All This Saber Rattling Has Chuck Fearing the Worst!

Rocktober 11, 2017

* Saber Rattling ratchets up…
* Russia prints $1.2 Billion Surplus!
* Euro climbs back to 1.18!

Good day… And a Wonderful Wednesday to you! I’m not ready for prime time today… I can’t seem to fully wake up… I’ve tried eating something crunchy, which usually does the trick, and I’m even trying to drink a soda… UGH! Maybe as I go along here something will click in! Jackson Browne greets me this morning with his song: Doctor My Eyes…

Well the saber rattling is ratcheting up again… I was talking to my good friend Duane last night, and I was expressing my fear of all this saber rattling turning into something bad. (Poor guy, was trying to watch the Blues hockey game and I’m carrying on about N. Korea, etc.) The stock market doesn’t seem to be caught up in the saber rattling, as it continues to move higher and higher every day… I’m just going to say that this reminds me of something that my dad used to tell me all the time… Trees don’t grow to the moon… And that’s all I have to say about that!

I’m not even your last pick as someone on your stock jockey team… Even though the stock side of the business is where I began my career in investments… Alrighty then, let’s get to what we do feel very confident talking about and that’s currencies, metals, economies and dolts!

The currencies are still, for the most part, trading in the same clothes as yesterday and Monday. The euro however, has betting some love from traders, and yesterday I told you that it was knocking on the door to 1.18, and later in the morning, someone answered the door, and let the euro in, and the single unit is trading above 1.18 this morning.

That darned price of Oil… One day it appears to be ready to go for a ride on the slippery slope, and then along came John on his white horse, and the price of Oil jumps nearly $2 on the day. However, it appears that the Norwegian krone is the lone ranger when it comes to Petrol Currencies that have responded favorably to the upward swing in the price of Oil.

The Russian ruble is a trading just a bit stronger this morning, and the Brazilian real, who just last week, was putting together a nice stealth-like upward move, lost ground overnight. The Canadian dollar / loonie remained unchanged through it all. Hmmm… I wonder what’s going on with the loonie? Just last month, we saw the loonie trade well into the 82-cent handle, then settle back to the 81-cent handle. but in the last few weeks we’ve seen the loonie fall through 80-cents, and now it has settled in just below 80-cents… Hmmm…

I don’t know why journalists still go to this guy and think he has the answers… I’m talking about economist, Paul Krugman. I read on the Bloomberg this morning that Krugman was asked about the probable Fed Chair replacement for Janet Yellen, Kevin Warsh, and Krug didn’t hold back his opinion which was that “He’s been wrong about everything”… Krugman then went on to say, ” It’s kind of almost amazing, you could almost make money by taking whatever he thinks is going to happen, and betting the other way.”

Well, as we used to say in the old South St. Louis neighborhood… “It takes one to know one!” And that’s all I’m going to say about Krugman’s opinion on Kevin Warsh… Except to say that in MY opinion, now that Krugman has dissed Kevin Warsh, I’m all for Warsh gaining the Fed Chairmanship!

Gold was on a roll yesterday and ready to move back to $1,300, trading all the way up to $1,296.70, but then seeing “the boys in the band” enter the markets and immediately flood the market with paper trades that were selling Gold short, and at the end of the day, Gold was able to hold onto $3.90 of its gains it had earlier in the session, to close at $1,287.50…

This will eventually stop folks… And all those paper short trades will be thrown in the trash can. When that will be is a guess that if you knew the answer to, you would become rich and be sitting on your own island with an umbrella drink!
Moving along… As I don’t like to get stuck on any one subject too long, as it could make for a read that puts you to sleep! Which is what I just did, for a few minutes!
Well, Bill Gross, the former Bond King, who now runs a bond fund at Janus, had some things to say about the Fed yesterday… I guess his mother never taught him about how if you don’t have something nice to day about someone, don’t say anything at all! On Monday this week, Gross said that,”financial markets are artificially compressed, in the process distorting because of the U.S. Federal Reserve’s loose monetary policy.” And he wasn’t finished there, going on to say, “think we have fake markets.”

OK, Bill, what do you propose we do about this problem? I really don’t like it when someone has something to say that makes sense, but then doesn’t offer up a remedy… If he had said, I propose that we get rid of the Fed altogether and let the markets set the interest rates. I would have been all over that with a bunch of “atta boys!”

Moving on… there’s not much happening around the world data wise today.. But we did see a very good print in Russia this morning… The Russian Current Account for the 3rd QTR 2017 was a SURPLUS of $1.2 Billion. In 2016 for the same period the SURPLUS was 0.4 Billion.. So, a very nice print from Russia, and that along with the near $2 jump in the price of Oil should be good news for the ruble?

The Fed’s Minutes from the last meeting will print this afternoon… This is the meeting where the Fed announced their plan to unwind their balance sheet of bonds. I’ll be looking for any Fed members that voted no to this idea… And that’s it for the U.S. Data Cupboard today…

To recap,,,, The saber rattling continues to ratchet up the volume scale, and has Chuck feeling very uneasy about what could happen… the currencies for the most part, are stuck in the mud, but the euro has found some loving from traders the last two days and is back above 1.18 this morning. Paul Krugman does a little of the “look who’s calling the kettle black” talk, and Chuck can’t hold back his dislike for this guy’s opinions!

For what It’s Worth… Hey! my template has been fixed, and I’m good to go with a FWIW story today… this one is about Kobe Steel’s problems after admitting they fudged the steel figures for cars, etc. and can be found here: http://www.zerohedge.com/news/2017-10-10/kobe-steel-collapses-37-after-admitting-falsifying-data-could-destroy-international-

Or, here’s your snippet: “Japan’s third-biggest steel producer is in trouble. After admitting falsifying data about the quality of aluminum and copper it sold, shares in Kobe Steel have collapsed 37%, -20% limit down yesterday and another -17% at the open today following news that the falsification also involved iron powder product, in the biggest bloodbath the company has ever seen.
Bloomberg provides a quick Q&A:

1. What exactly did Kobe Steel falsify? — Data related to the products’ strength and durability. Kobe Steel says it discovered the falsification in inspections on goods shipped in the 12 months through August, affecting some 4 percent of shipments of aluminum and copper parts as well as castings and forgings. As yet, the company, which employs about 37,000 people, says there have been no reports of safety issues.

2. Was this a rogue event? — Hardly. The fabrication of figures was found at all four of Kobe Steel’s local aluminum plants in conduct the company described as “systematic.” For some items, the practice dated back some 10 years ago, according to executive vice president Naoto Umehara. Details have yet to emerge.

3. What do its customers say? — Here’s a taster. Toyota is “rapidly working to identify which vehicle models might be subject to this situation and what components were used,” according to spokesman Takashi Ogawa. “We recognize that this breach of compliance principles on the part of a supplier is a grave issue.” Toyota found the materials in question in hoods and doors, as did Honda Motor Co. Boeing, which gets some parts from Kobe Steel customer Subaru Corp., said there’s nothing to date that raises any safety concerns. Hitachi Ltd. said trains it has exported to the U.K. contained compromised metal as well as bullet trains in Japan. Mazda Motor Corp. also confirmed it uses aluminum from the company, while Suzuki Motor Corp. and Mitsubishi Motors Corp. all said they were checking whether their vehicles are affected.”

 

Chuck again… Corporate Scandals just keep mounting… Last year it was VW, this year its Kobe Steel, who’s next? because I’m certain that there is at least one Corporation with scandal written all over it, and just waiting for someone to call them out!

Currencies today 10/11/17… American Style: A$ .7789, kiwi .7067, C$ .7990, euro 1.1816, sterling 1.3193, Swiss $ .9735, … European Style: rand 13.5728, krone 7.9295, SEK 8.0590, forint 262.12, zloty 3.6236, koruna 21.8870, RUB 58, yen 112.24, sing 1.3568, HKD 7.8056, INR 65.28, China 6.5861, peso 18.76, BRL 3.1802, Dollar Index 93.21, Oil $51.30, 10-year 2.35%, Silver $17.16, Platinum $928.70, Palladium $938.04, and Gold… $1,2791.04

That’s it for today… Well, I got through it! YAHOO! But I’m still yawning like I haven’t slept in days! Oh well, life goes on, Chuck… How our Blues? That’s now a 4 game winning streak to start the season after beating the Rangers in back-to-back games in NYC. Cubs / Nats got rained out yesterday, and Indians / Yankees play a game 5.. Good stuff! Go Indians! Nazareth takes us to the finish line today with their song: Holiday… don’t know that one? You would if you heard it! Momma momma please no more face lifts, I don’t know which one you is… And with that it’s time to get this out the door, it’s late I know… sorry about that! I hope you have a Wonderful Wednesday! And be Good To Yourself!

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

 

a) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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