, now let’s see them go .750 at home!  The great Albert Pujols will be coming back to St. Louis at the end of this week…  The first time since his departure after the 2011 Championship…  If he had stayed in St. Louis, they would be fitting him for a statue opposite Stan Musial’s statue right now… But, he didn’t… and the game goes on…   Supertramp takes us to the finish line today with their song: Even In The Quietest Moments…  I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

 

June 13, 2019

* dollar fights back on Wednesday, despite some awful debt news… 

* Two Oil tankers are attacked, and the U.S. is pointing at Iran…. 

Good Day… And a Tub Thumpin’ Thursday! Blues Win, Blues Win, Blues Win… For the first time the 50 year history of the Blues, they are the Stanley Cup Champions! I can’t even begin to tell you what this means to me… I’ll have more on this as we go along… Today’s letter is going to be more about the Blues winning than currencies and metals, so if that bugs you… Sorry… Come back next Monday for regular programming! Laura Branigan greets me this morning with her song: Gloria… That was the Blues rallying song this year, and while I had to go to youtube to find it, because I can assure you it’s not on my iPod, it’s beautiful music to hear!

When I was 13 years old, in the 2nd year of the Blues existence my good friend, and live-in pal, Frank Weiler, and I, would take two city busses to the old Arena and buy tickets at the window to watch our Blues play hockey… The total cost for the night was less then $7.50, and since I worked all the time back then, that was no big deal for me… People would dress up in suits and fancy dresses to go to hockey games back in those days… But those were the days that I first saw hockey played live, and I was hooked!

The Currencies saw the dollar bounce back yesterday, let’s listen in to hear what Reuters had to say about this move: “The U.S. dollar gained on Wednesday as trade tensions and U.S. interest rate policy remained in focus after President Donald Trump expressed optimism over making a trade deal with China.”

Really? There’s optimism about a trade deal with China, a day after you, President Trump, threatened to raise tariffs if Chinese leader, Xi, didn’t meet with you at the G-20 later this month? Really? Oh brother, what line of BS will the PPT used next to cover their rears as they buy dollars to keep it from falling off a cliff?

I know I can hear you saying, Chuck, how do you know it was the PPT (plunge protection team) buying dollars yesterday? Well, I put one and one together, folks… you tell me how the dollar could rally when this was a headline news item…..
Federal Spending Tops $3 Trillion Through May for First Time; Deficit Hits $738 Billion…

And Gold? Wouldn’t Gold be soaring on news like that? But it didn’t, and actually lost a buck and change on the day…

Our Deficit spending is soaring through the roof once again, and I just keep thinking about how I kept saying that our budget deficit was forecast to be $1 Trillion this year and on out, and I would say that I bet that it was more like $2 Trillion per year soon… So…. Got Gold?

In the overnight news, 2 Oil tankers were attacked in the straits of Hormuz, with one set ablaze and sailors had to be rescued by the U.S. Navy…  This news has heightened the fears of a Middle East war with Iran, and the price of Oil jumped by a buck…. But Gold? no real movement so far today in Gold, even though with something like this, we should be seeing tons of buying in Gold…  I’ve highlighted this news in the FWIW section today, so in a bit you’ll be able to read more. 

OK… with 3 minutes to go last night, my youngest son, Alex, who’s doing clinicals in Montgomery Alabama, face timed me, and we began to talk about how cool this was, and as the time ticked away in the game, both of us were crying! I had received texts earlier in the day from two former colleagues at my old bank… They’re both from the South, and they were watching the game and cheering on the Blues… I said, that’s pretty cool, I’ve converted some Southerners into Blues hockey fans!

And then last night I received an email from a longtime customer, who’s a famous rock singer and guitar player, congratulating me, even though he was a born and bred Bruins fan… Lot’s of texts from friends and family… it’s was a trey cool night, for sure…

But the topper, well, the topper right below the winning of the Stanley Cup, was my good friend Duane, who stopped by with a bag of Jack-in-the-Box tacos… I fired up Gloria on my Bose speaker, and we hugged and reminisced about all the Blues hockey games the two of us had gone to together, throughout the years… Not so much in the past few, with me being sick and gone for most of the winter, and the increased costs of tickets for games, but there was a time when the two of us would see probably 25 games a year! Which most were weekend games, but some were not, and getting up for work all those mornings after, was not a sunshine and lollipops for yours truly!

We used to always stop on our drive home at the Jack-in-the-Box for tacos… it was our winners dinner… So, it was so apropos that he brought over tacos last night!

So… I can tell you that I really had begun to think that the Blues were the Cubs (before 2016) of hockey… We would have the best team in hockey for the year, and bow out in the first round of the playoffs, and there were other strange things that happened to keep them from going to the Stanley Cup Finals, much less winning it! Somebody pinch me… did this really happen? I’m still getting chills down my spine every time I think of the team that I’ve followed for 50 years, finally winning the Stanley Cup…

All the team members, even healthy scratches, get to hold the Stanley Cup above their heads and skate in a circle and then hand it off to the next team member… I think I should be given the chance to lift it over my head! But there are bigger fans tham me, I’m sure…

I played hockey in the school yard, and I played it on roller skates in gyms… let me repeat that for those that don’t think that’s something worthy of talking about… not rollerblades…. Rollerskates!!

They had 20,000 at the Enterprise Center last night to watch the game on the jumbotron… They had 25,000 people at Busch Stadium to watch it on the Big Screen, and another 5,000 at the Ballpark Village to watch it on the big Screen… I was so proud of my fellow St. Louisans they partied, but didn’t let things get out of hand, no property damage, no cars overturned, or burned, no looting, just good old partying into the night!

The U.S. Data Cupboard had PPI yesterday, and like recent prints it was not up to snuff, when considering sending price pressures into the inflation pipeline…  May PPI was 0.1% to the good…  And immediately, really smart economists began talking about deflation… Today’s Cupboard will have the stupid CPI (consumer inflation) and it too will probably show just a 0.1% increase in May…  

I’ve told you this before but it bears repeating here… The Fed Head don’t really rely on CPI for their inflation gauge… They prefer the PCE (Personal Cost Expenditures) But even the PCE has been slip sliding away recently, which should be telling the Fed Heads that they need to get on the rate cut train before this turns into a real deflationary situation… 

One of those really smart economists is David Rosenberg, and he had this to say about the PPI print on his Twitter handle yesterday: “The key in today’s PPI data were the deflationary impulses in the core pipeline price measures. The Fed is way behind the curve. Yield on 10-year T-note down to, or through, 1% in the coming twelve months.” – David Rosenberg on Twitter…

 To Recap… The Blues Win!, The Blues Win! And the dollar bugs came back to fight the currencies for ground that the dollar lost so far this week yesterday… There was news of more Debt, but that didn’t keep the dollar bugs from buying… Chuck smells a rat, because Gold didn’t move either on that news or the overnight news that two Oil tankers were attacked… UGH!

For What It’s Worth…  I almost bagged this today, but shoot Rudy, what’s a day without a FWIW article? HA!  OK, I told you above I had more on the 2 Oil tankers that were attacked and here it is, and it can be found here: https://www.cbsnews.com/news/two-oil-tankers-attacked-in-gulf-of-oman/

Or, here’s your snippet: “Two oil tankers near the strategic Strait of Hormuz were reportedly attacked on Thursday, leaving one ablaze and adrift as sailors were evacuated from both. The U.S. Navy rushed to assist, amid heightened tensions between Washington and Tehran.

Iran claimed it dispatched search teams that rescued the 44 sailors who were on the two vessels.

But a U.S. Defense Department official told CBS news senior national security correspondent David Martin it’s “likely” Iran is the source of the attacks — and said Iran’s rescue claims were “patently false.” He said the USS Bainbridge picked up 21 of them.”

Chuck Again… Think back in history… World Wars have been started over smaller aggressions than this…  I’m just saying… 

Currencies today 6/13/19 American Style: A$.6906, kiwi .6565, C$ .7517, euro 1.1290, sterling 1.2676, Swiss $ .9928, European Style: rand 14.8313, krone 8.6507, SEK 9.4722, forint 285.36, zloty 3.7734, koruna 22.6524, RUB 64.67, yen 108.46, sing 1.3665, HKD 7.8282, INR 69.44, China 6.9158, peso 19.16, BRL 3.8534, Dollar Index 96.99, Oil $52.78, 10-year 2.11%, Silver $14.80, Platinum $812.55, Palladium $1,435.46, and Gold… $1,336.69

That’s it for today and this week… It’s time to party, St. Louis! The plans for a parade will be announced today, and I have to wonder just how many people went to work today here in St. Louis! On a night when it was all about the Blues, my beloved Cardinals took one on the chin… So it was not ALL Good for us last night… Good enough for me though!  When the Blues scored their 4 goal to make it 4-0 I began to cry, with joy, for I knew then that they had won the Stanley Cup…  OK… well, I was up very late last night, as you can imagine, and this was the best I could do today… I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will continue to Be Good To Yourself!

Chuck Butler

 

 

June 12, 2019

*Currencies trade flat on the day with little to no movement

* What will the next recession bring us?  spoiler alert… Chuck’s scared… 

Good Day… And a Wonderful Wednesday to you… If I heard the announcer correctly last night he said that 6,308 people were in the stadium for a major league ball game last night in Miami… Shoot Rudy, we get more than that for a Spring Training game! The Cardinals finally bunched some hits together, late in the game and won last night… Whew! Our Blues are on the ice for Game 7 tonight… Game 7 folks, it doesn’t get any more tense than that! Let’s Go Blues! If the Blues don’t come through tonight, I won’t be writing tomorrow, because I’ll be crying in my beer… But if they do come through, I’ll be here to talk about it! I went to Horse Hookey yesterday, and man was that fun! And I got to eat some fried Chicken, which happens to be my fave meal on earth, good juicy, crispy, fried Chicken… it doesn’t get any better than that in my book! Well… today is the wedding anniversary of Chuck & Kathy… Our 43rd year of marriage… I can tell you right now that she’s forgotten about it… And that she received the raw end of the deal when they said, do you take him in sickness and health… Little did she know in 1976, that I would be diagnosed with Stage 4 metastatic cancer 30 year later… Tomorrow is the 12th anniversary of my first major cancer surgery… I’ll be sure to rub my side in remembrance, of what I used to look like before they cut me from stern to spine… James Taylor greets me this morning with his song: Carolina In My Mind…

Whew! That was some intro today, eh? Well… I need to write about something to fill the page, for there wasn’t that much going on in the currencies and metals yesterday… The dollar is hanging on for dear life these days… Reminds me of the song by the Guess Who: Hang On To Your Life… Don’t recall that one? Well, it’s for real… I have the 8-track tape to prove it! HAHAHAHAHA! Seriously, the dollar is in trouble folks… While the Fed might not cut rates next week, they’re going to talk about how they may have to soon, which will be the same as an actual rate cut… And another chink in the Fed’s armor will fall off!

