Russia To Receive $40 Billion In Investment!

Rocktober 17, 2018

* Currencies rally, then fall back, over and over again!

* Rubles are best overnight performer… 

Good Day… And a Wonderful Wednesday to you! I have to get this buttoned up and out the door in a timely manner this morning, as I follow up yesterday’s 3 scans with an appt. with my heart doctor later this morning. I don’t know about you, but this switch in baseball to having bullpen pitchers begin their parade of pitchers in the 4th inning or before, has gotten on my nerves! When I was a young man, pitchers pitched 9 innings, and the only guys in the bullpen were washed up pitchers with hurt arms that could only go 1 inning or so… Bob Gibson, the greatest pitcher I’ve ever seen, completed 255 games in his career… He won 251 games, so there were games that he started and finished but lost! Juan Marichial and Warren Spahn, started a game that lasted 15 innings, both starting pitchers were still in the game at the end! Is baseball like everything else, it goes too far one way before it comes back? I certainly hope so! I listened to side 1 of Chicago’s 2nd album last night… My imagination took me back to 1972, when I first heard that music and my socks were knocked off me by the wall of sound! And I was only playing the album on a portable hi-fi record player! I mention that because Chicago greets me this morning with their song: Hard Habit To Break…

Well… I guess the old Butler Household Index (BHI) still carries some weight. I told you yesterday that September Retail Sales would be weak, and they were only gaining 0.1%, and losing -0.1% when you take out car sales… The Spin Doctors and not the ones that sang Two Princes, immediately began to spin a yarn about how hurricane Florence skewed the data… I always refer to economist guru, David Rosenberg, for the official take on this… and this is what he had to say on his Twitter feed yesterday…

“Some pundits are blaming Florence for the slide in food sales. We went back to all the 8 big hurricanes back to Hugo in ’89 and nothing came close to a 1.8% plunge; 7 actually saw gains in restaurant sales, & the avg was +0.5%.”

OK, that puts that attempt to spin the data to bed! Thank you David Rosenberg! My longtime readers believe me when I tell them things, but there are quite a few new readers to the letter, that want more proof when I say something, and when I get the opportunity to pull out a BIG GUN like David Rosenberg, then that goes a long way to showing them I can be trusted!

Well, the currencies didn’t exactly take liberties with the dollar on that weak Retail Sales print yesterday, and if anything they gave an inch back… But the moves were small… Nothing to write home about, and so we start today with the euro having rallied to close to 1.16 yesterday, only to give back most of that move in the overnight trading, and start today trading 1.1530… UGH! Tug and push, tug and push, and do it some more!  Where’s the trend? 

I got to thinking yesterday, when I was waiting for my turn in “the room” to be scanned… Retail Sales have now been soft for two consecutive months… And the Fed’s take? We’re going to keep hiking rates… Well soft Retail Sales now, will really be helped out a lot in the future, with 4 more rate hikes, eh?  NOT! I get it though… The Fed believes inflation is going to go to the moon, and they’ll be behind the inflation 8-ball unless they keep hiking rates… Well, my point is that the Fed is already behind the inflation 8-ball, and have been for some time, as inflation continues to push against the Fed Fund rate, and normally, I’m told, the Fed keeps rates about 130-150 Basis Points above inflation… Hmmm… Hello? Houston? We May have a problem! 

The Big mover in the currencies overnight has been the Russian ruble… It was reported there yesterday that more than $40 Billion will be invested into the Russian economy… And then Lola… you remember Lola, the girl that gets whatever she wants, and is my nickname for Goldman Sachs, because they always seem to get what they want too, issued a report calling out the U.S. Sanctions on Russia…  Better be careful Lola… Oh, that’s right, you can’t be fired! HA! 

Just when I was prepared to talk about how the Chinese looked like they were readying the renminbi for a 7 handle… It was reported by the GATA folks yesterday that — China’s top central banker today pledged to keep the yuan currency’s value “broadly stable,” a sign that Beijing may be trying to prevent a bruising trade dispute with the United States from spilling over into a currency war.”

Well, we’ll see about that, because it was just a month ago that the Chinese declared that they weren’t doing what they’re doing to the renminbi… And for a few days the currency remained steady Eddie… But then the Trade War numberbs began to come in, and soon the renminbi was back to daily depreciations by the PBOC… (Peoples Bank of China)… And at last look on Monday the renminbi had fallen from 6.29 last Feb. to 6.92… And to narrow that range a bit, a month ago the renminbi was 6.84… So, the rot is quite evident on the vine of the renminbi, but we can thank our lucky stars that the daily depreciations have stopped… Or so says the PBOC… I guess we’ll have to wait-n-see, eh? 

Well, I was wrong, it took too long, I got caught in the rush hour… No wait! I was wrong about the Sept. Industrial Production print yesterday… While it WAS weaker than August, it was still better than I expected it to be at +0.3%… And Last week’s dumping of stocks, seems to have rebounded a bit, so the stock jockeys have that going for them! There’s not much in the data cupboard for today, unless you get goose bumps with Housing Data, or Fed Meeting Minutes…  We won’t see real data until Friday when we’ll see the color of the latest Leading Indicators, which along with Capacity Utilization, are the only two “looking forward” pieces of data we look at, the rest are all viewed in the read view mirror. 

To recap… The Data was mixed yesterday… and the dollar got sold for awhile, until the dollar bugs realized the stock market was rallying, and in the overnight markets the currencies lost their gains… Tug and push, tug and push, where’s the trend? That’s Chuck’s dilemma this morning, and every morning these days! Chuck gets David Rosenberg to debunk some claims about Hurricane Florence’s affect on the economy… And the Russian ruble was the best performer overnight. 

For What It’s Worth… I really dropped the ball on Monday when I completely forgot to talk about the announcement that Sears had filed bankruptcy… Sears… Let me repeat that, the once almighty Sears has file bankruptcy… And this was the story in our local paper that described the problem, and it can be found here:

Or, here’s your snippet: Sears filed for Chapter 11 bankruptcy protection Monday, buckling under its massive debt load and staggering losses.
The question now is whether a smaller version of the company that once towered over the American retail landscape can remain viable or whether the iconic brand will be forced out of business.

Sears, which started as a mail order catalog in the 1880s, has been on a slow march toward extinction as it lagged far behind its peers and incurred huge losses over the years.

“This is a company that in the 1950s stood like a colossus over the American retail landscape,” said Craig Johnson, president of Customer Growth Partners, a retail consultancy.”

Chuck Again… Debt… See? It even negatively affects the BIG Guys, when it’s never paid back and continues to pile up! I’m just saying… 

On a sidebar Sears was BIG part of my life as a young man, as my parents had a revolving credit card at Sears, (long before Visa and Master Charge youngsters!) and that meant everything we owned, wore, played with was bought at Sears! There was a HUGE Sears building about 1/2 mile from the house, and we would walk there to get new jeans, etc. I thought that Sears owned the world back then… 

Currencies today 10/17/18…American Style: A$ .7120, kiwi .6565, C$ .7704, euro 1.1530, sterling 1.3112, Swiss $1.0068, European Style: rand 14.2629, krone 8.1768, SEK 8.9456, forint 279.67, zloty 3.7237, koruna 22.4160, RUB 65.42, yen 112.25, sing 1.3762, HKD 7.8376, INR 73.43, China 6.9139, peso 18.84, BRL 3.7216, Dollar Index 95.40, Oil $71.55, 10-year 3.16%, Silver $14.68, Platinum $838.95, Palladium $1,080.34, and Gold… $1,226.00

That’s it for today… Ok, let’s get this out of the way…  My oncologist called me yesterday afternoon, to tell me that the scans revealed that there was no sign of active cancer in my body!  The new Chemo I’m on, has really done the trick, but for how long before my body adjusts to it? And there is a spot that they’re concerned with, right now, that’s so small… so if they aren’t going to worry about neither will I!  I thank all you dear Pfennig Readers that have had me in your thoughts through the years that I’ve been battling this awful disease… And I thank the Good Lord, for allowing me to live all these years…  Ok… out the door to listen to the hear doc complain about my weight…  I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler