Author: admin

December 4, 2019

* Currencies drift with no data on Tuesday…

* Talking with Elvira, makes Chuck smile… 

Good day… And a Wonderful Wednesday to you! I was reminded yesterday by our local newspaper that it was the day to look back to December 3, 1990, when a man named Iben Browning predicted that we would experience an earthquake that would devastate the St. Louis region, with seismic shifts that would equal 1811-12… We were prepared, with lots of canned goods, bottles of water, large bottles not the kind they sell today for $4 a piece! We had backup plans and the whole shootin’ match, and the earthquake never came… I don’t believe anyone has heard from Iben Browning since… but it was a good thing, in reality, for companies and individuals all had to come up with backup plans… Disaster Recover Plans… I was responsible for coming up with the one we would use at our location… An interesting time no less, for sure! Chicago greets me this morning with their song: In The Country… the 4th song on the 1st side of the Chicago ii double album, which featured the Ballad for a girl in Buchannon… I still recall the day I first put this album on my old record player, and music, and sound coming from it blew me away! That was 1972… the album cost me around $12… Today, if you wanted to buy it you would fork out more than $44 for it!

OK… A long intro with little news in it… but I always have a story to tell about something, and once it gets in my head, it filters down to my fat fingers, and voila! Here we are!

The currencies didn’t give back their Monday gains on Tuesday, as there was little disappointing data in the U.S. to print… Vehicle Sales were supposed to print, but I never saw them! With nothing to move traders to sell more dollars, the currencies drifted, higher albeit, on the day… Gold, got a real nice booster shot in the arm and rallied as much as $17 on the day, but settled in for a $15 gain and close at $1,477 on the day… No need for safe havens,  behind the refrigerator was a piece of glass, I sat upon and broke my little, ask me no more questions, I’ll tell you no lies…. HA!

Neener, neener, neener… I told you traders that you would rue the day that you sold your safe havens! Shoot Rudy, even the one safe haven that I don’t believe should be called on, Japanese yen, has recovered its losses it took when traders thought safe havens weren’t needed!

OK, along with all the disappointing data prints we’ve seen the last couple of months, now comes word that the potato crop was really bad this year, due to cold, wet weather all spring and summer… That means we’re going to experience a French fry shortage… And you  will recall what I’ve told you for years that my dad taught me… There’s no such thing as a shortage, only something that’s in need of a price adjustment… So, with that in mind, what we’ll experience is more expensive French fries! Oh, the Humanity!

I read a report yesterday in the Russian Times (RT.com) that talked about how the cold war between Russia and Europe was ending, with Europe being quite impressed with the way Russia handled the economic sanctions that both the U.S. and Europe had place on Russia. And while the economy is still not up to snuff in Russia, it is positive, inflation is down, and they keep accumulating physical Gold… Imagine there’s no country… It isn’t hard to do… and so on… If the article is on to something it could mean the end of the European sanctions for Russia… Now…. If only that pesky price of Oil would move higher, so that the Russian ruble can spread its wings…

We’re getting back to the price level in Oil that pushes all the Shale producers out of the drilling market for awhile… We’ve seen this game with the price of Oil going on for years now… the price rises, the Shale producers hit it hot and heavy, flood the market with supplies, and that causes the price to fall, and the Shale producers get back out… What goes up, must come down… Spinning Wheel, to go around… Ahhh, a little BS&T for me this morning!

Speaking of going up but not coming down… The stock jockeys must be dancing in the street, these days, every day is a new record high…. I don’t know, maybe it’s just me, but does this scenario remind you of another period of time when stocks didn’t seem like they would ever lose again? We had just turned over to a new century… hint, hint… The dot.com collapse, which made sense because the majority of those dot.com companies had never earned a dime during their existence, but had unbelievable prices attached to them… Well, at least for a short-while they did… And then one day they didn’t, and they didn’t, and they didn’t, until very few of them were left standing…

The companies today at least have some earnings..c. But their price to earnings ratios are very skewered and out of control, so while it’s not really “the same scenario”, the current one in in the ballpark of the dot.com rise to fame and then the fall… I’m just saying…

OK… many of you have commented to me in the past about my insistence on talking about Russia and the ruble… And yesterday, I had the pleasure of reading a short interview with the Central Bank of Russia (CBR) Gov. Elvira Nabiullina… I’ve long said that she was a Central Banker that did what Central Bankers used to do… Be prudent, control inflation, and promote economic growth, but knowing all too well that their policies don’t guarantee economic growth… I liked the article so much that I have it featured in the For What It’s Section today… But there was one comment in the article that she (Nabiullina) was quoted saying that sounded like it came out of my mouth! Check this out and tell me if you haven’t heard me explain inflation like this many times in the past… Here’s the CBR Gov. Elvira Nabiullina:

When asked about inflation, she replied, “ Indeed, everyone has their own kind of inflation. Different families consume different sets of products. There are the kinds of products and services by which people primarily judge the increase in prices in stores. We pay special attention to such kinds of products and goods: gasoline, housing and public utility services, foodstuff, and everyday products. People react very quickly to these products.”

And people wonder why I call her the best Central Bank Gov. around….

I know I’m getting quite wordy these days… I’m using up all my thoughts and research now, since my annual winter vacation is just around the corner! So, with that in mind, here’s another scary thing that’s going on here in the U.S. Everyone knows that the low interest rate environment has brought on Borrowing from individuals, to Corporations, to Gov’ts… Well, the Corporations have gone quite overboard with their borrowing, and in an article that longtime reader Bob, sent me, the amount of Corporate debt is detailed… The article can be found at www.themostimportantnews.com

Corporate debt in the U.S. is almost $10 Billion, which is 47% of our GDP! And here’s the really scary part of this… Defaults on the riskiest class of Corporate Debt are on pace to hit their highest level since 2008… And we all remember what happened in 2008, when Lehman Brothers couldn’t meet their debt liabilities, now don’t we? Longtime analyst, Michael Snyder, calls this a “debt bomb”… And I wouldn’t argue with him one bit… 

The U.S. Data Cupboard opens up for business again today, with the ADP Employment report, which at this time is forecasting a total of 125,000 jobs created in November… I keep saying this and sooner or later it will stick, and actually be true, but the ADP report is supposed to be a harbinger for the BLS Jobs Jamboree which will print Friday this week… And the ADP print probably would be each month, IF the BLS didn’t go adding jobs from thin air to the surveys they receive… And that’s all I’ll say about all of this, because, as I’ve said before, I really don’t care how many jobs are created.

You see, the jobs that have been created since 2008, have been mostly min. wage, or low wage jobs, that can’t support the economic growth that an Unemployment Rate like we supposedly have, would bring… And the low wages don’t bring on wage inflation, which is what the Fed Heads are waiting for… 

We’ll also see the services indexes from Markit and the ISM for last month… These data prints don’t really move markets… unless they go rouge either way…

I haven’t been very prudent about reviewing the Pfennig Replies email box, lately… Sorry about that! If you sent me a question, I’ll attempt to get to it soon…  I know that we’re only promised today… But I’m betting a dollar to a Krispy Kreme, that we’ll all be here tomorrow….  I’m just saying… 

And speaking of weak data, wait! what? I wasn’t speaking of weak data, but I should be, each and every day!  But what I’m getting at is that last week the 10-year Treasury’s yield had bumped higher to 1.83%, but after the weak ISM earlier this week, the bond boys have the 10-year’s yield back down to 1.74%…   Just to repeat what I had said previously to today, The 10-year’s yield is destined to revisit it’s low from a few years ago at 1.38%… 

To recap… The currencies held their gains yesterday, and drifted a little higher as the day went along. Gold had a good day, closing up $15 on the day, and is flat in the early trading today.  Ever hear about a “debt bomb”? Well, Chuck talks about one today!  Along with a glowing review of the CBR’s Gov. Elvira Nabiullina…  The ADP Employment Report prints today, but other than that there isn’t much in the Data Cupboard today… 

For What It’s Worth…. OK, as aforementioned, this is an article that is about an interview with Elvira Nabiullina the Central Bank of Russia’s Gov. And if you don’t come away with a stronger opinion, liking her, well… I don’t know what else I can do to cure your “Russia phobia”… Ok, the article can be found here: https://www.vesti.ru/doc.html?id=3216440&cid=4441

Or, here’s your snippet: “Could Russia face a crisis in the near future?
Elvira Nabiullina, head of the Central Bank of Russia: Well, Russia could be affected, but we have laid the foundations for stability. We worked a lot to make the internal development of Russia less dependent on any external shocks and fluctuations. External shocks are primarily sanctions.

– Russia has been living under them for five years. The United States is threatening to impose new restrictions, first of all, against banks. Is our financial system ready for this?

– We got used to living under sanctions as well as in the context of constant discussions about new sanctions. That’s why we’re getting ready for this. We always calculate risk scenarios in order to best withstand the possible pressure of sanctions. We look at different aspects of financial stability to be ready for anything at any time.

– Despite sanctions, the ruble has even grown against both the dollar and the euro this year.

We did a lot to ensure long-term confidence in low inflation among people. We wanted to convince them that this is not a short-term period, that we’ll always have inflation under control.

Stability in the banking system is also under control. The amount people have in savings is growing along with the number of mortgages granted while home loan rates are going down. Today, they’re just above 9%.”

Chuck again… Com’n admit it, you’re wondering why the Fed, the ECB, the BOE, the BOJ, and any other Central Bank can’t find someone like her!

Currencies today 12/4/19 American Style: A$.6838, kiwi .6426, C$ .7533, euro 1.1080, sterling 1.3098, Swiss $1.0114, European Style: rand 14.5617, krone 9.1815, SEK 9.5183, forint 298.53, zloty 3.8598,  koruna 23.0320, RUB 64.12, yen 108.68, sing 1.3632, HKD 7.8287, INR 71.40, China 7.0511, peso 19.52, BRL 4.2112, Dollar Index 97.67, Oil $57.13,  10-year 1.74%, Silver $17.15, Platinum $915.44, Palladium $1,857.93, and Gold… $1,477.58

That’s it for today… Man, it’s been quite some time since I was woken up by my alarm… I set it each night, but usually, I wake up before it goes off, but not today, and by the time I actually woke up to it, the alarm had been gong off for 14 minutes!  (sorry Kathy!) Well, with November behind us, the sun had decided to return, and it has been quite a nice couple of days here… I passed a Salvation Army Kettle person, ringing her bell, yesterday, and said to her, “At least it’s not bitter cold today” She smiled…   For over 25 years our subdivision has held a Progressive Dinner Party, where we all visit different houses for a course and then finish at the last house for cocktails and dessert. We’ve always been the “last house” and will be that again this Saturday…  And with that, Matthew Sweet takes us to the finish line today with his song: Girlfriend…  Chuck, Kathy, Chris and Tina Gaffney, along with friend Michelle Camp, saw Matthew Sweet in concert many years ago…  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler 

 

 

December 3, 2019

* Currencies & metals rally on Monday

* Waiting for a short squeeze in Gold? 

Good Day… And a Tom Terrific Tuesday to you! Well, have you recovered from your Thanksgiving weekend, of… maybe travel, eating, celebrating, etc.? I had forgotten last night, that the Blues were playing the Blackhawks… But remembered just in time to turn the game on, only to see the first goal of the game… I can’t remember a Blues/ Blackhawks hockey game with very little rough stuff going on… Blues won 4-0… More decorating went on yesterday… The house is ready for Christmas! I love Christmas lights… Trees… ornaments, gifts under the tree… And I love the way the world seems to be under the trance of magic… At least for a few days that is… The Gin Blossoms greet me this morning with their song: Until I Fall Away…

I don’t want to spoil your appetite for more Pfennig today, so I’ll just touch on the note that the U.S. Data continues to be sketchy at best, and probably was the reason the dollar lost ground yesterday to the currencies and Gold. The euro was able to gain ½-cent on the day, which doesn’t sound like much, but in the whole scheme of things, and in the words of my longtime friend, and former Big Boss, Frank Trotter, it was “better than a sharp stick in the eye”…

On a sidebar, as many of you know I lost my left eye to cancer back in 2010… But before it went completely dead, I used to get shots in my eye of chemo… I can tell you that while it’s not as bad as it sounds, it’s still not the most pleasant thing in life! So, one day, after getting a shot in my eye, I mentioned something to Frank, and he came back with his “better than a sharp stick in the eye” comment, and I said, “you mean better than a sharp needle in my eye”! I don’t think he ever used that saying around me again after that! HA!

So, the currencies rallied about as much as they were going to be allowed to rally on the day, and the same thing went on with Gold who erased most of the $6 loss in early trading to close at $5 to $1,461 on the day… In the never changing back and forth trading of the shiny metal, Gold is up $7 this morning…. 

I read a lot about Gold yesterday, and from what I read, I garnered that some big time analysts, are calling for Gold to take off to the upside soon… It’s something that I’ve been thinking about for a couple of weeks now…. Remember when I would say that there was a “short squeeze” in an asset that caused it to rally? Well, I got to thinking about all the short positions that are out there in Gold and Silver… For instance it would take 100 days of current production to cover the short positions on the books in Gold… And for Silver it would take 210 days of current production to cover the short positions on the books…

And those two numbers are what I’m thinking about seeing a short squeeze… And that could beget more buying back of short positions, taken along with the actual physical Gold & Silver and we could be in store for a major upward move… IF a short squeeze happens to take place, which would come about if the physical buying of the two metals really makes a difference in the next positions each day… So, if we begin to see Gold & Silver begin to take off to the upside, we might very well, be in the first inning of a short squeeze…. I’m just saying…

There are times in one’s life when they are witness to something amazing… My first dance with seeing something amazing was the birth of my 3rd Child, Alex, who was born 14 years after our last child. My second dance with amazement has been seeing myself in the mirror each morning, when all the data says I should be 6 feet under by now… And now I’m hoping to see another amazing thing, and that is the collapse of the COMEX when all the short positions get jammed up…

OK, enough on short squeezes, COMEX problems, and the rest of that stuff for today… I think I sufficiently beat the dead horse on that one… (no animals were hurt here!)

Remember when all the talk was there was no need for safe havens because the Trade War was coming to an end? Well, they may want to rethink that strategy, as China balked yesterday at a Blacklist and the presence of it could threaten the Trade Talks… And now President Trump said there was no deadline for the Trade Talks, and he would prefer to wait until after the election… Recall that the next round of tariffs on China kick in on December 15th…  What will the markets think about that? 

Another thing for the markets to think about is the Fed making an announcement yesterday that they are going to, by policy shift, allow inflation to grow greater than 2%…   Mark my words on this folks… Once inflation gets going it will fly past whatever level the Fed is thinking they can stop it, and won’t be able to…  

The Eurozone Administrators sure are doing some back slapping, as a recent report showed that while the Eurozone economy is weak, that stimulants are working… And one of the things they point to was the fact that last week it was reported that Eurozone unemployment had dropped to an 11-year low! Eurozone unemployment rate fell to 7.5% from 7.6%, to represent the lowest figure since July 2008…

If I were a Eurozone Administrator, I would be backing away from any backslapping… There’s no proof that negative rates stimulate an economy… Again, if I’ve said this once I’ve said it 100 times, that if negative rates were “all that and more” then Japan would have the best performing economy on the face of the earth! And they certainly don’t have that, and haven’t had it for 2 decades, and won’t have it any time in the near future!

And I told you yesterday that the Chinese PMI (manufacturing index) had surprised the markets with an upward tick and that had the Global Growth campers in a happy state of mind. So much so that the Aussie dollar (A$) rallied and took its kissin’ cousin across the Tasman, kiwi, along for a nice upward ride… 

Australia hasn’t been receiving a lot of love from analysts lately, so it was good to see the A$ spread its wings again…  The problem with these kinds of moves is that, they, for the most part, don’t carry through… So, we’ll ahve to see with this one, eh? 

Now for the aforementioned Data report….Well, the Data Cupboard wasn’t so kind to the dollar yesterday, as the prints were quite ugly to say the least… Let’s start with the ISM Manufacturing Index… I told you yesterday that I didn’t agree with the forecasters call for the index number to improve… And I was correct to say that! Here’s the skinny on the data… The ISM for Rocktober was 48.3… The forecasters said it would improve to 49.2, but instead it slipped further to 48.1… That makes 3 consecutive months below the line in the sand number 50… In addition to the ISM, we also saw the color of Rocktober’s Construction Spending, and it was not colored so brightly, as it printed negative -0.8%…

The economic data hasn’t completely gone into “recession awareness mode” but it’s getting there, folks… I know, I know I said we would be in a recession by year-end, and while we still have 4 weeks, I don’t see how that will happen, not with the Fed not only cutting rates, but printing money like it’s going out of style with the repo operations in NY…. Oh, well, they say, that good things come to those who wait… Not that a recession would be a good thing, but… it’s what we need to clean out the excesses and start over… Let the bad companies and banks fail… Those that survive will scoop of the failed business and be stronger!

To recap… The Trade Talks take on water… The U.S. Data is weak… and a combination of those things sent the dollar to the woodshed yesterday, and through the overnight markets. The currencies all look a little healthier this morning, and Gold is up $7…  China’s uptick in their CAIXIN PMI was responsible for a mini rally in both the A$ and kiwi, as the Global Growth campers had a day in the sun. I have no idea what the Fed is up to now… they have me scratching my balding head! 

For What It’s Worth…. Oh brother… Two weeks ago it was JPMorgan in the sites of Russ and Pam Martens of Wallstreetonparade.com, and now it’s Morgan Stanley… And from what I read, They’re being very courteous to the folks at Morgan Stanley… Bloomberg announced a HUGE trading loss in currencies on Thanksgiving, when no one was paying attention… The skinny on that, and other problems at Morgan Stanley can be found here: https://wallstreetonparade.com/2019/12/the-new-york-fed-has-some-explaining-to-do-over-morgan-stanleys-unreported-trading-losses/

Or, here’s your snippet: “Today, the New York Fed will only say that it’s making these new loans, which tally up to hundreds of billions of dollars each week, to some of its 24 “primary dealers.” For the most part, those “primary dealers” are the high-risk trading units of big commercial banks in the U.S. and abroad. 

One of the primary dealers that is eligible to be taking these multi-billion dollar loans from the New York Fed is Morgan Stanley & Co. LLC. Morgan Stanley describes that unit as follows: “Its businesses include securities underwriting and distribution; financial advisory services, including advice on mergers and acquisitions, restructurings, real estate and project finance; sales, trading, financing and market-making activities in equity and fixed income securities and related products, and other instruments including foreign exchange and commodities futures; and prime brokerage services.

At 11:36 a.m. on Thanksgiving Day, when households across America were either watching the Macy’s Thanksgiving Day Parade on TV or hustling in the kitchen, Bloomberg News dropped the bombshell report that foreign currency traders at Morgan Stanley had hidden a trading loss of upwards of $140 million. Two of the traders involved in the losses were based in London, according to the Bloomberg report.

There are a number of curious and noteworthy aspects to this report. First, only Bloomberg News was privy to this information. Morgan Stanley had not informed its shareholders via any public statement nor had it informed the Securities and Exchange Commission via a public filing. Thus it is also highly likely that it had not informed the New York Fed, another of its regulators, despite the fact that its CEO, James Gorman, sits on the Board of the New York Fed. The Bloomberg article suggests that the firm itself is just now investigating what actually happened, meaning that an outside news agency attempting to place a realistic figure on the amount of the losses is suspect at best.

In 2012, the Chairman and CEO of JPMorgan Chase, Jamie Dimon, called news reports of its derivative trading losses in London “a tempest in a teapot.” Those hidden trading losses turned out to be over $6.2 billion.

Morgan Stanley, however, can top JPMorgan’s historic trading loss. During the financial crisis, one of Morgan Stanley’s traders, Howie Hubler, lost $9 billion betting on subprime debt. But Morgan Stanley survived the financial crisis because the New York Fed secretly pumped more than $2 trillion into Morgan Stanley from 2007 to the middle of 2010 according to a Fed audit performed by the Government Accountability Office (GAO) and released to the public in July 2011. The audit occurred as the result of an amendment attached to the Dodd-Frank financial reform legislation of 2010 by Senator Bernie Sanders and others.”

Chuck again… These major banks are taking on water folks… and as Russ and Pam Martens said in their ending of the article: “If you’re thinking this is the banking structure from hell, you would be spot on.”

Currencies today 12/3/19 American Style: A$.6845, kiwi .6520, C$ .7515, euro 1.1075, sterling 1.2989, Swiss $1.0111, European Style: rand 14.6267, krone 9.1696, SEK 9.5295, forint 299.17, zloty 3.8648,   koruna 23.0490, RUB 65.25, yen 108.85, sing 1.3648, HKD 7.8283, INR 71.55, China 7.0360, peso 19.57, BRL 4.2279, Dollar Index 97.81, Oil $56.02, 10-year 1.79%, Silver $17.00, Platinum $901.08, Palladium $1,852.68, and Gold… $1,469.56

That’s it for today… That’s really something isn’t it, that on one day the markets are thinking there’s no need for safe havens, and the next day the thought is reversed?  Crazy, fickle traders!  Our Blues sure seem to be a streaky team, in the early season so far… multi-winning streaks are followed my multi-game losing streaks. So far however the winning streaks like the one they are on now that totals 4 games, have occured more! I saw that the folks at Roger Dean Stadium charged me for my Spring Training tickets already…  But in reality Spring Training is only 2 months away…. Yay!  The report from the wound treatment center last week was that there was 30% healing in the leg wound… It’s a start! The original Doobie Brothers take us to the finish line today with their song: China Grove…  I watched a documentary about the Doobie Brothers yesterday, learned some new stuff, rehashed the rest…  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself! 

Chuck Butler

 

 

December 2, 2019

* Currencies succumb to the dollar’s strength

* We may, after all, find out who needs repo money…. 

Good Day… And a Marvelous Monday to you!  And Welcome to December! I hope you all had a very Blessed Thanksgiving, with family, friends, whomever, and that you took the time to hug someone and tell them you love them and that you’re thankful they’re in your life… I got to hold my darling granddaughter, Evie, once again on Thursday… I sang to her, she was happy, and not fidgety for me… By the time everyone ate, there was very little but scraps and legs of the two turkeys we cooked, left… And Alex wasn’t even here! I guess next year, I’ll need to cook a third one on the Big Green Egg! My Mizzou Tigers won their last game of the year on Friday, beating rival Arkansas… And then they fired the head coach the next day… So, now we’re looking for a head coach once again… UGH! Procol Harum greets me this morning with their iconic rock classic song: A Whiter Shade of Pale…

Man, did I listen to a lot of Pandora’s Smooth Jazz Christmas station this past weekend! The house is beginning to get dressed up… It’s my fave time of year, too bad it’s cold outside! Oh well, it is what it is…

The currencies lost a little ground as they went into the weekend. There wasn’t much going on with the U.S. on holiday on Thursday, but in reality, from about noon on Wednesday thru to Saturday, there was a holiday especially by traders, and market participants… So, the euro, for instance was 1.1050 on Wednesday morning, and ended the week 1.2025… No biggie, just a small downward movement, as witnessed by the Dollar Index which on Wednesday was 98.34 and on Friday to close the week it was 98.37…

Gold got an opportunity to trade without the price manipulators breathing down Gold’s rise… And so the shiny metal, even with little volume, found a way to end the week up about $10 from where I last talked to you last Tuesday… I would have like to have seen Gold’s move be greater in numbers without the price manipulators, but I’ll take $10 and be a happy camper! But guess who’s back at their desks today?  And from the looks of it, they are already catching up, as Gold is down $6.40 in the early trading this morning… 

Speaking of Gold… Jared Dillian of the 10th Man newsletter recently ran a survey, and among the questions he asked, was this one: What do you think the best medium term investment is with a time horizon of 4 years? Of individual stocks, mutual funds/ index funds, real estate, bonds, savings/cd’s, and Gold, guess which one was the leader? That’s right Gold! Gold beat individual stocks! Now that was a survey of 10,000 responses… I guess he asked the right people, because, from my view in the cheap seats, I would think the average joe six pack would say individual stocks, and not Gold…

And here’s another ditty about Gold… I got this from the good folks at GATA… “The gold options market today saw $1.75 million in block trades betting the precious metal could almost triple in more than a year, surpassing the record.

Around noon in New York, 5,000 lots for a gold option giving the holder the right to buy the precious metal at $4,000 an ounce in June 2021 changed hands. The bets were sold at $3.50 an ounce.”

Chuck again…. Seems to me, that whomever it was that bought the $4,000 / oz. Gold options knows something that we don’t… And may I throw an idea out there? Of course I can, it’s my letter! HA! Here’s my thought… if this person (s) want to buy Gold @$4,000 then they must believe that Gold will be much higher than that price… Therefore they must know something we don’t… And I’ll only throw this out there for everyone to take shots at, but my spider sense was tingling when I read that… So, it’s either a hoax, and the trades will be pulled back…. Or, the great price reset for Gold is coming… Got Gold?

Palladium continues to move higher and higher with each trading day, and late last week it traded over $1,800!  They say that there’s a shortage in Palladium and that’s the reason for the moonshot price…  Well, as I’ve said before, if that’s good for Palladium it should be the same for Silver! 

OK… There was a horrible attack on citizens in the U.K. this past week, and the focus was taken away from the BREXIT negotiations, although I did read that the two opposing sides were blaming each other for the attacks… Dolts, all of them! Here’s my memo to them… Just focus on getting the BREXIT agreement put to bed, so life can go on in the U.K. and they can get back to spending money they don’t have…

I say that last part with a bit of cynicism because everyone is spending money they don’t have… Debt is growing by leaps and bounds everywhere… And especially here where we live… I read this weekend that it was a record spending weekend for Christmas shoppers. The caveat was that the stores weren’t crowded, that most of the sales were done online… Oh, and the last report on Consumer Income and Spending showed the income was flat, while spending was up 0.3%, which means we’re spending more than we have…

On a sidebar, do you ever wonder if there will come a time, when you won’t be able to find a bricks and mortar store around, and that the only business will be done online? First it was the Catalog business going to the curb, next it will be the bricks and mortar businesses going to the curb… I’m just saying… it sure seems like where this is heading…

Speaking of spending what we don’t have… I read a report on Bloomberg.com this weekend that talked about the ways to get out from all this debt… It’s common knowledge that economic growth would certainly help, but since that’s not coming, and hasn’t been around for nearly a decade, that is unless you count 2.1% per annum growth… There was not one mention of austerity measures… Wait! What? Are you kidding me, they got all these economists in a room and the two things they talked about was 1. The need for economic growth, and 2. That the only thing to do now is to spend more… They pointed out that the rate structure being what it is, does help the debt burden, but come on…. So, they had all these economists together, and best they could do was to tell us not to worry about the debt hole we’ve dug for ourselves, and to keep digging?

