The President “May Regret” Nominating Powell!

Rocktober 24, 2018

* Currencies get sold in the overnight markets

* Gold gains $8.20 on Tuesday, but needs to go on a roll! 

Good Day… And a Wonderful Wednesday to you! Well, I received a high five from my oncologist yesterday, but she reminded me that the wolf (metastatic cancer) is always at the door, and we should continue the chemo treatments… I liked, and pointed it out to her, that she said “we should continue the chemo treatments.” I told her that unless she’s going to get up at the time of day that I get up to take that medicine on an empty stomach, with me… Than “we” should come up with another way of saying that… Of course I laughed, she laughed, and she sent me to the infusion center as my punishment! HA! So, life is good for me right now, no active cancer in me at this moment in time… YAHOO! And the Beatles greet me this morning with a very appropriate song: Getting Better… I have to admit it’s getting better, it’s getting better all the time, (It can’t get no worse!)…

OK, that’s out of the way… I don’t have any bombshells to lob your way today, like I did yesterday… And the currencies just drifted yesterday with some booking some small gains, and others with small losses, it was a nothing day for the currencies, except… The Brazilian real, which trades outside the grid, if you will, and is not included with anything other than the BRICS… And the real has been on a very strong run for over a month now… A few years ago, the real was the best performing currency of the year! And then the trap door sprung under the real, and down she went, down, down, down… So, the first to worst title is owned by the real… Now, the question is… Can the real go worst back to first? I’ll leave that for you to decide, but if you decide to take a flyer on the real, please be careful and watch it like a hawk!

But as I look at the currencies early this morning, they have a different look to them than they did yesterday, and this look isn’t a good one for the currencies, as in the overnight markets they got sold further… I’m not seeing the justification for al this dollar strength, but it’s here, and so we have to batten down the hatches once again. UGH!

Gold couldn’t hold onto its early morning gains of nearly $13 yesterday, but did end the day up $8.20 to close at $1,229. I’m wondering what it’s going to take to get Gold on a roll, here… I noticed last week in the Commitment of Traders (COT) report that the Commercials had gone long gold futures…  Hmm… Apparently that news isn’t going to do the trick, so we’ll have to look for something else…  I guess, and this is my mea culpa, that the big move in the price of Gold that I thought we would see by the end of summer didn’t materialize…  I still believe that this will happen, but don’t have any timeline in mind at the moment. Not that giving a timeline makes it come to reality, right? 

The price of Palladium has really pushed the appreciation envelope lately, and as I understand it, this is because of a lack of supplies issue… Remember a few years ago, when Palladium and Platinum were the stories each day with their increases, and then one day it was no more? Well, that came about because Russia delivered a Truck load of the metals to the markets…   The question this time is… Will Russia be so quick to help out the West this time? 

The only thing I have for you that could be considered a bombshell, is the news that President Trump “Jerome Powell was endangering the US economy by raising rates and that he “maybe” regretted nominating him”

Unfortunately, for the President who is by nature a lover a low rates, and understands inflation, he did the deed, and he hired the Fed Chairman that has hiked rates 3 times so far this year, and will most likely do so again in December.  And this is reality, not reality TV, so, while it’s theoretically true that Powell could be “fired”, it’s not going to happen… 

Well, a couple of weeks ago, there was a lot written about how the price of Oil was heading back to $100… I even got caught up in it, thinking that the Hurricane hitting the Gulf of Mexico would be the lynchpin of a move for the price of Oil to reach $80…  But that didn’t materialize, as I explained last week, Oil supplies here in the U.S. have seen a huge ramping up and then I talked earlier this week about how China stopped buying Oil from the U.S. which was probably the cause of those supplies increases…  So, as I write this morning the price of Oil is trading with a $66 handle.. 

In Central Bank news… The Bank of Canada (BOC) meets this morning and most likely will hike rates 25 basis points or 1/4%, which would help the loonie out given the hit it is taking from the drop in the price of Oil.  

The Norges Bank and Riksbank (Norway & Sweden) are meeting as I write, but their timing couldn’t be more bad, given that the European Central Bank (ECB) meets tomorrow, and the Norges Bank and Riksbank would love to know what the ECB is going to say before they make any moves, so I don’t expect anything from these two today, and as far as the ECB goes, I’m hoping that they will be more upfront with their plans for the unwinding of their stimulus policies, that, my friends would go a long way toward helping turn around the euro… 

The Indian rupee has gotten a stay of execution from Currency traders as the price of Oil slips.. India is one of the countries that benefits from a lower Oil price, as their Current Account Deficit, doesn’t take so many hits…  On the other side of the Coin… The Russian ruble benefits when the price of Oil is in rally mode…  So, here are conflicting countries that are both a part of the BRICS (Brazil, Russia, India, China, S. Africa).

I read a report this morning on the Bloomberg that the writer was of the opinion that Oil’s rally wasn’t over yet, and this pullback in the price of Oil is temporary at best…  Hmmm…  no mention of the supplies… I’m just saying… 

It’s also PMI Day around the world…  Today and tomorrow, we’ll see the PMI’s (manufacturing indexes) from most countries… The Eurozone has already printed their PMI for Rocktober… And they weren’t pretty…  I took this from the Financial Times… “The purchasing managers’ index for the eurozone fell to 52.7 in October, down from 54.1 in September, and the lowest figure for 25 months. “The slowdown is being led by a drop in exports, linked in turn by many survey respondents to trade wars and tariffs, which appears to have darkened the global economic environment and led to increased risk aversion.” -Financial Times 10/24/18

The U.S. Data Cupboard will have the Markit version of PMI’s today, so it will be interesting to see if the Trade War is affecting the U.S. too… I suspect it is… 

To recap…  The currencies drifted yesterday, but are getting sold in the overnight markets. The Eurozone printed their latest PMI, and it dropped, due to the Trade War… The Trade War is beginning to show up everywhere folks… Gold gained $8.20 yesterday, but just can’t seem to find the umph to go on a roll… and President Trump “may regret” nominating Jerome Powell as Fed Chairman… 

For What It’s Worth… When I saw this on Ed Steer’s letter this morning, I about blew a gasket! Paul Volcker speaking? WOW! This has got to be good, I thought to myself, and it was, and now it ended up as my FWIW article today, and it can be found here:

Or, here’s your snippet: “While we have grown used to Alan Greenspan’s flexible world views appearing regularly among US media channels, when former Fed Chair Paul Volcker speaks, it’s low frequency nature tends to make on pay attention, and he is not optimistic about the state of the world… at all.

When he looks around now, he sees “a hell of a mess in every direction,” including a lack of basic respect for government institutions.

“Respect for government, respect for the Supreme Court, respect for the president, it’s all gone,”he said.

“Even respect for the Federal Reserve.”

“And it’s really bad. At least the military still has all the respect. But I don’t know, how can you run a democracy when nobody believes in the leadership of the country?”

…a current Fed that seems to be following a completely arbitrary benchmark…”I puzzle at the rationale,” he wrote. “A 2 percent target, or limit, was not in my textbook years ago. I know of no theoretical justification.”

…and a “swamp” in Washington run by plutocrats.

“There is no force on earth that can stand up effectively, year after year, against the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process.“- Paul Volcker

Chuck again…  Well, respect is earned, and that’s all I’m going to say about that!

Currencies today 10/24/18.. American Style: A$ .7091, kiwi .6544, C$ .7636, euro 1.1400, sterling 1.2910, Swiss $1.0027, European Style; rand 14.1793, krone 8.3230, SEK 9.0832, forint 283.37, zloty 3.7732,  koruna 22.6510, RUB 65.35, yen 112.65, sing 1.3801, HKD 7.8417, INR 72.96, China 6.9374, peso 19.31, BRL 3.6918, Dollar Index 96.36, Oil $66.72, 10-year 3.14%, Silver $14.71, Platinum $826.28, Palladium $1,133.98, and Gold… $1,228.65

That’s it for today…  Well, the World Series began last night…  The Red Sox won the first game, which ended much later than I could bear to stay up for…  If you ever want to get depressed quickly… Visit a Cancer Center’s Infusion Center… I used to spend a lot of time in those centers, and don’t wish that on anyone! OK, Chuck, no need to bring everyone’s spirit down… move along here…   I wonder what’s on the agenda today? I haven’t a clue, and that’s a good thing… spontaneity!  Ok, get ready for this one… Humble Pie, takes us to the finish line today with their song: I Don’t Need No Doctor…  A young Peter Frampton was an important piece of that band… ( a little rock trivia for you today!)  I hope you can get out make this a Wonderful Wednesday, and remember to Be Good To Yourself!

Chuck Butler