Back-To-Back Quarters Of Negative Sales, Here In The U.S….

April 22, 2019

* That doesn’t stop the dollar bugs from buying dollars!

* U.S. appears to be ready to drop Iranian Oil Waivers… 

Good Day… And a Marvelous Monday to you! I trust everyone that celebrates Easter, had a grand day, it was probably one of the nicest days, weather-wise, for Easter that we’ve had here in a while… Simply beautiful, as was Saturday too… I broke in my Big Green Egg on Saturday, it took me a couple of hours to get it ready to cook in… How about our Blues! What a thrilling game 5 win with 15 seconds left in the game, and then a natural hat trick by Jaden Schwartz in a Game 6, series winning game! On to the second round! We sent Alex off to his home the next 10 weeks in Montgomery Ala, for clinical work. He texted us last night that he made it… 9 hours drive, alone for the first time… OK… the band Yes, greets me this morning with their song: Rhythm Of Love…

So much for when Chuck’s away the currencies rally, eh? Last Thursday and Friday were awful days for the currencies… As Retail Sales, on the outside, were stronger in March than expected, as they rose 1.6%, and ex-autos rose 1.2%… But there was something interesting in the report that the media failed to uncover, and therefore the markets went bananas over the strength of the report, and that “something ” is better explained by economist David Rosenberg on his Twitter handle… “Strong March for retail sales but look at the entire first quarter. Down to +0.2% SAAR from 1% in Q4, 4.3% in Q3 and 6.1% in Q2. REAL sales in Q1 were -0.7% and followed -0.5% in Q4, first back to back contraction since the first half of 2009.”

Chuck Again… Hmmm… Makes you go Hmmm, doesn’t it? This sure paints a different picture of the report than the markets swallowed hook, line and sinker… Back to back quarters of negative Sales…  Hmmm…. 

The price of Oil has moved upward and past the $65 handle again in the last 24 hours, as it appears the U.S. is going to drop the Iranian waivers come May 2nd…  These waivers are in place for countries that import Iranian oil, so if they get dropped on May 2nd, then economic sanctions would go into place for the countries that import Iranian Oil…  Very interesting, eh? 

And did you see the article in the WSJ this past weekend? Now, how can the markets ignore this… The article was talking about what would make the Fed heads decide to cut rates… Here’s the headline from the WSJ: “Federal Reserve officials are starting to talk about the conditions under which they would cut interest rates, including a scenario where inflation drifts lower even if the economic growth doesn’t falter.”

Chuck again… Didn’t see the major media outlets talk about this? Of course you didn’t!

Just when I thought it was safe to go back to Twitter and see what economists are saying again… I was hit with this Twitter feed by Fred Hickey, who retweeted a post from Jesse Felder, of The Felder who talked about what could be the biggest thing out there that he fears the most right now, and it is not just the number of short positions in the VIX (volatility index) but the number of leveraged 2x the short in VIX… That’s crazy folks… This is what I would call “extreme positioning” and puts their risk way out on the limb… I’m with these two guys who say this is scary… Something to think about for sure!

Well… things aren’t that rosy around the world either folks… While China printed some better than the average bear data last week, it still wasn’t what you would call, a sign of renewed Global Growth, and like I said last week, I doubt this is enough to slow the momentum of the Globlal slowdown. And in Germany last week, they didn’t print strong data… When you have China, the U.S., Japan, and Germany all having problems generating economic growth, you might as well pick up the phone and call Houston… Hello, Houston, we have a problem…

And Gold… Well at least this morning in the early trading Gold is up almost $4… But it was a wild and whacky week for the shiny metal last week… for sure! Gold a lost a lot of ground, and the salami slicers, (as Ed Steer calls them) Were working overtime to push the price of Gold downward and away from any moving averages that were out there. I just don’t know what’s happening here, folks… It could be a couple of things in play here…  1. The selling of Gold to pay for margin calls is already happening… (I doubt that but who knows right now?  2. The Boys in the Band can’t stop what they started a couple of weeks ago, when Gold looked like it was ready to take out the so-called maginot line of $1,350…  (probably more likely) or 3.  I have no idea… (probably the most likely! HA!)

The U.S. Data Cupboard starts the week very slowly with housing data Monday and Tuesday. On Wednesday, there’s no data scheduled to print. So we won’t be dealing with data until Thursday when March Durable and CAPEX Goods Orders will print… Recall those were negative in Feb… I truly expect both of these to be negative again in March…  I went on and on about CAPEX a couple of weeks ago, if you missed class that day, may I suggest you simply go to and read the archives… 

To recap…  It was a weird reaction by the currency traders to the U.S. Retail Sales data last week, and the dollar got on the rally tracks and hauled rear down the tracks, taking bits and pieces from all the currencies… Even the Petrol Currencies didn’t get to rally alongside the price of Oil where the news of a drop of the Iranian waivers got the price of Oil on the rally tracks.  Germany prints some very weak data late last week, and feeds into Chuck’s thought of a Global Slowdown, led by the U.S.  for, the U.S., China, Japan, and Germany are all having much difficulty generating economic growth. 

For What It’s Worth…. This came to me last week from longtime reader Bob… It’s about the retail Armageddon that’s been going on in brick and mortar stores. And it can be found here:

Or, here’s your snippet: “If the U.S. economy is in good shape, why have retailers already shuttered more stores than they did in all of 2018? Not only that, we are also on pace to absolutely shatter the all-time record for store closures in a single year by more than 50 percent.

Yes, Internet commerce is growing, but the Internet has been around for several decades now. It isn’t as if this threat just suddenly materialized. As Internet commerce continues to slowly expand, we would expect to see a steady drip of brick and mortar stores close, but instead what we are witnessing is an avalanche. If the U.S. economy really was “booming”, this wouldn’t be happening. But if the U.S. economy was heading into a recession, this is precisely what we would expect to see.

Last year, U.S. retailers closed 5,864 stores.

That was a rather depressing number, but here we are in April 2019 and we have already surpassed it. The following comes from CNN…

This year, US retailers have announced that 5,994 stores will close. That number already exceeds last year’s total of 5,864 closure announcements, according to a recent report from Coresight Research.

Once again, you can’t blame this on Internet commerce. Foot traffic was rising for quite a while, but now what we are seeing is perfectly consistent with an economic slowdown.

Sadly, this could be just the beginning. In fact, one expert quoted by CNBC expects total store closures in the U.S. to hit 12,000 by the end of 2019…
“I expect store closures to accelerate in 2019, hitting some 12,000 by year end,” Deborah Weinswig, founder and CEO of Coresight, said.
If that happens, we will shatter the old yearly record by about 4,000.
We are in the early innings of America’s “retail apocalypse”, and it is going to get much, much worse.”

Chuck Again… Brother can you spare a dime? That’s all I could think of when I was reading this article… But not to worry, folks… The economy is doing just fine, right? NOT!

Currencies today 4/22/19 American Style: A$.7135, kiwi .6675, C$ .7483, euro 1.1250, sterling 1.2988, Swiss $.9855, European Style: rand 14.1095, krone 8.5008, SEK 9.3045, forint 284.20, zloty 3.8037, koruna 22.8298, RUB 63.99, yen 111.92, sing 1.3565, HKD 7.8444, INR 69.80, China 6.7032, peso 18.79, BRL 3.9257, Dollar Index 97.34, Oil $65.29, 10-year 2.57%, Silver $15.05, Platinum $909.36, Palladium $1,428.54, and Gold… $1,279.30

That’s it for today…  Yesterday was not only Easter, but it was also the birthday of my longtime friend, Frank Trotter! And I can’t forget that former colleague, Mike Harrel also celebrates his birthday on 4/21! Well, my beloved Cardinals found a way to take 2 of 3 from the Metropolitans this past weekend…  And our Blues! WOW! After the awful way they played in the first half of the season too! Hockey playoffs are so about who’s healthy, with good goalie play, and on a roll come the playoffs, it doesn’t matter what you did in the regular season, if you don’t have those 3 things, you can start packing your golf clubs! And the Blues… well, they have those 3 things going for them… I’m just saying…   Todd Rundgren takes us to the finish line today with his song: It Wouldn’t Have Made Any Difference…  That song was featured in the movie: Almost Famous, about a rock band in the early 70’s… (I lived that life!)   I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler