BOE Cuts Rates.

* Dollar has the conn ahead of the Jobs Jamboree!
* A$’s and rupees rally! .
* Gold loses $5, Silver loses 19-cents!
* James Rickards joins us today.

Good Day. And a Tub Thumpin’ Thursday to you! You all know the routine by now, so, you’ll have to do all the Tub Thumpin’ today, as it’s an infusion Thursday for me. I know you have it in you to do a fine job of Tub Thumpin’ today, so don’t let me down! I’m greeted today with a song from Aaron Neville. Tell It Like It Is. This song has special meaning to me, as it was the song that my oldest sister, Brenda, played while she taught me to slow dance with a girl. And I always think about how she taught me to tie my shoe, and what things NOT to say to a girl. Brenda was only 38 when she was taken from us by ovarian cancer. And before I begin to tear up, I’ll move along this morning to something else.

Well, there’s not much going on right now in the markets, but later this morning there should be some hub-bub, as the Bank of England (BOE) will be ending their meeting, and most likely will be announcing a rate cut. But quite frankly, it’s like when the European Central Bank (ECB) was in this predicament a couple of years ago, and their rates were already well below 1%. I told you then that in my opinion, it just doesn’t make any difference to cut rates when they are already so low, and so accommodating. But that doesn’t stop the Central Bankers, because, well, they know better, right? HA! As IF! So the BOE probably will announce a rate cut and talk about how they are doing whatever it takes to keep the economy running smoothly. I would laugh in their collective faces if I would happen to be there. But I’m not so I’ll save the snickering for the U.S. rate hike campers.

Yesterday we had Jeffrey Gundlach telling people to “sell everything, except Gold and Gold stocks”. And today we have the Bond King, Bill Gross, telling everyone to “forget bonds, buy Gold and Real Estate” There’s a reoccurring asset mentioned by both investment gurus. Gold. Hmmm. Nothing like getting hit smack dab in the face first thing in the morning, with someone telling you that you need to buy Gold, eh?

The dollar held the conn on the currencies and metals all day yesterday, and has seemed to retain that in the overnight markets, with the Aussie dollar (A$) being the outlier this morning. The A$ move is somewhat strange, in that the A$ rallies on a weaker than expected Retail Sales for June. Wait, What? Really? By golly, yes, ma’am! The A$ traders weren’t shaken by the June Retail Sales print that came in at .04% VS .05% expected, with the trend rate of growth slowing. See? How can a currency rally on news like that? Especially after the long discussion about the Central Bank going back on their word yesterday? Oh, well, it is what it is, and tonight the Reserve Bank of Australia, (RBA) will give their Quarterly Monetary Policy Statement. I guess we’ll find out what’s really on the minds of the RBA, and then whatever the A$ traders do, we’ll have to live with!

You know, after all the excitement, if that’s what you want to call it, after the BREXIT vote, things have really settled down, in the global markets, eh? Like I keep telling you though, these things that could happen will take time to work their way through. So, I really don’t believe that we should be complacent here, with our feet up on the desks, and smoking cigars, with a glass of fine vino in one hand. This is what’s going to be referred to as a Minsky Moment, I’m so sure of that! This seems to me to be very much like the eye of the storm.

My friend, Dave Gonigam, over at the 5 Minute Forecast, (www.agorafinancial.com) had a good piece on the U.S. from James Rickards yesterday, and while I was reading it, I was thinking, my dear Pfennig Readers need to read this! So, without further ado, here’s James Rickards with a thought on the U.S. economy.

“For starters, “the U.S. economy is dead in the water,” says Jim.

We told you about the miserable GDP report on Friday. But it’s not just one bad quarter.

“Annualized real growth for the past four quarters has been an average 1.23%,” Jim explains. “That’s a trend that will drive the U.S. into a sovereign debt crisis. Deficits are still running over 3% per year and set to skyrocket as baby boomers retire and claim Social Security and Medicare benefits. In effect, the U.S. economy has flat-lined at a level that cannot sustain our deficit spending.”

He goes on to talk about Helicopter money here in the U.S. and how the Fed would love nothing more to unleash Helicopter money, but the political calendar pretty much makes that impossible the rest of the year, but come next January, no matter who the new president is, we can look for Helicopter Money. He goes on to say, “The helicopters won’t come to the Fed’s rescue for a few more months.”

I had a long conversation with a good friend of mine yesterday, Charlie, and he was so sure that we’re going to see negative interest rates here in the U.S. I reminded him that “real interest rates” (interest rate minus inflation) are already negative, but that didn’t satisfy him, and he went on to explain why he thought interest rates would be negative here in the U.S. sooner than later.

Can you get your arms around that scenario for the U.S.? Helicopter money and negative rates? Well, I can, because I’ve been warning you for so long now about what the Deficit Spending and debt accumulation was going to do to us eventually. And Helicopter money will just increase the debt by whatever amount the White House and Congress agree on, but you can bet your sweet Bippie that it won’t be a “small amount”.

All right, I’ve got to move on here, or else my blood pressure will rise, which is not a good thing before I go to see the doctor this morning!

Another currency that is on the rally tracks this morning is the Indian rupee. yes, it sure seems like a month of Sundays since I last talked about something good going on in India, but yesterday, PM Modi received the biggest win in his time as PM as a Goods and Services Tax (GST) was passed. This tax was first proposed a decade ago, and therefore, gives the credit to Modi for getting it passed. What this tax does is eliminate more than a dozen levies, creating a single market with more than a billion increasingly wealthy citizens, tells the markets that Goldman Sachs, aka Lola, is onto something when, in June, they called India, “one of the world’s most compelling consumer stories for the next two decades.”

I’m happy for Modi and India on this announcement, as it had begun to seem that Modi had lost his appeal and all this promises of changes were falling on deaf ears. So, he pulled a rabbit out of his hat with this one, and India was in dire need of a kick in the rear! I’ve been waiting so long for someone to unlock the Indian economy, and this just might be the key!

The price of Oil rebounded back above $40 in the past 24 hours. But that rally is being short-lived as the bubbling crude, Black Gold, Texas Tea, also known as Oil, is seeing selling pressure early this morning. But it does remain above $40 right now, as I write, so that’s a good thing, and the Petrol Currencies aren’t getting any love right now from the rally, UGH!

I was reading an article this morning that caught my eye, talking about how Millennials don’t believe they can save $1 million for retirement. This was a study conducted by GFK for Wells Fargo, that revealed that 64% of millennials believe they’ll never accumulate that amount. And do you want to know the main reason they believe this? Too much student debt! They have too much student debt, that they’ll be paying off for years, instead of saving. Welcome to the world of debt, people. I sure hope everything works out for you, but I doubt it will, and you’ll be occupying Wall Street in your future.

Oooooh, that was harsh, Chuck, do you want to go back and soften that up a bit? No. I don’t! I may be the first person in their lives that will tell them that they don’t get a trophy for participating, and that they have to pay back all that debt they accumulated! Everyone has to pay back their debt eventually, or default. The problem with the Student loans is that they can’t be walked away from, they will hunt you down and make you pay them. Hey! Somebody needs to explain this to them!

Well, the news just came across the wire, the BOE did cut rates this morning, so let the fireworks begin!

There’s not much going on in the U.S. Data Cupboard today ahead of the Jobs Jamboree tomorrow. But we did have this news yesterday that was quite interesting. The WSJ reported yesterday that Lola aka Goldman Sachs had agreed to pay $36.3 Million to settle allegations that they obtained and used confidential regulatory materials from the Fed two years ago. This settlement will be added to the $50 Million Lola had already paid in October of last year to banking regulators in the state of New York for failing to properly supervise the former employee who stole and shared Fed Secrets. . Well, that’s what you get for cheating. But then $86.3 Million for Lola is chump change. When will the Gov’t learn that they need to really hurt a financial Institution that does something like this? Fining Lola $86 Million is NOT hurting her!

Gold lost $5 yesterday and Silver lost 19-cents. UGH! Up one day, down the next day, and every day has some interesting trading going on with these metals. For instance in Gold yesterday, we saw the shiny metal move from $1,371 in the early morning trading to $1,373, and then fall to $1,357.70. and it was a flurry of trading that happened shortly before the close yesterday. Hmmm. The not for profit sellers in action if you ask me!

To recap. The dollar has the conn again, but the clock is ticking on just how long this will go on, given the rot on the dollar’s vine. The BOE cut rates this morning, I’m sure, the BOE will say that they did so in reaction to the BREXIT vote. James Rickards joins us this morning for some of his insight, courtesy of the 5 Minute Forecast, and Gold lost $5 and Silver 19-cents yesterday, what gives with that move?

For What It’s Worth. Well, did you hear the news? The news about how Ireland decided that 3 top bankers had to go to jail for their roles in the 2008 financial crisis? Here’s the link to the whole article: http://www.reuters.com/article/us-ireland-banking-court-idUSKCN10912E?il=0

Or Here’s your Snippet: WOW! Iceland did the right thing, and now Ireland is doing the right thing! The longest-ever criminal trial in Ireland last 74 days, and led to convictions of 3 Top bankers. They received ranging between two-and-a-half to three-and-a-half years. I loved what the Judge had to say about it, let’s listen in. “By means that could be termed dishonest, deceitful, and corrupt, they manufactured 7.2 Billion euros in deposits by obvious sham transactions.”

Chuck again. I know, it happened 8 years ago, but these things take time, folks, you have to let the dust settle, and then once you figure out what happened, and who was eventually the root problem, you then can build a case against them. Will anything like this ever come of all the problems that were created by a number of people and organizations in 2007-2008? Not a chance. Ain’t that a shame?

Currencies today: Currencies today 8/4/16. American Style: A$ .7622, kiwi .7192, C$ .7658, euro 1.1136, sterling 1.3160, Swiss $1.0285,. European Style: rand 13.7365, krone 8.4501, SEK 8.5424, forint 279.31, zloty 3.8542, koruna 24.265, RUB 66.1955, yen 101.16, sing 1.3424, HKD 7.7561, INR 66.8475, China 6.6444, peso 18.8291, BRL 3.2227, Dollar Index 95.78, Oil $40.71, 10-year 1.52%, Silver $20.40, Platinum $1,159.00, Palladium $709.25, and Gold. $1,361.05

That’s it for today. Time to get going for my appointment, it’s an early one today, and therefore Mike or Chris will get you the currency prices today. Thanks to them for helping. I got up extra early so I could get this done, without having to ask them to do the whole enchilada for me today, as they will have to do tomorrow. Cardinals figure out that all they need is 3 outs in the ninth, to finish a game! Day game today, but when I get home from the infusion center, all I want to do is sleep! Eat lunch first though, because I don’t eat after noon the day before an infusion, just to keep the stomach in check while in the infusion room! A GREAT BIG HAPPY BIRTHDAY TO MY DARLING GRANDDAUGHTER: Delaney Grace! Little D, or just Dee as I call her, turns 9 today. She is so darling to me, and cute as can be! She’s a smart kid too! She’s always concerned about me, and wants to know if I feel OK. Love her to pieces! So Happy Birthday Dee! And with that, Kansas takes us to the
finish line today, with their song: The Wall. A great 70’s song. I’ll talk to you next on Monday, so be there or be square! I hope you have a Tub Thumpin’ Thursday! Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts
1-800-926-4922
https://www.everbank.com