Currencies Have A Mini-Rally, While Chuck Was Away!

A Pfennig For Your Thoughts

April 10, 2019

* U.S. data continues to print very week…
* What the heck is going on in Italy?

Good Day.. And Wonderful Wednesday to you! Well, I was away from the laptop, research, reading and writing yesterday, and guess what the currencies did? They had a mini rally! My day of travel began very early in the morning, and ended back in St. Louis, with the temperature in the 70’s! YAHOO! It’s warm! I know it’s spring here, and warm weather can be fleeting, but at least for now, I’m a happy camper! I want to start today off with a note to my former asst. and colleague, Jennifer Mclean… She’s celebrating her 20th year at the bank, even though it’s no longer EverBank, it’s still 20 years… We had a lot of good years together, I’m sure I mad her mad on occasion and vice versa, but we still got along just fine… So… Happy 20 years there Jennifer! Leon Bridges greets me this morning with his song: I’m Coming Home…

Front and Center this morning I have to talk about the news from Italy, where there was an announcement of tow laws that could strip the Gold reserves from the Central Bank … Taking a page from FDR, who instead seized it from citizens… One draft law may, reportedly, oblige the central bank’s owners to sell their shares to the Italian Treasury at prices from the 1930s, while the second law is set to declare Italian nationals to be the owners of the Bank of Italy’s reserves.

What the heck is going on over there? I sure hope they don’t give the U.S. lawmakers any ideas! Gold guru, Jeff Clark had this to say about the news… “Revolution is in the air! Seems like it’s similar to the movements in those countries that want to repatriate their gold back home.

Yeah, it’s not clear what the full ramifications will be, we’ll see if the law passes.” – Gold guru Jeff Clark

Yeah, it’s too early to go Rambo on them, just for coming up with laws like this, but then one never knows for sure, now does one?

Ok, back to our regular programming… So the mini-rally in currencies was yesterday, and in the overnight markets… they moved a little higher, as they must not have figured out that I’m back in the saddle! HA!

And Gold got back up on the rally horse yesterday… And I think it’s because of some words uttered by the President, about “how the world hasn’t seen the last of my Trade Wars”… So, while the China and U.S. talks are winding down, the jabs at Europe and the rest of the world are being made… OK, for those of you new to class… I understand that our trade partners have taken advantage of our good will for a long time… And negotiations are the way to end that, not placing tariffs on goods with your trade partners… That’s what causes slowdowns in economies folks…

Remember, this folks… Trump wants a narrower Trade Deficit… Why else would he be complaining that the dollar is too strong? And chancing major slowdowns in economies with trade tariffs?

The ministers at the European Summit are expected to grant the U.K. yet another extension to iron out their BREXIT details. 1. I’m really surprised that U.K. PM May is still in control, and 2. that the pound sterling isn’t just falling like a rock off a cliff… Everything is muted, as everybody is holding out hope that a deal can be ironed out… Well, that is everybody but me!

How about the price of Oil? It just continues to ratchet higher, inch by inch, step by step, and before you know it, Oil is trading with a $64 handle this morning. I’m not a fan of higher Oil prices, except that they help the Petrol Currencies like rubles, krone, real, loonies, and others…

Speaking of the krone… I read this morning that recently the krone has been moving positively VS the euro… I was very skeptical of this, headline, so I read on, and saw the facts… The krone has been moving positively VS the euro, which is something that I don’t know that I’ve seen, as the krone has always taken its cue to move in one direction or the other from the euro…

Many years ago, the people from Forbes Magazine came to me and asked me to write an article that talked about alternative currencies other than the euro… I told them that I would be writing about the Norwegian krone… and after I sent them the article and backing graphs, etc. they decided to make it a cover story, and they called the krone, “The safest currency in the world”… They had their Oil revenues, and their largest in the world Sovereign Wealth Fund to support the krone… Well, they still have their Oil revenues, albeit much smaller VS back “in the day”… And they still have their Sovereign Wealth Fund, so I get that traders would take a flyer on krone… But it can’t get too far out in front of the Big Dog, euro, folks…. I’m just saying.

Well, there was a lot of hub-bub in Russia the past few days, as their Central Bank Reserves were nearing $500 Billion ($487 Billion), and the calls for the Central Bank to cut of purchases of their reserves grew louder and louder until this was said… “In the latest statements the bank said it is necessary to “increase FX and gold reserves even more” from the current highs, given the “persisting sanction risks and current economic structure,” deputy head of the CBR Sergey Shvetsov told the press on April 3.”

So, it appears to me as this was nothing more than a tempest in a teacup, and Russia will continue to buy Gold for its reserves…

The U.S. Data Cupboard didn’t have much for us yesterday, and today they step it up a bit, with the stupid CPI, The Federal Budget, and the Fed’s Meeting Minutes… OK, before we get all giddy about the meeting minutes, let me offer that I used to think that we would get the true goings on at the Meetings with these minutes, but over time that’s just not the case… But I’m sure the markets will be looking for any sign, wink or nod that the Fed Heads are getting scared, and are readying their battle stations for a return to a rate cut cycle…

If you recall, on Monday this week, I told you that February Factory Orders would probably print negative, and that’s exactly what they did, printing negative -0.5%… all in all, it’s just another brick in the wall… I mean what did everyone expect? Durable and CPAPEX Orders for the same period already printed negative, there’s no way Factory Orders were going to be anything but negative!

The economic data here in the U.S. continues to print weaker and weaker with every passing month, except the lies that the BLS tells us each month about the labor picture…

I told you Monday that the European Central Bank (ECB) was meeting this week… I do believe it’s tomorrow, but could be today… either way I don’t expect anything exciting to be mentioned here… So move along, for these aren’t the droids we’re looking for…

Before I head to the Big Finish… Bloomberg is reporting this morning that The BIG BOYS are heading to “the hill” today… Here’s Bloomberg’s take on this… “JPMorgan Chase & Co.’s Jamie Dimon and Goldman Sachs Group Inc.’s David Solomon are among U.S. bank CEOs set to face a grilling in front of the House Financial Services Committee from 9 a.m. this morning. They are likely to be questioned on pay, profit and regulation during the session in which Democrats are expected to go on the attack on the industry’s track record a decade after the financial crisis.”

Well, since I’m no longer employed at a bank… Man, let’s see, I started at the old First National Bank of St. Louis, in 1978, so that means I had been in banks for 40 years! Ok, what I was going to say is that since I’m no longer employed by a bank, I can say I hope these guys get fileted! and the fire is so hot that the meat sticks to the grill!

To Recap… The Currencies and metals have a mini-rally on Tuesday while Chuck was away, and flying the friendly skies, and so far in the overnight markets nothing has changed… BREXIT may get a stay of execution from the European Summit today, and while the China / U.S. trade talks seem to be winding down, President Trump, is making sure that everyone is on notice! Chuck talks about some stupid stuff going on in Italy… And the ECB meets tomorrow…

For What It’s Worth… Well, since I was on Bloomberg this morning looking for things that would catch my eye, I did find this, and it plays well with my mention of Russia continuing to buy Gold above… It’s about China’s renewed physical Gold appetite and can be found here:

Or, here’s your snippet: ” China’s on a bullion-buying spree as Asia’s top economy expanded its gold reserves for a fourth straight month, adding to investors’ optimism that central banks from around the world will press on with a drive to build up holdings. Prices advanced back toward $1,300 an ounce.

The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website on Sunday. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.

China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as progress is being made in trade negotiations with the U.S. The latest data from the PBOC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at the current rate over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018.

Last year’s bullion buying by emerging-market central banks was the most robust in a long time as countries diversified reserves, Ed Morse, Citigroup Inc.’s global head of commodities research, said in a Bloomberg TV interview on Monday. The bank’s positive on gold, targeting $1,400 by year-end.”

Chuck again… I continue to monitor these Central Bank physical Gold purchases, because of numerous reasons, but most of all, to prove in my mind and yours that physical Gold demand is still strong, and should see a strong Gold price in tandem with this demand…

Currencies today 4/10/19 American Style: A$.7150, kiwi .6755, C$ .7505, euro 1.1276, sterling 1.3083, Swiss $1.0005, European Style: rand 13.9669, krone 8.5067, SEK 9.2524, forint 285.27, zloty 3.7966, koruna 22.7080, RUB 64.81, yen 111.22, sing 1.3527, HKD 7.8383, INR 69.38, China 6.7117, peso 18.86, BRL 3.8499, Dollar Index 96.90, Oil $64.42, 10-year 2.50%, Silver $15.25, Platinum $891.68, Palladium $1,384.60, and Gold… $1,303.80

That’s it for today… A nice win VS the Dodgers last night for my beloved Cardinals! And our Blues begin the playoffs tonight… Let’s Go Blues! I’m all excited about the hockey playoffs! And I bought some tickets last night to tomorrow’s day game! YAHOO! Day Baseball… Love it like a kid loves cake! I’m going to be very busy with doctor appts. and scans next week, so this day game came at the right time! This is the longest period of time that I’ve gone without a blood draw, doctors, scans and other fun things, in 12 years! But that reprieve from those things ends next week. UGH! I’m sure the docs aren’t going to be happy with the cellulitis in my leg, but it is what it is… Cat Stevens takes us to the finish line today with his song: If You Want To Sing Out, Sing Out… I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

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