Currencies Take Another Dive Downward on Wednesday…

A Pfennig For Your Thoughts

April 25, 2019

* No more Black Fridays here any longer?
* Halleluiah! Gold finally found a bid yesterday!

Good Day… And a Tub Thumpin’ Thursday to you! I’ve been pretty tired lately throughout the day, needing a good long nap to get through the rest of the day… I know it’s the chemo wearing on me, as it accumulates in my system… I’m lucky that I’m now retired and the kids are out of the house, for I have quiet time whenever I need it. So, having said all that, I’m going to try to do some Tub Thumpin’ tonight, but then one never knows! Son, Andrew stopped by last night, to drop off tons of meat he wants me to cook for him for Saturday, as Saturday is the main day of the water polo tournament that he hosts each year at this time… So, I’ll be busy tomorrow and Saturday morning for sure! Steely Dan greets me this morning with their song: Black Friday… When black Friday comes I stand down by the door And catch the grey men when they Dive from the fourteenth floor… Long before the term came to denote the shopping frenzy on the day after Thanksgiving, Steely Dan released this song about the original “Black Friday,” when on Friday, September 24, 1869 a failed ploy left many wealthy investors broke. The investors tried to corner the market on gold, buying as much of it as they could and driving up the price, but when the government found out, it released $4 million worth of gold into the market, driving down the price and clobbering the investors.

Strange how things come and go, eh? We still have investors (mainly the bullion banks) that are trying to manipulate the price of Gold. But only this time they want to bring down the price of Gold… Only this time, if my thought proves to be correct, the Gov’t already knows about and condones it!

Whew! What a way to start the day, eh?

Well, it was better than having to tell you that the euro lost another ½-cent yesterday, bringing its total loss so far this week to 2 cents… HEY! Currency Traders! Enough is enough! Since the euro is the offset currency to the dollar, when the euro gets sold, the dollar rallies… and it has moved quite high this week, as evidenced by the move in the Dollar Index, which on 4/17 it stood at 97.02, and this morning it is trading around 98.30… That’s over 100 index points in less than 2 weeks, with a couple of days missing because of the Easter holiday…

I had a very nice long conversation with my good friend Dennis Miller, the Retirementor, who can be found at: www.milleronthemoney.com And we were discussing an idea about updating an article I wrote for the Dow Theory Letters back in June of 2016! I won’t spoil the soup here… But those of you who were kind enough to follow me to the DTL will be able to find the letter and see what it was I was talking about back then…

I was reminded about this conversation when I clicked on the Bloomberg site and saw an article titled: “What If The Bull Market In Stocks, Never Ends?” well, with all things manipulated these days, I don’t see how, even a recession can knock the stuffing out of the stock market right now… Historically speaking, recessions have always been a dark cloud over stocks… But what I’m saying now is that given the manipulation, and Central Bank buying (yes, Central banks buy stocks, like the Swiss National Bank) I’m wondering the same thing that the Bloomberg writer was wondering and writing about.

OK, letting discretion be the better part of valor, I was typing a spiel about the deep state, when something hit me and said, “Chuck, don’t go there”.. And so I erased it, and went on… Aren’t you proud of my new sense of right things to talk about and wrong things not to talk about? HA!

Well… The currencies didn’t fare much better in the overnight markets either, so we begin the day with all the currencies, including the ruble, on the downside of their values VS the dollar. It appears that the boys in the band have gotten what they wanted from shorting Gold, as the shiny metal was able to eke out a $3.80 gain yesterday, and is up a buck in the early morning trading today… Halleluiah, halleluiah, halleluiah, I was beginning to believe that we might not see a day of Gold being bid higher every again!

Palladium is still being bought though, as its price is back above $1,400 this morning… This is a strange one to me… Because auto sales are slowing, and in fact they just posted the slowest beginning of the 2nd QTR in years, and Palladium is tied to auto sales… Hmmm…. Something is fishy here… Do you smell it? It’s yesterday’s fish! Something is awry here I can feel it in my bones!