OK… enough of that! Gov’ts are going to keep spending because that’s all they know to do! And the U.S. is no different, even though we should be better than all other gov’ts… And there’s nothing I can do about all this debt spending…

Remember a week or so ago when I told you that the GATA folks had been told by the Fed NY that it would be two years before they would reveal the banks that needed assistance? Well, there’s been some developments there in the meantime. The GATA request asked for “all loans” for this year, and the Fed ducked under the Dodd Frank rule of not having to reveal receivers of funds at the Discount Window… So, if GATA or anyone else is looking for the banks that need repo money, then they’ll have to request that specifically… I’m sure the will, so there’s more to this story that will come to us as the days go by…

As I look across the globe for things that might markets, I find the news that the dollar is at a 6-month high VS Japanese yen…  Which makes sense given the selling of Gold. I talked last week about how it seemed there was this feeling in the markets that a save haven was no longer needed… And while I would argue with whomever, until the cows came home that yen was not a Safe Haven, it sure gets treated like one these days, so if Gold is no longer needed, neither is yen… 

That’s all hogwash to me folks… No need for a safe haven!  It’s as if the markets have lost their marbles…  They’re acting like Tootles in Peter Pan!

OK, in the U.K. they will have an election on Dec. 12th, and right now there are fears that the result will be a hung parliament… So, the U.K. has that going for them!  

In China over the weekend, the private print of the CAIXIN Manufacturing Index showed there was still life in the Chinese economy, as the index number rose from 50.2 in the previous month to 51.8, thus giving the global growth currencies a little room to bask in the sun, at least until the sun goes down! 

The price of Oil dropped in the past 5 days by over $2…  I guess the Thanksgiving driving wasn’t what it once was?   I hear that our friends at OPEC (NOT!) are talking about more production cuts… I also read that OPEC is making a bet that the U.S.’s golden shale age is coming to an end…  I would be the one driving the car on that bet if I were a Chinese OPEC member, as I’ve talked a lot about how the Shale business is waning… 

So, the price of Oil being what it is right now, is of no help to the Petrol Currencies, and the likes of Russian rubles, Norwegian krone, Brazilian real, and Canadian loonies, can’t seem to find a bid right now… UGH! 

The U.S. Data Cupboard has a boat load of data prints for us this week, starting today and ending Friday with the November Jobs Jamboree. The real economic data prints this week will include: Factory Orders scheduled for later in the week, and the ISM Manufacturing Index that will print today. Recall that the ISM slipped below 50 a couple of months ago, and didn’t recover, but instead, it slipped lower in the following month…  So, for Rocktober it was 48.3….  The forecasters say that we’ll see some healing in this index number for November…  I say, I’m from Missouri, you’ll have to show me!

To recap…  The U.S. was basically on holiday for 3 days last week, and so the trade volume was thin, and the currencies didn’t move much, while Gold gained $10 during the holidays… Gold is down more than $6 in early trading today, and the dollar looks like its ready to kick some butt and take names later…  Debt is everywhere, but more importantly it’s here, in the U.S. and there’s nothing anyone can figure out what to do with, so economists think that we should strap on the feed bags and create dollars until the sun don’t shine any more…

 

For What It’s Worth…. Geez, you know, there are sometimes I wish I could just be like most people and believe everything the media, Gov’t, Fed, and Treasury tell us… It sure would make things easier for me, I could print the Polly Anna, lollipops and rainbows that I have to sift through every day … But then I thank God that I’m not like most people! For who would have the gumption to report the things I talk about to you? It sure wouldn’t be Paul Krugman, or any other gov’t economist! Well, with all that in mind here’s today’s FWIW article. This article come to me from longtime reader Bob, and it’s about subprime loans defaulting again, and it can be found here: https://wolfstreet.com/2019/11/28/whats-behind-the-subprime-consumer-loan-implosion/

Or, here’s your snippet: “OK, we’ve got a situation in subprime consumer loans. The delinquency rate on credit-card loan balances at the nearly 5,000 smaller commercial banks in the United States – this means all banks except the largest 100 – is blowing out, according to Federal Reserve data. In the third quarter, the delinquency rate at these banks rose to 6.25%. That’s higher even than during the peak of the Financial Crisis.
Back in 2016, the credit-card delinquency rate at these banks was in the 3% range. It has more than doubled in two years.

Credit card balances are considered delinquent when they’re 30 days or more past due. This delinquency rate means that out of the banks total credit card balances, 6.25% are 30 days or more past due. This is a disturbingly large rate.

But delinquencies are a flow. Balances are removed from the delinquency basket either when the customer cures the delinquency, such as catching up with past-due payments, or when the bank “charges off” the delinquent balance against its loan loss reserves. But as these delinquent balances were taken out of the delinquency basket, even more new delinquencies fell into the basket, and the delinquency rate rose.

Subprime auto loans have also been blowing out. In the third quarter, the serious delinquency rate of the $1.3 trillion in auto loans has risen to 4.71%, the highest since the worst months of the Financial Crisis, when the auto industry collapsed, and when the US was facing the worst unemployment crisis since the Great Depression. In the third quarter, about 21% of all subprime auto loans were seriously delinquent – meaning 90 days past due.”

Chuck again… yes… Hello Houston, we’ve got a problem kept coming to my mind when I read this article… And then we can circle back to the top today when I talked about all the online purchases… those are made with credit cards, folks… And when the bills come in, guess what will happen then….

Currencies today 12/2/19 American Style: A$ .6785, kiwi .6473, C$ .7520, euro 1.1017, sterling 1.2933, Swiss $1.0023, European Style: rand 14.6590, krone 9.1938, SEK 9.5683, forint 302.08, zloty 3.9020,   koruna 23.1688, RUB 64.31, yen 109.55, sing 1.3685, HKD 7.8285, INR 71.54, China 7.0316, peso 19.54, BRL 4.2350, Dollar Index 98.32, Oil $56.36, 10-year 1.83%, Silver $16.88, Platinum $891.83, Palladium $1,857.55, and Gold… $1,457.59

That’s it for today…   Well… let’s see, there are a few birthdays this month in addition to Christmas, so it will be a month of parties, get togethers, and good cheer…  I think I remember that former colleagues, Jennifer, and Ty will celebrate birthdays this month. My wife’s birthday is the day after Christmas… (please don’t tell her I mentioned her!)   My sister, Terri, will celebrate a birthday, and there are probably more that I’ve forgotten about. UGH!  It was quite the cold weekend, with no sunshine… Typical for November… I’m sure glad that’s over with! We’re supposed to warm up a bit for a couple days this week with sunshine, that will sure be welcomed! Well, did you overeat on Thanksgiving? I didn’t…  I don’t know what was wrong with me that day, but I just wasn’t into eating!   I was more interested in the pies!  And with that…  The Beautiful Dusty Springfield takes us to the finish line today with her song: Wishin’ and Hopin’ ….  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

 

November 26, 2019

* Currencies go back to drifting on Monday… 

* You really need to read the FWIW article today! 

Good Day… And a Tom Terrific Tuesday to you! Since this is the last Pfennig before the Thanksgiving holiday, I have a special treat for you… Well, the same treat as I have every year! And we’ll start the letter off with it to put everyone in a good mood! (I’m sure to change that later! HA!) Our Blues were on the ice last night, and my Missouri Tigers Basketball team was too… And both teams lost… UGH!  I’ve really taken to listening to Pandora’s Smooth Jazz Christmas… Something different for yours truly! I started early this year listening to the season’s music. I really need to be pushed and prodded to get me in the spirit of the season this year, as so much has gone wrong this past year… But I’ll come around, and then be just like a kid at Christmas! The Rolling Stones greet me this morning with their song: Can’t You Hear Me Knocking…

OK, Pfennig Tradition calls for this… It’s a snippet of Adam Sandler’s: Turkey Song…

Turkey for me
Turkey for you
Let’s eat the turkey
In my big brown shoe
Love to eat the turkey
At the table
I once saw a movie
With Betty Grable
Eat that turkey
All night long
Fifty million Elvis fans
Can’t be wrong
Turkey lurkey doo and
Turkey lurkey dap
I eat that turkey
Then I take a nap

OK… well if that doesn’t put you in a good mood, I don’t know what will! HA! Alrighty then, you may want to exit out, or walk away from your computer at this point, because the good mood feeling end there! I have a lot to say today, so buckle up, keep the arms and legs inside at all times during the letter, and let’s go!

Well, the stock jockeys are beginning to remind me a Star… it seems that the stock jockeys only want to hear about the good stuff from the Trade Negotiations… But I’ve got news for them.. The actual Trade Negotiations, per se, aren’t going anywhere! Sure, they’ll come to an agreement on Tariffs, and some trade entry stuff… But as far as the real meat of the Trade War is concerned, includes: subsidies, theft of intellectual property, forced transfer of technology, closed markets, unfair competition, cyber-espionage and more. Do you know what kind of follow up is going to be required to make certain the Chinese follow through on these things if they agree to them? The Chinese have basically told fibs about their Trade for years, and to be able to get into the Chinese books and really look into them, is going to be impossible… so…

All this buying of stocks because investors are sure the Trade War is going to be over soon, really is like a Star that burns the brightest right before it burns out! I’m just saying… make sure you have adjusted your stop losses higher! We don’t want retirees or near to be retirees losing a large portion of their investment portfolio like they did in 2007/08…

OK… the currencies drifted again yesterday, and besides the selling of Friday and Sunday night, this has been the MO for the currencies… Gold, on the other hand saw more selling yesterday and closed down $6.80 to $1.455…  I hope you got an opportunity to read yesterday’s FWIW, on the Gold price being subjected to selling this time of year…  

Those darn Trade Talks have been playing hell with the price of Gold, folks… Don’t be confused… This selling is all tied to the fact that traders believe we don’t need a safe haven right now…  And that’s where I begin to lose it! If there was ever a time for the need of a Save Haven, like Gold, it’s now…   I just had that song… It’s now or never, run through my mind… 

Here’s a little ditty on Gold from the good folks at GATA… “Poland brought about 100 tons of gold home from the Bank of England in a bid to demonstrate the strength of nation’s $586 billion economy, central bank Governor Adam Glapinski said today.

The institution bought about 126 tons in 2018 and 2019 to increase its gold reserves to 228.6 tons. As a result, the country has become the 22nd-biggest bullion holder in the world and has the biggest reserves of the metal in the European Union’s east, the central bank said.”

Longtime readers will recall me using the research of a guy named Koos Jansen… Then it seemed that Koos went into hiding… And I couldn’t find him anywhere… Now it seems he’s gone back to his real name of   Jan Nieuwenhuijs   and he had this to say about Gold and a safe haven… 

“”After the global financial crisis, not only have Western central banks changed the way they talk about gold — that is, they have become more honest regarding gold’s function as a safe haven — but, as a sector, central banks have also become net buyers. Many central banks have redistributed their gold, carefully considering all possible future risks and developments. ”   

I know where to find him now as he’s with the firm Voima Gold  of Finland…  Good to see him writing again! 

But things all seem to be upside down in my opinion… 

I think I’ve mentioned before that I always enjoy reading Simon Black’s Sovereign Man letter… Well, last week’s letter Simon talked about how things are upside down these days… Good is bad, and bad is good and so on… I’ve lamented several times in the past that things just aren’t right any longer regarding trading of currencies and metals… But Simon said something at the end of his letter that made abundant sense to me, and so I’ve copied them here:

These are the new rules of upside-down capitalism:
– Debt is wealth
– Loss is the new profit
– ‘Wokeness’ above all else
– Rich people are evil
– Socialism makes sense

It’s amazing how quickly this new reality took over… and I shudder to think how much more absurd it will become over the next few years.”

Chuck Again… yes, he points out that the current candidates for election to lead their party thinks that the Gov’t, who spent $2 Billion dollars created a web site, can do better things with people’s money… And that leads me to the famous Margaret Thatcher quote, “The problem with socialism is that eventually you run out of other people’s money”… And I’ll leave that there!

I’ve got a real doozy for you in the FWIW section today, and if you’re not scared out of your PJ’s then you’ve been drinking too much of the Kool-Aid the Government’s serving up to everyone these days…  And it’s just not the gov’t… the darn media is just as much to blame… this morning, for instance, on the Bloomberg.com site, they have an article titled: “The Inverted yield curve is so last year”…    They should be ashamed of themselves!  I’m just saying…

I had a dear reader send me a note yesterday, and asked me why I call Morgan Stanley, Lola…  I thought, you dolt Chuck, you just assumed that the readers know you’re talking about Goldman Sachs!  So, to straighten every that was confused about that yesterday, I call Goldman Sachs, Lola… because it sure seems through the years now, that whenever Goldman Sachs says something about an asset class, their words eventually come to pass…  And so, I changed their name to Lola, because as the song goes, What Lola wants, Lola gets…   OK, clear?  

The U.S. Data Cupboard continues today to be void of any real economic data. But Tomorrow that all changes, as Consumer Spending and Income will print along with the Durable & Capital Goods Orders…  These data prints will, in my opinion, show the rot on the economy’s vine in plain view, so even Fed Heads like Neal Kashkari can see that there is a recession in our near future!  

To recap… The currencies went back to drifting on Monday, and didn’t move much at all, the Dollar Index yesterday morning was 98.30, and today it’s 98.28…  Gold on the other hand can’t find a bid these days, and lost another $6.80 yesterday…  Chuck goes all Alamo on the folks that think we don’t need a safe haven…   And he hypes the FWIW section today, so with no further delay, I give you the FWIW section that you’ve all been waiting for! 

For What It’s Worth…. There’s something happening here… What it is, ain’t exactly clear… There’s a bank with a gun over there… and I’m telling people that they had better beware… Two of my fave reads Russ and Pam Martens of wall street parade.com Recently did a bang up job finding the amount of derivatives that JPMorgan holds… And you can read it all here: https://wallstreetonparade.com/2019/11/its-official-jpmorgan-chase-is-the-riskiest-big-bank-in-the-u-s/

Or, here’s your snippet: “Another scary category is OTC Derivatives. OTC (over-the-counter) means derivatives that are not traded on an exchange and are not being cleared by a central clearing house. In effect, it means a private contract between your bank and some potentially non-credit worthy financial institution. (Recall how the giant life insurer, AIG, blew itself up in 2008 because it was holding tens of billions of dollars in derivative contracts for the biggest banks on Wall Street that it could not make good on. The situation was so dire that the Federal Reserve actually allowed AIG to secretly borrow billions of dollars from its Discount Window, even though it was an insurance company, not a bank. AIG had to be eventually nationalized by the U.S. government for a time during the financial crisis – all because it got involved with Wall Street’s derivatives.)

