A Trade War “Tentative Agreement”!

A Pfennig For Your Thoughts

Rocktober 14, 2019

* Currencies fight back to gain VS the dollar…
* Gold takes a spin on Mr. Toad’s Wild Ride…

Good day… And a Marvelous Monday to you! Today is a holiday for a lot of the U.S. as we celebrate Columbus’s discovery of the West Indies… (SIC) So, this will be shorter than usual, since normally, I would be off work today! What an absolutely, fantabulous, weekend, weather wise here where I live! The sky was cloudless, blue umbrella skies, the sun was full on, but just warm with a bit of a chill in the air.. Great bonfire weather… My beloved Cardinals on the other hand are in a deep dark hole, that their inability to hit, has put them in, as they travel to Washington D.C. for three (if needed) games… They are down 0-2, in games and it’s a best of 7 series, so today’s game is a must win, if they are to extend the series… Lots of teams through the years, have been down 0-2 and come back to win, but… most of those were with the team down 0-2, coming home to play, not the other way around… UGH! The group Madness greets me this morning with their song: Our House…

Well, since we last talked, last Wednesday, we had a number of things take place… Including: A Tentative agreement in the Trade War, and brighter outlook claimed by the BREXIT negotiators, an Iranian oil tanker get blown up in the Red Sea, the stock jockeys dancing in the street, CPI Core Inflation staying Steady Eddie, the gloom and doom of the citizenry, remaining in place, and I became a grandfather again! … The writing is on the wall that we’re heading to a recession, and by now even the naysayers are starting to believe it…

The dollar remained well bid as we ended the week, but the currencies were doing their best to keep up and the euro did trade back over the 1.10 figure, thus signaling a little dollar weakness… A little that is, not the much in reality…

Gold had a wild an crazy ride on Mr. Toad’s Wild Ride on Friday… First it traded upward to $1,508, then it saw another engineered take down, which brought it down to $1,478, and then it rallied to close at $1,488, down $4.90 on the day… That’s a wild swing in prices for one day, eh? Let’s hope there’s a line waiting to take a spin on Mr. Toad’s Wild Ride so that Gold doesn’t get to “go again”, today! In the early trading today, Gold is up nearly $7, so it has that going for it, so far!

Speaking of Gold… I have a dear friend in Florida, that sent me a link to an interview that’s about 6 minutes long, with the Econoguy, David Rosenberg… Longtime readers know that I love this David Rosenberg guy, for we think alike most of the time… The link has Rosenberg talking about Gold, and I think it’s a very good piece, in that he says he “wouldn’t be surprised to see Gold rise to $3,000… I thank my good friend Sharon, for sending this to me, and now I give it to you! https://www.youtube.com/watch?v=0XFWot87A2Q

And finally on Gold… the good folks at GATA sent me this note, and it’s a doozy if you ask me… “De Nederlandsche Bank (DNB) holds more than 600 tonnes of gold. A bar of gold always retains its value, crisis or no crisis. This creates a sense of security. A central bank’s gold stock is therefore regarded as a symbol of solidity.”

That is a message that can be found on the Central Bank’s website! They also say there that, “Gold is ‘the perfect piggy bank’ and can rebuild a financial system.”

OK, do you think they got this idea from the Central Bank of Russia, that decided years ago, that instead of adding to their currency reserves with other countries’ currencies, that they would instead buy physical Gold… And now all these years later, Russia’s balance sheet is one of the best looking balance sheets in the world!

So, as I’ve been telling you for years now… “follow the money”… And the money continues to find itself being spent on physical Gold… And when Central Banks tout the buying of physical Gold… Well, do you know of any other entity that has deeper pockets than a Central Bank that can turn the printing presses on at any time? Got Gold?

OK… I heard from good friend, and former colleague, Chris Gaffney, last week… He said he was heading to Dallas for the Money Show, and was getting ready to answer the question, “How’s Chuck?” I told him to tell people that I was still kicking! Chris made it to the Butler Labor Day BBQ this year, so I had just seen him last month, so he can tell them the truth, that I look old, broken down, and barely able to get around, but still with a smile on my face when I see friends!

I have no idea why I went down that rabbit hole, but I did, and now I’m back out… See Government? When you find you’ve dug yourself a hole, you don’t keep digging, you work yourself out of the hole! Speaking of a hole…

A BIG BLACK HOLE is where we keep throwing down the newly created money! I made a big stink last week about knowing who the Fed was giving the cash to in their daily injections of newly created dollars to the repo market… They won’t release the names of the recipients, and I find that to be a crock of &$%#! But the currency traders don’t care, that hundreds of Billions of newly created dollars have entered the economy, thus in the “old days” of currency trading, it would mean a trip to the woodshed for the dollar… But not any longer… Print all you want, Fed…

The currency traders don’t care any longer! UGH! Well, I say that but at the same time I know that at some point, they will care… And that’s when the wholesale signs get hung on the dollar…

So, there was elation, and dancing in the street, here in the U.S. when it was announced late last week that a “tentative agreement” has been signed between China and the U.S. I love it when people get all lathered up over something that has not been proven to exist… A “Tentative Agreement” is better than “no agreement”, but far worse than an “ironclad agreement”… And will we ever really, truly find out what was in the “Tentative Agreement”? Did the President get the Chinese to agree to stop stealing our “intelligence”? I find this to be interesting in that why didn’t we build a mousetrap to protect this stuff if it was so important”? Oh, well, we have a “Tentative Agreement” and we should be happy….

And the stock jockeys sure were on Friday!

Maybe the “tentative Agreement” will be like the “Temporary” move to remove the Gold backing of the dollar, back in 1971?