The U.S. Data Cupboard has the previously mentioned Durable and Capital Goods Orders for March this morning… Reminder, I say they’ll be negative! Tomorrow’s Cupboard will have the next revision of Q1 GDP, if you recall this original number was around 3%, and I told you then that it was hogwash, and to look for downward revisions, which have come and the last print was 2.3%… Given that Q4 2018, ended up at 2.2%, I would think that Q1, 2019 will be even lower, but even if it’s not… Our over 10 year run in the economy, has generated just 2.3% of GDP growth in that time…

To Recap… The currencies sunk further to the dollar yesterday, and in the overnight markets… This is getting ugly folks… Time to pull down the hatches and lock them tight! Halleluiah, Gold finally found a bid yesterday, and gained $3.80… About time, eh? Now, let’s hope it wasn’t just a one and done! It’s all about manipulation and price supports these days folks, and a Bloomberg writer wants to know if the Bull market in stocks is ever going to end?

For What It’s Worth… Well, I had this sent to me by a dear Pfennig reader, and thought it to be quite FWIW worthy, in that it covers a topic I had in the FWIW last week, regarding the Retail Apocalypse… And it can be found here: https://wolfstreet.com/2019/04/19/retails-existential-threat-is-private-equity/

Or, here’s your snippet: “Since I first wrote about private equity’s looting and ultimate devastation of Mervyn’s (“On Private Equity and Real Estate” September 2012, behind paywall), retailer after retailer has been similarly gutted. Payless Shoes, Toys ‘R’ Us, Gymboree, Sears Holding, Mattress Firm and Radio Shack — all companies at one point owned or controlled by private equity firms — have since filed Chapter 11.

In fact, Debtwire, a financial news service, calculates that about forty percent of all US retail bankruptcies in the last three years were private equity backed.

How do the private equiteers do it? Simple, the leveraged buyout. The LBO is the financial world’s pick and roll, that is, a highly effective play that is difficult to counter, especially if the PE firm takes the prudent first step of bribing its intended victim’s CEO into going along with their acquisition.

In short, the PE firm pays top dollar for a given retailer, often even overpaying, but using as little equity and as much debt as it possibly can. It then improves the company’s profitability by cost-cutting beyond prudence and, as with Debenhams, says, “What a good boy am I,” rewarding itself with a major dividend, often recovering not only its entire initial investment, but a substantial profit to boot.”

Chuck again… this snippet is just the tip of the iceberg in this article, and if you’re tired of hearing that the internet is causing brick and mortar businesses to close, then this explains it as just one of many reasons for the Retail Apocalypse…

Currencies today 4/25/19 American Style: A$.6996, kiwi .6588, C$ .7405, euro 1.1125, sterling 1.2866, Swiss $.9781, European Style: rand 14.5217, krone 8.6838, SEK 9.5497, forint 289.71, zloty 3.8590, koruna 22.1290, RUB 64.07, yen 111.90, sing 1.3652, HKD 7.8432, INR 70.36, China 6.7200, peso 19.14, BRL 3.9469, Dollar Index 98.30, Oil $66.21, 10-year 2.52%, Silver $14.87, Platinum $880.35, Palladium $1,419.29, and Gold… $1,276.63

That’s it for today, and tomorrow of course! I’m going to rest up today, to be ready for being busy tomorrow and Saturday… What an ugly day here yesterday, but they got the game in downtown, which the Cardinals won, completing their sweep of the Brewers, so it wasn’t all bad… Our Blues begin the 2nd round of the playoffs tonight… The game doesn’t start here until 8:30 which is ridiculous, I’ll probably barely get through 1 period before feeling the calling of sleep! On Saturday, I’ll be all by myself here once again for about 10 days… Matthew Sweet takes us to the finish line today with his song: Girlfriend… I saw Matthew Sweet in concert probably 20 years ago now… Many where does the time go? I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday and will Be Good To Yourself!

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