Among the biggest banks on Wall Street, JPMorgan Chase has the largest exposure to derivatives, with $45.2 trillion exposure, according to the National Information Center graphic. Yes, we said “trillion.” The Office of the Comptroller of the Currency, however, which is the federal regulator of national banks and reports the derivative exposures of the biggest banks on a quarterly basis, shows that as of June 30 of this year, JPMorgan Chase’s notional derivatives (face amount) stood at an even larger $55.7 trillion. (See Table 1 in the Appendix here.) In other words, while JPMorgan Chase is backing away from lending in the repo market, forcing the Federal Reserve to effectively bail out Wall Street’s lack of liquidity in overnight lending, that hasn’t stopped JPMorgan Chase from increasing its systemic risk footprint in other areas.”

Chuck Again…. I know, I know it’s Thanksgiving in a couple of days, and I shouldn’t be so hard on the Beaver… But These guys (JPMorgan)  are 3 times felons, and the regulators are still looking into their misbehavin’ … I just couldn’t pass up this article to give to you today. The whole article should be read, and then reread to make certain you understand what they are telling us… It’s scary folks… very scary…

Currencies today 11/26/19 American Style: A$.6780, kiwi .6415, C$ .7512, euro 1.1017, sterling 1.2868, Swiss $1.0031, European Style: rand 14.7880, krone 9.1570, SEK 9.6022, forint 305.08, zloty 3.9202,   koruna 23.1501, RUB 63.87, yen 108.95, sing 1.3663, HKD 7.8264, INR 71.34, China 7.0347, peso 19.43, BRL 4.2044, Dollar Index 98.28, Oil $58.10, 10-year 1.75%, Silver $16.92, Platinum $899.71, Palladium $1,793.14, and Gold… $1,457.10

That’s it for today….  Tomorrow I’ll go see the wound treatment center again… And it will be my little buddy’s birthday! Everett, turns 9 tomorrow! I think back to when he was born, it was during a Mizzou / Kansas football game…  A couple time during his 9 years his birthday has fallen on Thanksgiving…  I guess that’s not as bad as having your birthday on Christmas or the day after!  So, Happy Birthday E!  I keep getting the days of the week mixed up. I guess that’s what happens when you’re retired!  All the grandkids will be here on Thanksgiving…  I’ll be thankful for that! Including miss Evie! Bad rain storms are supposed to be moving in and last all Thanksgiving weekend. UGH! Oh well, it could snow…  Years ago, when we lived in Des Moines, Iowa, we traveled back to Missouri for Thanksgiving, and on our return home at the Missouri/ Iowa border the rain turned to snow, and there was a foot of snow on the ground! Talk about making the trip longer!  So, I guess as far as families trying to get together, I’m thankful that it won’t be snowing!  At least here that is! Three Dog Night takes us to the finish line today with a song from their Live  At the Forum Album: Eli’s Coming…   I hope you have a Tom Terrific Tuesday, and Wonderful Wednesday tomorrow, and a most Blessed Thanksgiving…   Hug someone and tell them you love them… 

Chuck Butler

 

 

November 25, 2019

* Currencies & metals get sold on Friday… 

* U.S. Data will be all jammed into Wednesday… 

Good Day… And a Marvelous Monday to you! Talk about a shortened week! That’s this one folks! Today and tomorrow are the only days the Pfennig will be written this week, as Wednesday I head to the wound center early, and Thursday is, well, it’s Thanksgiving! What are you thankful for? I’m thankful for so many things, I can’t begin to write them all down! I’m most thankful for the love of God and his gracefulness in keeping me alive when I should have had my last rites given to me years ago… Not to turn this into a religious manifest, just wanted to get that out there! My darling granddaughter, Delaney Grace, was fabulous on Saturday night! Although she was not the leading actress, she was the star of the show in my mind! The Cornelius Brothers & Sister Rose greet me this morning with their song: It’s Too Late To Turn Back Now…

That should be our main topic this morning, it being too late to turn back now, that is… I’m talking about the recession train pulling out of the station and into the economy… Fed Head, Neal Kashkari, doesn’t agree with me… He said, last week that “he didn’t see a recession, although there has been some weakness in some of the data”… I laughed… I said, “Some of the data?” How about all of the data Neal? Oh, I guess not all of the data per se, as Consumer Confidence rose last month… The economy has that going for it. But in reality, the stupid Consumer Confidence report and a quarter won’t buy you a cup of coffee… I’m just saying…

So, on Friday last week, the currencies and metals finally made a move out of the mud they had been stuck in. Unfortunately, they moved downwards VS the dollar on Friday… the moves were huge, but significant enough to notice, which hadn’t been the case all week up to Friday’s trading. The Chinese announced that they would place heavy fines on anyone pirating IP intelligence… And I guess traders took this to signal a Trade Agreement would soon follow… So the dollar rallied, and the currencies and Gold lost ground… Gold has lost a total of $10 since we last talked ($7 on Thursday, $3 on Friday), which is no big deal… I have an article for you on Gold in the FWIW section today, so please stay tuned for that, you won’t want to miss it!

Gold is down another $4 in the early trading today…  Well, the shiny metal sure is trying to attract buyers at cheaper levels now isn’t it?  

In the overnight markets last night the dollar continued to be bought, and pushed the currencies even lower throughout the night. We used to be able to rely on the European Markets to push the euro higher, and then wait for the U.S. counterparts to mark it back down… but that’s not what happened last night. UGH!   

The last 30 days have seen the Russian ruble remain steady Eddie VS the dollar. The price of Oil fluctuates over and under the $57 handle, not really giving any love toward the ruble, as a Petrol Currency… Many years ago now, I was a featured speaker on a panel that had some heavy hitters sitting next to me. We, as a panel, were asked about the Russian ruble’s forecast… I responded with, “the ruble is a petrol currency, and probably the lead Petrol Currency, therefore, the ruble, to me, is an oil play… what’s your forecast for the price of Oil?” Because that’s going to help determine what the ruble does going forward”…

Afterward, James Rickards, came up to me and said that he agreed with me on the ruble… And I thought… “WOW! Even a blind squirrel can find an acorn! “ But that WAS important to me to have my thought on the ruble be agreed to by one of the utmost respected analysts in the world…. This past weekend I ran into a note about whether the ruble will get stronger or not… And this is what I read: “The Russian ruble doesn’t need to recover, according to President Putin’s plan. … It depresses imports and boosts extractive exports, securing a healthy trade balance and filling President Putin’s war chest.”

The first thing that entered my mind when I read that, was that the ruble’s price is manipulated / managed to remain steady Eddie…. And then I thought, that it wasn’t that bad of an idea given the rest of the world’s Central Banks have gone mad! And playing rob thy neighbor… So, I’m just saying, the ruble has a good interest rate, and a steady outlook… What more could you ask for?

The Chinese renminbi had its rally stopped in its tracks in the past week, and has steadily moved weaker each day. A month ago I was surprised at the strength in the renminbi as it dropped below the 7.0 figure briefly… But that appears to be over now… And I think that the direction of the renminbi tells us more about the Trade War Talks/ negotiations, than the media gets half-right… So, if the renminbi is weakening again, as it appears to be doing each day, that would mean the negotiations aren’t going so well… Now, that’s a horse of a different color than what the media has been telling us isn’t it?  

In Switzerland, the Swiss National Bank (SNB) continues to amaze me… this past weekend the SNB Gov. said that the Bank is looking to cut rates further… Remember, Swiss rates are already negative, so another rate cut would take them deeper into negative territory… I can’t believe the SNB can have their folks stand there with a straight face and talk more negative rates! I’m going to say this again, as I’ve said it before… If negative rates were so good for an economy, then wouldn’t Japan have the best economy in the world?

And I guess I should stop dissing pound sterling, for Lola (aka Goldman Sachs) says that sterling will be the currency du jour for 2020! It just doesn’t pay to fight city hall, and it’s the same for fighting Lola… for what Lola wants, Lola gets… and why shouldn’t Lola get what Lola wants? They have people all over the Treasury, Fed, White House, you name it, former Goldman guys and gals are everywhere, and representing Lola’s point of view, I’m sure!

On a side bar, this is what gets my goat about one of the 3 nasty things that President Woodrow Wilson did during his term… 1. Fed Reserve, 2. IRS, 3. Changed the way Senators went to D.C. … I’m talking here about the way Senators used to be assigned by the Gov. of the respective state, and would go to Washington to represent their state’s wishes… And if they didn’t do that the Gov. would just call them home and assign someone else! This my friends, is where the Gov’t began to take over state’s rights… I’m just saying… Wilson changed that, and made a Senator an elected official… Well, now, who do these Senators represent, other than their own personal agenda?

OK… back to regular programming…

In other things that went on this past weekend, the U.S. sent a bill to S. Korea for their military costs in providing defense for the country… S. Korea balked, and then went out to sign a defense agreement with China… Wait! What? Does this mean we can bring our soldiers home from S. Korea? Wouldn’t that be wonderful? But that’s not going to happen overnight folks… The U.S., / Korea/ and China will have to work out everything… Otherwise, will S. Korea pay their bill? Only the shadow knows!

The U.S. Data Cupboard  also has a shortened week, and most of the good stuff will be in the Wednesday offering. Durable and Capital Good Orders, which have been negative for a couple months running, will print, along with the Rocktober numbers for Consumer Income and Spending… But by the time the Beige book prints (Fed regional reports) there won’t be anyone around to see the ink dry on the report…  In fact, I’m sure that by noon, trading desks in the Big Apple will be ghost towns…  

Which brings us to the Friday after Thanksgiving, aka Black Friday… the markets will be thinned out, and this is my annual warning of the potential of wild swings in those thinned out markets…  Don’t get caught up in any of it… Sit on the sidelines and watch the goings on, would be my suggestion… 

To recap… The drifting of the currencies and metals last week, turned to outright selling of these two asset classes, that has continued on throughout the overnight markets last night.  Lola says that pound sterling will be the currency du jour for 2020… And we know that what Lola wants, Lola gets, right?  I found out early in life that you don’t fight city hall, and you don’t go against Lola…  I’m just saying… 

For What It’s Worth… I know what’s on every Gold holder’s minds these days… “Why hasn’t Gold continued to rally?” I mean, for crying out loud, Gold has every reason to be making great strides toward $1,600… But it seems to be stuck in the mud around $1,475… This article was on Kitco.com, which used to post my Pfennigs every day… I wonder what happened there? Oh well, this article tried to explain why Gold hasn’t moved higher and it can be found here: https://www.kitco.com/news/2019-11-22/Gold-price-has-every-reason-in-the-world-to-rally-why-isn-t-it.html

Or, here’s your snippet: “ The yellow metal was unable to sustainably break the $1,475 an ounce this week, signaling a new resistance line before the $1,500 mark.

“Gold is not looking great. It’s got every reason to rally in the world and it can’t right now. That’s a problem,” RJO Futures senior market strategist Phillip Streible told Kitco News on Friday. “The Federal Reserve cut rates three times this year. It is a race to the bottom globally with central banks. The Fed is embarking on somewhat of a QE with this repo rate. You have protests going on everywhere. In Iran, they burnt down the central bank; in Lebanon, there is a run on the banks; and Hong Kong protests are escalating.”

The new resistance level for gold is $1,475 and the inability to break it next week could send the precious metal to $1,425, said Streible.
“Gold even can’t hold on to $1,500 anymore. It seems like $1,475 is the new resistance point,” he noted. “We are below the 100-day moving average, that’s resistance. Support is the 200-day moving average at $1,410. A 50% retracement from $1,300 when it started this massive move up back in June to $1,550, would be $1,425, which is probably where we are going.”

This is a tough break for gold in the short-term, considering there are still multiple factors support the yellow metal. But, it is important to remember the seasonality of gold, added Streible.

“Gold seasonally goes down around this time. From November 25 to December 20, gold has gone down 12 out of 15 years,” he pointed out.”

Chuck Again… Well, they go on in the article to talk about the conflicting news we received daily about the China / U.S. Trade negotiations… And that DOES have a lot to do with how traders deal with Gold… The other thing that’s on my mind this morning is that there was yet another JP Morgan metals trader with charges brought against him last week… I mention this because, in my humble opinion, the price manipulation is the main reason Gold is stuck in the mud right now…

Currencies today 11/25/19 American Style: A$ .6790, kiwi .6411, C$ .7518, euro 1.1012, sterling 1.2870, Swiss $1.0017, European Style: rand 14.7241, krone 9.1862, SEK 9.6376, forint 304.16, zloty 3.9010,    koruna 23.1380, RUB 63.81, yen 108.87, sing 1.3652, HKD 7.8272, INR 71.50, China 7.0382, peso 19.36, BRL 4.1943, Dollar Index 98.30, Oil $57.59, 10-year 1.79%, Silver $16.89, Platinum $891.98, Palladium $1,789.24, and Gold… $1,457.79

That’s it for today…  I sure had a great time Thursday evening, as my former colleagues came out to my little river town to have an adult beverage with me!  I’ve seen some of the people recently, and some of them I hadn’t seen since I left the bank…   And even Mike Meyer, who no longer works there, came by! A good time was had by all!  Mike used to be the first guy after me of course, in to start the day, and we would listen to my iPod play everything from Frank Sinatra to AC/DC…  We had our fave TV people, and we would watch the earth rotate from Winter to Summer… Oh well, life goes on….   November is almost over! Thank Goodness! The Christmas decorations are getting brought out, and then it’ll be my fave time of year!  The Allman Brothers take us to the finish line with my fave song by them: Melissa…    I hope you have a Marvelous Monday, and please Be Good to Yourself! 

Chuck butler

 

November 21, 2019

* Currencies and metals continue to drift… 

* Fed’s FOMC Minutes show commitment to pausing rate hikes… 

Good Day… And a Tub Thumpin’ Thursday to you! I do believe I’ll be doing some tub thumping this evening, as I heard from a little bird that several of my former desk mates are planning to make the trek to my favorite watering hole this afternoon… I’m as excited as a kid at Christmas this morning… Well, my visit yesterday to the oncologist was good… She loves me, I have to say… Which is great for one reason… When I complain that the chemo is making me too sick, she says, “Ok, back off of it until you feel better”… And that’s where I am now… I’ve had a horrendous week of stomach problems last week, and she was concerned with my weight loss… (no biggie, like removing a bucket of sand from the beach!) So… the decision was made to back off the chemo for a week… YAHOO! It’s like Christmas came early for me this year! I’ll get to celebrate Thanksgiving next week, and not worry about what I put in my stomach! YAHOO! OK… enough of that… Elton John greets me this morning with his song: Levon… (one of Elton’s best in IMHO)

OK… Well, yesterday saw no movement in most of the currencies, and they have settled into a drifting pattern where traders don’t know what to do… They know that buying dollars right now seems like the wrong thing to do, but buying most of the currencies in the world is also a bad thing to do… Of course if they asked me… I would point them in the direction of Russian rubles… But then that’s just me! The ruble still pays, relative the rest of the world, a nice interest rate, and the currency has been pretty steady Eddie for some time now… So, if the dollar traders need some direction… there you go!

I was exchanging emails with a long time reader the other day, and we were talking about how the Central Banks of the world are sending their respective economies to hell in a hand basket, and I said, “that’s why I like the Russian ruble, their Central Banks seems to “get it””… I then explained how through the years, I’ve been accused of being non-patriotic when talking about the ruble… And so on… Oh well, sticks and stones may break my bones…

The signs from China’s economy haven’t been very appealing lately, and they are beginning to weigh on Commodities and the Commodity currencies… The Aussie dollar (A$) is the poster child for commodity currencies, and it has been a rocky road for the A$ in recent weeks… It pops up over 68-cents and then drops back below it, pops up, and drops below, like the instructions on a shampoo bottle to later, rinse and repeat… (they never tell you how many times to repear that process, do they? HA!)

In the old days when interest rates around the world were normal. You wouldn’t mind holding A$’s while it did this two-step dance with 68-cents, because most likely you were getting paid 4% or more to watch the dance… But not any longer… Governments with major debt, have to keep interest rates uber-low to finance their debt… It’s that easy peasy, lemon squeezy, folks… If you want more proof, I suggest you check out the debt levels and the rate structure of countries like: the U.S.,  Eurozone, Japan, China, U.K. and I could go on…

I used to write about how rising debt levels that weren’t getting paid off or down for that matter, would slow down an economy, for there’s just too much to have to deal with and it takes away from other things the Gov’t could be doing… Of course in a real world economy the Gov’t wouldn’t be required to do anything, but provide services like military defense, police, fire, etc. Everything else would be owner operated, and allowed to fail if it didn’t make it. But long ago, and oh, so far away, I fell in love with you before the second song… No wait! As I meant to say, long ago, and far away, people like you and me, not you and me per se, but like you and me, decided that it was OK, for the Gov’t to take on all sorts of things… And then the next thing led to another, and we have the mess we have in Debt accumulation in the U.S. today… I told you last week that $1.3 Trillion in the last year and we’re now over $23 Trillion in current Debt with another $126.8 Trillion in Unfunded Liabilities… And if you really want to get down and dirty with debt numbers check this one out… It’s a category called “Unfunded Interest Debt”… That’s the interest that will need to be paid on our existing Treasuries, and that total is $74.187 Trillion… So, when you add them all up… you get nearly $224 Trillion in debt that the U.S. is in… So, if we really compared apples to apples… the U.S. actual debt to GDP ratio would be much larger than the 1.06% they show now…

Well, that was an interesting discussion on debt, now wasn’t it? And to think that when I was a young lad, we were a creditor nation! Ah, that was long before Johnson’s “great society”, Social Security, Medicare, the war debts of Vietnam, And then along came a long line of presidents that didn’t see to it that the deficit spending stopped… Oh, they all talked about a balanced budget, but then they would use “future earnings” in the calcs, which didn’t balance a pile of dookie! OK, I’ve got to stop I almost went down a very deep rabbit hole there…

OK, well, so the currencies are drifting, and so is Gold… On Tuesday Gold saw a 70-cent gain… On Wednesday, it saw a drop of -40 cents… I’d call that drifting… The euro started the week at 1.1060, and on Tuesday saw it trade at 1.1077, and yesterday 1.1078, and this morning it’s 1.1085… I’d call that drifting… Afloat on the sea, with no sense of direction, other than by the sun… And now it’s getting lower in the sky because of the change of seasons, what will be used for direction when the sun is only out for a short period, and not out at all up north? The main tool for currencies and metals to use as direction will be…. Drum roll please…. The U.S. economy…

And will it enter 2020 with the 4th QTR of 2019 holding a negative GDP quarter? Then all the attention will be on the 1st QTR GDP, which in my humble opinion, is going to be even more negative than the 4th QTR, and then we’ll finally have the official call from the NBER (National Bureau of Economic Research) that the U.S. is in recession… Until then, we may all know it, feel it, sense it to be a recession, but the official rhetoric will be that’s it’s not official until the NBER says so…

Funny thing about the NBER… lots of times in the past, when a recession if finally called by them the recession is over… But I have this sneaky feeling this time that it’s not going to be over so quickly… You know how I always have talked about markets going back and filling in gaps? Well, that’s what the U.S. recession needs to do… go back and fill in gaps that were missed in previous recessions because the Fed wouldn’t allow the recession to go on, and clean out the excesses… I’m just saying…

The Fed Heads and the boys and girls over at the Treasury Dept., will do their very best (the opposite in my opinion) to keep the recession from happening, but it’s like a cold you feel coming on…  You begin to drink large glasses of orange juice, you start to take some home remedy that’s supposed to limit the time you have a cold, and then before you know it your head feels like a concrete block and you’re coughing instead of breathing… 

So, what’s it going to be folks, in regards to whether inflation takes hold or deflation returns?  One of my fave economists, Dave Rosenberg, had this to say on Twitter yesterday, “So the ISM shows that in October, the grand total of 5 of 18 industries posted any growth. Fully 25% saw deflation and 16% saw inflation. What an economy!”   So, see what I’m talking or asking about here? What’s it gonna be boy? Inflation or deflation?  

On a personal note I would hope for deflation, while it doesn’t help the economy it does help consumers to buy cheaper goods while they can, not that most consumers are already up to their eyeballs in debt, and can’t scrape together money to get their car fixed, but that’s another discussion…   

On a general note, I believe we’ll see runaway inflation, it’s been down far too long, and the monster needs to breathe again!  Besides this is the tool the U.S. Gov’t needs to have going (inflation) to inflate their debts to workable numbers…  If you owe $20 and inflation takes that $20 down to $5, aren’t you better off (loan wise that is?) 

The U.S. Data Cupboard had the Fed’s FOMC meeting minutes yesterday and in them the markets got what they didn’t want… A strong confirmation that the Fed is taking a break with rate cuts, and that the Fed’s worries about the economy had subsided…  Of course that was before we had Manufacturing show a deeper slide below 50, Factory Orders, and Durables along with Capital Goods all print negative…  So, maybe by now they’ve changed their minds?  I doubt it… Think of the Fed FOMC unit as a Big cruise ship, making an about turn in the ocean… That’s how slowly the FOMC will come around to seeing the economy for what it really is… Slowing to a halt… 

To recap…   Well, the currencies and Gold have been drifting all this week so far… A little upward movement in the currencies, and a less than one dollar back and forth in Gold…  Traders know in their heart of hearts that they need to sell dollars, but just can’t find a currency to buy instead… Chuck points them to rubles… We’ll see what they do…    The slowdown in China continues to worsen, and that’s playing bad games with commodities and the Commodity currencies.  And Chuck talks debt… You know how he goes all in when it comes to talking about debt! 

For What It’s Worth… Since I wrote so much about the U.S. Debt today, I thought this would be a good follow up on that discussion… It’s about the debt runup in the past 12 months, and who’s buying this debt, and it can be found here: https://wolfstreet.com/2019/11/18/us-national-debt-spiked-by-1-3-trillion-in-12-months-to-23-trillion-but-who-bought-this-pile-of-treasury-securities/

Or, here’s your snippet: “The U.S. Gross National Debt has jumped by $1.28 trillion as of today, compared to 12 months ago, to $23.04 trillion. And these are the good times. The economy is rocking and rolling, we’re told. How will this debt balloon during the next economic downturn? Yes, that was a rhetorical question. It’s better to not even think about it. And no one is thinking about it:

Every dollar of this debt exists in form of Treasury securities that someone must have bought and must own. In terms of foreign holders, we got some answers in the Treasury Department’s TIC data today, which shows how much of this debt was held, bought, or dumped by foreign investors through the end of September. And we can glue the other pieces together from the Fed’s balance sheet and from the Treasury Department’s disclosures.

All foreign investors combined – “foreign official” holders such as central banks and foreign private-sector investors of all stripes – dumped $84 billion in U.S. Treasury securities in September. But compared to September 2018, their holdings were up by a massive $551 billion.

In the prior month, August, foreign holders had set a record with $6.86 trillion in Treasuries! September was just tick-down from that record — and remains the second highest ever.

Japan, which had become the largest US creditor once again in June, bypassing China, shed $29 billion of its Treasury holdings in September, but its holdings still surged by $118 billion over the past 12 months, to $1.15 trillion, which remains below the peak in 2014 of $1.24 trillion.
China has kept its Treasury holdings roughly flat over the past two months, at $1.10 trillion, but has shed $49 billion over the past 12 months”

Chuck Again… We as a country can always depend on the kindness of strangers, right? Oh, but when we go around ticking off even our allies, how far will this kindness of strangers go? Well, I’m hoping it goes on forever, but then trees don’t grow to the moon, and anything saying you want to throw in is ok… But you get my drift…

Currencies today 11/21/19 American Style: A$.6809, kiwi .6433, C$ .7512, euro 1.1085, sterling 1.2953, Swiss $1.0084, European Style: rand 14.7110, krone 9.1100, SEK 9.6088, forint 300.95, zloty 3.8754,  koruna 23.0050, RUB 63.88, yen 108.58, sing 1.3613, HKD 7.8208, INR 71.57, China 7.0321, peso 19.46, BRL 4.1931, Dollar Index 97.82, Oil $57.06, 10-year 1.75%, Silver $17.11, Platinum $914.11, Palladium $1,764.46, and Gold… $1,470.48

That’s it for today, and tomorrow…  Next week will be really shortened, as there obviously won’t be a Pfennig on Thursday next week, as it will be Thanksgiving!  Our Blues get back on the ice again tonight at home VS Calgary… Let’s Go Blues!  They did stop their winless streak on Tuesday night, so let start a new win streak!  I’m getting wound up about getting to see my darling granddaughter, Delaney Grace, in the Gateway Production of Matilda on Saturday night…  Crosby Stills and Nash take us to the finish line today with their iconic rock classic: Suite Judy Blue Eyes…  I just watched a documentary on the full CSNY group on Amazon, and it was pretty good, told me some things about the guys that I didn’t know… And with that I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and Please Be Good To Yourself! 

Chuck Butler

 

November 19, 2019

* Currencies hold Friday’s gains, and inch higher

* Gold makes a come back on Monday! 

Good day… And a Tom Terrific Tuesday to you! I wrote so much yesterday morning that I had to take a long nap to recover! HA! And now I don’t have a thing to talk about today! And if you believe that then I’ve got some land I’ll sell you, don’t worry about the reports of it being swamp land! The bad thing about what I have to say, is that it all makes me out to be gloom and doom… And if that’s what gets people to read what I write, and act accordingly, then so be it! The Charlie Daniels Band (CBD) greets me this morning with their song: Long Haired Country Boy… If you ever have a group of guys hanging around, play this song, and listen to them all sing along!

OK… yesterday I told you that the currencies looked to be well bid going into the day’s trading, after rallying on Friday, for a number of reasons… And that bid held most of the day, and the currencies at least held their Friday gains and did move a tad bit higher on the day VS the dollar… And Gold fought back during the day and ended up gaining a buck or two VS the close on Friday… But after being down more than $9 in the early trading yesterday, Gold fought back, so the $2 buck gain was really $11 on the day! Good Show!

There was little to learn from the Trade Negotiations between the U.S. & China, but there was some closure on the negotiations between the U.S. and Canada… The stock jockeys just don’t care about all the bad economic data that keeps mounting for the U.S. It’s as if they have blinders on, or they’re doing the monkey thing See no evil, hear no evil, speak no evil…

So, let them keep buying at these high overrated prices in stocks, which will only make the fall even greater… A friend from way back, when I used to be a key speaker at the Agora Vancouver Symposium, Tom Dyson, is writing again after having some difficulties with his health, and yesterday’s postcard from Hong Kong had two charts that I wish I could show you… These two charts show the direction of the stock market for the next ten years… That’s right, I said next ten years! And all they while that I was looking at the charts, I was thinking… Got Gold?

