May 23, 2018
* Currencies for the most part give back Monday’s gains
* Geopolitical problems arise again…
Good Day… And a Wonderful Wednesday to you! One and done! Yesterday was a One and Done Day for more than one thing… UGH! Another good night’s sleep last night, I’m of the opinion, that my recent problems have dissipated, for now that is, and things are looking up… Of course, I will find out more this morning, when I visit my oncologist. And then next month when my bi-annual set of scans are taken. That nasty cold I had is gone too! Man, I may just sign up for the next marathon! NOT! HA! Now, if we could get the markets healed, that is the markets I care about! The Guess Who greets me this morning with their song: No Time…
Well, our first One and Done yesterday is in the currencies, which for the most part gave back their gains from Monday. Geopolitical pressures entered into the markets again, as President Trump told reporters that the summit with N. Korea planned for June in Singapore, may not happen. The Turkish lira plunged and that led the Emerging Markets currencies down the slippery slope. There were a couple of currencies that added to their Monday gains, and they were members of the Petrol Currencies Club.
Yes, the Russian ruble, and Brazilian real bucked the tide yesterday, and rallied, even with the price of Oil slipping back below $72 on the day. I think the huge gains in the commodities on Monday, spilled over to these two currencies. Gold’s consecutive days of gains, albeit very small ones, ended, with a drop of $1.70, but, the shiny metal is up big in the early morning trading today, and has climbed back to trade above the $1,300 figure.
I read a report yesterday, where James Rickards, was saying that Gold is getting ready for a Big Breakout to the upside… And then I received a note from the GATA folks who printed a report from someone that believes the messages calling for Gold to rise to new heights is hurting GATA’s attempt to expose the price manipulators. Hmmm… Well, unless the folks, like me, are pointing people to possible gains, how else would they find out?
Of course, I have to emphasize the word, “possible” because no one, including yours truly, knows for sure that an asset is going to gain, or lose for that matter! For Instance, remember late last year, when I told you that James Rickards was calling for a HUGE “price reset” for Gold? That was supposed to have happened at the start of the new year. Well, we’re almost to June… But all Gold holders would have been happy campers for sure, had the “price reset” occurred… Sometimes it takes a major prod to get investors to move, and if this got investors to buy some Gold, then that was a good thing, in my opinion!
Our next One and Done came in the stocks… I won’t spend a lot of time here, but geopolitical unknowns are not good for stocks folks… The next One and Done is a work in progress, as the yield in the 10-year Treasury dropped from 3.08% to 3.01%.. I don’t think this buying of Treasuries is going to last long, so this is will turn out to be another one and done!
So… How about that rally in the Russian ruble? The RT recently had this to say, that makes abundant sense to me.. “Western media would have you believe that Russia is an underdeveloped nation with a wretched standard of living. They advance the perception that it is a country that has never recovered from the collapse of the Soviet Union.
They would also want you to believe that Russia is suffering under the heavy burden of Western imposed sanctions that have brought Russia to her knees as a result of isolation, which couldn’t be further from reality.. ”
Well, that’s all fine and good, but the ruble is still very weak considering where it was trading before the conflict with Ukraine erupted. Which if you’re someone that likes to buy when everyone else is selling, this seems to be the place you would want to start! Especially if you believe the price of Oil is going to continue to inch higher…
The next one and done came from the Commodities, which on Monday looked like they were ready to run a marathon, but apparently it was only a sprint. And the main commodity currency, the Aussie dollar (A$) got pushed downward, thus wiping out its Monday’s gains.
Speaking of wiping out Monday’s gains, the biggest wipe out came in the euro, which saw the problems in Italy worsen, as Italian bonds are getting whacked and now trade at a huge premium VS a German Gov’t Bond… Remember back in 2011, when the problems with Greece were first being exposed, and I said then that Greece had an economy the size of Kentucky’s… But writing off Italy’s problems won’t be as easy, as Italy is the 3rd largest economy of the Eurozone… And their debt is HUGE!
The new anti-euro Gov’t needs to sit down and be talked to by the leaders of the Eurozone, and tell them that leaving the euro is impossible, and therefore they need to quiet down the leave the euro rhetoric, and the demands that the ECB write off loans made to Italy… Otherwise this is going to go down a rabbit hole that no one wants to go down… I’m just saying…
The Swiss franc dropped below parity to the dollar… We first saw this drop a week or so ago, but the franc quickly move back above parity, but to see this drop below parity again, gives me the thought that this is the general direction for the franc…
Back in 2011, when investors were running away from the euro as if it were Godzilla trashing the streets, they ran mostly to the Norwegian krone, and some to the Swiss franc. But soon investors realized something that I had been telling them for years, that the franc is so closely tied to the euro…
And then back to Gold for a minute.. In Ed Steer’s letter today he highlighted an article that I took this quote from… You can find Ed Stter’s letter at www.edsteergoldsilver.com .I highlight this because it was just yesterday that I was talking about how China’s Gold reserves totals are much greater than the World Gold Council quotes them to be. Let’s listen in here… “Perhaps more interesting however in terms of global gold trade was the export of 16.1 tonnes (24.6%) direct to mainland China (and only 0.5 tonnes to Hong Kong). As we have often pointed out the known gold exports to mainland China (mostly from Hong Kong and Switzerland) tend to be comfortably in excess of the figures assessed by the major precious metals consultancies as Chinese consumption, and the high UK export figure, although well below the amounts from Switzerland and Hong Kong, serves to emphasize this point.”
Well, the U.S. Data Cupboard is still pretty much emptied out, but this afternoon, the Fed’s last Meeting Minutes will print, and like I said yesterday it will be chock-full-o-the-same-nonsense… I’m just saying… Around the world though, it’s what I like to call PMI Day… As the PMI reports for April will print for a lot of countries today.. These are the Markit PMI’s, which I’ve explained are different from the Gov’t PMI’s. PMI is the short version of a manufacturing index report.. It will be interesting to see if manufacturing around the world is still expanding…
To recap… Well, the currencies just couldn’t stand the prosperity, neither could the stocks, commodities including Gold and Oil! The good news though is that Gold is up nicely in the early morning trading today, as geopolitical problems have come back into focus for the markets. The Trump / Kim summit in Singapore is “iffy” right now… Chuck calls Tuesday a One and Done Day…
For What It’s Worth… I want to thank dear reader Bob for sending this to me. It’s an article about how decarbonization or an energy transition, is just folly, and can be found here: http://business.financialpost.com/commodities/energy/what-decarbonization-the-world-will-soon-be-burning-100-million-barrels-of-oil-per-day
Or, here’s your snippet: “One hundred million. It’s a number that drowns comprehension; it’s more jelly beans than can fit in an average-sized swimming pool.
Within a year, world oil consumption will top 100 million barrels of oil per day. Over the same time period, close to 100 million new piston-firing vehicles will be bought by petroleum-thirsty customers.
I hate to say it, but any notion of an imminent “energy transition” or “decarbonization” is folly.
In fact, the percentage of fossil fuels in the world’s energy mix — coal, oil and natural gas — is still lingering well above 80 per cent, a figure that has changed little in 30 years. That remains so, despite being challenged by serious environmental policies, financial pressures, viable alternative systems, public awareness and social activism.
It’s true that wind and solar are being deployed quickly, in fact, at an exponential rate. But impressive as it all is, renewable energy installations are far too slow to catch the still-hardy appetite for fossil fuel consumption.”
Chuck Again… I liked the article because it tells it like it is, and should be good fodder for Commodity traders… wink, wink…
Currencies today 5/23/18… American Style: A$ .7543, kiwi .6910, C$ .7758, euro 1.1727, sterling 1.3358, Swiss $ .9908, … European Style: rand 12.61, krone 8.1140, SEK 8.7695, forint 272.92, zloty 3.6882, koruna 21.9715, RUB 61.33, yen 109.79, sing 1.3443, HKD 7.8499, INR 68.44, China 6.3686, peso 19.90, BRL 3.6610, Dollar Index 93.83, Oil $71.79, 10-year 3.01%, Silver $16.56, Platinum $907.84, Palladium $988.10, and Gold… $1,301.60
That’s it for today… Today is Braden Charles Butler’s Birthday! Happy Birthday buddy! Braden turns 7 today… Wow! Where do these years go? Oh well, I sure hope your day is Grand today! I have a busy morning, with a visit to the oncologist and then off to the ball game! Another One and Done came in the Cardinals game last night, who saw their 1 day of good pitching and hitting go missing! Well, there’s someone walking around upstairs this morning, I’m not alone any longer! 🙂 Maroon 5 take us to the finish line today with their song: This Love… I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!
Chuck Butler