ECB Confirms The End Of Their Bond Buying Program…

A Pfennig For Your Thoughts

December 13, 2018

* Currencies drift through Wednesday…
* California wants to do what? Wait until you hear this one!

Good Day… And a Tub Thumpin’ Thursday to you! I’m saving myself for tomorrow, so I won’t be Tub Thumpin’ Today or tonight… Tomorrow is our (the guys in the neighborhood) annual “shopping day”, so it will be a long day for yours truly… And then we’ll be 1/2 – way through the month of December… The sun was out again yesterday, making the temperature outside bearable, but still too cold for me! I’m back to listening to Christmas music from my satellite radio station, and this morning it’s playing Chet Atkins singing Silver Bells… When I was a very young man, I remember hearing my first Christmas song, and it was Silver Bells, which my mom told me she liked a lot, and so now when I hear Silver Bells, I think of my mom…

Well, the currencies tried to mount a rally yesterday, but just couldn’t get past the border patrol, who had the road to bigger gains on the other side of the border patrol’s gate. So, small gains were all that was on the docket for yesterday. Data here in the U.S. didn’t help the dollar’s fate going forward, as CPI (consumer inflation) saw 0% growth in November from Rocktober, and Core CPI gained just .2%, unchanged from Rocktober. I don’t believe that the Fed really pays much attention to the CPI prints, for if they did they would be backing away from the rate hike table very quickly… I said yesterday, that I doubt many people pay much attention to the stupid CPI any longer, after years of being hedonically adjusted. But stocks had a good day, not as good as they were having in the middle of the day, but a good day nonetheless…

This up one day down the next day for stocks is a very telling sequence of things… Historically, a bear market starts off with these kinds of days… So… there you have it…

The U.S. Treasury 10-year’s yield gained a couple of shekels and finished the day with a 2.90% yield, up from 2.8i9% yesterday… Last week we had the short end of the Treasury yield curve invert…. That should have scared the bejeebers out of most people, but then it didn’t last too long, But the 2year and 5year Treasury right now, yield the same level 2.77%… So a full inverstion is teetering, folks…

I read a report yesterday that claimed that Oil supplies had seen a huge chunk withdrawn. and I thought, well that should be good news for the price of Oil… NOT! I guess supply and demand just doesn’t rule the roost any longer, eh? Yesterday, I talked about the shortage of Silver, and that doesn’t seem to make a difference, and so on… Oh, and there’s a semi-truck load of dollars out there, and it doesn’t seem to hurt the dollar’s value… I’m just saying!

Gold and the other precious metals had a day of drifting, with even Palladium the recent star each day, taking a pause for the cause. I have a brief article for you from Jim Rogers this morning in the FWIW section, where he talks about commodities, and repeats my thought from a couple of weeks ago, that Commodities should rebound in 2019. So, we’ve got that going for us today…

The European Central Bank (ECB) is meeting while I talk, but they have already confirmed the one thing, and that is that they will be ending their bond buying at the end of this month, as planned. Recall I said that the risk was that they would decide to delay this end of bond buying, given the recent data that has been damaged by the Trade War. So, that’s out of the way, and the euro has already begun to move higher this morning!

I had a dear reader chastise me for always banging on the dollar… Well, I say, gimme one reason to love you, as Bonnie Raitt once sang… I told him that I just didn’t think that the Fed, Treasury, and Congress had done a good job shepherding the Reserve Currency of the world, accumulating debts that can never be repaid, and therefore the shepherds have brought this banging on the dollar on themselves…

Besides, I don’t want to see this stuff happening, but since most people don’t write about it, I take it upon myself to be there for you. I use dollars for gas, groceries and giggles, and would prefer to see the power that be, take better care of the dollar… And that’s all I’m saying about that!
But that got me thinking… Had I become so dollar-centric? That made me think back of things I’ve said about other countries and their dolt Central Bankers?

And of course, I’ve beaten on the U.K. for first their debt, second the choosing of Mark Carney as BOE gov., and then the problems with negotiating a BREXIT agreement… I agree with those traders keeping the pound down in value while this all gets sorted out.

I’ve been hard on the beaver, I mean Australia for not hiking rates and now they have a housing bubble ready to pop…

I didn’t have nice things to say about the Reserve Bank of New Zealand, after they hinted late last year that they would be hiking rates in 2018, and then crickets…

And I warned people about the new Central Bank Gov. (Poloz) in Canada, when he was announced, because his background was on the Trade Side of the business, and those trade guys are always clamoring for a weaker currency… Since he’s taken over, the loonie hasn’t been able to return to its former lofty value…

I’m not fan of Mexico, as their past indiscretions with foreign investors still weights on the peso, and I’ve pointed out over and over again that until there’s higher rates that represent a rate premium, over other currencies, the peso will remain weak.

So… As I look at it… I don’t always bang on the dollar… But, the dollar does give me more opportunities to do so, and I take them! When you have characters like Lola, aka Goldman Sachs, and JP Morgan Chase, and others to throw darts at, well, they give me plenty of opportunities to do just that…

I told you all this story before, but it works well here too… In 1998, I attended a conference in London, and one of the first questions asked was to see a show of hands of those in the crowd that didn’t believe the euro would make it… I raised my hand… And in 1999 when the euro was introduced it immediately fell in value from 1.17 down to 90-cents… I wrote back in those days that the euro was going to fail, and this drop in price was a precursor to that fall… People back then thought I was banging on the euro a lot…

But once the euro got through its first year, and got a couple years under its belt, and finally called in all the legacy currencies and swapped them for euros, the currency began to rebound, and in 2002, I wrote a white paper titled 2003: The Year of the Euro… So, just because I bang on a currency at some point doesn’t mean it can’t reverse its course… Soon the euro was the 2nd most traded currency in the world, behind the dollar… And the rest, as they say, is history…

And when the hidden debts of the Club Med countries of the Eurozone were revealed in 2011, I backed off my support for the currency, and still believe that until the ECB removes all the stimulus, the euro won’t be allowed to move significantly higher…

Sooner or later Debt is going to come back to haunt a country… And so it will be with the U.S. Shoot Rudy, we already have reduced GDP because of the debt… And just wait for the bond servicing bills, (bond interest) begin to show up at the Treasury’s door… The Trillion dollar a year deficits will only enlarge that number… How long can this go on? Well, apparently longer than I thought, but then it’ll end when it ends, and then it will be too late. I’m just saying!

OK, in other news… U.S. PM May survived a vote of confidence, but with at least 1/3rd of her supporters now against her BREXIT plan, the vote on the BREXIT plan is going to be quite sticky, and could get ugly, which would only add more weight on top of the pound.

And did you hear the proposal to help the deficit spending in California? They want to tax, texts… Talk about one of most insane things I’ve heard from politics… This is it! Considering that texting has become the way that we communicate these days, that would be quite the haul for the California leaders… But… if it costs to text, wouldn’t it behoove the texters to use the phone for what it’s original purpose, make a phone call?

The U.S. Data Cupboard doesn’t have much for us today, and all eyes will be turned to tomorrow’s Data Cupboard, which will have November Retail Sales, which I’ve already told you the BHI indicates that November will be weaker than Rocktober.

To Recap… The Currencies drifted yesterday, but the euro is attempting to lead them upward this morning, after it was announced that the ECB will indeed, end their bond buying program at the end of this month. U.K. PM May survived a vote of confidence, but her BREXIT remains in peril. Chuck goes back and talks about times he found fault with other currencies… And California wants to tax texts! yes, I said texts! Crazy, eh?

For What It’s Worth… I’ve know Jim Rogers for many years, he used to read the Pfennig, but I don’t know if he still does… But when I saw an article with his name in the title, I knew in a moment it must be St. Nick, no wait! It must be good pfodder for the Pfennig’s FWIW… So, this is Jim Rogers talking about commodities, and it can be found here: thesoundingline.com/jim-rogers-commodities-will-outperform-stocks-oil-is-making-a-complicated-bottom/

Or, here’s your snippet: “this is the time to buy commodities again. I would say to you and you can write it down… commodities are going to do better than stocks in the future.”

“I have learned not to pay too much attention to OPEC… I think oil has been down ten days in a row which is one of the few times in history that that’s ever happened. Oil is making a complicated bottom. We are going to look back one day and say ‘2015, ’16, ’17, ’18, ’19, oil made its bottom, and then oil is going to go up again. Known reserves of oil are in decline, and continue to decline, except for fracking, but that bubble has popped, so be careful. Don’t sell your oil.” – Jim Rogers

Chuck again… I watched the video that’s on the website, and Jim Rogers mentioned that he thinks Sugar is a buy, as it’s down 80% from its high. “There are not a lot of things in the world that are down 80%” was what he said…

Currencies today 12/13/18: American Style: A$.7227, kiwi .6865, C$ .7483, euro 1.1370, sterling 1.2660, Swiss $1.0075, European Style: rand 14.6330, krone 8.5653, SEK 9.0570, forint 284.10, zloty 3.7739, koruna 22.7080, RUB 66.36, yen 113.46, sing 1.3706, HKD 7.8083, INR 71.42, China 6.8828, peso 20.12, BRL 3.8777, Dollar Index 97.07, Oil $50.54, 10-year 2.90%, Silver $14.72, Platinum $799.74, Palladium $1,259.92, and Gold… $1,242.91

That’s it for today… And tomorrow… and the next two weeks! Yes, I’ve talked about it a lot, but it’s finally here, my annual Christmas vacation! While I’m gone there will be a few birthdays to celebrate… My sister Terri, Jen Mclean, Ty Keough, Kathy, and of course the most important birthday of all, that of Christ. So, Happy Birthdays all around… I plan on writing a Christmas Pfennig, so I won’t be away, for good those two weeks, and if you follow me on Twitter, you never know what I might say there! I hope everyone has a very blessed Christmas… I’ll be back on the 27th and I’m sure there will be some catching up to do… Until then I suggest you go to sleep and dream of SNOW… (Bing Crosby!) HA! Yes, faithful friends who are dear to us, gather near to us, once more… And we all will be together if the fates allow… So, like I said I hope you have a Blessed Christmas, or whatever holiday you personally celebrate. I hope you have a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

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