My thought on stocks is…  As my good friend and Retirementor that can be found at www.milleronthemoney.com says… “make sure your stop losses are kept up to date”… 

OK… I know people have been warning you about a deep dark recession for sometime, and nothing appears… And do you know why it hasn’t? Well, the Fed Heads are doing everyting they can to keep this economic ship out to sea… But what they’re not seeing is the Tsunami that’s forming out on the ocean and headed for the coast! I’ve chronicled the rotten tomatoes economic data for you whenever it prints, and then I read more that tells me that things are going south in a hurry…

For instance, yesterday, I wrote about the 4th QTR downgrade for GDP, to 0.3%…. That’s not 3% folks, that’s 3/10ths of a percent. A figure that’s so close to going negative, it could get there easily just with a rounding calculation! Yesterday, I told you that Industrial production was negative, but later in the day I read that the print was the worst decline for U.S. industrial production since 2009. And I talked about the Cass Freight Index and said that it was negative since spring, but later in the day I read that it had . fallen for the 11th month in a row!

I’ve chronicled how all the jobs that have been created in the last 10 years haven’t regenerated the economy, and that’s because a very large percentage of those jobs created barely paid $793 a week, with no health care benefits! The economy can’t grow with numbers like that folks! And so these people turn to their credit cards, and buying things on debt, like their cars…

I read last night that The NY Fed just announced that there are serious car loan delinquencies… Here’s the NY Fed… “auto loans that are 90 days or more past due – in the third quarter of 2019, after an amazing trajectory, reached a historic high of $62 billion…

What you do not learn about history, you a damned to repeat it… in 2007/ 08 it was subprime home loans… in 2019/ 20 it will be subprime car loans, and before you begin to think that car loans can’t be the size of home loans, that may be true for the McMansions, but regular homes aren’t that much more than a new Cadillac Escalade… Go on, price one and see what I’m talking about!

ENOUGH Chuck! You’re going to need to issue a warning about putting away the sharp objects before reading your letter if you keep this up!
Oh, and one more thing before I move on down the road… That college kid of yours that can’t find a job that will make him president on his first day, is going to be living with you F-O-R-E-V-E-R!  

Man, you’re fit to be tied today, Chuck! Full of you know what and vinegar for sure… And when it all come crashing down, people will look around and say… You know, Chuck told us this was going to happen, but we all thought, the going is good and what’s going to stop it?

Quick question… Who’s the most indebted country in the World? Of course it’s Japan… but remember… over 70% of their outstanding debt is held domestically… That’s a HUGE difference to the country that’s number two in the World in debt…. The U.S. who relies on the famous quote by Blanche… We depend on the kindness of strangers… In other words, we’ve lost our control over debt, before we lost our sanity!

Last week I mentioned a Debt Jubilee… And said that would be a very bad thing… I had a dear reader, write me and say that a Debt Jubilee is the only thing that will save this country… The term comes from the scriptures, but did not actually refer, as the term does now, to debt cancellation, or debt forgiveness, nor did it discuss/ involve the distribution of property…

The term NOW, refers to Debt Forgiveness, along with redistribution of wealth. I can only imagine that this would involve a devaluation of the dollar, and not a small one… There are Pandora’s Box of evils that would come out of a Debt Forgiveness folks… Maybe some other time, I’ll write about those, but for now, I really got off on a tangent here and went down a deep rabbit hole that I’m now going to try to climb out of!

OK, one currency that didn’t maintain its gains from Friday was the New Zealand dollar / kiwi… And rightly so, given the news yesterday from the Reserve Bank of New Zealand (RBNZ)… “The Reserve Bank has increased its supervisory monitoring of the Bank of New Zealand (BNZ) and applied precautionary adjustments to its capital requirements following the identification of weaknesses in BNZ’s capital calculation processes.”

Wouldn’t you just get the major willies if you heard that the Fed Reserve was going to increase their supervision of your local bank? Or how about one of the Too Big To Fail Banks? Now that would send chills down the spine of the markets, now wouldn’t it? So, as I said it was “just” that kiwi got sold on that news… 

But that was yesterday… In the overnight markets, traders have thought otherwise about this and moved kiwi higher again…  Stranger than fiction, I know, but it is what it is… 

Well, the optimistic campers have the conn in the U.K. again, and have been marking up sterling on their thoughts that a BREXIT deal will be made soon…  I just shake my head and wonder what these guys are smoking, because there are so many hurdles to be jumped with a BREXIT deal, so many hands that need to be greased, and politicians that need to be assured of their reelection that a BREXIT deal is nearly impossible. That’s not to say they won’t eventually get there, but right now with all the political strife in the country I just don’t see it happening in the near future. 

Russia is going to reduce the share of the U.S. dollar in its National Wealth Fund and is considering investing in other foreign currencies including the Chinese renminbi, Deputy Finance Minister Vladimir Kolychev said last week… Hmmm…. Now, wouldn’t it be nice if they had told us just how many dollars are involved here?  Well, yes, but… The idea here is this is just another chink of the dollar’s armor being removed…  One day, we’ll all wake up and find that the Emperor has no clothes…  I’m just saying…

Well, President Trump met with Fed Chairman Powell, and Treasury Sec. Mnuchin yesterday… The reports from the meeting claim that the President focused on interest rates with Powell, and the strength of the dollar with Mnuchin…  I wish I was a fly on the wall for that meeting! I can hear President Trump just lambasting Powell, for keeping interest rates from going negative (like the rest of the world), and the same harshness in his voice in talking to Mnuchin about how they’ll never get the Trade Deficit down with the dollar so strong… 

The U.S. Data Cupboard has some housing sector data for us today, but in reality the markets are focused on what’s in the Fed’s FOMC meeting minutes that will print tomorrow afternoon.  Other than those meeting minutes, there’s not much for us to see this week, other than housing data, so unless that’s your bag baby, I’ll leave that for others to comment on… 

To recap…  The currencies held their gains yesterday and inched higher during the day and in the overnight markets.  Gold made a comeback yesterday, and wiped out its early loss with a $3 gain on the day. Good show, Chuck said!  The euphoria campers have the conn in the U.K. again, with regards to a BREXIT deal getting put to bed…  Chuck’s from Missouri, he’ll have to shown! No data today other than housing stuff… 

For What It’s Worth… Well, I really went out on a limb today and bared my soul with what I feel is going to happen here in the coming months… And the accumulation of Debt is the root cause of those problems. This article talks about the U.S.’s share of the Government Debt in the world, and it can be found here: https://www.usnews.com/news/best-countries/articles/2018-10-23/america-takes-the-largest-share-in-the-global-debt-pie

Or, here’s your snippet: “WHILE POLICYMAKERS IN the United States wrestle with a growing federal budget deficit, America isn’t alone in facing soaring government debt.

According to the International Monetary Fund, the level of global debt is at historic highs, reaching $164 trillion in 2016. Debt in advanced economies peaked at 105 percent of the gross domestic product, or GDP, the highest level since World War II, while the total debt is at 225 percent of the world’s GDP. Overall, the world has amassed $247 trillion in debt, with $63 trillion owed by central governments, according to a report put together by Visual Capitalist, a Canadian digital media company.

The United States, Japan and China report the biggest shares of overall global debt. Using data from the IMF, the Visual Capitalist report states that the U.S. reports having $20 trillion in government debt, which is nearly a third of the overall global debt pool. Japan follows with about 19 percent of the global debt, while China, one of the leading economies by growth, owes about 8 percent of world’s debt.

The report highlights Japan as a special case, with its debt reaching 239 percent of its own GDP. A similar situation is reported by Greece, which has a debt-to-GDP ratio of more than 200 percent and owes 0.6 percent of the world’s debt.

“The IMF warns that if Greece continues at its current pace, debt-to-GDP will hit a whopping 275 percent by 2060,” the report states.”

Chuck again… So… if everyone has debt, who’s holding all that debt? Look in the mirror folks… When a negative yielding Greek Gov’t bond is oversubscribed by 4X, you can’t talk sense to these investors… Do you know what investment doesn’t have debt? That’s right, Got Gold?

Currencies today 11/19/19 American Style: A$.6821, kiwi .6417, C$ .7569, euro 1.1069, sterling 1.2937, Swiss $1.0089, European Style: rand 14.7790, krone 9.1024, SEK 9.6153, forint 302.30, zloty 3.6153,   koruna 23.0685, RUB 63.78, yen 108.73, sing 1.3602, HKD 7.8276, INR 71.54, China 7.0161, peso 19.26, BRL 4.1950, Dollar Index 97.82, Oil $56.50, 10-year 1.81%, Silver $17.11, Platinum $897.97, Palladium $1,737.42, and Gold… $1.468.10

That’s it for today…  Our Blues get back on the ice tonight at home and attempt to end this current winless streak! Let’s Go Blues!  MNF played a game in Mexico City last night, and while watching some of it, I had a thought about former quarterback, Colin Kapernick, who started the kneeling during the U.S. National Anthem…  He would be welcome to play in Mexico!  So, there you go Colin…  Oh my, oh my… what goes through these individual’s minds is beyond me…  Did their parents not teach them anything?  OK, stop! Whew! That was a close one, I almost went down another rabbit hole that I doubt I would have been able to climb out of! OK, so for all you “older folks like me” you’ll enjoy this… Dion takes us to the finish line today with his song: The Wanderer…    I hope you have a Tom Terrific Tuesday and please Be Good To Yourself! 

Chuck Butler

 

November 18, 2019

* Currencies rally on Friday, and remain well bid… 

* Gold gets sold on Friday and in the early morning today… 

Good day… And a Marvelous Monday to you! This will be a short week for yours truly, as it will get cut down to 3 days. I have my monthly oncologist visit bright and early on Wednesday. So this is your early alert of no Pfennig that day! Well, our Blues had their unbeaten streak stopped and now they’re on a losing streak… What in the world has happened to my beloved Missouri Tigers football team? They were 5-1 and number 23 in the country, and the wheels fell off. They are now 5-5 with two games left to at least make it a respectful season… UGH! A former colleague of mine, Dave Conway, is Florida grad, and he had bet me the last two years on the Florida/ Mizzou game, of which I had won… This year I told him he could have a double or nothing bet. So, I guess now we’re all even… Otis Redding greets me this morning with his live from the Whiskey A Go-Go album, and the song: I’ve Been Loving You…

Well, before I get into what happened in the currency and metals markets on Friday, and last night in the overnight markets, I first have to tell you that yet… ANOTHER JPMorgan metals Trader has been indicted by the federal prosecutor… The list of things he did are long, folks… But once again, we see traders from JPMorgan getting ensnared by the Federal Prosecutor’s web… And in my opinion, it couldn’t happen to… no wait! I’m going to take the high road here, and say he’s innocent until proven guilty… And that’s that!

OK… Well, the currencies did rally on Friday VS the dollar, and it could have been the news that the Chinese have balked at some of the items in the trade negotiations… So, apparently this is not the layup the markets were led to believe it was, eh? Of course had they just listened to me, and waited for their euphoria until the eggs were hatched, they might not look so silly now with those broken eggs all over their collective faces!

Or, it could have been the Rocktober print of Industrial Production, Capacity Utilization, and Business Inventories… IP was a negative -0.8%, which was double negative of what was forecast… Capacity Utilization saw a drop from 77.5% in Sept. to 76.7% in Rocktober… That’s a significant drop for this set of data folks… And then there was the Business Inventories, which were flat… 0% growth, which taken with the previous month’s negative -0.1% is telling us something folks… Do you want to know that might be? OK… if you really want me to get into my economist chair and tell you… First of all on the outside it would be a good thing for a business to have zero inventory, for the cost savings and benefits such as improved cash flow, reduced carrying costs and inventory waste from maintaining large, unnecessary levels of inventory stock, will be a good thing, but… Is this a signal that the businesses know what’s coming and they don’t want to be caught with their pants down, I mean,  long with a boatload of their inventory that can’t be sold?

I believe it is a sign, folks… And the other thing that happens when inventories go stagnant like this is that they give no benefit to GDP… Yes, that’s a silly thing that happens in the GDP calculation, and that’s business inventories get added in… Stranger than fiction, I know… But it is what it is… And the 3rd QTR GDP isn’t going to get a lift from Business Inventories… 3rd QTR GDP is already thought to be on the slide… I’m just saying.. .

Longtime readers know that I don’t like to begin the letter with all this talk of data, but it was unavoidable today… So, we carry on… But before I get back to the markets I first wanted to apologize for a couple of errors lately… First, I understand the link to the Grant Williams presentation didn’t work for some folks… And second, that I didn’t put the currency roundup in the letter last Thursday… I could swear I did! I even have the notepad here where I write them all down before I put them on the screen! Oh well, sorry that it got missed!

The overnight markets haven’t moved the currencies much, and so they begin the week with a bid, and the dollar looking a little tired.  Gold on the other hand is down $9 in the early trading today… I have to think that Gold’s downward movement is nothing but paper short Gold trades… But then we still haven’t gone back to $1,425 like the techie guys said we would, so a $9 downward move, isn’t that big of thing, and gives investors thinking of diversifying their investment portfolios with Gold or Silver the opportunity to buy at cheaper prices… 

Oh, and last week, some readers thought I was taking a shot at Al Gore… I really wasn’t, I was just saying what anyone that was outside in St. Louis and it was 14 degrees early in November, would say to him…  Especially if they were a smart- alec like me! I completely understand weather patterns, etc. I’ve been a fan of weather for a long time… I’m just saying…

OK… Well as I said above, Friday was a good day for the currencies… However, Gold couldn’t break free of the short Gold paper trades, and ended the day at $1.467 down $3 on the day… I had a dear reader send me a note last week, and asked me to explain the huge price differences between Gold and Platinum and Palladium… OK, I’ll give my best college try… Gold is most traded of the three, but Platinum and Palladium are more industrialized metals than investment metals, and having that as their moniker, they don’t get the amount of short paper trades placed on them by the price Manipulators… Silver, for instance has short positions on it that would be equal to 215 days of production, and Gold’s number of days of production is 95… But the industrial use is important to Platinum & Palladium… 

I’m not sure I did that explanation justice, but I do need to move on, because there are bigger fish to fry this morning…

Did you hear the news from the Fed NY who told reporters that it will be 2 years before they know who has needed the help in the repo markets… Wait! What? We have to wait 2 years before they’ll tell us?… Where’s the truth and transparency that the Fed promised us? This really ticks me off folks, and should you too, so much that a letter, email, call to my representative is being made! I can see the gate keepers of that correspondence saying, “It’s that Chuck Butler again, he’s going to ask more uncomfortable questions that we can’t answer!”

Speaking of those repos… The guy with the utmost respect in the business than anyone I’ve ever crossed, James Grant, had this to say about the repos… “the Fed has embarked on one of the most aggressive monetary policy re-accommodation regimes in history.” He points out that the Fed has done $3 Trillion in repos in the past two months… That’s crazy folks, and still no word for 2 years on who gets this money! And in my mind I can’t believe that this isn’t the top item on the list of subjects each day by the Fed! Last week, for instance there were only two questions posed to Fed Chairman Powell, one question each day, about the repos… The lawmakers asking the questions got what everyone else got… It’ll be 2 years, blah, blah, blah…

I would bet a dollar to a Krispy Kreme that most people outside of Pfennig Readers, even are aware that this is going on each day, and what it signals….

Oh, well, the sheeple will be led to, the poor farm… Remember the “poor farm”? Or ‘debtors prison”? Things of the past…

I have to give kudos to CNBC for their admittance yesterday that owning GLD (the ETF) doesn’t constitute owning Gold… I received this from the GATA folks, and it goes on to tell CNBC’s thoughts on GLD… “GLD “tracks one of the world’s most popular commodities,” provides “an easy and particularly cost-effective way to get indirect exposure to gold,” and is a device for “having exposure to movements in the gold price.”

The Folks at GATA had this to say… “Of course it would have been nice for CNBC to note that the custodian of the vault holding GLD’s gold is the investment bank HSBC, perhaps the biggest short in the gold market; that the bank is the beneficiary of a new New York Commodities Exchange rule apparently allowing the bank to inject more “paper gold” into the futures market —— that GLD itself facilitates the shorting of real metal through the borrowing and conversion to metal of its shares and the sale or lease of that metal by enormously well-funded brokers executing central bank market-rigging policy; and that anyone buying “paper gold” might as well flush his money down the toilet.

But then if CNBC or anyone else covering the gold market ever undertook journalism that serious, nobody would need GATA anymore.”

Chuck here… very interesting indeed… and the thing I always point out as the biggest difference between ETF’s and actual physical Gold… Try to get the physical Gold from your ETF…

The U.S. Data Cupboard was busy last Friday, and we’ve already talked about those numbers…. And this week’s Cupboard will have a bunch of housing data numbers for us, which doesn’t do much for move markets per say, unless there’s a collapse there somewhere, and I don’t see that… On Wednesday this week, the FOMC’s Meeting Minutes from their last meeting when they cut rates but said that was it for now, will print… it will be interesting to see how many no-votes there were to cut rates… And IF the minutes leave the door open for more rate cuts sooner than later, then and only then will the markets react accordingly…

Before I head to the Big Finish I can’t let this go another day without getting if off my chest… Well, well, well, what do we have here? Former Fed Chairman, Big Ben Bernanke, gave an interview to promote a new book he’s authored, and in it he came clean and said that “some Wall Street executives should have gone to jail for their roles in the financial crisis that gripped the country in 2008.” Really? Where, may I ask, Big Ben, was all this tough talk back in 2008 or 2009, or even 2010? Weren’t you in charge then of the Fed? And wasn’t The Fed NY’s responsibility to regulate the banks that you now claim that besides fines, their leaders should have gone to jail? You know, as a PHD you should know better than to bring stuff up from the past, that might have the focus switched to you!

Too much, too little, too late, Big Ben… I’m just saying!

To recap… The currencies rallied on Friday, and remained well bid in the overnight markets last night. Gold hasn’t seen the love the currencies have though, and closed down $3 on Friday, and is down another $9 early this morning. The economic Data in the U.S. was downright awful on Friday, and the Chinese are balking at the requests of the trade negotiators, so apparently it’s not the layup we were all told it was going to be, eh?

For What It’s Worth… Well, another sign of the economy grinding to a halt came my way on Saturday when I saw this “Cass Freight Index collapses in Rocktober -5.9%, the index has been negative since springtime, folks… “ So, then I saw that the 4th QTR GDP is being forecast to collapse, I had to include it here… So this is the article on the 4th QTR GDP and it can be found here: https://www.zerohedge.com/economics/q4-gdp-crashes-us-economy-growing-slowest-pace-4-years

Or, here’s your snippet: “Following a burst of poor U.S. economic data, including today’s disappointing retail sales and dismal industrial production, the U.S. economic surprise index has slipped back into the negative after peaking in late September.

This slowdown in high frequency economic indicators has not been lost on strategists, and in just the past week, tracking estimates for Q4 GDP have tumbled by over 0.4% in just the past week, with both the Atlanta Fed and New York Fed now expecting a sub-0.40% GDP print in the current quarter.

U.S. GDP in Q4 is set to print at the lowest level in 4 years at around 0.35%, and would be only the fifth time in 42 quarter since the Q3 2009 exit from recession when U.S. growth has risen by less than 0.5% Q/Q.

We only bring this up to point out that the S&P500, which is printing at all time highs well above 3,100, is clearly no longer reliant on the U.S. economic outlook, even if U.S. GDP is now expected to print dangerously close to contraction due to a sharp slowdown in household spending, capex, residential investment and inventories.

So what does matter, if it’s not the market, or earnings which as we pointed out previously are not only negative for Q3 but also just turned negative for the 4th quarter according to consensus sellside estimates, suggesting a technical earnings recession awaits?

The answer: the Fed’s balance sheet, which has increased by $288 billion in the past two months, a faster rate of increase than that observed during QE3.”

Chuck again… Wait, Zerohedge.com didn’t you get the memo from the Fed, that we can’t call what they’re doing QE? Better clean up your act, or you’ll be in deep dookie with Jerome Powell! HAHAHAHA!

Currencies today 11/18/19 American Style: A$.6810, kiwi .6405, C$ .7565, euro 1.1060, sterling 1.2950, Swiss $1.0094, European Style: rand 14.7689, krone 9.1065, SEK 9.6408, forint 302.89, zloty 3.8778,  koruna 23.1344, RUB 63.70, yen 109.06, sing 1.3602, HKD 7.8284, INR 71.65, China 7.0074, peso 19.24, BRL 4.1947, Dollar Index 97.94, Oil $57.59, 10-year 1.85%, Silver $16.82, Platinum $882.41, Palladium $1,716.35, and Gold… $1,459.22

That’s it for today… Quite a long one I might add, but I had a lot to say today about the ridiculousness of the things that people say!  One of these days I’ll get it right… Last week I said my granddaughter, Delaney would be in the production of Madeline, but it’s actually Matilda!  What a dolt sometimes, eh? We attended a fund raiser for a fallen police officer last Friday night. It was a Trivia night, and the subject was the 90’s…  I said, well there goes out chances, because I tell you all about the 60’s, but not the 90’s!  OK…  Styx takes us to the finish line today with their ballad song: Lady…  And with that I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

November 14, 2019

* Currencies slide further, Gold nets out a $7 gain

* Eddie George talks Gold price manipulation… Seriously! 

Good Day… And a Tub Thumpin’ Thursday to you! I’m still feeling the queasy stomach but I’m better… I’ve just been so darn cold… I put layers on, including a sweatshirt/ hoodie, throw a blanket over me while I watch TV, and my hands are still like ice, and I’ve got the chills all the time… If I don’t get out of this Cold area soon, I’m going to turn to a pop-cycle! Man, have I got a doozy of a piece of a quote on Gold manipulation from the Gov. of the Bank of England today… All the naysayers will be needed to find to get some salt on the crow they’re going to have eat! The Moody Blues greet me this morning with their song: The Voice…

Well, I contemplated opening with the major story I have for you today regarding Gold manipulation, but then thought, it would be better to have you wanting to get to it… I learned something back when I was in the show business if you will, playing on stages with the band, “Leave them wanting”… So… with no further adieu, here we go….

The currencies and metals barely moved on Wednesday, as the markets focused on the Impeachment proceedings, and looking for any word on the Trade Negotiations… The dollar bugs still have the conn, and Gold couldn’t hold to its early gains over $9 but still closed better on Wednesday at $1,463 than on Tuesday at $1,455. When you add in the pennies that was a net $7 gain on the day… But like I said, since the bulk of Gold’s gain on teh day was in the early trading, it didn’t move much while we were all awake!  I get emails from readers that remind me to put the closing price of Gold in when I’m talking about the shiny metal… And I’m happy to do it… but I do print the current price of Gold in the currency roundup each day… I’m just saying…

Yesterday in the Eurozone, they printed their September Industrial Production and while it was negative it was far better than anticipated and the print from August… September’s IP was -1.7%, VS -2.8% in August… Things must really be slowing down here, as even Germany can’t pull the rest of the laggards out of the red like they used to each month… If I’ve said this one I’ve said it 100 times in the past, and that is that it would nice if we could just buy Germany right? And not have the German numbers pulled down by the likes of Italy, Spain, Greece and so on…

But we can’t, so you have to take the bad with the good, with the euro… And right now the European Central Bank (ECB) is under the belief that negative rates will spur spending and economic growth… I ask, when will they ever learn, when will they ever learn?

Today in Canada, we’ll see the latest Jobs report… Last month’s surprise to the upside was well taken by the currency guys, and they rewarded the loonie… The forecast for today’s print is for an even strong number than last month’s print… And if that happens, that certainly would be a feather in the cap of the loonie, eh?

And Russia printed their 3rd QTR GDP which was double the 2nd QTR print at 1.7%…  The Central Bank of Russia (CBR) has a target for GDP for the year at 1.9%, but unless the 4th QTR GDP going gangbusters they won’t make it, as that 2nd QTR poor performance did them in…  You must remember here that Russia has a boatload of economic sanctions placed on them by the U.S. and Eurozone, so look at the 1.7% GDP as really like 2.5 or 3%…  

OK, before I get into this comment by Eddie George, former Gov. of the Bank of England, I’ve got another special treat for you today… When you have time, and can carve out 30 minutes to watch and listen to a presentation, I have Grant Williams speaking on Gold in Switzerland, and you can get to that by clicking here: https://www.gowebcasting.com/events/precious-metals-summit-conferences-l…

Alright… hold tight… fasten your seatbelt and keep all arms and legs inside the vehicle while reading this next piece…. May the force be with you!
Regarding Gold and price manipulators… My good friend, the Retirementor, Dennis Miller, is back to writing and today, he sent out his letter, that includes an interview with yours truly! Check it out at www.milleronthemoney.com Dennis also sent me a quote that appeared on the Burning Platform site… read this first and then we’ll discuss, ok?

“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K.”
Eddie George, Governor Bank of England, in a conversation with the CEO of Lonmin, September 1999

OK, now I want to have a discussion with all those naysayers through the years that said the U.S. Gov’t had nothing to do with Gold price manipulation…. Are they going to say that Eddie George, BOE Gov. was lying back in 1999? This is like the icing on the proverbial cake to me folks… All those years researching and following the Gold movements, and what have you, finding the wiki link with the conversation between Greenspan and a noted Senator about keeping the price of Gold down so that investors don’t shun the dollar and other things, and now this… I feel like I should be rubbing noses in this… But I won’t… I carry on despite their shortcomings in seeing the writing on the wall…

Back to our regularly scheduled programming… The Good folks at GATA sent me this note yesterday regarding China and I thought that since I’ve been telling you this was going on in China now for years, that it would be good to see the China newspaper reporting it….

“Beijing sends corporate China a €4 billion message: diversify away from US dollar debt

• China has capitalized on a low-yield environment in Europe to issue euro-denominated government bonds cheaply. It is also setting an example to Chinese companies, in the hope of weaning them off dollar-denominated debt dependency.”

That’s something that’s been going on since 2007, whcn China first started signing up countries to their currency swap agreements. I’m not applauding this, I’m simply saying that when you as a country (U.S.) go about building debt like they have with no regard for the dollar’s value, why then should other countries hold dollars with losing values? 

Speaking of Debt…The U.S. Budget office printed the Rocktober Budget last night… The Budget Deficit for the first month of the U.S.’s fiscal year was a deficit of $134 Billion!!!!!   Annualized that would be an annual deficit of $1.6 Trillion!!!!  That would see us going past $24 Trillion in July…  Got Gold? 

The U.S. Data Cupboard yesterday had the stupid CPI, and the Rocktober print saw an increase in consumer inflation by 0.4%, VS September’s 0.0%… I guess, as long as you hang your hat on the CPI being the correct figure, then you would question the Fed’s rate cuts, right? I’m just saying…

The U.S. Data Cupboard still doesn’t really have anything for us to take a bite out of, but that will change tomorrow when Retail sales, Industrial Production and Capacity Utilization prints… But that’s tomorrow, and today all that’s there for us is PPI (wholesale inflation) and a roster full of Fed heads on the speaker’s circuit.

Before I head to the Big Finish today I wanted to share with you a quote from one of my fave economists, Dave Rosenberg, who like me is scratching his head over what the Fed is telling us these days… This is from Dave’s Twitter feed: “Chicago PMI comes in at 43.2 and the business sector is in recession but the Fed keeps talking about the economy and the state of monetary policy as being in “a good place”. Surely this is some sort of dark comedy routine.”

