Data Returns, But Will It Be Weak or Strong?

Good day… And a Marvelous Monday to you! What an absolute, no questions about it, beautiful weekend here in St. Louis, weather-wise, that is, this past weekend. OMG! Beautiful blue umbrella skies, warm but not hot temps, and a breeze from the South…  When I was a young man, and we would have days like this, my dad would say to me… “Chuck, they don’t have days like this in Russia”…  I kept thinking about my dad this weekend… Elton John greets me this morning with his song: Levon..
Well, as we start our week, the last week of June, and thinking about that, can you believe the year is half-over? Where does the time go? Oh well, as we start our week, the currencies are drifting with no real direction. The economic data returns to the U.S. this week, and I think that’s what’s holding up the currencies from any movement early this morning.  No one wants to make a call on the data prints for this week…  But I will!  Let’s see, first of all, I need to pick out the “real economic data”…  That would include: Durable and Capital Goods Orders that print today, and will be negative, I’m sure. the Case/Shiller Home Price Index tomorrow, the Advance Trade Goods on Wednesday, and we finish the week with two of my fave prints: Personal Income and Spending… And I don’t see any of those giving any strength to the dollar…
Now, there are more data prints that will show their colors this week, but, they are of the variety that  don’t really mean that much, as far as I’m concerned! Like Consumer Sentiment. As I’ve said before, until they call me and ask me my opinion, I’m not paying attention to the print! HA!
The euro continues to knock on the door of 1.12, but unlike the Paul McCartney song, no one is  getting up to answer the door! I worry about currencies that can’t seem to get past a figure. As I’ve told you for years now, dear reader, traders are fickle, and if they’ve attempted to move a currency past a figure a few times, and fail, they’ll just give up and move onto to something else… But, like my new Thursday article for the Dow Theory Letters readers, I’m making a bold call for the return of the euro…   There are other currencies to get excited about, but when you’re talking about the offset currency to the dollar, you’re talking about the currency that will see dollar weakness first, and foremost…
And that brings me to this quiz for you… Which currency do you believe is the best performing currency so far this year? It’s probably not the one your thinking of, unless of course you’re thinking of the Mexican peso… In January this year, the peso was trading with a 22 handle… Today, it is around 18… And the IM currency positions report last week showed the peso with the highest level of long positions of any currency, including the dollar! A couple of months ago, my old colleague, Chris Gaffney, sent me a note and said, “X) is calling for the peso to be the best currency this year”… And I said “hogwash”! How could that be? The Trump administration was talking about redoing the NAFTA and building a wall, and making the Mexicans pay for it… And besides, as I pointed out at the time, the peso still wasn’t paying a “risk premium”… Of course, saying that it’s the best performing currency this year to date, is a little misleading, in that, just a year ago, the peso was trading with a 15 handle… So, while it has recovered from the depths of a 22 handle, to 18, it still has a ways to go to even get back to even Steven with last year’s level!
And here’s the thing that scares me about the peso’s level and apparent popularity right now… It’s an overcrowded trade, and any sign that the Fed is going to continue their rate hikes, will mostly likely cause this overcrowding to disperse… And when one sell begets another, then they become an avalanche of sells… So, I guess, what I’m trying to say here is to be careful, because there are just too many wolves at the door of the peso right now…
The Aussie dollar (A$) and New Zealand dollar/ kiwi, continue to inch higher, as if they are sneaking around in the dark so nobody notices… Last week, these two currencies had to weather the storms of a Central Bank meeting in New Zealand, and the meeting minutes from the last Central Bank meeting in Australia. Having weathered the storm nicely, it’s time for these two to get going! Come on! I know you can do it!
Saturday, I received a Daily Reckoning ( and in it was an editorial piece from Charles Hugh Smith, where he talked about how all the government “fixes” of the past eight years have produced a fragile system ready to crack. Boy was I ready to read that! Because, as I’ve told you for years now, all those crazy ideas to “fix’ the economy were not working, and they wouldn’t work, and they won’t work! There’s just too much debt, for anything to work, and still we continue to add to the debt! There’s an old saying that when you find yourself digging yourself a hole, stop digging! But not the U.S. we just keep on digging, and deficit spending! Oh, and Charles Hugh Smith! Here’s a short snippet of what he had to say, but I truly think you should hit the link above and go read his whole article, you’ll think… Wait! Is this Chuck writing?
