February 16, 2018
* Bart Chilton sings: I can see clearly now…
* A day of allowing the dust to settle…
Good Day… And a Happy Friday to one and all! From the looks of the sunrise this morning, it appears that it will be a carbon copy of the beautiful days we’ve had here in S. Florida, today, and so I’m proclaiming this to be a Fantastico Friday, right out of the starting gate this morning! The Pfennig is coming out a little later than usual this morning, as I was a real bum this morning, and slept through two alarms! The Group, Styx greets me this morning with their song: Lady…
Well, after a day when Gold gained $20, and the Chicken Littles were out screaming that the sky was falling because the stupid CPI ratcheted up to 2.1% yoy, we had a day of drifting yesterday… The currencies are, for the most part, trading in the same clothes as yesterday, as witnessed by the Dollar Index, which yesterday morning was 88.84, and today it’s 88.83.
It was a day of allowing the dust to settle form the awful data here in the U.S. the previous day. However, the U.S. data again was very disappointing yesterday… The economy seems to be slip-sliding away, you know the nearer your destination, the more you’re slip-sliding away…
We did see some minor gains VS the dollar in: kiwi, rubles, real and krone, with the later 3 all being Petrol Currencies, which saw some love from another gain in the price of Oil yesterday. After gaining $2 the previous 24 hours, Oil added another $1 to its price in the past 24 hours, and is trading with a $61 handle this morning… Up, down, later, rinse and repeat for the price of Oil, which I went through a couple of days ago…
I told you yesterday that kiwi was sneaking up on 74-cents, and last night it broke through that level! This last upward move in kiwi came courtesy of a report by the Reserve Bank of New Zealand (RBNZ), that showed that businesses in New Zealand are expecting inflation to rise this year, and that led to the idea that the RBNZ will have to begin their rate hike cycle soon… I had just said yesterday, that I was convinced late last year that the RBNZ would be removing the dust covers from their rate hike machine in the 1st QTR of 2018… I sure hope this all comes together like a good plan, because longtime readers know that I love it when a plan comes together!
Could it be that inflation is ready to rise all around the world? Why not? Most countries have kept their respective currencies under wraps too long, and allowed inflation to enter their economies…
I had a dear reader question me yesterday about me calling the euro the offset currency to the dollar, and wondered why I’ve been such a fan of the euro since its inception… Well, the euro is the second most traded currency in the world, which moves it ahead of Japanese yen as the offset currency to the dollar, that’s a layup…
But me being a fan of the euro since its inception? I recall me sitting in an audience in London, in 1998, and the moderator asked: Who here thinks the euro will be successful? Then he asked to see a show of hands of those that think it would fail? I raised my hand… And after the euro’s introduction, I looked to be bang on with my thought, as the euro was introduced at a price of 1.17, and quickly fell to 90-cents…
But it survived, and I love survivor stories, especially after being diagnosed with cancer in 2007! And the euro began to win me over… Remember this was pre-2000… or Y2K as they used to call it. So, I sat there thinking about what changed my mind so many years ago, and then it hit me… The European Central Bank (ECB), was the key… Under the leadership of Wm Duisenberg, the ECB quickly gained respect…
Now, if you think back to the beginnings of the Fed here in the U.S. you’ll recall that there were two failed attempts to get the Fed off the ground here in the U.S., before Woodrow Wilson, made the big mistake of allowing the cartel of banks to pull the wool over his eyes, and create a “new” Fed/ central Bank…
There was none of those shenanigans with the creation of the ECB, folks… Yes, we’re talking about eons ago, but the comparison is a good one, and one of the reasons, I quickly turned coat and jumped on the euro’s band wagon. In fact, I wrote a white paper in 2002 titled: The Year of the Euro!
OK, time to move on here… Recall last week when I highlighted the article that claimed that there was manipulation of the VIX (volatility Index), and said that it didn’t surprise me any to hear that, because in my eye, all markets are manipulated these days… Well, I came across this yesterday, and found it pretty interesting… Bart Chilton, a former member of the Commodity Futures Trading Commission, said a whistleblower’s allegation of manipulation of the CBOE Volatility Index “rings true.” “The VIX has been suspect for at least seven years,” Chilton said.
My oh my… what being free of the Government’s or deep state’s control can do to a person’s view point, eh? I mean look at former Fed Chair Alan Greenspan, who was a Gold Bug before he was nominated to the Fed Chair, but then forgot all about Gold during his 19 year run as Chairman, but since he’s retired from the Fed, he’s all about ownership of Gold again… Hmmm… And now we have Bart Chilton, formerly of the CFTC (the commodities regulator), who NOW sees that there could be manipulation in the VIX, even though the CFTC “suspected it for years”…
The U.S. Data Cupboard yesterday, as I mentioned above, had some disappointing data yesterday… Industrial Production here in the U.S. for the month of January printed a negative -0.1%, and Capacity Utilization fell from 77.7 to 77.5… Folks, remember, slippage in the Capacity Utilization data indicates that looking forward, businesses think that their businesses will be working at a slower pace…
We also saw January PPI (wholesale inflation) yesterday, and it ratcheted up 0.4%… Uh-oh! That means coming down the pipeline are price increases folks… Got Gold?
Let’s do a quick review of the data this week… Household Debt rose to a new record level, Retail Sales were negative, and flat when taking out the slumping car sales, Industrial Production was negative, and Capacity Utilization lost ground… Not a good week for all those “the economy is strong” flag wavers, eh?
Gold gained $3.10 yesterday, with 234,000 contracts traded… I’m somewhat surprised given the rise in PPI that we’ll talk about in a minute, that Gold didn’t gain more on the day, but I’ll take $3.10 gains rather than a whacking!
To end this week that contained Valentine’s Day, I came across something that ties romance with debt… Leave it me, to do that, eh? But in a recent survey, it was found that a romantic partner would be kicked to the curb if they disclosed that they had more than $11,000 in credit card debt…
So, all you youngsters out there, that think that the Gov’t has your back on your credit card debt accumulation, you might find that you grow old, live alone with all that debt… I’m just saying!
To Recap… More disappointing data for the U.S. yesterday, but the markets were more about allowing the dust settle on the upward moves in the currencies and metals the previous day. So, for the most part the currencies are trading in the same clothes as yesterday… Don’t run up credit card debt or else you’ll have problems finding a soul mate! And Bart Chilton is singing the Johnny Nash hit, I can see clearly now…
For What It’s Worth…. I saw this yesterday in the WSJ and it about blew my socks off! This is a tiered subscriber article, which means you can read some of it, if you aren’t a Wall Street Journal subscriber, by clicking here: https://www.wsj.com/articles/fannie-mae-to-require-3-7-billion-government-cash-infusion-1518616798 It’s about how Fannie-Mae needing another tax-payer infusion of cash… Here we go again!
Or, here’s your snippet: Fannie Mae reported a net loss of $6.5 billion for the fourth quarter, triggering what is expected to be the first taxpayer-funded infusion for the mortgage-finance giant in six years.
The quarterly loss was due to a one-time accounting charge due to the reduction in the corporate tax rate. But Fannie, which has been under government conservatorship since the financial crisis, said Wednesday that its regulator, the Federal Housing Finance Agency, would seek a fresh taxpayer infusion of $3.7 billion from the Treasury Department…”
Chuck again… As I said… here we go again…
Currencies today 2/16/18… American Style: A$ .7948, kiwi .7402, C$ .8005, euro 1.2467, sterling 1.4040, Swiss $1.0820, … European Style: rand 11.6524, krone 7.7694, SEK 7.9538, forint 249.65, zloty 3.3394, koruna 20.3263, RUB 56.59, yen 106.28, sing 1.3105, HKD 7.8208, INR 64.33, China 6.3439, peso 18.52, BRL 3.2216, Dollar Index 88.83, Oil $61.34, 10yr 2.89%, Silver $16.76, Platinum $1,007.14, Palladium $1,034.54, and Gold… $1,357.20
That’s it for today… It’s a 3-day Holiday Weekend as we celebrate President’s Day… I’ve always said that we shouldn’t clump the President’s birthday’s together… If the President deserved to have a Holiday to commemorate his birthday, then let’s celebrate that day! Feb 12, and Feb 22 should be holidays, not clumped together! I’m just saying! I can’t wait to get out to the deck with my cup of coffee this morning… So, no Pfennig on Monday… I hope you can get through the withdrawal! HAHAHAHA! March is right around the corner, folks, and longtime readers know that I take a spring vacation from writing every year during March… I’m just throwing that out there to get you prepared… Mathew Sweet takes us to the finish line today with his song: Girlfriend… And with that, I hope you have a Fantastico Friday, and it sure looks like a Good Day to have a Good Day, eh? Remember, to Be Good To Yourself!
Chuck Butler