Gold was able to push back and rally through the $5 it was down in the early trading to close up $5… That’s a $10 move folks… now don’t tell me…. I’ve got nothing to do… Counting flowers on the wall that don’t bother me at all… No Wait! What I really meant to say was Gold investors are seeing this rate picture come into focus… And all the time the price manipulators could point to higher interest rates here in the U.S. as their reason to sell Gold Short… They won’t have that in their back pocket any longer!

And the dollar didn’t get any help from the Data Cupboard yesterday either… Producer Price Index (PPI) was only up 0.1%… And today we’ll see the stupid CPI (consumer inflation) for May… That too will show nascent inflation forces  at work… And that will bring about more calls for rate cuts by the markets… 

But don’t just take my word on what’s going on with the dollar right now… The GATA folks sent me a note that they pulled from MarketWatch yesterday that included this snippet: “A growing chorus of analysts has started to pencil in expectations for a weaker dollar in 2019, particularly as expectations grow for Federal Reserve rate cuts. Fed-funds futures, which six months ago were forecasting official interest rates to continue rising this year, now reflect trader expectations for as many as three cuts before year-end amid fears rising trade tensions could amplify a global economic slowdown.”

I read a piece yesterday where the writer was calling for the euro to be at 1.17 in 2020… Well, I’ve got news for him… IF, the dollar goes into a weak trend, the euro will find itself pushing 1.20 once again… and from there who knows? But it will all be about the dollar weakness and not euro strength… But holders of euros won’t care what they call it, as long as the euro is kicking some dollar rear and taking names later!

First it was too much debt that weighed on pound sterling, then along came BREXIT, and the then the BREXIT Talks, and then the stepping down of their Prime Minister, and now we have what I’ll call the battle Royale! This is the goings on to pick a new Prime Minister, one that the people will like, and that’s going to be difficult, because the population feels as if they’ve been let down by politics and that they voted for BREXIT two years ago, and still nothing has happened… 

So, sterling will bounce higher  and then dip lower on any political news these days, which leaves me to say, that I would rather look elsewhere for a currency to invest in… I’m just saying… 

On Monday this week (2 days ago) I told you that Consumer Debt had risen last month to $17.5 BLN for the month, and that it was not going to be a good thing for the economy…   Sean Hyman and I used to write a letter for the Sovereign Society, so I’ve known him a long time, and he’s my “go-to” guy when it comes to technicals… He had this to say about consumer debt yesterday on his Twitter handle: “ Wow!: Auto debt is $1.27 Trillion… And Auto delinquency rates are at a 19-year high! OMG! Consumers now have more debt than they had before the Financial Meltdown…”  

But don’t worry about that stuff folks, it’s all going to work out to the sunny side of the street, right?  I’m kidding, as I’m sure you’re aware…  So grab your coat and grab your hat, leave your worries on the doorstep, Just direct your feet to the sunny side of the street!   Because that’s where all the “strong and robust economy” campers are hanging out…  Go ahead and join them if you dare… I’ll be over here on the dark side of the street, warning people about how the next recession is going to be a doozy… 

Speaking of the next recession… I also read a piece yesterday from a writer that believes that a recession is just that the U.S. economy needs…  Well, if that had been written 19 years ago, I would agree, for we didn’t have all the debt, derivatives, and people who didn’t care about anything but themselves… We had built up access that needed to be wiped out and started again… But now?  I can’t think of anything that could be worse for us right now than a recession… yes, it’s needed, but I’m telling you now, so you will listen to me later, the next recession is going to be a doozy… 

I’ve given you these facts before but it seems appropriate to give them to you again here…  The average Fed Funds rate cuts that the Fed makes during past recessions is 5%…. Our current Fed Funds rate is 2.50%… Uh-Oh!  And the average level of where rates were at the beginning of past recessions is around 6%…     I’m now wondering just how many people went to the sunny side of the street…  For I’m worried about them!

To Recap…  There really wasn’t much movement in the currencies yesterday, but the dollar, in Chuck’s opinion, is hanging on for dear life right now, and the Fed’s FOMC meeting is next week, and the Fed will either cut rates or talk about cutting rates, which in Chuck’s opinion is the same…  And today is Chuck and Kathy’s 43rd wedding anniversary… 

For What It’s Worth…. Well… this is my last free article from Bloomberg.com… So sad, but since I do this letter for free, I would have a difficult time reconciling paying for a news source… So, this article, my last free one, is about Corporate Debt, of which I’ve been warning you about for some time now, and it can be found here: https://www.bloomberg.com/news/articles/2019-06-11/regulators-alarmed-by-risky-loans-but-don-t-know-who-holds-them?srnd=premium

Or, here’s your snippet: “The steady drumbeat of warnings over the surge in risky corporate borrowing is growing louder and louder. Time and again, regulators in the U.S. and Europe have pointed to the hazards of businesses taking on too much debt.

At issue is the $1.3 trillion leveraged lending market, composed of high-yield loans from firms with some of the weakest finances. While Federal Reserve and European Central Bank officials have drawn attention to these heavily indebted companies and the deteriorating standards of loans bundled into securities called CLOs, most regulators are careful to say a repeat of 2008 is unlikely because investors, rather than the banks they oversee, hold most of the debt.

Yet that’s created a new, and potentially more dangerous, kind of risk. Precisely because roughly 85% of leveraged loans are held by non-banks, regulators are largely in the dark when it comes to pinpointing where the risks lie and how they’ll ripple through the financial system when the economy turns. More and more, critics are questioning whether regulators like the Fed have a handle on the problem or the right tools to contain the fallout. A big worry is highly leveraged businesses employing thousands could face severe financial stress and, in some cases, insolvency, deepening the next downturn.”

Chuck Again… Once again, I’ve seen these dark clouds forming over Corporate Debt long before the market and media get a clue… Not that I’m patting myself on the back, but my dad told me many years ago, Son, sometimes you have to toot your own horn”…

Currencies today 6/12/19 American Style: A$.6952, kiwi .6580, C$ .7521, euro 1.1325, sterling 1.2738, Swiss $.9936, European Style: rand 14.7674, krone 8.6395, SEK 9.4439, forint 283.82, zloty 3.7634, koruna 22.6150, RUB 64.54, yen 108.35, sing 1.3642, HKD 7.8222, INR 69.31, China 6.9137, peso 19.14, BRL 3.8708, Dollar Index 96.70, Oil $51.77, 10-year 2.12%, Silver $14.80, Platinum $816.60, Palladium $1,395.36, and Gold… $1,335.81

That’s it for today…  The U.S. Women’s Soccer team got the World Cup off on the right foot yesterday with a 14-0 score VS Thailand…  OK, when did they start to give 7 points for a goal in soccer? HA!  Or, seriously, how did the authorities think that Thailand would be good competition for the U.S? I shake my head in amazement…  OK… Game 7 of the Stanley Cup Finals is tonight… I can barely type that without thinking about what it would mean to this city for the Blues to win the Stanley Cup after 50 years of waiting, and being faithful fans…  So… Let’s Go Blues!  Jimi Hendrix takes us to the finish line today with his remake of the song: All Along The Watchtower… Extra credit for those that know who originally did this song?  I hope you have a Wonderful Wednesday, and will Be Good To Yourself! 

Chuck Butler

 

 

June 11, 2017

* A tourniquet was wrapped around the bleeding currencies yesterday

* What’s up with the rising 10-year Treasury yield? 

Good Day… And a Tom Terrific Tuesday to you! I had a dear reader send me a note last week that was dripping with sarcasm… he said, “I just heard that Tom Brady is calling himself “Tom Terrific”, you might be in trouble with his people if you keep using it”! HAHAHAHA! Where does Tom Brady get off stealing Tom Terrific! He was a cartoon character of my youth, one that I hold near and dear to my memories! I really am upset by this news… And they’ll have to come knock down my door to stop me from using it! I’m just saying! HA! Steely Dan greets me this morning with their song: Don’t Take Me Alive… From the Royal Scam Album…

OK… the currencies were largely unmoved on Monday… The dollar might have fought back in the overnight markets, but it did little during the U.S. trading session, due to the news that “Unless China’s Xi meets with Trump at the G-20, at the end of the month, Trump will impose more tariffs on the Chinese”… That was a slam the brakes on moment for the dollar bugs… Gold gained back a couple of $15 bucks it had lost in the early trading, but still closed down $12 on the day, while the euro inched higher, and most of the other currencies treaded water the rest of the day.

The U.S. Data Cupboard was dry as a bone yesterday, and will only have PPI (Wholesale inflation) and CPI (consumer inflation) these next couple of days to show us… The fireworks for data comes on Friday, Flag Day, when Retail Sales, Industrial production, Capacity Utilization, and more will print… So, hang onto your hats come Friday morning!

With no data yesterday, the dollar was playing the “no news is good news” trick, but then President Trump put an end to that! I’ve got a good article for you in the FWIW section today about the Trade War with China, so you’ll not want to miss that… It comes up in a few reading minutes, so hang on….

The Chinese renminbi moved lower yesterday, in response, I would think, to the Trump comments about the G-20 meeting… You see, China has not agreed to any meeting as of yet… And there’s some fear that Xi won’t meet with Trump… Come on boys, why can’t we all play nicely together in the sand box?

The Russian ruble has been stealth-like with its recent strong move… And for once, in a blue moon, ( Billie Holiday song) , the ruble is moving without the price of Oil as a crutch… it was about a month ago, that I waxed poetically about the ruble… So, it’s nice to see it moving in the right direction… And why not? The ruble sports the highest deposit rate among established countries, and now it looks as if the interest rate spread, if you will, between the ruble and other currencies is going to widen, given what I’ve been telling you about the Fed, and the ECB… And the Swiss and so on…

Oh, and the euro wannabes , zloty, forint, and koruna continue to ratchet higher not only VS the dollar but also against sterling and the euro… Very interesting moves here folks… I’m telling you once again, so you can hear me later, these three are a good indicator that a weak dollar trend is coming…

I read yesterday where the flows of capital out of S. Africa are really becoming a problem for the country, and it’s being reflected in the drop in the price of the rand. I’ve said this now for the 27 years that I’ve been writing the Pfennig… I wouldn’t touch rand with your ten foot pole!

So, like I said above, the U.S. Data Cupboard doesn’t really have a lot for us to see until Friday, Flag Day, but we will see PPI (wholesale inflation) today for May… The thing to look for here is that in recent prints PPI has dropped, and so we’ll want to see if that trend continued in May… I would think it did. 

We’ll also see the NFIB Small Business report for May, which isn’t market moving but interesting nonetheless. 

There’s just no life preserver we can throw Gold once the price manipulators go to work on the shiny metal…  And it looks like today won’t be any different for Gold, as it’s already down $6 in the early trading today…  Doesn’t make any sense to me, given the interest rates around the world and the outlook for them here in the U.S. 

Speaking of interest rates here in the U.S. The Fed’s FOMC Meeting will take place next Wednesday 6/19. I wonder what Fed Chairman Powell, has up his Bullwinkle sleeve for us?  The markets don’t believe that the Fed has the intestinal fortitude to cut rates next week…  It’s sort of like the old Charles Atlas commercials, where the big muscle bound man kicks sand in the face of the weak man…  The markets are the big muscle bound man, in case you were confused on that one! HA! 

OK.. the yield on the 10-year Treasury has slipped higher once again. Last week it was down to 2.10%, and this morning its yield is 2.17%…  What gives? Well, remember what I’ve been telling you about China and other Central Banks selling Treasuries and buying Gold?  Well shame on you if you didn’t remember! HA!  But it makes sense when you fold that into the equation… Remember bond yields and price move counter to each other, so as Treasuries are getting sold, the price goes down, and the yield goes up…   Something to watch for, and keep in mind, for sure… 

To Recap…  The overnight moves to bring the dollar back from Friday’s downward move, petered out in the U.S. session, and the currencies treaded water for most of the day… The dollar bugs had a slam the brakes on moment, when President Trump announced that if China’s leader, Xi, doesn’t meet with him at the upcoming G-20 meeting that more tariffs will be placed on China… China said they were unaware of any meeting! 

For What It’s Worth… Well as previously mentioned, this is an article about the trade war with China, and how China views it, and it can be found here: https://www.cnbc.com/2019/05/27/china-is-digging-in-its-heels-on-protecting-a-state-run-economy.html

Or, here’s your snippet: “ As trade talks between the U.S. and China increasingly center on Chinese treatment of foreign companies, Beijing says major American complaints about structural aspects of its economy are running up against “core interests.”

The implication: Those matters are not up for negotiation.
Previously, the vague “core interest” term was generally understood as referring to Beijing’s territorial claims, such as those on Taiwan. But a commentary piece published this weekend by state news agency Xinhua emphasized that China will not yield on its prerogative about how to manage its economy.

The Chinese-language article published Saturday claimed there were five ways in which the U.S. is harming the growth of the global economy by launching a trade war with the Asian giant.

“At the negotiating table, the U.S. government has made many arrogant requests, including restricting the development of state-owned enterprises,” the commentary said, according to a CNBC translation. “Obviously, this is beyond the field and scope of trade negotiations, (and) touches upon China’s fundamental economic system.”

Chuck Again… To me… it looks like the Trade War is just getting started, and is nowhere near coming to a conclusion!

Currencies today 6/11/19 American Style: A$.6955, kiwi .6581, C$ .7541, euro 1.1320, sterling 1.2705, Swiss $.9911, European Style: rand 14.7443, krone 8.6379, SEK 9.4355, forint 283.32, zloty 3.7697, koruna 22.6587, RUB 64.74, yen 108.70, sing 1.3645, HKD 7.8348, INR 69.39, China 6.9244, peso 19.16, BRL 3.8790, Dollar Index 96.77, Oil $14.68, 10-year 2.17%, Silver $14.68, Platinum $804.91, Palladium $1,386.46, and Gold… $1,322.20

That’s it for today… I  so was pumped about adding the link to Delaney’s singing of the national anthem that I forgot to mention yesterday that it was good friend Mike Kettler’s birthday… Happy Birthday Mike! The Cardinals found a team that they could beat last night when they beat the Marlins… Like I said yesterday, this is a strange team this year, that can’t seem to find any good karma… And now with every loss, it’s even more evident that each guy wants to hit a 10-run homer, each time he comes up… UGH! I’m going to play Horse Hooky today! Although it’s not really playing hooky when you’re retired, but that’s what they call it, and I’m all in! YAHOO! Oh and thanks to all that sent along nice notes about Delaney’s performance… I’m just so proud of her! Elton John takes us to the finish line today with his song: Mona Lisas and Mad Hatters… I hope you have a TOM TERRIFIC Tuesday today, and will Be Good To Yourself!

Chuck Butler

 

June 10, 2019 

* Currencies and metals rally on Friday… 

* But then get turned around on the Mexico Trade deal announcement… 

Good Day… And a Marvelous Monday to you! Well, we had the opportunity last night to put the finishing touches on the Stanley Cup Finals… But it was not to be… I say it’s not the end of the world, as the Blues are a very good road team, and that’s where Game 7 will be played… On the road! Let’s Go Blues! Game 7’s are special, to people like me… The true Championship team rises to the hype and pressure of a Game 7… It’s the last game of the year, no matter what, so winter takes all… Let’s Go Blues! I’m sad that they didn’t put the series to bed last night, but what the heck, it’s not like the Bruins were going to roll over and give us the game! Ok, we’ve got a lot to talk about today, so…. Loggins and Messina greet me this morning with a live 20 minutes version of their song: Vahevala…

There are a few things to talk about today, so let’s get to them! First of all, the Jobs Jamboree on Friday was very disappointing… Second of all, The U.S. averted a Trade War with Mexico when negotiators agreed on a pact… And Third of all We need to talk about the European Central Bank (ECB ) meeting last Thursday.. Those and more will be our topics today, so go get that refill of coffee, and meet me back here in 5!

Well… The Jobs Jamboree was a real bummer for the flag bearers of a strong economy… Instead of gaining 185,000 jobs as forecast, the U.S. only added 75,000 jobs in May… And that was net of 204,000 jobs added by the BLS after the surveys… So, in Chuck’s eye… The economy lost jobs in May by 129,000 jobs… Stranger things have happened, as the Unemployment Rate remained at a record level of 3.6%… The currency traders weren’t buying it as just a one and done month, for disappointing job creation here in the U.S. And the dollar bugs were sent to the woodshed for the rest of the day.

And let it not be said that I forgot about the revisions… The Labor Department also revised down March’s gain from 189,000 to 153,000 jobs, and April’s from 263,000 to 224,000 jobs…

That’s a pretty big revision isn’t it from 263,000 down to 224,000? Well, it is my book! But I don’t think the currency traders were looking at the revisions, just the current numbers, which, like I said were disappointing!

So, before we go any further…  The currencies and metals all rallied on Friday… The euro reached a 2 1/2 month high, and Gold was ready to take out the maginot line of $1,350…  But then something happened to turn the dollar around…  

Well, well, well… Finally, they listened to me! Negotiations worked when dealing with Mexico, and the Trade War that was about to begin was called off, and the negotiators were able to iron out what they wanted from Mexico… I’ve said all along that trade talks and negotiations are far better than Trade Wars… Now, if we can only get something ironed out with China before both economies are brought to their knees… And just the news that the Trade War with Mexico was averted, caused a lot of profit taking in Gold, and pushed the price back down in the overnight markets last night…

The euro is at 1.13, and has backed away from its 2 1/2 month high, as first it was the dollar moving higher on the Mexico deal, but then, even though the European Central Bank (ECB) last week, talked about keeping rates unchanged to mid-2020, two countries were out talking about how they knew that a rate cut was in the cards, and that pushed the euro down… 

Last week I left you with the news that the European Central Bank (ECB) were meeting, and I expected dovish Draghi at the meeting… And that’s what we got… Here’s some news that should have sunk the euro’s battleship on Friday, but with the dollar getting taking to the woodshed, the euro benefitted, like I’ve always told you it would no matter if the economic data from the Eurozone isn’t up to snuff… OK, here’s the info of what’s going on in the Eurozone… German industrial production plunged the most in almost four years in April and that’s where Dovish Draghi stepped in with his assessment of the outlook, highlighting an ongoing slump in Europe’s largest economy.

While the Europeans aren’t in the Trade War club just yet… German factories are seeing a slowdown, as trade tensions, weaker car sales and cooling global demand weigh on exports.  

Gold is getting whacked in the overnight and early trading today, and is down $15 from Friday at this point…  I thought some words from the Gold man, Egon Von Greyerz would be calming right now, so let’s listen to what Egon has to say… “Gold, already has broken out in many currencies and its breakout in U.S. dollar terms is coming.”  (I got that from the GATA folks)

The U.S. Data Cupboard last Friday, had another print other than the Jobs Jamboree, and it was Consumer Credit (read debt), which showed that in April the deficit spending by Consumers jumped to $17.5 Billion, after March’s number had slid to $11 Billion…  So, a HUGE increase of Consumer Debt in April…  This is how it’s got to go for most consumers… They don’t have the disposable income to spend so they go further into debt…  

I really cringe when I read stuff like I did this weekend, that 80% of Americans live on paycheck to paycheck…  The writer went on to point out that it’s not the money they spend on iPhones, or whatever, it’s big ticket items, that have piled up and backed up and now are a HUGE monster that stares at the Consumer each month when the bills come in… 

This can’t be good for an economy, because… eventually the credit agencies will say “No mas”, and then what happens?  No more buying and the economy goes to hell in a handbasket…  I’m just saying folks… 

To Recap…  the Jobs Jamboree last Friday was a disaster, and sent the dollar to the woodshed, only to see it escape, later in the day after it was announced that a deal had been done with Mexico to avert the Tariffs… And at that point, the boys and girls in the markets had just about closed shop for the week, but handed things over to their Asian and European desks, who saw to it that the dollar rebounded… Gold has lost $15 since Friday, and so on…  The Blues lost game 6, and now have to play a Game 7 in Boston. UGH! 

Before we head to the Big Finish…  I have a link to share with you, if you care to click on it, you’ll find an 11-year old young girl singing the national anthem at a minor league ballpark…  The young girl is my darling granddaughter, Delaney Grace…  I only do this because there were some readers that requested I do this…  So, here’s the link: https://youtu.be/yZIX0PEX58Q

I can’t explain to you just how proud I am of her…    Oh, and that cute baseball/ stars dress was made for her by her grandmother… 

For What It’s worth…   Ok, since last Friday the Jobs Jamboree was so disappointing, I thought this article was a good fit for our FWIW section today, as I pointed out how the BLS had adjusted the number of jobs in May, this report shows the BLS hedonic adjustments each month and it can be found here: https://www.zerohedge.com/news/2019-06-06/examining-discrepancy-between-jobs-and-employment

Or, here’s your snippet: “In the past year, the BLS says the number of jobs rose by 2.62 million. Employment rose by 1.429 million.
The discrepancy between the increase in jobs and the increase in employment is 1,191,000. On average, over the past year, that’s a discrepancy of 99,250 every month, in favor of jobs.

Numbers in Perspective
In the household survey, if you work as little as 1 hour a week, even selling trinkets on eBay, you are considered employed.

If you don’t have a job and fail to look for one, you are not considered unemployed, rather, you drop out of the labor force. Searching want-ads or looking online for jobs does not count. You need to submit a resume or talk to a prospective employer or agency.

In the household survey, if you work three part-time jobs, 12 hours each, the BLS considers you a full-time employee.

In the payroll survey, three part-time jobs count as three jobs. The BLS attempts to factor this in, but they do not weed out duplicate Social Security numbers. The potential for double-counting jobs in the payroll survey is large.

These distortions and discrepancies artificially lower the unemployment rate, artificially boost full-time employment, and artificially increase the payroll jobs report every month.”

Chuck Again…  Like I sing all the time, the words of the Joe South song… The games people play , every night and every day , never meaning what they say, never saying what they mean… 

Currencies today 6/10/19 American Style: A$.6961, kiwi .6615, C$ .7533, euro 1.1300, Sterling 1.3660, Swiss $.9913, European Style: rand 14.8723, krone 8.6527, SEK 9.4193, forint 283.24, zloty 3.7724, koruna 22.6705, RUB 64.78, yen 108.67, sing 1.3673, HKD 7.8428, INR 69.53, China 6.9088, peso 19.26, BRL 3.8788, Dollar Index 96.90, Oil $54.24, 10-year 2.14%, Silver $14.73, Platinum $798.37, Palladium $1354.29, and Gold… $1,325.93

That’s it for today…  A crazy weekend here for sure, and a lot of deeply disappointed hockey fans for sure! The Cardinals played a game last night that no one in St. louis watched! HA!  They got swept this weekend by the Cubs. UGH!  Strange team this year for sure…  I got to go to the day game last Thursday and brought home a winner… Fun day!  It looks like it will be a beautiful day here, so I’ve got to get outside and enjoy it!  I ask that you all add my good friend, Dennis Miller, to your prayer list, as he’s having a difficult time with his cancer treatment…   The band Spirit takes us to the finish line today with their song: Nature’s Way…   I always get the chills when this song plays, as it was Nature’s Way of telling me something was wrong back in 2007…    I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

 

June 6, 2019

* The dollar bugs fought back on Wednesday… 

* ECB meets today.. Will they see the writing on the wall? 

Good Day… And a Tub Thumpin’ Thursday to you! It’s also D-Day… Yes, on June 6, 1944, the largest seaborne operation was put into place on the beaches of France… If you’ve ever seen the movie Saving Private Ryan, you would have an idea of what that invasion ran into on those beaches… With all the taking down of statues from our history these days, I’m surprised they still allow this day to be observed… I’m just saying… Another rain delay last night for my beloved Cardinals… And the game was finally postponed..  Poco greets me this morning with their song: Good Feeling To Know… “Yes, it’s a good feeling to know… somebody loves you”

In a case of See I told you…. The dollar fought back yesterday, but, not because the data prints were kind to the dollar bugs… Factory Order for April were negative -0.8%, and the ADP employment report showed only 27,000 jobs created in May… That has to be typo… but then the folks at MarketWatch sent me a note talking about this being the slowest month of job creation in 9 years! The architect of the ADP , Mark Zandi, had this to say about the report… “The economy’s weakening, this number overstates the case,” he went on to add: “Growth is slowing, and it’s slowing very sharply and Business capex is dead in the water.”

So… no such luck in having the dollar bugs stay away for more than 2-3 days… The Fed is talking about cutting rates… We have a two-headed Trade War Monster going on, with the possibility of the 3rd head joining, The economic reports are flashing “recession” “recession” “recession”, and yet, the dollar won’t succumb to the currencies for more than 3 days…

Since we’ve gone down the data rabbit hole, we might as well keep going, eh? The U.S. Data Cupboard today will have the April Trade Deficit, which won’t show any gains, most likely… And the 1st QTR Labor Costs data will get a revision, and that revision will most likely be a big fat negative number!

I told you earlier this week that on Wednesday the Fed heads were holding a Fed Policy Conference in Chicago… And these are highlights from that meeting that Bill Bonner printed…

We [FED] are closely monitoring the implications of recent developments [tariffs] on the U.S. economic outlook”
“We [FED] will act as appropriate to sustain the expansion”
“FED policy remains data dependent”
“Persistently low inflation could lead to downward drift in expectations”

Chuck again… Wow! I told you yesterday that the stock jockeys had nothing to fear that the Fed’s got your back, Jack! And now we know that even more!

OK… on to something else! Gold was up over $9 yesterday morning to $1,334, it ended the day up $4… UGH!  The shiny metal is up more than $5 this morning, so let’s see if they can be held on to, or added to…   I wish I didn’t have to talk like that, but with price manipulators waiting around every corner…  I’m sheepish to talk brazenly about a Gold move… 

In Australia yesterday, the Reserve Bank of Australia (RBA) cut rates ¼% or 25 Basis Points. This was their first rate move in 3 years… But with the Trade War effecting China so badly, I can see where the RBA felt the need to cut rates… Although I’m no fan of debasing currencies… But I can see it here, and the currency traders didn’t get too upset by the news, causing only some minor slippage in the A$…

Another reason the RBA may have sprung a rate cut on the markets by surprise is that just the other day there was an article that stated that Australia’s 26 years of no recession, could be coming to an end… All that was based on how bad the China slowdown will hurt the Aussie economy…

How many readers recall me telling them years ago that when the real weak dollar trend becomes a reality, the forint, zloty, and koruna will be front and center in the moves against the dollar… In fact, when they begin to really move strongly, you can be assured a new weak dollar trend is in place…

Just to whet our whistle… All three of these what I coined years ago as the “Euro Wannabes”, have been moving steadily stronger Vs the dollar in recent trading… You can bet your sweet bippie that I’ll be keeping an eye on these three… for signs that the weak dollar trend, has taken hold…

The European Central Bank (ECB) is meeting today… Will we get hawkish Draghi, or dovish Draghi?  I’m thinking that the ECB can red the writing on the wall, that they are stuck in the middle… Clowns to the left of me, jokers to the right, here I am stuck in the middle with you!  (Gerry Raferty)  And that will make Draghi sound dovish today, which won’t help the euro in the near term… 

Speaking of the euro, I read a report on Reuters that talked about the euro climbing to 1.17 by next year…  Of course they based that forecast on their belief that the U.S. economy will be going into recession in 2020…  So, just move that up by 6 months, in my opinion! Recall I said that I believed the U.S. would be in recession in 2019… I’ve still got more than 5 months before the clock strikes 12… 

Let’s review really quick what should be the nails in the dollar’s coffin…  First of all we debt coming out of our ears, not just the Gov’t, but Corporate, and Individual… We have a Central Bank that doesn’t have a clue… We have a Trade War going on with two different trade partner countries, with a 3rd simmering on the stove…  We have an economy that has been in a growth, albeit very slow growth, but growth nonetheless, cycle for more than 10 years, and getting very long in the tooth…  We have a Treasury yield curve that has inverted, which normally is a strong indicator that a recession in near…  Those same Treasuries are seeing Central Banks around the world discontinue to buy them…  We have pensions underfunded by billions of dollars… We have Corporate Debt issuance that’s mostly BBB, near junk, hanging over  the economy like the Sword of Damocles, and there’s more, but my fingers are getting tired! HA 

And under this umbrella of things that should be weighing on the dollar, the dollar bugs won’t give up the ship on a strong dollar… All I’m going to say here is that just isn’t kosher, and won’t last too much longer in my book… 

Longtime readers know I don’t trust the government’s data reports, and rely on what John Williams of shadowstats.com says… And what I feel, and see as to what is happening every day in the economy.  Well, for the FWIW article today, I have an article that talks about “shadow accounting” that the Gov’t uses… it’s very interesting so you don’t want to skip over that! 

Before we head to the Big Finish…  I have something I want to share with you… I recently mentioned that I own an annuity and how easy it is for uneducated buyers to get ripped off. Friend, and RetireMentor Dennis Miller has published a 63-page comprehensive Annuity guide. He pulls no punches. It’s the only material I have seen that is not written by someone who is trying to sell them.

You can find more information here. https://milleronthemoney.com/product/annuity-guide/ If you are interested, enter the discount code CHUCK and Pfennig readers will receive a 25% discount.

To recap…  The dollar bugs fought back on Wednesday…  See? they can’t say away for more than 3 days!  But Chuck lays out all the major things that should be weighing on the dollar… How much longer can the dollar bugs remain in control?  The ECB meets today, will we get hawkish Draghi, or dovish Draghi… Chuck believes it will be the latter of the two…  And the RBA cut rates yesterday, their first rate move in 3 years! 

For What It’s Worth… Well as previously advertised… This is about the “shadow accounting” that the gov’t uses… See? Chuck was right all these years regarding not trusting the Gov’t data reports… And it can be found here: https://www.zerohedge.com/news/2019-06-04/bipartisan-support-secret-accounting-hide-missing-black-budget-money

Or, here’s your snippet: “Investment advisor and former Assistant Secretary of Housing Catherine Austin Fitts says when it comes to making government accounting secret, there is widespread bipartisan support. 

Fitts explains, “If you look at FASAB rule 56, it was approved by both the (Trump) Administration and the bipartisan (Congress) on the same week that everybody was screaming about Judge Kavanaugh. It was passed we had all the hearings on Mr. Kavanaugh’s teenage sex life. At the same time everybody supposedly looks like they are fighting, we had a bipartisan Congress and Administration pass this very quietly underneath the attention given to the Kavanaugh hearings.”

Why did both parties “quietly” pass FASAB rule 56 that makes federal budgets secret? Fitts says:

“Since WWII, we have been building secret financial operations, whether it’s the ‘Black Budget’ or what some people call the ‘hidden system of finance.’ Secrecy is a huge financial addiction. I think every member of Congress does not see a way to kick the can down the road without becoming more and more extreme in tactics. I called FASAB 56 ‘secret money for secret armies.’ The same week that passed, an ad came out in one of the mercenary magazines that said ‘Blackwater is coming.’”

Just because trillions of dollars are “missing” and the federal budgets are now “secret” doesn’t mean you cannot see the effects of all the massive amounts of money created. It’s is showing up in the form of inflation, not official inflation calculated by the government, but real inflation for the man on the street. Fitts contends, “The U.S. dollar is getting debased…”

Chuck Again…  Joe South sang… The games people play now, every night and every day now, never saying what they mean, never meaning what they say…  

Currencies today 6/6/19 American Style: A$.6976, kiwi .6625, C$ .7462, euro 1.1230, sterling 1.2700, Swiss $.9956, European Style: rand 14.8959, krone 8.7150, SEK 9.4380, forint 286.01, zloty 3.8077, koruna 22.8410, RUB 65.15, yen 108.23, sing 1.3650, HKD 7.8405, INR 69.19, China 6.9074, peso 19.71, BRL 3.8628, Dollar Index 97.23, Oil $52.08, 10-year 2.10%, Silver $14.95, Platinum $806.42, Palladium $1,337.94, and Gold… $1,335.53

That’s it for today…  Our Blues are back on the ice tonight this time in Boston…  Let’s Go Blues!  This having 2 days between games, to me, removes the enthusiasm and then it has to be rebuilt as the game goes on…  UGH!   Cardinals game is postponed last night, which takes care of a problem they had for Sunday… They needed a pitcher for Sunday’s game, but not now, the just push all the pitchers back a day…  I have tickets for today’s day game at Busch… let’s hope the rain stays away for the game!  Thanks for all the notes to me regarding my cellulitis in the leg…  Crazy stuff, and with me it’s always something, right?  That’s why they call me, Mr. Lucky!   Toad The Wet Sprocket takes us to the finish line today with their song: Walk On The Ocean…  I hope you have a Tub Thumpin’ Thursday, and will continue to Be Good To Yourself!  Oh! And good luck tomorrow Toni!

Chuck Butler

 

 

June 5, 2019 

* Currencies and metals take a pause for the cause Tues.

* Jeopardy James, loses!!!! How’d that happen? 

Good Day… And a Wonderful Wednesday to you! A day of catching breaths was the order of the day on our Tom Terrific Tuesday… The Blues had won on Monday night, so all the people that stayed up late to party into the wee hours Monday night, were basically out of it yesterday… And last night, after another lengthy rain delay, Cardinals fans were at the ballpark very late… For a loss! UGH!  But that’s just here, not the center of financial activity, such is New York City… And brother am I glad that’s the way it is, there’s no way I would want to live in that area… It’s a nice place to visit, but not live… in my book. However, having said that, tens of millions of people would disagree! INXS greets me this morning with their song: What You Need

Well, I can tell you straight up that what I need is to go back to sleep this morning… After a couple of days of my leg feeling better, it let me know it still have cellulitis last night, and I was up half the night with tremendous pain… UGH! Much better now so I have to stop complaining! HA!

The currencies took a pause for the cause yesterday, as the dollar’s plunge from last Thursday to this morning is quite evident in the Dollar Index, which last Thursday morning sat at 98.11, and this morning it sits at 97.10… ( and was down to 97.02 last night) But I’m of the opinion that we’ll see more dollar selling as the week goes on, due to the data prints that are scheduled, of which haven’t been kind to the dollar lately…

Gold didn’t do much either yesterday, so it was a full-on, pause for the cause… But… But.. But… Gold is up over $9 in the early morning trading today…  As we draw nearer to the so-called maginot line of $1,350, I worry about the boys in the band gearing up for a good whacking…  I’ve got my fingers crossed in hope that the boys in the band keep tuning their instruments, and don’t begin to play… 

In another case of “boy you missed the sign again, Chuck”… Yesterday, I talked about how Fed St. Louis president, James Bullard, had signaled for rate cuts, and how that had put the kyboshes on the dollar rally… But I missed the sign! Oh, the third base coach is going to be mad at me again! The sign was a simple…. This was a case of the Fed coming to the rescue of the failing stock market, who had seen a number of down days… The proof is in the pudding folks… U.S. stocks rallied over 500 points yesterday… And to add on, Fed Chairman Powell, said yesterday that he’s “open to rate cuts”… How did I miss that sign? I do only have one eye, but even someone more blind than me could have seen the Bullard comments for what there were… A life preserver thrown to the stock jockeys… Hey! The Fed’s got your back, Jack!

I’ve had my eye on the Singapore dollar lately… late last month, the Sing dollar (S$) started getting sold, and it weakened very quickly… I noticed it and thought, well, it has for over 10 years now been following the performance of the Chinese renminbi, which I had told you was being marked down almost daily, even though we were told the Chinese wouldn’t do that in reaction to the Trade War. But then the S$ turned around and started getting bought again, and just like that… it was right back to where it was before the selling began!

Longtime readers know my affection for the Singapore way of fighting inflation… They allow the Currency to go up and down a in a band to fight inflation, and not depend on willy nilly rate moves… The Monetary Authority of Singapore (MAS) sets the band width, and they use the old currency axiom that a strong currency holds down inflation… So, if the MAS is allowing the S$ to strengthen like this again, then maybe they’re seeing inflation coming out of the Global economy that won’t pass them by… I’m just saying…

Speaking of a Global slowdown… and higher global inflation… There sure seem to be quite a few analysts, economists, and market observers jumping on my “the economy is weak” bandwagon these days… A dear Pfennig reader sent me a note yesterday with a list of new warnings made by different people… Amazing… But when other people see it, it’s usually too late folks… I’m just saying once again…

Last week there was a shocking Deutsche Bank report that showed global equity fund outflows over the last 6 months in dollar terms have now been larger than over any prior 6-month period. Uh-oh…  And I just thought of something… the global equity funds are seeing large outflows, just as Gold has begun its upward move…  Co-inki-dink?  I don’t believe so… I guess my message of “Got Gold” is taking hold… 

Speaking again of Gold… I’ve got a related story in the FWIW section today, that is quite interesting… So, don’t skip over it! I’m warning you, don’t do it, you’ll be sorry! HA!

The U.S. Data Cupboard never printed the May Factory Orders report that was due yesterday…  Hmmm…  Ok, you know me, I  immediately go to the idea that there’s a reason that it hasn’t printed, and it’s not good!  Today, we’ll see the ADP Employment report for May, the precursor to the Jobs Jamboree on Friday this week.  

There’s also a Fed Economic Conference going on in Chicago, and we might get a verbal grenade tossed from left field or maybe we won’t, but it’s there, so I thought you should know the risks… 

Last week I went the whole 9 yards on the guy that paid the college expenses for a graduating class at a college… And I had a dear reader send me a note that made me think of something else this does… It reinforces what these knucklehead college students have been taught, and that is… someone else will pay… Whenever a lawmaking group comes up with some new plan/ policy, I always ask the same question… “Who’s going to pay for that?” Of course knowing all the time that taxpayers like me and you, will be the payers of the bill… But don’t tell that to those college grads, that just had all their irresponsible spending for 4, 5, 6 however many years it took them to graduate, paid for… A very bad precedence was set that day, and I can’t believe I’m the only one that thinks it was a very bad thing to do!

To Recap… It was a “take a pause for the cause” day of trading in the currencies and metals yesterday… But Gold has jumped the gun on trading today and is already up more than $9 this morning…   No new news on Tariffs, except President Trump says they’ll start next week with Mexico, and the congress says, “not so fast”…  This will be interesting, no? 

For What It’s Worth…   I saw a headline story on the Bloomberg pate this morning about how Deutsche Bank had taken a large chunk of Venezuela’s Gold, and you know me, that got my spider sense tingling, and I had to find out more… So for the rest of the story, you can find it here: https://www.zerohedge.com/news/2019-06-04/venezuela-defaults-750-million-gold-backed-swap-deutsche-bank

Or, here’s your snippet: “Somewhere Hugo Chavez, who several years ago successfully repatriated much of Venezuela’s gold, is spinning in his grave.

It started in March, when Venezuela’s embattled leader Nicolas Maduro defaulted on a $1.1 billion gold-backed loan with Citi, in the process losing several tonnes of gold placed as collateral by Venezuela’s central bank after the deadline for repurchasing them expired. Now, Bloomberg reports that Venezuela has also defaulted on a gold swap agreement valued at $750 million with Deutsche Bank, prompting the German bank to seize the precious metal which was used as collateral, and close out the contract.

As part of a financing agreement signed in 2016 which we profiled here, Venezuela received a cash loan from Deutsche Bank and put up 20 tonnes of gold as collateral. The agreement, which was set to expire in 2021, was settled early due to missed interest payments as Venezuela has now effectively run out of foreign reserves.”

Chuck again….  Whoa! 20 Tons of Gold was the collateral? That means Deutsche Bank gets to keep the 20 tons of Gold!  That’s crazy folks, and I would think that Venezuela’s Gold holdings were the last financial asset worth anything in that country…  And now they’re losing large chunks of that?  Not good folks… not good. 

Currencies today 6/5/19  American Style: A$.6986, C$ .6640, C$ .7474, euro 1.1256, sterling 1.2705, Swiss $.9923, European Style: rand 14.7195, krone 8.6833, SEK 9.4370, forint 285.46, zloty 3.8013, koruna 22.7949, RUB 65.21, yen 108.32, sing 1.3653, HKD 7.8397, INR 69.27, China 6.9070, peso 19.56, BRL 3.8724 (this currency sure has turned around! ) Dollar Index 97.10, Oil $53.01, 10-year 2.12%, Silver $14.85, Platinum $831.43, Palladium $1,342.75, and Gold… $1,334.81

That’s it for today…   Well, the weather people weren’t wrong about the rain storms last night! I sure hope they’re wrong about the next 6 days, especially tomorrow, as I have tickets to the day game at Busch!  The Stanley Cup Finals have gone to 2 full days of rest between games… Nothing like dragging this thing out to July! UGH!  I’m torn between going up stairs and getting a cup of coffee or going back to sleep! I’m awake now, might as well stay that way, until I can’t! HA!  How about Jeopardy James? He finally lost! after 80+ days of being Jeopardy Champion! Amazing!  He was astute with every topic they threw up on the board!  Well, he’s got some winnings that he gets to share with the U.S. Gov’t, but after that, he’ll have good base of savings!   The Rolling Stones take us to the finish line today with their song from the Sticky Fingers album: Bitch…  great song, for the Stones, if I’m allowed to say so myself!  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

June 4, 2019

* Currencies and metals continue to move higher VS the dollar

* A hedge fund refuses redemptions… Got Gold? 

Good day… and a Tom Terrific Tuesday to you! Another beautiful day here yesterday, too bad they weren’t playing baseball here last night! For tonight the weather people say that we’ll see T-Storms that won’t stop for 7 days! OUCH! The rivers crest today, and then we’ll go through all the pain and angst about flooding again in a few days… UGH! Our Blues were back on the ice last night, here in a very loud St. Louis Arena… And despite dominating the game the Blues had to score a late goal to be a winner and tie the series at 2-2.  Whew!   We have a few things to talk about today, so let’s not beat around the bush and get to them! Maroon 5 greets me today with their song: This Love…

Well, well, well, what do we have here? A very influential Fed Head, St. Louis Fed President, James Bullard, saying yesterday that with inflation running under the Fed’s targets, and the inversion of the Treasury yield curve, that the Fed’s current rate may be too high, and in need of a rate cut soon…

Well, that sent whatever dollar bugs that were still running around, for a run to the wall boards for protection, for the dollar selling was coming hard and fast… Wasn’t I just a week ago, complaining that I just didn’t get why traders were so gung-ho on the dollar? Well, Bullard put an end of that gung-ho for buying and shifted it to a gung-ho for selling!

The euro is trading well into the 1.12 handle this morning, and the Japanese yen is trading with a 107 handle… I had also just talked last week about how the flight to safehavens had historically included euros, but not this time… Well, no more… Now it’s dollars that are being left at home and not allowed to go to the party! I have no idea if this is the start of something that could last years, shoot Rudy, I have no idea if this will continue today! There should be some additional buying, but one never knows, until we are well entrenched in a trend… Then and only then will you be able to wake up each day knowing that the dollar was losing ground to some currency overnight…

Ok, the other thing I want to talk about today is Silver…. Yes, I know, I talk all the time about Gold, but believe me I have the same interest in Silver… And yesterday, it was announced that the price of Silver had dropped when compared to Gold, to its lowest level since 1993… OK, longtime readers of mine know that a few years ago, I wrote about how Silver demand was going to be going higher because of its use in Solar Panels… But that didn’t fan out… And then there were articles going around that there was a shortage of Silver… And I said, my usual, “there’s no such thing as a shortage, it’s simply something that’s in need of a price adjustment”… Which in Silver’s case should have been higher… But that didn’t fan out… But now….

Now, that we’ve reached a low for Silver VS Gold… I’m getting my spider sense tingling again… which means that Silver could very well be ready for a moon shot! I say that knowing all too well that JPMorgan has truck loads of short silver trades ready to unload on the COMEX, when they feel it necessary to do so… I have to think that JPMorgan et, al. are going to be on the sidelines this time, just like there were in 2009-2011, when Silver rose to $50 an ounce… In 2010, I wrote an article for a publication titled: Is Silver The New Gold? I wish I could find that article and reprint it!

OK… There’s just no civil place to have a discussion about the economy any longer, except here in the Pfennig, because, if someone gets snotty with me, I simply delete their response to me! But check out Twitter sometime, and follow the threads of arguments that go on and on about who’s responsible for this, and how someone doesn’t agree with them! I’m just so happy that I don’t have to deal with that stuff when I point the finger of blame at a policy or Fed heads, or whatever! So, let’s keep it at that, and we’ll have a good relationship!

I have a good friend, who is retired as a shop foreman in a tool & die shop… I tell you this because I, for years, while he worked, would ask him about the business etc, to help me determine if the economy was slowing or booming…  So, I have to turn to someone else now…  And he doesn’t know it but he’s being asked about the pace of business to help me determine the direction for the economy…  

See? I use real physical economics in my studies on the economy… I just don’t depend on data, because these days, who knows if the data has been massaged and had hedonic adjustments before it prints…  And then you have guys like White House economist Navarro saying, “the U.S. economy is expanding at an “unprecedented” rate. Really? Well, I’m a monkey’s uncle if that’s true… 

Yesterday, when I was looking up the currency prices, I came to the Swiss franc, and thought, well, the franc should be pushing the envelope to get back to parity with the dollar, only to see that it had fallen from the previous day’s trading figure…  So, I set out to find the real story here… And there it was!  The Swiss National Bank (SNB) announced that they were considering moving their current negative rate even lower!  YIKES! 

No wonder the franc can’t find a bid while the rest of the currencies are moving higher VS the dollar.  Even lower negative rates? Really SNB, you can’t think of something else to….. No wait! I’ve got it! The SNB doesn’t want the franc back at parity, they want to see it cheaper…  That’s been their MO for sometime now, and I’m surprised I didn’t see it for what it was from the get-go! 

The U.S. Data Cupboard had some data prints yesterday of importance… First there was the ISM (manufacturing index) which continued to show slippage in the manufacturing sector, as the index fell to 52.1 VS 52.6 in April.  The private firm, Market, also printed their version of the manufacturing index and their number was 50.5, oh so close to falling below 50… Uh-oh!   There was also a check of the pulse of Construction Spending, which was flat as a pancake (Head East!)    

This economy has no legs folks… and the White House economist, is way off base with his comments…  OK, what do these economic prints say about where interest rates are going?  Well, if you ask me, I think they would already be going lower, but Fed Chairman Powell, doesn’t want to look like he was ordered to do so by the President…  Powell, will cut rates soon enough folks, he’s just waiting for the right time, which means… he’ll be too late to the party, and the Fed will be behind once again…   

Recall last week, when I told you that I believed China was selling Treasuries and buying Gold?  Well, do you think that explains why Gold has been on a one-way move higher since then? I do!  I had a longtime reader send me a note yesterday that said he had read that other Central Banks around the world are following China’s lead on this… If that’s so… I’ve got one question for you…. Got Gold? 

To recap…  That wild and crazy guy, Fed St. Louis President, James Bullard, is calling for rate cuts, and that got the dollar bugs scared to come out of the wall boards… The currencies and metals rallied strongly throughout the day, and through the overnight markets too. Chuck gets into his thoughts for Silver… Spoiler alert… he’s talking about a Silver rally… 

For What It’s Worth…  Well, this is something that should scare the bejeebers out of everyone…  A hedge fund blocked redemptions! The skinny on that and more can be found here:https://www.zerohedge.com/news/2019-06-03/it-begins-multi-billion-hedge-fund-blocks-redemptions

Or, here’s your snippet: “

In a moment of financial serendipity, earlier today we tweeted that as a result of the sudden collapse in the market’s most crowded positions (which as we noted over the weekend, now face the biggest risk of a wipe out), “hedge fund redemption requests re-emerge.”

It turns out we were very much spot on, because just a few hours later, the Financial Times reported that Neil Woodford, the U.K.’s equivalent of David Tepper, has blocked redemptions from his £3.7bn equity income fund after serial underperformance led to an investor exodus, “inflicting a serious blow to the reputation of the UK’s highest-profile fund manager.”

The freeze on redemptions, exactly five years after Woodford opened his eponymous fund management group, underlines his increasingly precarious position. It follows a steady stream of investor outflows, which have occurred each month for two years, with the fund shrinking by two-thirds to £3.7bn since a peak of £10.2bn in May 2017.

The severity of this latest hit to the hedge fund industry can not be underscored enough. The FT quoted a veteran fund manager who has known Woodford for more than 20 years, who said that “this is one of the bigger events for the U.K. asset management industry of the last decade. A bonfire of reputation and a terrible moment for investor confidence.”

Chuck Again…  How would you like to call your hedge fund manager, and ask for a redemption of your investment in his fund, and he tells you, sorry, no can do?  YIKES!  I will bet a dollar to a Krispy Kreme that this is just the tip of the iceberg on these stories, to come, folks… 

Currencies today 6/4/19 American Style: A$.6984, kiwi .6598, C$ .7444, euro 1.1260, sterling 1.2686, Swiss $.9926, European Style: rand 14.6282, krone 8.6976, SEK 9.4370, forint 286.17, zloty 3.8015, koruna 22.8675, RUB 65.36, yen 107.98, sing 1.3681, HKD 7.8391, INR 69.21, China 6.9031, peso 19.75, BRL 3.9077, Dollar Index 97.12, Oil $52.61, 10-year 2.10%, Silver $14.71, Platinum $821.82, Palladium $1,332.30, and Gold… $1,325.27

That’s it for today…. I wonder how many folks will actually be able to get up this morning and go to work after partying went well into the night after the Blues victory last night…  It was the first time in over 50 years of hockey in this city, that the home ice crowd saw a winner!  What a complete domination too!   A lot of “firsts” this year for the Blues… About time if you ask me! HA!  Well, my doctor visit yesterday, had him gushing about my weight loss… I go to my oncologist next week, I’m betting she’s not going to be so “gushing” about it… But it had to be done… my weight was inching higher and higher, and getting bad…  The Cellulitis in my leg is still hurting like a son-of-a gun, but I think I’m finally on the winning side of the ledger with it, and that would be a good thing!  Brian Setzer takes us to the finish line today with his remake of the Santo and Johnny song: Sleepwalk…   Man, he’s a good guitar player!  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

 

June 3, 2019 

* FSOC meeting spooks the markets and sends the dollar reeling… 

* An addition Trade War begins with Mexico… 

Good Day… And a Marvelous Monday to you!  And Welcome to June! Pfennig Tradition calls for:   June is busting out all over, all over the meadow and the fields….  Wow! What a gorgeous weekend, weather-wise here in my neck of the woods. The only blemish was a violent storm that came through our area Saturday night… I was at the ballpark, the game was tied 2-2, and it was the 5th inning… We looked at our phones and saw the storms coming, and decided to bail… Good thing we did, it was a 3 ½ hour rain delay! The weekend was made extra sweet because my beloved Cardinals swept the Cubs! The only downer was our Blues and their poor showing in Game 3, the first Stanley Cup Finals Game played in St. Louis in 49 years, and the Blues didn’t show up… They had 46,000 at the ballpark, 19,000 at the ice rink, and 50,000 in the street for a street watch party… Downtown was hopping! That is until the storms came… The Young Rascals greet me this morning with their song: A Beautiful Morning… Quite apropos eh?