“As I explain in my book Why Our Status Quo Failed and Is Beyond Reform, all these fake-reforms only increase the systemic fragility by weakening all the dynamics that generate adaptability, accountability, feedback, transparency, etc.
The status quo is now like a wafer-thin sheet of ice over a deep lake of killing-cold water. To the naive and inexperienced, the ice looks solid; they believe the tall tales of “recovery,” growth,” “wealth” and solvency.
It’s all phony public relations. As a strange as it may sound, PR doesn’t make thin ice thick enough to stand on.
All the “fixes” have fatally weakened the real economy, and created a dangerous illusion of “wealth,” “growth” and solvency.
Soaring debt and declining earnings = brittle thin ice.” – Charles Hugh Smith
OK…Well, Gold got to have another day in the sunlight on Friday, closing up $6.50 on the day to $1,256.60… Gold WAS higher during the day, but not allowed to end higher… UGH! But, it had gained nearly $14 in the last 3 trading days of the week… A good start for a Gold run that I see coming…  Ahem, Chuck… you said that, and you need to go look at the early morning trading, because Gold is down $14 in the early morning trading!  UGH!  Oh, well, a drop like that just begs for investors to buy at cheaper prices, eh?
Hey! Did you see the latest Gold accumulation numbers from Russia? Hold onto your seats, because this will blow you away… Russia is still gobbling up all the gold it can get its hands on. According to Reuters, Russia’s central bank posted an increase in gold reserves in May—the fifth consecutive month of gains. Russia’s gold reserves rose to 54.9 million troy ounces by early June from 54.2 million ounces as of May 1.
For those of you keeping score at home… there are 35,273.96 ounces of Gold in a Tonne.. So, 54.9 Million divided by 35,273.96 give us… drum roll please.. $1,556.40 tonnes of Gold… That’s more than the World Gold Council reports that China has, which isn’t nearly correct, but for illustration purposes, I wanted to show you just how much Gold Russia has accumulated in the past few years…
Why is Russia accumulating all this Gold? A Couple of reasons… One, the Central Bank of Russia (CBR) Gov. Elvira Nabiullina, made the decision a few years ago that Russia would stop accumulating foreign reserves in other countries currencies and their own, and instead buy Gold… What a Goldmine (pun intended) that was for the CBR, given Gold’s rise VS all currencies in the past few years.. And Second, Russia along with China, have made numerous statements about how they want the dollar standard to end… Well, if that were to happen, then those with Gold get to make the new rules, and guess who wants a seat at the table? That’s right… Russia!
After awaking from my Infusion Confusion fog on Friday, I began reading emails, and one that I received was from an analyst and he was highlighting the impressive performance of Palladium.. Let’s listen in to some of these facts that he spewed out.. “Palladium is probably the stealthiest bull market in the world. Its performance since 2009 beats every other metal out there…
Since January 2009, it outperformed gold by 300%. It outperformed silver by 300%. It outperformed platinum by over 350%.”
Now that’s all grand, and in fact a couple of months ago I told you about a mining company president that said that Palladium would eventually trade higher than Platinum.. Right now, Platinum is $930-ish, and Palladium is $892-ish, so not that far from overtaking its older sister..
But here’s where I think we might see some problems going forward… You see, the main driver behind Palladium’s great run since 2009 is the fact that carmakers were building cars by the shipload every year, here, Canada, Mexico and China… But, what have I been telling you for months now about car sales? They are falling… 5 consecutive months of reports that show car sales falling from the previous month. I think that car sales are in real trouble, folks… And therefore that COULD be a fly in Palladium’s ointment… If car sales keep dropping, and I think they will, then we could very well see the carmakers slow down their production of new cars, which would mean less Palladium needed… We’ve already seen Ford shut down some plants temporarily, and the other day GM announced some plant closings… So, it’s already beginning to happen…
The rabbit that Palladium has up its sleeve though, is supplies are dwindling… In Africa, the second largest Palladium producer, their mines are very old, and it’s difficult to get the Palladium out of them at this point. Russia is the number one Palladium producer, and that would just leave them as the main supplier, and that could have all kinds of ramifications should this saber rattling going on between the U.S. and Russia escalate.
So… I guess all I’m saying is that Palladium looks good, but it does have this nasty looking hickey, that was put there by the falling car sales, so be careful is what I’m saying, don’t think just because someone shows you some gaudy returns from 2009 to today, that those will continue… They might.. and they might not!
The price of Oil rebounded a bit since last Friday morning, when it was being trading in the $42 handle. This morning, it has a $43 handle, and the Petrol Currencies of rubles, real, loonie, and others all breathe a sigh of relief…
The U.S. Data Cupboard gets to show off all the restocking that took place last week, with a print of Durable and Capital Goods Orders today… As I said above, I fully expect them to be negative, keeping pace with the other weakening economic data prints that we’ve seen for the last couple of months now… But not to worry… The Fed says that these are only “transitory”… Boy, do I feel better about all these weak data prints now…  NOT!
To recap… The early morning trading has Gold down $14, but other than that, the currencies are drifting about this morning, waiting to see what traders think of the data prints that will come in by the truck load this week. Everybody likes the peso these days, but when “everybody likes something” it becomes overcrowded, and the reversal can be a killer!
For What It’s Worth… I thought we could have some fun with today’s FWIW section, and talk about work related stress, and how it affects your body… In my last Pfennig from the old EverBank, I talked about how I lived with so much stress during the growing years of building a World Class business, and how I thought it might have had something to do with me getting cancer. Well, on Saturday, I was doing some reading, and came across this article that talks about how work related stress can affect your sleeping habits, your junk food cravings and so on, and so I thought… Let’s feature this on Monday… and so, here’s the link to the whole article:
Or, here’s your snippet: “Yes, workplace stress is doing a number on your weight. But a good night’s sleep can get you back on track.
A new Michigan State University study published in the Journal of Applied Psychology this week is one of the first to connect the dots between job stress, junk food and catching Zs.
Researchers followed 235 workers at two business: a Chinese information technology company where overworked employees felt there was “never enough time in the day,” as well as a call center where staffers were stressed from dealing with “rude and demanding” customers.
The study linked stress at both workplaces with the employees experiencing a bad mood on the job, which in turn shaped unhealthy eating once they were off the clock.
“We found that employees who have a stressful workday tend to bring their negative feelings from the workplace to the dinner table, as manifested in eating more than usual and opting for more junk food instead of healthy food,” wrote study co-author Chu-Hsiang “Daisy” Chang, an associate professor of psychology.”
Chuck again…. And there’s so much more, so if you’re interested in this stress related stuff, I suggest you check out the link and find out more!
Currencies today… 6/26/17… American Style: A$ .7577, kiwi .7270, C$ .7556, euro 1.1186, sterling 1.2732, Swiss .9737, … European Style: rand 12.8755, krone 8.4647, SEK 8.7246, forint 276.33, zloty 3.7644, koruna 23.4407, RUB 59.41, yen 111.65, sing 1.3877, HKD 7.7984, INR 64.42, China 6.8330, peso 17.93, BRL 3.3316, Dollar Index 97.40, Oil $43.33, 10-year 2.16%, Silver $16.50, Platinum $920.83, Palladium $857.66, and Gold… $1,242.20
That’s it for today… Man, I had a lot on my mind this morning, didn’t I? The Pfennig is quite long today, but I had to make up for Friday’s Short-n-sweet effort! HA! My beloved, bumbling, Cardinals finally won a game last night, but with it being one of those stupid Sunday Night games, I didn’t see the ending… UGH! Makeup day game today, and I’m going! YAHOO! Love day baseball! A great St. Louis band, Mama’s Pride, takes us to the finish line today with their song: Blue Mist… And with that, I’ll get out of your hair for today… I hope you have a Marvelous Monday, and Be Good To Yourself!
Chuck Butler