A Trade Talk, BREXIT Talk, Free Zone Today…

A Pfennig For Your Thoughts

April 8, 2019

* BLS tries to pull a rug over out eyes…
* Currencies remain stuck in the mud…

Good Day… And a Marvelous Monday to you! My last day here in what I call paradise, as I leave for home base tomorrow morning… A friendly spiderman reminder that there’s no Pfennig tomorrow… Well, Opening Day was in St. louis on Friday… I love the Clydesdales… I used to get goose bumps when I was in the stadium and they would come prancing in… They are such large animals, but beautiful in my eye! Well, we’ve got lots to talk about today… I really don’t want to get started on the Jobs Jamboree, but something inside of me tells me I must be me, and do it anyway! Graham Nash greets me this morning with a song from his Songs For Beginners album: Military Madness… I used to not only play guitar to most of the songs on that album, but the piano too! I’m not much of a piano player, but I used to be able to bang out chords with the best of them!

Before I get started… This is going to be a Trade Talk, BREXIT talk, free zone today…

OK… Didn’t I tell you that there would be some major shenanigans played with the Jobs report for March? Recall, I played out a scenario, where the chief bean counter at the BLS was called on the carpet after last month’s dismal 20,000 gain for Feb., and reminded that there’s a shelf full of hedonic adjustments at his disposal, and that 20,000 should never happen again! And guess what happened? 196,000 jobs were created in March, according to the BLS… Really? We went from 20,000 one month to nearly 200,000 the next month? Don’t give me weather problems in February either… If, you lost your job in February, I don’t care how bad the weather was, you would be at the unemployment office filing for benefits! So, really, markets, you believed this BS from the BLS?

I guess you (markets) did, swallowing it, hook, line and sinker! What a shame, what a shame… Don’t you know by now that the BLS is there to just make you feel better, so you’ll go all-in buying stocks? I shake my head in disgust, folks… Of course there were 51,000 jobs added by the BLS after the surveys were received, and then they massaged the surveys, added some eye of newt, and other magical things, and voila! Nearly 200,000 jobs created!

Speaking of the surveys… I’ll let the folks at the Burning Platform explain what they saw in the surveys, this will really get you scratching your head… “And this isn’t some one month hiccup. The Household Survey showed we had 156.9 million Americans employed in December, but only 156.7 million employed in March. Does that sound robust?” – the Burning platform.com

OK, I give up! Quite a few months ago, I told you I didn’t care about what the BLS was printing any longer… But that proved to me false, because when I saw that number on Friday morning, I about came out of my recliner swinging! Screaming at the walls! (good thing they’re concrete walls and no one is next door to me!) So, I guess I do care, because it hurts the people that keep investing thinking the economy is strong and robust, when it’s really just all smoke and mirrors…

Currency traders didn’t exactly fall for the numbers, as the dollar remained well bid, but didn’t gain any more ground on Friday, and the currencies remained in Thursday’s clothes… Gold was able to eke out a $2.60 gain, to follow up on Thursday’s $2.80 gain… Whoopee! Right? Oh well, you have to take gains any way you can… I’m just glad the price manipulators didn’t whack it again like they did earlier in the week!

While Gold is fresh on my mind…. Well, there I was, minding my own business, filling out a Saturday Crossword puzzle online, and an email hit my box… it was a notification of a Twitter posting. So, needing to get my mind off the crossword clue I couldn’t figure out, I clicked on the email and it took me to Twitter, where a graph of Annual Returns for the last 20 years (1999-2018) was staring me in the face… This was so good, as far as I was concerned because, there are still so many people out there that don’t believe in Gold…. So, here’s the lineup for 20-year Annualized Returns by Asset Class…
REITS 9.9%
Gold 7.7%
Oil 7%
S&P 5.6%
Bonds 4.5%
Homes 3.4%
Inflation 2.2%
And the average individual investor…… 1.9%…

Now, one more time…. Got Gold?