Any-old-way, the news got the Chinese to allow a good appreciation of the renminbi, which gave the Monetary Authority of Singapore (MAS) the giddy up to allow their version of a dollar to rally strongly…

In the U.K. the news from the negotiations on BREXIT were promising, and that’s the best sign they’ve had from those negotiations in a month of Sundays! They have two weeks to iron out a BREXIT deal before the deadline of 10/31… I’m still of the opinion that they won’t make it… But then they could always come out on 10/31 and say that they have a “tentative Agreement” and everyone would be happy! I’m just saying…

But my negativism hasn’t hurt the pound sterling, as the currency went for a ride on the rally tracks that went quite far! This is the best rally in sterling I’ve seen in a month of Sundays!

The price of Oil rose on Friday, for the first time in a quite a few trading sessions, as news spread that an Iranian Oil Tanker blew up in the Red Sea… The Petrol Currencies, led by the Russian ruble, were on the rally tracks following the news of the Oil Tanker… I have to tell you that every time I hear about something like this news from the Middle East, I think will this spark WWIII? And each time I’m calmed down when nothing of the sort happens… but they scare the bejeebers out of me, especially when I hear that Saudi Arabia has announced that they will allow U.S. miltary to be deployed on their border… I can’t for the life of me think that that would be a lot of fun…

But like I said, the Petrol currencies really moved higher, led by the Russian ruble, but not just the ruble, the Norwegian krone got up off the mat, along with the Canadian dollar… The Brazilian real wasn’t allowed to come to play with the other Petrol Currencies…

Last week’s Data Cupboard had Core CPI unchanged, and that caused the bond boys to pause, and pull their foot off the accelerator with regards to sending yields lower… The 10-year Treasury’s yield a week ago was trending downward around 1.55%, and today the yield is 1.73%…

That’s a huge move folks, for bonds that is… But… the 10-year’s yield is still down 17 Basis Points in the last month, and down 143 Basis Points year on year!

The U.S. Data Cupboard will have a few real economic prints for us this week, starting tomorrow with Retail Sales for Sept. And then on Wednesday we get the Industrial Production and Capacity Utilization duo, and finish the week with Leading Indicators… The economic data hasn’t been kind to the “the economy is the strongest in history” folks… And I doubt that this week’s contributions will not get them to change their collective minds…

But if you cornered me, and asked, I would say that I think the data this week will point to another rate cut, before year-end.

To recap… A Trade War “Tentative Agreement” has the stock jockeys dancing in the street, Core CPI sent bond yields higher, brighter news from the BREXIT negotiations sent pound sterling on the ride higher of its life, and an Iranian Oil Tanker was destroyed in the Red Sea, sending the price of Oil higher, and putting the Petrol Currencies on the rally tracks… Gold had a spin on Mr. Toad’s Wild Ride… And today is a holiday…

For What It’s Worth… Well, this is something that I want to see more of and to see that they find stuff… Reuters is reporting that regulators are at JPMorgan in the U.K. to go over their metals trading, and it can be found here: https://www.reuters.com/article/us-britain-metals-jpmorgan/british-regulator-reviews-jpmorgan-metals-trading-amid-u-s-probe-sources-idUSKBN1WQ26Q

Or, here’s your snippet: “The UK Financial Conduct Authority (FCA) is one of the various authorities that JPMorgan has previously said were investigating its metals trading, according to one of the people, who declined to be named due to the sensitivity of the matter. The watchdog has requested documents and other information from JPMorgan, the source said.

The exact scope of the FCA scrutiny or whether it will result in any charges was unclear.

The U.S. Department of Justice (DOJ) has charged five current and former JPMorgan metals traders, who worked in New York, London and Singapore, with alleged price manipulation between 2007 and 2016. Two of them have been charged in parallel by the Commodity Futures Trading Commission (CFTC). The joint investigation is ongoing, a DOJ official has said.

One of the traders was charged in 2018, and four this year. Two have pleaded guilty to manipulating prices. The lawyers for the three most recently charged, in September, said their clients would contest the allegations against them. ”

Chuck Again…. All these charges, and still no one goes to jail… And like I’ve said before, until someone big goes to jail, these guys will continue to do what they do and not give a hoot who regulates them!

Currencies today 10/14/19 American Style: A$ .6753, kiwi .6287, C$ .7570, euro 1.1028, sterling 1.2553, Swiss $1.0046, European Style: rand 14.8125, krone 9.1130, SEK 9.8443, forint 300.31, zloty 3.8915, koruna 23.4090, RUB 64.17, yen 108.20, sing 1.3692, HKD 7.8439, INR 70.99, China 7.0872, peso 19.31, BRL 4.1087, Dollar Index 98.45, Oil $53.61, 10-year 1.73%, Silver $17.62, Platinum $895.74, Palladium $1,698.78, and Gold… $1,495.86

That’s it for today… Well… On Friday morning, last week, we got the word that our new granddaughter had arrived… And it was a few hours later that I sat there in the hospital room holding, little Evelyn, Evie, and we will call her, and thinking about all the days and nights that I was as sick as a dog, and thought, that it was all worth it, to get to hold that little girl in my arms… Big brother, Braden, who was staying with us while mom and dad were in the hospital, couldn’t stop giving his sister kisses on her head… So, welcome to the world, Evie… And congratulations Andrew and Rachel… As Braden said, “now it’s all even, 2 girls, and 2 boys”… The Main Ingredient takes us to the finish line today with their song: Everybody Plays The Fool… So, see… not so short… but there was a lot to talk about today! I hope you have a Marvelous Monday, and please Be Good To Yourself!

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