Chuck again… And the dollar bugs keep swallowing that bait, hook, line and sinker, folks…

To recap… not much movement in the currencies and metals yesterday… The dollar  continued to slip but not by much, and Gold was up a net $7 on the day… German Industrial production printed negative, but beat last month’s -2.8%, so that something, eh? China tells Corporations to ditch the dollar… Chuck knew this day was coming… And David Rosenberg treats us today …

For What It’s Worth… OK, lots of stuff to go through these days, but this is something I’ve talked about for some time now, and that is how the President keeps dissing the Fed and demanding lower rates… And it can be found here: https://www.cnbc.com/2019/11/12/trump-rails-on-fed-says-market-and-economy-would-be-doing-even-better-without-powell-mistakes.html

Or, here’s your snippet: “Instead of highlighting warmer relations with Beijing, Trump criticized the Fed for what he sees as its hesitation to lower interest rates and blamed the central bank for capping gains in the U.S. economy and stock market.

The president noted that since his election, the S&P 500 is up more than 45%, the Dow Jones Industrial Average is up over 50% and the Nasdaq Composite is up 60%. But those numbers could be way higher, Trump said, if it weren’t for the reluctance of the Fed.

“And if we had a Federal Reserve that worked with us, you could have added another 25% to each of those numbers, I guarantee you that,” Trump said.

“But we all make mistakes, don’t we?” the president added. “Not too often. We do make them on occasion.”

It wasn’t immediately clear which “mistake” Trump was referencing: His choice to nominate Fed Chair Jerome Powell to lead the central bank or Powell’s preferred course of monetary policy.”

Chuck Again… You know… Like I told Dennis Miller for his article that printed yesterday… if negative interest rates worked so well, then why isn’t Japan leading the world? They’ve had negative rates longer than any of the other countries, but still their economy is a basketcase… I’m just saying!

That’s it for today… and tomorrow… I go to the wound center again tomorrow morning bright and early… I’m thinking that when they cut the una-boot off me that I’ll see major improvement in my open wound… fingers crossed! In looking for something to watch last night, I came across our St. Louis University Billikens basketball game, so I settled in to watch them win by 22… Good game… Next Saturday, I’ll be in attendance for the St. Louis Gateway’s production of Madeline… My darling granddaughter, Delaney has a part in the production, and is the “stand in” for the lead of Madeline… So, that’s next week… On Saturday, my beloved, and dragging Missouri Tigers will face Florida, a highly ranked team comes to Columbia, MO. Should be a good game! Time to hit send… The Counting Crows take us to the finish line today with their song: Round Here… I saw the Counting Crows back in the 90’s… as they came through St. Louis on tour… I hope you have a Tub Thumpin’ Thursday and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler

 

 

 

November 13, 2019

* Currencies continue to get sold… 

* RBNZ leaves rates unchanged… 

Good Day… And a Wonderful Wednesday to you! Brrr, it’s cold here… too cold for this time of year, that’s for sure! Where’s Al Gore? I would like to point out to him that these temperatures at this time of the year are very rare! I was finally able to eat something other than saltines yesterday, so I would think I’m over my stomach bug… That was no fun! But I’m glad it’s over! Our Blues finally lost a game  last night, this time on home ice… They did get a point for a tie, but lost the second point when they lost the shootout…  (You know I dislike this way of deciding a game vehemently!)  And somehow my beloved Cardinals are able to stay in the news, as they signed longtime pitcher, Adam Wainwright, to another 1 year contract yesterday… Baseball news, keeps me warm! HA! Billy Squier greets me this morning with his song: In The Dark…

I think that’s what the dollar bugs are doing right now… They’re trading In The Dark… While the selling wasn’t as harsh as on Friday last week, the dollar bugs did keep the conn and have the currencies crying “uncle” right now… I read a report on Bloomberg yesterday, and the writer must be a Pfennig Reader, for he went through the exercise of saying how the strong dollar trend was nearing an end, and that investors should look to the euro for a currency that will gain VS the dollar when the strong dollar trend ends… He then went on to explain that the euro is the offset currency to the dollar… Wow! I’ve been saying that for sometime now, and Bloomberg didn’t print my article! I’m hurt! Hey! Those mean people at Bloomberg.com hurt my feelings… Isn’t there some law now that I get to sue them for that? HAHAHAHAHAHAHAHA!

I have a high tolerance of pain, so I doubt anything like that would hurt my feelings, and beside if it did, that would be MY problem for being such a sap! I came up with that all by myself, and didn’t need a “safe room” to come up with it! I’m just saying….

Remember yesterday, when I told you that someone (we won’t know who for a while) showed up and sold 3 million ounces of Gold on Monday? I got to thinking about this more and more yesterday… You know in the past if someone was going to sell 3 million ounces of Gold they would do it in several different trades throughout the day, so that the markets don’t get wind of it, and to keep the price from dropping dramatically while the sell is being made….. The only reason to throw all 3 million ounces of Gold for sale at once is the manipulate the price lower… They wanted the markets to get wind of it, they wanted the price to drop dramatically… And still the CFTC doesn’t do anything about… Congress doesn’t do anything about it… The Fed doesn’t do anything about it…

OK… on to other things here before I get all riled up! What? Wait! I already was riled up! OK, then, before I go bananas! Better…. Don’t want people to get the wrong impression of my moods when writing stuff! I watched a video on YOUTUBE yesterday from Mike Maloney… Mike is a good guy, that normally talks Gold & Silver, but looks at what the Fed is doing too… And in his video yesterday, he talks about The Fed getting recession indicators… And it just so happens that 3 months before the recession in 2001, the Fed began cutting rates…. And it just so happens that 4 months before the recession in 2008 the Fed Began cutting rates… And… Didn’t the Fed begin cutting rates two months ago now? I’m just saying…

Last night, for us, today for New Zealand, The Reserve Bank of New Zealand (RBNZ) met today to discuss rates… The RBNZ left rates unchanged, which was no surprise to me, although, these days you never know what those Central Bankers are going to do, right?  In The Eurozone, today, we will see the color of September Industrial Production, which I can’t imagine won’t be negative, and in the U.K. where BREXIT seems to be tearing the country apart, they’ll see the color of Retail prices, which is a way of seeing inflation.

So, there are things going on outside of the U.S. today folks, and with the U.S. Data Cupboard only having the stupid CPI for us today, then the focus today will be…. No wait, I know better than to say the focus will be on the outside of the U.S. today, not with the Trade War negotiations going on still… Yesterday, the President was scheduled to talk at the economics club of New York, and most observers thought he would use this scenario to announce a Trade Agreement… But that didn’t happen, and now the markets are beginning to get that olde tyme feeling, once again that an agreement is not going to come of these negotiations, and all those that took their safe havens and sold them, thinking the deal was done, will be going back to them soon… Or, at least, that’s how I see it going…

And why wouldn’t they? There’s just too much uncertainty in the markets today folks… And haven’t I always told you that traders don’t like “unknowns”? So, far the dollar has withstood all this uncertainty, but one has to wonder for how much longer it can do that? I mean we have the aforementioned Trade Talks still going on… We have an impeachment process starting today… We have seen an inverted Treasury bond yield curve… We have the repo market in a huge mess, that has caused the Fed to reintroduce QE… We have a Fed Reserve that has cut rates at 3 consecutive meetings, and should I go on?

Well, yes, Chuck, if it pleases you… OK, then… We have exploding debt that no one other than Chuck cares about… We have a Trade War going on with our biggest Trade Partner (China), and outside of the U.S. we have BREXIT tearing the U.K. apart at the seams…

Is that enough uncertainty for you? Then throw in that the stock market is at all-time highs, but the stocks don’t have the earnings that would warrant the high stock price… And a dollar that’s been in a strong trend for 8 years, and you’ve got a recipe for chaos in the markets… And after all that I’ve said, here I ask this one question…. Got Gold?

 Talk about a BIG Unknown…. A few months ago, I wrote about the protests in Hong Kong, and wondered then just how badly they would affect the Hong Kong economy… The protests continue, and have turned quite ugly with violence, tear gas, all kinds of bad things, and all the while the economy continues to suffer… This is going to play hell with the peg that exists between the honker and the U.S. dollar… As capital flees the country, not wanting to be in a country that is at war basically with itself, the pressure on the Hong Kong Gov’t to come up with something to help the economy from sinking further. Just last week it was announced that the Hong Kong economy had slipped into recession. Chuck? You don’t think that China would opt to drop the peg in the honker do you?

No…. But in today’s environment, anything is possible folks… If capital flows continue to leave Hong Kong then anything’s possible, including a drop of the peg! Longtime readers might recall me saying this years ago… I thought then that once China took over Hong Kong from the Brits, that they would eventually drop the peg of the honker with the dollar, and then use their experience in how to manage a dirty float of a currency, to ready themselves for when they go to a non-managed currency, (the renminbi) in a dirty float… Remember me saying that then? Sometimes, not often, but sometimes, I have a mind like a steel trap! And other times its like oatmeal! Anyway… I think that even though these protests are happening around the world, that they are important to keep abreast of…

Gold hemmed and hawed yesterday and ended up gaining 30-cents on the day… That’s it, a lousy 30-cents!  Of course it’s all relative, for when I was a kid if I had 30-cents in my pocket I was able to buy a moonpie and a R.C. cola, and  have a dime left over for my piggy bank… I was on top of the world!  Geez, am I becoming an old man who only reminisces about the “good old days”?  Oh well, so what if I have? It’s far better to be an old man with good memories, than the alternative! 

OK, getting back to Gold, sorry about that tangent I just went on…  Gold is up over $9 in the early trading today to trade $1.465…   And I just noticed that the yield on the 10-year Treasury dropped from 1.95% to 1.87% in one day, which would tell me that what I just talked about above where investors that sold their safe havens are piling back into them is happening as I write! 

The U.S. Data Cupboard is still searching for real economic data to print, and they won’t find it today, as the only thing printing today is the stupid CPI (consumer inflation ).  Real economic data won’t print here until Friday… So, the focus, as I said above remains with the Trade negotiations, will they or won’t they come to an agreement? Only the Shadow Knows…. 

For What It’s Worth… Yesterday, I had a long FWIW article from Grant Williams, and today I have a quote from the same Grant Williams in this article about Gold that can be found here: https://www.sharpspixley.com/articles/lawrie-williams-central-banks-only-hold-gold-for-traditional-reasons-bs_297472.html

Or, here’s your snippet: “I append the following quote, which was accompanied by a chart, in the Charts that make you go hmm.. section from Grant Williams’ excellent latest ‘Things that make you go hmm…’ newsletter as it truly emphasizes a point I’ve been trying to make here several times over the past few months.

Grant’s observation was as follows: “Central Banks only hold gold because of tradition (if you believe their nonsense), so it probably comes as some surprise to many that, between them, they have bought more of this ‘traditional’ asset in the first half of 2019 than they have done in any other 1H on record. It’s enough to make the skeptics of the world think they might be concerned about something but… well that would be directly opposed to their assurances that everything is under control so… it’s probably nothing. Just tradition…” Do I detect a sharp degree of sarcasm here? Well one would be foolish not to!

It is apparent that the Powers That Be, not only speak with forked tongues, but are beginning to build their gold reserves in prospect of improving their positions ahead of any forthcoming global financial reset which seems to be approaching rapidly. For most of these central banks it is a case of ‘too little too late’ though.

It also makes the then U.K. Chancellor, Gordon Brown’s decision to sell off half the U.K.’s gold holdings at the bottom of the market some 20 years ago – a timing now irreverently known as ‘Brown’s bottom – a particularly abject move’. This was, in hindsight, a remarkable misjudgement by a U.K. political leader, and subsequent Prime Minister, who professed economic prudence and was the self-proclaimed ‘saviour of the world’s economy’ over his role in the implementation of quantitative easing post the 2008 great financial crisis. The U.K. now languishes as the world’s 18th largest national holder of gold as reported to the IMF with a holding hugely below many countries with considerably smaller GDPs. If the U.K. had held on to its gold it would currently be in around 9th place in this gold hierarchy, although still hugely behind some of its more prudent European neighbours like Germany, Italy and France, three of the E.U.’s economic powerhouses.”

Chuck Again…  Makes sense to me, right? You have Central Banks (other than China & Russia’s that have been buying Gold for years) stepping into the Gold buying arena, doesn’t that send us an omen of things that yet to come? I’m just saying… 

Currencies today 11/13/19 American Style: $.6830, kiwi .6396, C$ .7541, euro 1.1009, sterling 1.2837, Swiss $1.1009, European Style: rand 14.9394, krone 9.2141, SEK 9.7539, forint 304.05, zloty 3.8911,   koruna 23.2250, RUB 64.01, yen 108.89, sing 1.3626, HKD 7.8316, INR 71.89, China 7.0046, peso 19.38, BRL 4.1592, Dollar Index 98.38, Oil $56.48, 10-year 1.87%, Silver $16.97, Platinum $874.90, Palladium $1,720.18, and Gold… $1,465.51

That’s it for today…  While the cold temps outside try to sneak inside, I continue to think about the warm weather in S. Florida…  UGH!  So, how does a hockey team win 4 games in a row on the road trip, and then come home to lose on home ice?  They say, “it’s why you play the game” and I guess they would be correct!  I’m going to really test my stomach as soon as I hit send this morning, and drink some coffee! I really do enjoy a cup of hot coffee, especially when it’s cold outside! Remind me sometime to tell you about my former colleague of years ago, Art, who used to out due me with how strong the coffee was each day…  I wonder where Art is these days?  I guess I’ll check LinkedIn…  The Walker Brothers take us to the finish line today with their song: The Ain’t Gonna Shine…   the moon isn’t gonna rise in the sky, the tears are always found in your eyes…   great stuff! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler