Do Central Bankers Read The Pfennig?

May 23, 2019  

* The broken record says… “Another day, another day of dollar strength”

* Happy Birthday, Braden Charles Butler! 

Good Day… And a Tub Thumpin’ Thursday to you… I had a much better day yesterday with regards to the pain in my lower leg from cellulitis… Maybe, I’m finally winning the battle? I sure hope so! Well, the city was still buzzing yesterday about our Blues, and their 6 game series win that will take them to the Stanley Cup Finals… I love it… I even had tears in my eye, yesterday, morning when I was writing about how my two sons had never seen the Blues go this far… All the talk about the Blues, has given my beloved Cardinals a flyer, if you will, on their poor play recently… Well, in less than 2 weeks, the hockey season will be over, so the Cardinals had better get things turned around soon! The Beatles greet me this morning with their song: The Long And Winding Road… That leads to your door…

Another day, another day of the dollar bugs still holding the conn… The currencies seem to have dug in here at current levels… I’m taking the fact that the dollar bugs didn’t bat an eye at the Fed’s FOMC Meeting Minutes, that the markets took the message that the minutes had for them that basically said, “Minutes of the Fed’s May 1-ending interest-rate meeting revealed that the members of the Federal Open Market Committee seemed comfortable with their “patient” stance on interest rates, agreeing it could last for “some time.”

So, interest rates are going to remain steady Eddie for the time being and near future, unless we see some drastic changes to the muddle through economy we have going on and has been going on for over 10 years now.

You know… I often wonder to myself about “what if the Fed Heads read the Pfennig”… I then laugh hysterically, and come back to my senses… But, having said that… They always seem to do the opposite of what I say ahead of time I think they’ll do…  A Co-inki-dink? I doubt it! Me admit that I’m just wrong all the time? Has as much chance as a snowball’s chance in hell… Then it must be that they are readers, plain and simple… And are pledged to perform acts that counter any and everything I say!

OK, let’s get back to the markets… The Fed Heads are on hold and don’t see the dark storm clouds gathering off in the distance… I see them, and I have seen them for months now… I guess if the Fed Heads took off their rose colored glasses, things might look a bit different, eh?

The Big News of the day yesterday came from Nevada, and no it wasn’t a new gambling license…. Voters in Nevada voted to eliminate the Electoral College…. Sure you dolts, just go ahead and wipe our history, tradition, the republic that the founding fathers left us… what do they teach kids in school these days? It certainly isn’t the true history!

I’m sorry, I just got all heated and exhausted thinking about what to say there, without ticking off half the readers… But I’m like a bull in a China shop at times, eh?

OK… The Fed heads may not be the only Central Bankers who read the Pfennig… Remember earlier in the week when I said that I thought the Chinese official who said that China would not allow the renminbi to weaken to offset the tariffs, had his fingers crossed behind his back? And that the renminbi had done nothing but continue to weaken, to 6.91 that morning, and I said soon it could be 6.95 and then 7 and so on… Well, ever since I pointed all that out, guess what the People’s Bank of China (PBOC) has done with each passing day? They have allowed the renminbi to appreciate! And yesterday, the head of the nation’s foreign-exchange regulator, assured investors that the renminbi will remain stable.

It’s all a conspiracy to get me to quit! Yeah, that’s gotta be the ticket! Central Bankers are ganging up to make me look bad, which they believe will cause me to quit! I’m sure of it, and yes, I do have my tin foil hat on! HA! But they have no idea who they’re messing with, that’s for sure! Don’t they know that I looked Cancer in the eye and spit in it? Don’t they know the Butler spirit, will not allow me to quit?

One of my longest known friends in the world, Mike Karvas, (we met in 2nd Grade) grew up with me in South St. Louis, and knows me like the back of his hand, and he likes to joke and always say, Those doctors didn’t know they were talking to the Chuck I know!

OK… Gold lost little footing yesterday… So like Gold’s brother in arms against the dollar, the currencies, Gold held steady Eddie for the most part, losing $1.40 for the day. But… the shiny metal is up nearly $4 (3.83) early this morning… 

I’ve Got it! I need to say that I believe the stock market is going to the moon, Treasury yields will remain steady, the currencies are going to zero, along with Gold… I’ll aveha ym ingersfa rossedca ehindba ym ackba! (think that attempt at pig latin will confuse them? )

I went through some research on consumer debt yesterday… And believe me it sure wasn’t pretty! Credit Card Debt, and Student Loan Debt have tripled since the financial crisis to $1.46 Trillion in the 4th QTR of 2018… Auto debt is $1.27 Trillion… And Auto delinquency rates are at a 19-year high! OMG! Consumers now have more debt than they had before the Financial Meltdown…  

And don’t give me that line about there’s more people in the country than before because I’m not buying that they had anything to do with these numbers… 

That’s crazy folks… simply crazy! Nearly 8 of 10 Americans live paycheck to paycheck… And earlier this week I told you that nearly ½ of Americans are just one paycheck, not received, from a crisis…

But can you blame Americans for taking on all this debt? They’re just following the lead of their Government. The U.S. current debt (not unfunded liabilities) is now 108% of GDP… Wanna guess where the percentage stood before the Financial Meltdown? I’ll let you stew on that a bit and get back to you on Tuesday next week!

Back to Gold for a moment, as this thought almost slipped my mind, but I reached out and caught it before it flew away… Russia added 500,000 ounces of Gold to their reserves in April… Russia has not hid the fact that they are buying physical Gold left and right, like the Chinese, who every now and then will tell us when they buy some Gold, when everyone and their brother knows that they buy Gold every month! They may not import it every month… But it’s being bought…

When the you know what hits the fan, and the countries of the world come together to show their hands (how much physical Gold) , Russia and China will be “players” for sure! Will the U.S. ? I guess that depends on whether you believe or not that the U.S. still owns the physical Gold that’s in their vaults or has it all been swapped / or leased out? Remember when the you know what hits the fan, calling in loaned Gold will be difficult at best… It’ll be a case of… Show what you’ve got right here, right now…   and the old saying that possession is 90% of the law, will come into play for sure! 

The U.S. Data Cupboard today has the New Home Sales for April… Remember the previous few months have shown falling Sales each month… We’ll also see the Markit Version of PMI (manufacturing Index) for April… Recall that March saw the index fall to 52.6, so precariously close to 50… So it will be interesting to see if the index falls closer to 50 or moves further away from the line in the sand number of 50.

Tomorrow, we’ll get to see some real economic data, as Durable and Capital Goods Orders will print for April… I’ve been quite vocal about the lack of Capital orders in the past and its weight on the economy, so I’ll be watching for that one for sure!

To recap… The currencies remained Steady Eddie along with Gold on Wednesday, but the bid is still with the dollar, even after the Fed’s FOMC Meeting Minutes said that rates were on hold for the near future… Which meant that what was once thought that rates would be coming down soon, is fading… The dollar which began this run because the Fed was hiking rates while no other central bank was doing so, didn’t get sold… Hmmm…

For What It’s Worth… A month or so ago, I wrote about the Brazilian real and how it was getting sold left and right… Well, that selling hasn’t stopped and caused this article that was on Reuters and can be found here:

Or, here’s your snippet: “The rapid acceleration of the Brazilian real’s slide against the dollar this week has put traders on high alert for intervention from the central bank to stop the rot, although so far there is no sign the central bank has shown its hand.

With messy politics slowing the government’s fiscal reform agenda in Congress, the domestic economy deteriorating and global trade war tensions rising, the real has plunged through 4.00 per dollar to its lowest level since September.

It has depreciated 3.5% this week, one of its biggest weekly declines since Brazil emerged from a brutal recession in late 2016.

A spokesman for the central bank declined to comment.

The last time the central bank intervened in the spot foreign exchange market was February 2009. Its interventions since then have been in the FX swaps market where it is routinely active, by adjusting the size and maturity of contracts it rolls over.

Market participants say it is inconceivable that policymakers will not be more sensitive than ever to the real’s price, liquidity and volatility.
“It’s a perfect storm for a speculative attack on the real. They (policymakers) will definitely be monitoring this,” said a broker in Sao Paulo. “What the market is looking for is the point at which the central bank gets uncomfortable.”

Chuck Again… The real was falling still today, and is trading well within the 4 handle… it’s a sad, sad thing for the currency that was once the best performing currency in the world…  But this is what happens when a country has political scandal, and then they attempt to do something about their underfunded pensions…  Is this a look at our future here in the U.S. with lawmakers trying to do something about Social Security, Medicare and Medicaid?  for those are the elephants in the room when it comes to causing problems for the U.S…. 

Currencies today  5/23/19 American Style: A$.6876, kiwi .6492, C$ .7426, euro 1.1136, sterling 1.2642, Swiss $.9917, European Style: rand 14.4396, krone 8.7525, SEK 9.6415, forint 293.57, zloty 3.8680,  koruna 23.1810, RUB 64.32, yen 110.11, sing 1.3816, HKD 7.8487, INR 69.91, China 6.4049, peso 19.02, BRL 4.0340, Dollar Index 98.20, Oil $60.46, 10-year 2.36%, Silver $14.49, Platinum $789.83, Palladium $1,319.20, and Gold… $1,277.17

That’s it for today…  and for tomorrow, and Monday! Yes, Monday we will celebrate Memorial Day…  Today is my grandson, Braden’s Birthday… Happy Birthday Buddy!  Yes, Memorial Day is more than the opening of public pools, BBQ’s and graduation parties… it’s about remembering our fallen heroes…  those that died while in service for the U.S. As far as Holiday’s go, this is a fairly new one, beginning in 1971, and previously called Declaration Day…   Cardinals split the doubleheader with the Royals, winning the night cap…  They needed that win last night, as their skid was beginning to become very glaring…  At the beginning of the month the Cardinals were 10 games over .500, and today a little more than 3 weeks later, The Cardinals are 1 game over .500…. UGH!    The Turtles takes us to the finish line today with their song: Happy Together…  I hope you have a Tub Thumpin’ Thursday, Fantastico Friday, and Wonderful Holiday Weekend, and promise you’ll Be Good To Yourself!   Bye~

Chuck Butler