The Fed’s Inflation Target Has Finally Been Met!

May 2, 2018

* Trump’s tariffs are getting watered down… 

* The Fed’s two-day meeting ends today…. 

  Good Day… And a Wonderful Wednesday to you, along with a putting out the welcome mat to May… Sorry I wasn’t here yesterday, but it was a travel day, which brought me back home, and now here I am at my writing desk! I got back and the temps here are warm! YAHOO! Much better than my earlier return and it was nothing but chills and rain. A nice walk-off win for the Cardinals last night in the 9th inning. The Cardinals had been stymied until the 9th, so better late than never, eh?  The Beatles greet me this morning with their song: Get Back…

Well, we’re still dealing with dollar buying… Yesterday, Gold got whacked again, as the “boys in the band” were busy. The euro is hanging onto 1.20 by the skin of its teeth this morning, and the “old reliable” Chinese renminbi has seen a week of losses.  The U.S. President, Trump, decided to soften up his tariffs for the U.S.’s allies, proving once again that it’s nice to have friends in high places! 

It does appear to me that all the Trade War talk was built to a crescendo, only to see them dissipate…  It was more talk than walk, as my dad used to say… And as far as I’m concerned, that’s a good thing for the U.S. economy, and bad thing for the currencies, as the dollar, which got sold during the Trade War Talks, is getting bought on the war drums beating fading away…

I told you last week that the short squeeze that was happening, and breathing new life into the dollar, could go on for some time, and it appears to be doing just that. You know… All the reasons the dollar was sold prior to the short squeeze are all still in place, which leads me to believe that once we get through all this short dollar buying, that new shorts will be placed and the dollar will once again be on the chopping blocks…    

I arrived home last night, and quickly set up my laptop to view what happened during the day.

It was, of course, May Day, which is also workers day… Hmmm… I talked to a friend the other day about when we were youngsters and the nightly news on May 1st, would show us the military parade in Russia… Remember that? Well we don’t have that going any longer, but… what we have these days is the workers in Paris, France, setting the town on fire… That kind of stuff always boggles my mind… You’re upset with something, so go burn down the city… Makes so much sense to me… NOT! The city is flooding, let’s go loot the local TV store! NOT! And so on… I just don’t get that mentality, so I guess, I have officially crossed over to “Old crabby guy, that yells at his kids to “get off my lawn””…     

I mentioned the Aussie Bank scandal on Monday, but totally forgot to explain what the scandal was all about. Thank Goodness for Bloomberg who gave a quick snippet on the subject… “he most startling revelations relate to financial planning and wealth management. Banks have provided poor and inappropriate investment advice, charged fees without providing any additional services, siphoned fees from the estates of deceased clients, impersonated clients or forged their signatures on documents, and generally failed to act on legitimate client grievances.”


Scary stuff, eh? And even more reason for the “boys in the band” to be busy, propping up the dollar VS Gold, because when I read stuff like that, I immediately think, “Do I have enough Gold?”  Oh, well, Gold lost $11 yesterday, with 268,000 contracts traded… Crazy, eh?    

Well… I would love to say that this story made my day yesterday… But then I would probably receive a letter of cease and desist! HAHAHAHA.. But, I’m Chuck Butler, and I don’t care, because the more that Lola gets noticed that their practices earn the name that Matt Taibbi of Rolling Stone magazine bestowed upon them several years ago… the Great Vampire Squid… The more I feel better… But, as usual NO ONE WENT to JAIL! So with no further ado, here’s what I’m talking about…

Goldman Sachs Group Inc. has agreed to pay about $110 million to resolve allegations that its foreign exchange traders improperly shared information about client orders on an electronic chat room, putting clients at a disadvantage.

The firm will pay roughly $55 million each to New York’s Department of Financial Services and the Federal Reserve Board. As part of its settlement, Goldman Sachs Bank USA, the state-chartered unit overseen by the New York agency, will provide its regulators with a plan to improve its internal controls and compliance program.  

But again… nobody went to jail! And that’s all I’m going to say about that! 

The U.S. Data Cupboard today will have the ADP Employment report, which is the appetizer for Friday’s Jobs Jamboree…  On Monday, we saw Personal Income and Spending, and the PCE report for March… Personal Income is on the rise in the U.S. which is a good thing as long it’s a steady and even rise. And don’t get all caught up in the comparisons to last year’s data, because that data was so darn weak, that it makes this year’s print look even stronger than it is.  

But Personal Spending continues to lag Income…  I would have to say that given the Vehicle Sales of more than 17 million, that consumers must be concentrating on autos…     The ISM also printed earlier this week, and it slipped from 59 to 57… A sign of things to come? That’s difficult to say for sure until we see next month’s print…    And the Fed’s preferred inflation calculator the Personal Consumption Expenditures report showed that inflation has finally reached the Fed’s 2.0% target, on a year on year basis…  Once again the data a year ago was so weak that the increases to last year are a little skewered, but nonetheless, the target has been reached… What will the Fed Heads do now?

I saw this article on the Bloomberg, and them MarketWatch also sent it to me and it’s about a Billionaire investor that has over half of his total investments in Gold…  I bet he yells at the walls, and sets off a string of curse words directed at the price action in Gold, every time the “boys in the band” begin playing….   But that’s quite an investment in Gold, eh? 

Now, I would never suggest to any investor that they have over half of their net worth in any particular investment asset class.  Diversification is the key, and it should be conservative and spread across several asset classes that have little to no correlation with other investments in your portfolio.

That would include currencies and metals… Longtime readers have heard this preaching by me so many times, they probably grow tired of hearing it! But this won’t be the last time I get up on my soap box and preach about diversification!    

Oh, and I almost forgot!  Today the Fed will tell us what their two days of playing board games got them thinking about…  the two-day FOMC meeting will end this afternoon, and the wisdom for all (NOT!) will be passed on to the markets… Recall that on Monday this week, I told you that there were some rumors going around that someone’s underground, no wait! the rumor was all about the Fed hiking rates at this meeting… I don’t see that happening, but then again nothing surprises me coming from the Fed any longer… 

To recap…  The dollar buying continues, and Gold has gotten caught up in the dollar buying. The euro his hanging onto 1.20 by the skin of its teeth, and Gold lost $11 yesterday. Trump’s tariffs are getting watered down, and the Trade War drum beating has faded The Data Cupboard has been good and bad with PCE reaching 2.0%, the ISM sliding backwards, and the Personal Income and Spending reports mixed…   

For What It’s Worth… This article is from and is about how the U.S. booked debt in the first quarter that we haven’t seen the likes of since the Financial meltdown..  And it can be found here:  

Or, here’s your snippet: “For months, analysts have been warning that the U.S. is set to borrow an unprecedented — for a non-recessionary period — amount of money…and on Monday afternoon this was confirmed, when the U.S. Treasury announced that in the quarter ended March 31 (the fiscal year’s second quarter), the U.S. borrowed $47BN more than its had anticipated three months ago, or $488BN to be precise.

This was the single biggest quarterly amount of debt sold by the U.S. Treasury since the record $569BN in debt borrowed in Q4 2008 when the financial system nearly collapsed, and Treasury had no choice but to raise a gargantuan amount of money during the biggest financial crisis in modern U.S. history.

What is scary is how fast the U.S. is raking up the debt: as a reminder, just a few weeks ago we reported that in the first six months of the fiscal year, the U.S. budget deficit rose to $600 billion as spending increased at three times the pace of revenue growth in the October-to-March period. At that run-rate, the U.S. deficit will soar to $1.2 trillion for fiscal 2018, far above the $804BN projected budget gap and resulting in an even greater amount of debt borrowed.”   

Chuck Again… Can you believe this? But not to worry folks, the Tax bill is going to cure all that ails the U.S. according to the Treasury Dept…  Somebody please check the foreheads of the Treasury Dept folks, as they must be running a temperature!    

Currencies today 5/2/18… American Style: A$ .7511, kiwi .7022, C$ .78, euro 1.2003, sterling 1.3657, Swiss $.9963, … European Style: rand 12.62, krone 8.0728, SEK 8.8590, forint 261.54, zloty 3.5518, koruna 21.3235, RUB 63.25, yen 108.83, sing 1.3347, HKD 7.8495, INR 66.64, China 6.3392, peso 18.98, BRL 3.5042, Dollar Index 92.35, Oil $67.51, 10-year 2.99%, Silver $16.39, Platinum $898.95, Palladium $960.40, and Gold… $1,311.70  

That’s it for today… Well, there’s a day game at Busch Stadium today, so that means I’m going to the game! Good Friend, Duane took care of getting the tickets, and it’s supposed to be 86 degrees today, perfect for a baseball game! The flights home yesterday were non-events, no hassles, no problems, and Alex picked us up at the airport right on time… Which meant I needed to buy Alex’s dinner! But we had a good time together, and the brisket sandwiches we had were yummy!  And with that, The Blues Image takes us to the finish line today with their song: Ride Captain Ride… I hope you have a Wonderful Wednesday and remember to Be Good To Yourself!  

Chuck Butler