It’s Opening Day!

March 28, 2019

* Dollar continues its march to higher ground… 

* The other side of a narrowing Trade Deficit… 

Good Day… And a Tub Thumpin’ Thursday to you! I’m hoping to do some Tub Thumpin’ of my own tonight as I hoping to go to my fave place for live music tonight… It’s a Glorious Day, because…. IT’S OPENING DAY! And today should be a national holiday, to celebrate Opening Day for the national pastime! My beloved Cardinals begin the year on the road in Milwaukee today, and I will be glued to the tv for sure! I just finished watching them play 15 games in 30 days, and you would think I’ve seen enough! But nooooooooo! I only saw the starting lineup together for 1 inning all spring! I’m so excited… I can’t wait for first pitch at 2pm today! Call me crazy, because I am… crazy in love with baseball, and my Cardinals! The Doobie Brothers greet me this morning with their song: Listen To The Music… I like the Doobie Brothers before and after Michael McDonald… He was good, but it wasn’t the same… in my opinion, that is!

So, what’s up with the news media, have they all become Pfennig Readers? Yesterday, I told you that I was thinking that U.K. PM May might have to fall on a sword to get her BREXIT plan passed, and then all day long I’m reading article after article about how May has offered to resign if her plan is passed! I find that to be a very eerie co-inkee-dink!

The euro gave back more ground to the dollar yesterday, not much, but more… I guess having the Trade Deficit shrink to a mere $57.7 Billion was cause to celebrate for the dollar bugs… And while that looks nice, here’s the other side of that coin for you… The U.S. is a nation of consumers, we spend until we can’t and then we spend some more just for good measure… Well, when our imports from China plummet, it should cause some questions to be asked… No one? Ok, then I’ll ask them! If imports from China plummeted then visa-vie our spending has to also plummet, right? Well, I would think so… and that my friends is the other side of a narrowing of the Trade Deficit by the size it narrowed… (59.8 VS 57.7)

I guess I am a glass half full kind of guy… But then there’s no reason to be excited about having half of our glass emptied, unless you did the drinking!

That was all the data to be had yesterday, as we’re still getting delayed signs hung on data release dates… But getting back to something I made a big stink about yesterday, it was the stupid Consumer Confidence Index plunge… I thought it to be significant, and judging from one of my fave economists, David Rosenberg, he thought it was too… Here’s David Rosenberg on his Twitter feed yesterday… “Declines in the Conference Board “jobs gap” index of 5.7 points or more don’t happen every day. In fact, this development was saved for the past five recessions; they don’t happen in expansions.”

David has seen the same writing on the wall that I have, and I feel quite cocky about that, given his stature in the financial arena, and my lack of stature in the financial arena! Dare I say though, that I saw it first? Ooops, I just did say it! Oh, but didn’t say it out loud did I? Ahem, yes you did Chuck… so go on, slap yourself on the back and move along!

I just don’t get what’s going on with currency traders, investors, hedge funds, etc. these days… Jackson Browne sang it best when he sang… These days I sit on cornerstones and count the time in quarter tones to ten… my friend… Don’t confront me with my failures, I had not forgotten them… Currency traders continue to reward the dollar with every weak data print, every sign pointing to a recession, and I just don’t get it!

Back in my day, when I was a currency trader, fundamentals meant something… Now, they’re treated  like the crazy old uncle that you still invite to family gathering because he’s “family”, but then wish you hadn’t when he decided to swimming in the Koi pond!

Isn’t that what old-timers always would say… “Back in my day!” Well, I guess that’s what I’m becoming… They showed me the door, and told me not to come back, and all I have left are memories of “back in my day”…

OK.. enough of that! I have no idea how that all began, but I know how it ended, and I’m better than that!

I had a few dear readers question me about my statement yesterday regarding the dollar being devalued back in the 30’s by FDR… Yes, I’m sure that’s what happened… He didn’t come and say “I’m devaluing the dollar”, but he did decree that the Gold that he had just confiscated from citizens, was going to be repriced higher, thus devaluing the dollar…. Just for fun, I asked Google if the dollar had ever been devalued before and this is the answer I received…

“The more a currency is devalued, the less you can buy with it because the purchasing power decreases. The graph below shows the purchasing power of the US dollar since 1913. … In fact, the dollar has lost over 96% of its value. That means today’s dollar would be worth less than 4 cents back in 1913.”

Ahhh, 1913… I know, I can hear some of you saying, “Oh, no! here he goes again with 1913”… Yes, every chance I get to talk about repealing 1913, I make the most of… 1913 is infamous for 3 reasons….. 1. Woodrow Wilson crammed the Fed Reserve down our throats… 2. Woodrow Wilson ushered in the IRS… and 3. He changed the way State Senators were sent to Washing D.C. before this change, Senators were assigned by each state’s Governor to represent the state’s affairs in Washington D.C. This way, if the senator wasn’t doing his job, he could be recalled very easily, and replaced immediately… Now, doesn’t that sound like a far better idea than what we have now?

OK… enough on 1913… But curtesy of the Federal Reserve which began in 1913, the dollar has lost 96% of its purchasing power…. I’m just saying…

Back to the euro… Well, yesterday one think tank said something that pushed the euro weaker, and now we have the think tank IFO with a different point of view, of which euro traders didn’t seem to be fazed by… So… let’s check out what Germany’s IFO Institute said in its business climate index… It rose to 99.6, beating a consensus forecast of 98.5 and ending six consecutive months of decline. But as I said, euro traders weren’t fazed one iota by this… so we move along…

Boy did the precious metals get their you know whats handed to them yesterday by the boys in the band… Palladium lost over $90 in one day! Gold was sent packing to the tune of $6, and the others fell in line… I wonder if what I was talking about the other day regarding how in the initial days of the financial meltdown that’s coming Gold would get sold to pay for gas, groceries and giggles, but when the dust settled it was time to back up the truck…  I wonder if this is coming to fruition..  

I do keep talking about how I believe the recession hits the U.S. economy in this year, while most economists think it will hit next year…  I’m just saying…

The U.S. Data Cupboard has a 4th QTR GDP revision for us today… Look for a significant drop in the GDP number…  I wonder if that gets the currency traders to notice?  Other than that, we have a few Fed Heads hitting the speaking circuit today, including St. Louis Fed President, James Bullard, who has been a very outspoken dove… Maybe he can make the currency traders notice?  

Oh, and one more thing… It’s being reported that U.S. shale exports are being turned away by Asian importers because the oil is infected…  that can’t be good, folks…  So, I have an article in the FWIW section that explains this today… 

To recap… The dollar moved onward in its march to higher ground yesterday, but the move was small in nature. The dollar bugs must have been giddy over the narrowing of the Trade Deficit, of which Chuck shows us the other side of that narrowing…   Precious metals got whacked yesterday with Palladium leading the way, seeing a fall of over $90 on the day… And finally, a 4th QTR GDP revision will print today, we should see a significant downward revision. 

For What It’s Worth…. OK, I teased you above about the infected shale Oil getting turned away by Asian importers, and here’s where the article I reviewed can be found:

Or, here’s your snippet: “Two refiners in South Korea—the top buyer of US seaborne supply— have rejected cargoes in recent months due to contamination that makes processing difficult. Growing North American output from dozens of fields pushes everything from highly-volatile oil to sticky residue through shared tributaries and trunk pipes. Smaller carriers then take cargoes from shallow-water ports to giant super tankers in the Gulf of Mexico for hauling to far-away buyers.

Throughout its transit from pipes to tanks and onto vessels, foreign compounds from other fuel or chemicals for cleaning tanks or stabilizing material can leach into the supply and foul up refining equipment. While crude passes through a similar chain in the Middle East too, the risk of impurities is lower because each oil variety typically has its own designated infrastructure.

In the case of American condensates, a type of ultra-light oil pumped in shale fields, cargoes can get pollutants such as “oxygenates, metals and cleaning agents,” said Sebastien Bariller, Senior Vice President at South Korea’s Hanwha Total Petrochemical Co. That’s causing uncertainty around US oil quality, unlike purchases from the Middle East, where quality is stable, he said.”

Chuck again… This is the kind of thing that can spread, and cause major ripples in the Oil Shale exports… 

Currencies today 3/28/19 American Style: A$ .7093, kiwi .6810, C$ .7450, euro 1.1250, sterling 1.3145, Swiss $1.0046, European Style: rand 14.6540, krone 8.6450, SEK 9.2615, forint 284.53, zloty 3.8195, koruna 22.9282, RUB 64.65, yen 110.30, sing 1.3556, HKD 7.8498, INR 69.05, China 6.7198, peso 19.38, BRL 3.9133, Dollar Index 96.96, Oil $59.25, 10-year 2.38%, Silver $15.24, Platinum $851.78, Palladium $1,425.90, and Gold… $1,307.76

That’s it for today, tomorrow and this week! It was an ugly night out, as I was awoken a couple of times with the rain coming down so violently. The ocean is angry this morning, and the wind is howling… Not a good day here for sure, but it’s days like this that make the pretty ones every prettier!  I already have a problem with Cardinals’ Manager’s lineup… Baseball tradition says your best hitter hits 3rd…  We just made Paul Goldschmidt the highest paid Cardinal of all time, which in my mind makes him the best hitter on the team, so why’s he hitting 2nd?  UGH! Albert Pujols in his prime, always hit 3rd… I’m just saying…   That’s one of the great things about baseball… the discussions that can take place about something like that, and go on for hours at a time!  Baseball is back! YAHOO! The Kinks takes us to the finish line today with their song: Sunny Afternoon…  which looks like won’t happen here today!  I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday tomorrow, and a Wonderful Weekend… Monday is April Fool’s Day!  Be Good To Yourself! 

Chuck Butler