And don’t look now, but it sure looks like the scenario I talked about a month or so ago is coming to fruition… I’m talking about the pricing of Platinum and Palladium. I talked about how it could be possible that the price of Palladium had gotten too expensive and auto makers could switch back to Platinum… The pricing action of the two metals are looking very much like this is happening, as Platinum has been going up and Palladium’s price is getting cheaper by the day… Just something to think about, this fine morning!

Ok… So, all-in-all it’s just another brick in the wall… For those of you new to class, I’ve been singing the Pink Floyd song, whenever we see a piece of data that’s weak and we add it to the “wall”… On Friday, I came across something that really caught my eye… It was from G. Edward Griffin’s letter, which can be found here: https://needtoknow.news/2019/04/americans-borrowed-88-billion-dollars-last-year-to-cover-their-medical-bills-in-spite-of-insurance/

And it says… “Americans had to borrow 88-billion dollars to cover their medical bills last year, proving the abject failure of the American healthcare system. While most Americans have ‘health insurance,’ many are afraid to go to the hospital because of high cost. Two-thirds of personal bankruptcies in the United States are caused by medical bills, and most of the people going bankrupt had health insurance”

Chuck again… As someone who’s had to convert my employer insurance coverage to a private insurance, I can tell you that it stinks! And I completely understand where these people are coming from, for I’m in the same boat, with one more year to go…

I know, I know, I’m really getting carried away talking about things today… But this has got to be talked about, before…. Well, I’ll let you read and see where this it taking you…. The weekend Bloomberg Opinion had this juicy bit…. “President Donald Trump said the Fed should juice up the economy, but central banks around the world are in a bind over what to do.” – Bloomberg quoting Donald Trump…

What to do, what to do… Well, I sure hope they don’t resort to following Janet Yellen’s call for the Fed, to do when the going gets tough… and that was to buy stocks and corporate bonds… Longtime readers may recall me going bananas over this shocking announcement by Yellen, back when she made it… And how I said, “ She’s just greasing the tracks, folks”… Of course back in 2016, there wasn’t this black cloud hanging over the economy like there is now…

You know… this has all been done before… the Bank of Japan has been buying stocks for years now… Has it had anything to do with stirring economic growth? No… has it supported the Japanese stock market… yes…

And in Europe, the European Central Bank (ECB) had been buying corporate bonds for years, (just stopping on 12/31/18)… Did the buying of these bonds do anything to stir economic growth? No… did it support the bond market? … yes…

So, when we get back to the beginning of QE here in the U.S. did all that bond buying stir economic growth? Well, not if you expected more than 2.2% economic growth for the past decade… It did support housing, bonds, stocks, and leveraged loans… And now, we’re thinking of going back to the drawing board? Oh My!

I’m now wishing I had bought a private island somewhere in the S. Pacific… Yes, we’re turning Japanese yes, I really think so!

I’ve been a little harsh with the Beaver this morning, June… And reminds me that you don’t read this letter to just read about what’s going on in the U.S. right? I’m reminded of a dear reader who chastised me for always banging on the U.S…. My response is simple… Most of my readers are here in the U.S. so these are things that should matter to them regarding their investments… And two… We’re the U.S…. aren’t we supposed to be better than this?

My good friend, Dennis Miller of www.milleronthemoney.com, sent me a note yesterday from an email he received, that had a picture of the Economist magazine and they are quoting a former big shot in the IMF, as saying we’re heading to a global currency… all for one and one for all…

I immediately, told him of the times on the trading desk, when we used to hear about the Amero, all the time… We even had customers that claimed they had some Ameros in their hands… Well, we don’t hear about the Amero any longer now do we? Oh, and there’s also the “great revaluation of the Iraqi dinar” We had some many people call us and “guarantee the great revaluation” was going to happen on X-day… So many X-days came and went, with no great revaluation, that I doubt they hear anyone talk about any longer on the trade desk… (I wouldn’t know, I’m no longer there!)

The Petrol currencies are the only currencies moving stronger VS the dollar and their moves are muted in a way… The Price of Oil is trading with at $63 handle this morning, so you can see why the Petrol Currencies are stirring…

I’m not seeing anything market moving on the data calendar from around the world this week, except for an ECB meeting on Thursday… Things haven’t looked to strong in the Eurozone economic data lately, I wonder what the ECB will have to say… ECB President Draghi, will probably attempt to throw the euro under the bus again… We shall see…

The U.S. data Cupboard today has February Factory Orders… Given what we already know about the Durable and CAPEX Orders for February printing negative… I would suspect Factory Orders will print negative too… So, much for that robust economy, eh?

To recap… not much movement once again in the currencies and metals, with Gold able to eke out $2.60 in gains on Friday… The Jobs Jamboree has got Chuck all up in arms this morning… Good thing there’s no one in the unit next to him, as he screamed at the walls on Friday! Lot’s of other things going on too, that since Chuck won’t be writing tomorrow, he really went to town on today… So, happy reading!

For What It’s Worth…. Well, last Friday, my former colleague, and metals guru, Tim Smith, sent me a link to an article, and I soon found out that it was FWIW worthy! It’s about a change in Russia that will allow gold purchases by individuals without the special tax that’s put on Gold now, and can be found here: http://www.sbma.org.sg/media-centre/publication/crucible-issue-9/changes-coming-to-russias-gold-market/

Or, here’s your snippet: “This year is highly likely to be a year of changes for the investment gold market in Russia: the Ministry of Finance will assess the feasibility of VAT exemption on investment gold, the State Duma will consider a bill to allow citizens to purchase precious metals in individual investment accounts, and the Central Bank will make changes to its pricing policy when conducting its market operations.

Moscow Exchange sees potential in attracting the demand of non-residents through the International Clearing Members mechanism and has launched three new Asian POPs (point of presence) – Singapore, Hong Kong and Shanghai.

According to the World Gold Council, the demand for precious metals from individuals in Russia in 2018 was near 2.8 tonnes per year, whereas in China it reached 304.2 tonnes, 162 tonnes in India, and 96 tonnes in Germany. The main reason for such low figures is the current tax regime on physical precious metals. As an instrument of savings, gold is promising, but individuals buying the metal from a bank must pay VAT at a rate of 20%, which is not refunded to the individual investor when he/she sells it. This makes investing in gold unattractive.

The VAT exemption on investment gold in Russia is a promising change that may occur. If this happens, it would lead to a significant change in the structure of the precious metals market, growth in demand for this class of assets among individuals, and a significant increase in market liquidity.”

Chuck Again… Ok, it’s not a done deal… yet! But it looks like it could very well be a done deal soon, and that, could open up a brand new vein of Gold buying by individuals in Russia!

Currencies today 4/8/19 American Style: A$.7105, kiwi .6735, C$ .7477, euro 1.1237, sterling 1.3057, Swiss $1.0001, European Style: rand 14.1415, krone 8.5747, SEK 9.2795, forint 286.16, zloty 3.8168, koruna 22.8188, RUB 65.28, yen 111.45, sing 1.3560, HKD 7.8476, INR 69.69, China 6.7172, peso 19.09, BRL 3.8723, Dollar Index 97.26, Oil $63.39, 10-year 2.50%, Silver $15.15, Platinum $911.70, Palladium $1,377.78, and Gold… $1,297.26

That’s it for today… Well, I told you all a month ago, that my beloved Cardinals can’t hit… That was in Spring Training, and I know lots of people that would say “so what, it’s Spring Training”.. But I’ll contend that you play for real the way you practice… I’m just saying… Our Blues are back in the playoffs! Who would of thunk that given their start to the season? But they’re back and playing good as the playoffs start, let’s hope they can keep going this year! Let’s Go Blues! The song that’s playing as we head to the finish line, reminds me of the good movie Almost Famous… I lived that life depicted in the movie, so that’s why I think it’s good! It’s Elton John singing his song: Tiny Dancer… I hope you have a Marvelous Monday, and I’ll talk to you again on Wednesday! Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts