Currencies Get Up Off The Mat, And Fight Back!

A Pfennig For Your Thoughts

February 13, 2019

* Trade talks at an impasse… again!
* RBNZ & Riksbank don’t follow the Fed’s script…

Good Day… And a Wonderful Wednesday to you! Another beautiful day here yesterday, saw me outside reading a new (for me) Jack Reacher book… Harry Bosch, Alex Cross, and other similar books all keep my attention longer… But I in no means is someone that says, “the book was so good I couldn’t put it down to go to sleep”! For me… When it’s time to go to sleep, it’s time, period! The currencies rebounded yesterday, as I was beginning to think that their rebound of two weeks ago, was going to be another of those false dawns we’ve seen in the past year… So, that and a few more things are what’s on today’s docket… The Atlanta Rhythm Section (ARS) greets me this morning with their song: Imaginary Lover…

OK… I’m still seething about the new Green Deal that the socialists are trying to get people to like…. It’s all a bunch of nonsense to me, with no ability to pay for any of it, and things stated that a 5th grade math wiz would be able to point out as ridiculous… And that’s all I’m going to say about that today… Like I said, no politics, except when it comes to the idea that this country would be better off as a socialist country, I just wont’ let that slide…

And it IS my letter, with no upper management interference in what I say, so hopefully you don’t get so upset with me that you unsubscribe… For if you did, you would rue the day, you did so, because then, who’s going to tell you, for free, the truth, and all the other stuff I tell you?

Well, like I said in the opening the currencies, led by the Big Dog euro, rebounded yesterday, and through the overnight markets… The euro bounced off the matt, and got back up swinging left hooks, and uppercuts to the dollar bugs… Soon the dollar bugs were retreating to their homes in the wall boards…

Somebody asked me why I use the term dollar bugs, and instead of dollar bulls, and I replied, well, they call people like me “Gold bugs”… So I just return the favor!

So, what led the way for a currency rebound… Well this was in Reuters.com last night, “The dollar edged lower against its peers on Wednesday, as rising expectations of a breakthrough in the trade impasse between United States and China led investors to put money into the euro and Asian currencies.”

Oh, no… another trade talk impasse? Just when everyone thought these talks were going to come out like seashells and balloons… They don’t, and everyone goes home with their collective tails between their legs….
And here’s another thing that was going around the internet yesterday, and it rang so true to what I was saying yesterday morning about the new “Tentative deal to avert a Gov’t shutdown”… President Trump doesn’t like it… Even though some in the conservative party are asking him to reconsider, he’s sticking to his guns… so far… and that led many traders to believe a Gov’t shutdown will happen this Friday…

However, the reports this morning is that Trump is “coming around” to the tentative agreement…

So, the old one-two, to the body and then the chin of the dollar yesterday… Just to show in broad strokes, if you will, the hit the dollar took yesterday… The dollar index yesterday morning was 97.05, and by the end of the day it was 96.65… Now, the question is whether or not the currencies can more forward from here… I think they can, I think they can, I think they can…… Or better said, I think they should, I think they should, I think they should…

Well, we’ve had two Central Bank meetings since yesterday… First, overnight, the Reserve Bank of New Zealand (RBNZ) left rates unchanged, and did the Riksbank of Sweden this morning… But both had a different tone to them than what we’ve hear lately, from the likes of the Fed, and the Reserve Bank of Australia(RBA)… both the RBNZ and Riksbank weren’t exactly bubbly about their respective economies outlooks, but, as one observer pointed out, they certainly didn’t share the Fed’s pivot from the last two weeks…. So, both currencies have joined the euro in the rebound VS the dollar.

Do you know Pink Floyd’s song: Another Brick In The Wall? Who would have thought I could take a song released in 1979, and probably played on all FM radios over and over again in the early 80’s, and make it work with economic data? Well, I did… And for all of you who don’t have any idea of what I’m referring to… Think of it as a wall that’s being built with all the data prints that show were heading to a recession… And with each one, you sing… All, in all, it’s just another brick in the wall…

Well, one of my other fave economists was on twitter last night… Danielle Di Martino Booth, had this to say… “Those that Expect a Better Economy is down to 6% from 16%. It was 34% six months ago. There were also notable declines in those that Expect Higher Sales and it’s a Good Time to Expand.” – Danielle Di Martino Booth on Twitter
Chuck again… Just another brick in the wall… The wall that’s being built of bad economic data that’s pointing us to a recession… All in all it’s just another brick in the wall…

OK… The U.S. Data Cupboard come back today with the stupid Consumer Price Index (CPI)… I don’t like this data because it’s been so hedonically adjusted for more than 30 years now that it does not resemble the old staid basket of goods one iota any longer! But… It’s data… and it’s going to print today, and getting data prints out has been like pulling teeth with a pair of tweezers! So, I’ll take it, but, am far more interested in tomorrow’s print of December Retail Sales, of which I’ve already told you what the BHI indicated to me!

And finally… Gold… There just doesn’t seem to be a whole of interest in the shiny metal these days… The number of contracts traded each day have dropped to around 135-150,000, and the moves are small in Gold. Yesterday, for instance Gold was only able to eke out a gain of $2.60, and this morning it’s basically flat…

There was news last night that China got back into the Gold buying saddle… The reports are that China added 11.8 Tonnes of physical Gold in January, to their reserves… Between China and Russia, they certainly seem to be on a mission from God, to corner the physical Gold market… This January purchase followed December’s purchase of more than 10 Tonnes of Physical Gold… So, it’s not just a one and done deal, here folks…

To recap… The currencies bounced back yesterday, led by the euro, and news that the China / U.S. trade talks were at an impasse, and news that President Trump wasn’t happy with the tentative deal to avert a shutdown… He’s since said to be “coming around” to the deal, but for now, it’s a no-go in my opinion. The RBNZ and Riksbank both left their rates unchanged, but both were not gloom and doom in their statements, and that has boosted these two currencies this morning. And China is back to buying boat loads of physical Gold…. I’m just saying…

For What It’s Worth… Well, we finally topped $22 Trillion in national debt yesterday… That only took about 10 months… So, later this year before we turn the page on 2019, we should be looking at $23 Trillion… UGH! This article was sent to me by longtime reader, Bob… who I thank very much… and can be found here: https://www.usatoday.com/story/news/politics/2019/02/12/national-debt-tops-22-trillion-first-time-ever/2849978002/

Or, here’s your snippet: “The national debt surpassed $22 trillion for the first time on Tuesday, a milestone that experts warned is further proof the country is on an unsustainable financial path that could jeopardize the economic security of every American.

The Treasury Department reported the debt hit $22.012 trillion, a jump of more than $30 billion in just this month.

The national debt has been rising at a faster rate following the passage of President Donald Trump’s $1.5 trillion tax-cut package a little more than a year ago and as the result of congressional efforts to increase spending on domestic and military programs. The nation has added more than $1 trillion in debt in the last 11 months alone.

“Reaching this unfortunate milestone so rapidly is the latest sign that our fiscal situation is not only unsustainable but accelerating,” said Michael A. Peterson, chief executive officer of the Peter G. Peterson Foundation, a nonpartisan organization working to address the country’s long-term fiscal challenges.

For Americans, the growing debt should be a concern, experts said, because over time it can push up interest rates for consumers and businesses. The higher rates can ripple through the economy, nudging up rates for mortgages, corporate bonds and other types of consumer and business loans.”

Chuck Again… I feel like this is a Chinese water torture folks… Watching the debt rise again and again… in 2010, the debt was $10 Trillion and I thought that was bad! Look where we’ve gone in 8+ years… Unbelievable, and unsustainable in the long run, folks… Got Gold?

Currencies today 2/13/19 American Style: A$.7118, kiwi .6823, C$ .7560, euro 1.1330, sterling 1.2958, Swiss $1.0044, European Style: rand 13.8585, krone 8.6155, SEK 9.1830, forint 280.65, zloty 3.8190, koruna 22.7955, RUB 65.72, yen 110.60, sing 1.3558, HKD 7.8482, INR 70.80, China 6.7774, peso 19.30, BRL 3.7356, Dollar Index 96.81, Oil $53.72, 10-year 2.68%, Silver $15.69, Platinum $791.30, Palladium $1,410.77, and Gold… $1,311.05

That’s it for today, except to say a Great Big Happy Birthday to my very good friend Duane! I’ll be seeing him at the end of next week, so I’ll save my singing Happy Birthday to him for when he arrives! But until then, Happy Birthday! Our Blues won again last night for 6 in a row… Duane is a huge Blues fan, so they won for his birthday! And my beloved Missouri Tigers won a basketball game last night VS Arkansas! WOW! Thanks to all who’ve sent remedies for the gout to me… I couldn’t begin to use all them! I just know that the gout is freakin’ painful! And I’m glad that has subsided… Tyrone Davis takes us to the finish line today with his song: Can I Change My Mind… Don’t know that one? YouTube it or Google it… I hope you have a Wonderful Wednesday, and remember to Be Good To Yourself!

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