Hey Markets… Can’t You See I’m Tapped Out?

March 29, 2018  

* The PPT springs to action!   

* Consumer Confidence falls? What gives with that?


Good Day… And an Opening Day, Tub Thumpin’ Thursday to you! IT’S OPENING DAY… YAHOO! Yes, Major League Baseball begins its new season today. I’ve long said that Opening Day should be a National Holiday, for our National Sport! So, since I believe today should be a holiday, this will be short-n-sweet this morning! HA!  Seriously, I’m going to talk a bit about the markets yesterday and last night, and then turn a long discussion about the U.S. consumer for today’s letter…  R.E.M. greets me this morning with their song: It’s The End Of The World…  leave to my iPod to shuffle and spool up a song like that on a day when I’m going to give you some dire news on the U.S. Consumer…    

Well, while I was jetting through space yesterday, sipping on a Bloody Mary, and chomping down some peanuts, the currencies and metals were getting whacked! And when I checked everything last night I thought to myself that this didn’t really shock me one iota. In fact, earlier this week I told you that Gold had gone past $1,350, which was the line in the sand that the price manipulators had drawn, and every time Gold had climbed to that level and beyond in recent times, it got whacked, and whacked good… 

And that’s exactly what happened with Gold… The currencies on the other hand were subjected to a taste of the PPT (Plunge Protection Team), who saw to it that stocks recovered their losses last week, and brought the Dollar Index back above 90…  So, not to worry, as I attempt to do my best Alfred E. Newman, for this was all an engineered take down to protect the dollar…  And that’s my thought on this, and I’m not going to change it!

Wait, What? you don’t believe in this thought that stocks, currencies and Gold were all subjected to a taste of PPT seasoning?  Well, then you explain to me and everyone else what caused the stocks to rebound, and the dollar to rebound?  Come on, I’m waiting!     OK… So the euro has dropped below 1.24 again, and is barely holding on to the 1.23 handle. Aussie and kiwi dollars have given back most of their hard fought gains of recent trading days, and Gold lost $20 yesterday…   

So, I’m going to give you some information now about the U.S. Consumer that’s going to make you scratch your head and say, “How in the world are stocks rebounding when investors stop and think about this stuff?” 

Alrighty then with no further ado, let’s get to the information I’ve compiled…  The U.S. savings rate has fallen from, an already reduced figure of 3.2% in Jan to 2.9% in Feb… This savings rate level of 2.9% represents the lowest level since November 2007…  Now, do I need to tell you what happened right after 11/2007?   

Digging further into the U.S. Consumer’s plight…  we have credit card usage…  but first I need to tell you that this data is only recorded quarterly, so the last data we have is the quarter ending Dec. 2017…  But that’s recent enough for this discussion…  And Credit Card debt has risen like a rocket leaving a launch pad…  In the past year Credit Card Debt is up $779 Billion from the previous year or,  a change of 3.22% from last quarter and 7.06% from one year ago. 

Can you say, “tapped out”? I knew you could!  Well, if you think the U.S. Consumer can rebound given the tax cuts that are coming his way, you better think again… Even knowing that tax cuts are coming the Consumer Confidence Conference Board reports that plans to buy things like autos, home, large appliances, etc. has plunged in recent months…  

U.S. Household Debt’s graph looks like a the hill that you wouldn’t want to climb as it continues to grow, with last year’s gain at 4.55%…  In fact, when you break Household Debt down you see the pain levels… Auto Loan Debt is up .66% to the previous quarter. And Auto loan Delinquencies greater than 90 days is up 2.02%… Student Loan Debt is up 1.55%, and I already told you about Credit Card Debt..  

Who’s going to “bail out the consumer”   No one… foreclosures, debt defaults and all those other niceties that come with debt that cant’ be paid back is in our future folks…   I don’t like talking about this stuff, but unless you read it here, you won’t hear about it on the nightly or cable news, and if you didn’t read it here,  then one day, the crash and burn happens and you say, “I didn’t realize the U.S. Consumer was in trouble”…  

The U.S. Data Cupboard has seen the past two days some interesting data prints, like the Consumer Confidence report for March fell from 130 to 127.7…  I was surprised by this fall in Confidence… Maybe there something here? I guess we’ll have to see next month’s data to know for sure… We also have seen the Case/Shiller Home Price Index for January slip from 6.3% to 6.2%…  Again, something there?   