Well, not much happened on Friday, other than another Trade War being waged, this time with Mexico… That was enough to send the dollar bugs scampering to the wall boards… That, and the two other things… 1. The economic Data was so-so…. And 2. There was a report of a secret meeting in Washington, D.C. to discuss the highly leveraged Credit markets… Uh-Oh, what’s up with that?

Here’s the skinny from the Street.com… “The Financial Stability Oversight Council, a panel of top U.S. regulators charged with preventing future financial crises, met Thursday to discuss the past decade’s surge in corporate borrowing, much of it by companies with junk-grade credit rating. An economic downturn likely would bring a wave of credit-rating downgrades and debt defaults that could ripple across markets.

The Financial Stability Oversight Council, formed in the wake of the 2008 financial crisis to prevent a repeat, met “in executive session,” or behind closed doors, according to a statement released by the Treasury Department’s public-affairs unit following the meeting.

Members of the group include Federal Reserve Chairman Jerome Powell as well as the heads of the Office of the Comptroller of the Currency, Federal Deposit Insurance Corp., Consumer Financial Protection Bureau, Securities and Exchange Commission and Commodity Futures Trading Commission. “

You may be saying to yourself, why on earth is Chuck making such a big deal out of a meeting? Well… that’s easy enough to answer! You see, if the folks at the Financial Stability Oversight Council, see these corporate junk bonds as a problem, well then it’s too late, baby now, it’s too late!

The cow is out of the barn, as my grandparents would have said… They admit that they are worried about a downturn in the U.S. economy, and what these leveraged loans might do in that situation… And you can bet your sweet bippie that you had better be aware of this, potential problem, and has a very high percentage chance of becoming reality…

And keep this in mind…. Remember…. the rating agencies had Enron as investment grade two days before they went bust. I’m just saying…. 

And don’t tell me that this news didn’t have anything to do with Gold’s romp higher on Friday! Gold is back above $1,300… Now, it’s time to begin to scrutinize the short Gold paper trades each day… Because they’re coming, I’m not mixing your mashed potatoes here! The shiny metal is up another $12 this morning in the early trading… So, it’s on a roll… Don’t stop it now! 

I came across something interesting this weekend… Malaysian Prime Minister Mahathir Mohamad on Thursday mooted the idea of a common trading currency for East Asia that would be pegged to gold, describing the existing currency trading in the region as manipulative.

Mahathir said the proposed common currency could be used to settle imports and exports, but would not be used for domestic transactions. I Immediately had a flashback to 2004… WOW that long ago, Chuck? What made you think of 2004… Well, in 2004, the folks at Agora Publishing came to me and asked me if I thought that with the success of the single unit, euro, if other countries would form unions for their currencies… So, Frank Trotter and Chuck sat down and put our heads together and came up with the Asian Countries could form a union and create a single currency called “The Pan”… The article became well liked and publicized at the time…

Could this be the beginning of “The Pan”?

It’s a beautiful morning… I think I’ll go outside for a while…. And just smile… Breathe in some clean fresh air… The Trade War talk now with Mexico, and continuing with China, and possibly the European Union for trading with Iran, has got me really fidgety this morning, and had me that way all weekend thinking about what I would say today… So, I think I’ll stop for a minute or two, and go outside, for there Ain’t no sense in staying inside If the weather’s fine and you got the time
It’s your chance to wake up and plan another brand new day
Either way, it’s a beautiful morning, ahh

See how mature I’ve gotten through the years… Shoot Rudy, maybe even my former marketing person would like me now! HA! The U.S. economy is heading to disaster, The Oversight Committee sees it, and it’s not going to be pretty, We have two Trade Wars going on, and a possible third one in the making, and… I’m singing along to song…

As far as I’m concerned… It’s about time!  What now Chuck? Oh, I’m talking about the dollar bugs scampering to find protection in the wall boards…  The euro traded very near 1.12 overnight, the Aussie and kiwi dollars are looking healthier, as is the Brazilian real, which has seen some hot and heavy selling for the last 9 months. 

The price of Oil got whacked like it’s never been whacked before on Friday, dropping $5 in one day!  The thinking here is that even though our friends at OPEC (NOT!) are still cutting production, that the Global Slowdown is going to reduce demand for Oil…  I have to question their thinking on this, as we begin the summer driving season here in the U.S.  And there’s no amount of slowdown that’s going to keep June and Ward from taking Wally and the Beaver on a road trip this summer!  

But it is what it is… and the price of Oil is trading with a $54 handle this morning…  I will say that on Saturday, I stopped to fill my gas tank, and noticed, as usual I must say, that the filling station had been slow to move the price of gas down to match the moves in the price of Oil…  Oh, well, bad timing on my part I guess, which is par for the course… Always choosing the wrong lane when driving in traffic, always choosing the wrong line when checking out at the grocery store, etc.    

The thing I don’t like about this downward move in the price of Oil is the negative affect it has on the Petrol Currencies of Russia, Norway, Brazil, Canada, and a few others… 

I just can’t get that news of a not so secret meeting took place last week… One of my fave economists: Danielle Di Martino Booth, was all over this story, and had plenty to say about it… You should probably check her out on Twitter… 

The U.S. Treasury yield continues to become more inverted daily…  The 10-year’s yield is down to 2.11%…  I’ve told you all dear readers for years, to pay attention to what the bond boys were telling us about the economy, and this time is no different…  But let’s check with someone else on his thoughts on the Treasury yield curve inversion… 

I can’t go any further without allowing one of my fave economists throw his 2-cents into the conversation this morning. So, here’s David Rosenberg, from his Twitter handle… “I’m hearing comparisons to ‘98 when global risks caused bonds to rally into inversion. Well, back then, the Fed didn’t just go on hold, it eased 3x. We were also in the midst of the dotcom boom and heading into the Y2K spending binge. These differences can’t be ignored.” -David Rosenberg on Twitter… 

The U.S. Data Cupboard gets restocked this week with data prints, and first out of the Cupboard today is the May ISM (manufacturing index), which has been slip sliding away in recent months and stands at 52.6 this morning….  Tomorrow we’ll see the color of Factory Order for May, and then after some other not-s0-important data prints, we end the week with the Jobs Jamboree for May…  What will the BLS have up their Bullwinkle sleeve this month?  Remember that last month… The BLS reported an increase in jobs created (with created being the operative word here) of 263,000 for April, but when the curtain got pulled back, we saw that the BLS had added 281,000 jobs after the surveys were received!  

And the media and markets took that number by the BLS and swallowed it hook, line and sinker…  Again!  How many months are the BLS going to be allowed to “fix the jobs report”? 

To recap… The dollar’s hold on the currencies and metals ended on Friday last week, and has continued in the Asian and European markets overnight.  A new Trade War was announced, this one with Mexico, and there was a private not-so-secret meeting late last week of the Financial Stability Oversight Committee regarding Corporate bonds…  If this committee is seeing this as a problem, folks, then it’s too late baby now, it’s too late… 

For What It’s Worth…. I told you last week that China was thinking of suspending their shipments of rare earth minerals and metals to the U.S. in retaliation for the Tariffs on their goods… And a dear reader asked me why these were so important… I scoured the internet and found this article on the Bloomberg.com sight that discusses what the rare earth minerals and metals are used in, and it can be found here: https://www.bloomberg.com/news/articles/2019-05-29/all-the-things-you-never-knew-rare-earth-metals-were-used-for

Or, here’s your snippet:” Washing machines. Cars. Disk drives — if those are still a thing. The rare-earth minerals that China is threatening to withhold from the U.S. as a trade war escalates are more present in consumer products and manufacturing than people might think. Here are some of the surprisingly common things they’re used to make:

The Gasoline in Your Car
Oil refineries depend on rare-earth elements as catalysts in units called fluid catalytic crackers. In fact, they’re some of the biggest consumers of the stuff. These FCC units basically “crack” apart oil molecules to make gasoline and diesel.

Other energy industries use them, too: They’re in wind turbines and may be used to make solar panels and run nuclear power plants. According to the U.S. government, they can also be used in lights, semiconductors, superconductors and batteries. Large-scale energy storage projects, however, may see little impact as they don’t typically make use of the elements, according to BloombergNEF.”

Chuck again… It’s a very BIG Deal folks… So, let’s hope that calmer heads prevail in these Trade Wars, eh?

Currencies today 6/3/19 American Style: A$.6960, kiwi .6563, C$ .7410, euro 1.1186, sterling 1.2635, Swiss $.9981, European Style: rand 14.5230, krone 8.7334, SEK 9.4815, forint 289.36, zloty 3.8295, koruna 23.0920, RUB 65.42, yen 108.35, sing 1.3702, HKD 7.8359, INR 69.19, China 6.9036, peso 19.66, BRL 3.9119, Dollar Index 97.65, Oil $54.04, 10-year 2.11%, Silver $14.72, Platinum $802.25, Palladium $1,344.42, and Gold $1,317.43

That’s it for today…  June…. Well, at least the weather should begin to be more consistent…  The rivers all around us here in the St. Louis area are all up from all the rain, and they expected to crest this week… So, far, fingers crossed, the creek behind my house is behaving…  Well, how about that crazy night, this past Saturday night, in downtown St. Louis?  WOW!  Too bad the Blues and the rain storm ruined it for most…  A few years ago, my beloved Cardinals were a .500 team on June 15th, and then went on a roll to win the division… I’m hoping this team can duplicate that this year!  See what sweeping the Cubs can do to one’s psyche and out look for a team? HA!  Ok…  Chicago takes us to the finish line today with their song: Hard To Say I’m Sorry…    (kind of a sad song… )  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

 

 

May 31, 2019  

* Dollar bugs bask in the sunlight of a flight to safety… 

* German Unemployment rises in May for first time since 2013… 

Good Day… And a Tub Thumpin’ Thursday to you! Our Blues evened the best of 7 series known as the Stanley Cup Finals last night… YAHOO! An overtime win on the road, made it even sweeter of a win! The first win in Stanley Cup Finals history for the Blues too! And I know for fact I’m right about that one! Lots of chances to score for both teams last night in the 3rd Period, but once it got to overtime, the Blues dominated the Bruins! As excited about that game as I was, I was also as dejected about the Cardinals latest futile effort to win… I told my good friend, Dennis Miller, yesterday that the Cardinals had brought up a young kid to pitch tonight, that I had seen in Spring Training, and he couldn’t get anyone out there, what made the Cardinals think he could do the job here? Well, he didn’t… I sure wish I ran the team! OK… Midnight Oil greets me this morning with their song: Beds Are Burning…

Well, I beat around the bush long enough this morning, I might as well tell you that the dollar hit a 2-year high in the Dollar Index… Investors are rushing to Gold and Treasuries, and the buying of those Treasuries is a boon for the dollar bugs. Gold is a different animal, as Gold for a lot of the world is priced in dollars, but not in China… And the Gold Russia buys is from China, with renminbi they earned from selling the Chinese Oil… So, two major players in the Gold arena don’t use dollars to buy Gold… I told you yesterday the historically the safe havens included euros… But not this time around… Yen and Swiss francs are seeing some buying on the side, but not the type of buying that really moves a currency stronger… Just enough to keep it steady Eddie.

Well… China isn’t buying those Treasuries as safe haven investments, in fact they are unloading them in small amounts, as to not move the markets violently… China also made a statement yesterday about their retaliation in the Trade War, and they mentioned that they would use rare earth minerals as a tool… In other words, you can  get rare earth minerals from China, so if they hold them back from exporting them to the U.S. what will the U.S. do?  I understand that there are other countries that may have rare earth minerals, but what if one of this Iran? YIKES!

That’s the fear that the markets have and thus the flight to safety…. I mentioned that Gold is one of the Safe Havens, and it is, but the boys in the band are keeping Gold from gaining too much… They can’t have investors thinking that Gold is what they need to own in times like these! Oh, and on a side bar… one of the members of the Plunge Protection Team here in the U.S. stepped down… I guess he just couldn’t stomach what they were doing any longer! I don’t know… Like I said I guess… But I put myself in his shoes, and I would be sick to my stomach too, if I had to live with all the stuff the PPT did!

This story gets more interesting folks…  Simon Potter was the head of the Fed NY’s FOMC, and Richard Dzina, head of the Fed NY’s Financial Services Group, both quit this week and only gave 4 days notice…  My spider sense tingled when I read that they only gave 4 days notice…  Was their departure voluntary? Seems to me that with only 4 days notice, it was forced… 

Now what could be the reason that 2 stalwart Fed NY markets guys get the boot?  Please tell me it’s not because their GDP reporting system FEDNOW, just printed a revision to their 2nd QTR GDP forecast, from 2.2% to 1.41%?

 I can Imagine  hearing  their boss telling them…  “What are you two thinking? We can’t have this kind of reporting hitting the streets? But you two decided that it was the “right thing to do”… Well, I’m here to tell you that it wasn’t the “right thing to do”, now go clean out your respective desks, and don’t look back!  Oh, and there’s a nice parting gift for you at the door! 

In the Eurozone yesterday, German Unemployment jumped higher, unexpectedly, and caused even more slippage in the euro to the dollar. The Eurozone is not immunized against economic problems that the Trade War between the U.S. and China are causing… I have to tell you this before I go on… I’m so glad that today is Thursday, and since I don’t write on Fridays any longer, I won’t have to talk about the strong dollar for 3 more days…. YAHOO!

But for those of you keeping score at home… here’s the skinny… For the first time since 2013, the German unemployment rate rose: the ranks of the jobless made up 5% of the labor force in May, a tiny nudge up from 4.9% the month before.  In case you were wondering… That’s 60,000 Germans that lost their jobs in May…  

Parts of the world that are Catholics are off today for Ascension Day… Here in the U.S. we are no longer a God fearing country, as we once were… And I don’t know why I went down that rabbit hole… but my fat fingers were flying around the keyboard, and then it happened… I said it! Oh, well. Can’t take it back now… HA!

Remember when our former President wanted to remove the Star Spangled Banner as our National Anthem? Just goes to show how far these people that want to take over our history and twist it to their liking, will go… And that’s all I’m going to say about that! Today that is…

Every time I think of Gold, it always comes back to the price manipulators… and then the silly song from the 60’s by Nancy Sinatra rolls through my head… These boots are made for walking, and one these days these boots are gonna walk all over you…. Gold is the boots… and the you, is the price manipulators…

The U.S. Data Cupboard was empty yesterday… So no news is good news for the U.S. economy… Today, we’ll see Pending Home Sales, and the final revision of 1st QTR GDP, which previously was 3.2%… I’ll betcha a dollar to a Krispy Kreme that it gets revised downward…. Probably not by much, but still downward, because that’s the direction the economy is headed in the 2nd QTR…

I was reading longtime friend, Bill Bonner’s letter yesterday, and he sounded a lot like me regarding the signs of a recession coming being evident. Let’s listen in… “Retail sales are headed down. Appliances, too. GDP growth. Industrial production. Hours worked. New hires. Durables. Manufacturing new orders (excluding defense). Construction spending. All down…
A recession is approaching. And our Crash Alert Flag is up on the pole… flapping… waiting… warning.” – Bill Bonner

Nothing’s changed in the U.K. folks… they’re still bickering back and forth about BREXIT, with nothing getting done, which is what caused PM May’s departure, as she couldn’t bring the deal home…  And the poor pound sterling just keeps getting caught in the middle…  

You know, when I first became a currency trader, after having done foreign bonds for years, and wanted to have control of the other side of the bond trade, the currencies, everything was priced off of pound sterling…  Traders would use the sterling / dollar cross  as the base and then D-marks, both francs (Swiss and French), etc. were priced off that cross… 

Of course this was pre-euro…  and pre-computers that did the cross for you gave you the price VS dollars right on the screen!  Pretty nifty, I thought at the time…   

But times change, and the pound sterling is no longer held in high regard as the base currency to price other currencies from…  Another step downward for sterling, as before WWII it (sterling) was the reserve currency of the world… 

To recap… The dollar bugs are basking in the sunlight of a flight to safety that is seeing tons of Treasury buying…  The Trade War got notched up in the fear meter yesterday when China announced that they may suspend rare earth minerals to the U.S.  Germany sees its first Unemployment rise since 2013 in May, as the Trade War filters through to other countries for sure… Gold can’t get off the bench without being put right back on the bench by the price manipulators… And The Fed NY’s FEDNOW system is forecasting 1.41% GDP for the 2nd QTR…  Ahem…. 

For What It’s Worth….  I told you some months ago that the U.S. had warned Europe not to trade with Iran, and the Europeans said, “don’t tell us what we can and can’t do” and proceeded to trade with Iran… Well, now the U.S. is retaliating and threatening to cut the Eurozone out of the SWIFT system… That story is kind of long, and can be found here: https://www.zerohedge.com/news/2019-05-29/us-threatens-europe-loss-access-us-financial-system-over-its-iran-funding-spv

Or, here’s your snippet: ” It’s going from bad to worse for Europe, whose currency had just hit session lows after Brussels confirmed that Italy faces a massive fine over its debt, when the Euro was hit with a double whammy after Bloomberg reported that the Trump administration is escalating its battle with “European allies” over the fate of the Iran nuclear accord, and is “threatening penalties against the financial body created by Germany, the U.K. and France to shield trade with the Islamic Republic from U.S. sanctions.”

According to Bloomberg, the Treasury Department’s undersecretary for terrorism and financial intelligence, Sigal Mandelker, sent a letter on May 7 warning that Instex, the European SPV to sustain trade with Tehran, and anyone associated with it could be barred from the U.S. financial system if it goes into effect.

As a reminder, last September, in order to maintain a financial relationship with Iran that can not be vetoed by the US, Europe unveiled a “Special Purpose Vehicle” to bypass SWIFT. Back then we predicted that Washington would not be too delighted with this development seeking to undermine the dollar’s reserve status. We were right.

“I urge you to carefully consider the potential sanctions exposure of Instex,” Mandelker wrote in the letter to Instex President Per Fischer. “Engaging in activities that run afoul of U.S. sanctions can result in severe consequences, including a loss of access to the U.S. financial system.”

Germany, France and the U.K. finalized the Instex system in January, allowing companies to trade with Iran without the use of U.S. dollars or American banks, allowing them to get around wide-ranging U.S. sanctions that were imposed after the Trump administration abandoned the 2015 Iran nuclear deal last year.

Not surprisingly, a senior admin official behind the letter said the U.S. decided to issue the threat “after concluding that European officials, who had earlier downplayed the significance of Instex in conversations with the Trump administration, were far more serious about it than they had initially let on.”

Chuck again…  Believe me when I say that I don’t understand why we must tick off our allies…    

Currencies today 5/30/19 American Style: A$.6930, kiwi .6525, C$ .7413, euro 1.1140, sterling 1.2628, Swiss $.9907, European Style: rand 14.6000, krone 8.7523, SEK 9.5436, forint 291.64, zloty 3.8497, koruna 23.1905, RUB 64.94, yen 109.70, sing 1.3793, HKD 7.8477, INR 69.80, China 6.9114, peso 19.11, BRL 4.0039, Dollar Index 98.11, Oil $59.04, 10-year 2.26%, Silver $14.42, Platinum $795.73, Palladium $1,345.23, and Gold… $1,276.60

That’s it for today, and tomorrow…  I sure liked this 3-day workweek, I’ll have to look at my contract to see if I could swing that more often! HA!  Well, when I talk to you next it will be June… The year is flying by…   Cubs come to town this weekend, and I get to go the Saturday night game. YAHOO! The cellulitis in my leg is not getting any better, I’m at a loss as to why, except I keep thinking that the chemo I take each day, causes cuts and bruises I get to heal very slowly… So, in my mind, the chemo is holding the healing process up… In which case there’s not a thing I can do about it… Except grin and bear it…  Let’s Go Blues, Let’s Go Blues, Let’s Go Blues!  the Blues will play on home ice, also on Saturday night… I don’t know why the Cardinals couldn’t reschedule the game on Saturday night to a an afternoon game, so that fans don’t have to choose…  Oh well, it is what it is…  Del Shannon takes us to the finish line today with his song: Runaway… I always loved that song…   I hope you have a Tub Thumpin’ Thursday and a Fantastico Friday tomorrow, and will Be Good To Yourself! 

Chuck Butler