Yesterday’s Data Cupboard had the final revision of 4th QTR GDP, and surprisingly, it jumped higher than the last revision which was 2.5%, and ended the year, supposedly, at 2.9% GDP for the 4th QTR…   Today’s Data Cupboard has two of my fave data prints… Personal Income and Spending. In addition, we’ll see Core Inflation from Feb…   The Personal Spending data will be the key to today’s take on just how “tapped out” the U.S. Consumer is…   

Gold got whacked by $20 yesterday… I wish I could say that I didn’t know it was coming…   And the price of Oil slipped below the $65 handle. So all three anti-dollar assets were in the dumpster yesterday, euros, Gold and Oil…  

Hey! for all of you who are looking for a silver lining in all of this today… The Chinese renminbi saw an appreciation last night… So, we’ve got that going for us! HA!    

To recap… In Chuck’s mind, the PPT was out in force and bought dollars and stocks yesterday… I remember telling my good friend Walt on Sunday as we talked on the Butler Patio South, that not to worry about the HUGE sell off of stocks on Friday, the PPT would make sure that selling didn’t carry on… And looky there! Once again, I would slap myself on the back, but my arms aren’t long enough! HA!    

For what It’s Worth…  You won’t believe this when you read it, so stop, take a deep breath, and reread it… It’s an article about how Goldman Sachs, aka Lola, is touting Gold and fearing a stock market crash, and can be found here: https://www.cnbc.com/2018/03/26/goldman-sachs-expects-gold-to-outperform-amid-growing-fears-of-a-stock-market-correction.html    

Or, here’s your snippet: “Goldman Sachs is expecting gold to “outperform” over the coming months.

For the first time in more than five years, commodity analysts at the U.S. investment bank are bullish on yellow metal prices. Goldman’s analysts said signs of an uptick in inflation and the “increased risk” of a stock market correction should both prove to be price supportive for bullion.
“Our commodities team believes that the dislocation between the gold prices and U.S. rates is here to say,” Goldman Sachs analysts, led by Eugene King, said in a research note published Monday.

“Based on empirical data for the past six tightening cycles, gold has outperformed post rate hikes four times,” the analysts added.”

Chuck Again…  I want to thank Ed Steer, for he posted this article first, and is always first out of the chute each day with his letter, that can be found at www.edsteergoldandsilver.com     

Currencies today 3/29/18… American Style: A$ .7666, kiwi .7193, C$ .7742, euro 1.2306, sterling 1.4055, Swiss $1.0442, … European Style: rand 11.8244, krone 7.8675, SEK 8.3575, forint 253.80, zloty 3.4127, koruna 20.65, RUB 57.57, yen 106.60, sing 1.3120, HKD 7.8483, INR 65.04, China 6.2876, peso 18.29, BRL 3.3279, Dollar Index 90.08, Oil $64.51, 10yr 2.77%, Silver $16.23, Platinum $937.31, Palladium $971.72, and Gold… $1.328.00 

That’s it for today…  Basically an uneventful trip back to St. Louis yesterday from my little place in S. Florida. And today, my beloved Cardinals, injuries and all to start the season, open up in NYC against the Metropolitans (Mets)… The Mets have all that pitching, and getting them to start the season before they get hurt, which they have a history of doing as the season goes on, is not a good way to start the season… But we’ll have to see what happens…  Tomorrow is Good Friday… and it’s a holiday for the stock market, and therefore I’m calling for a holiday for me too! So, no Pfennig tomorrow, I hope, if you observe Easter that you have a blessed one. It’s supposed to be cold here for Easter, which will cut short the Easter Egg hunts for sure! I can’t wait to see what my darling little d is wearing on Easter… I really enjoyed getting to spend time with her last week, and her brother too! OK… time to go…  The Jackson Browne song that always makes me tear up, takes us to the finish line today, as he sings his song: Late For The Sky…   And with that, I hope you have a Tub Thumpin’ Thursday, and a happy Opening Day!   And Be Good To Yourself!

Chuck Butler