Everywhere You Look, There’s Too Much Debt!

A Pfennig For Your Thoughts

September 6, 2018

* Currencies rally on Wednesday
* Gold has a two day rally going!

Good Day… And a Tub Thumpin’ Thursday to you! While I’m tired, I’m still feeling pretty good, given that it’s been over a week since I last took Chemo… That all ends today, as a new dosage / shipment is being delivered to me today… But that’s not going to stop me from doing some Tub Thumpin’! My day of travel went as planned no hiccups, so that’s always a good thing. I’m back down South, where it’s still summer, for sure! I was sad to remind oldest son Andrew last Saturday, that I would be gone this coming weekend, when he asked me to attend the Missouri / Wyoming game … UGH! Missouri and Illinois used to play their first games of the year in St. Louis, which was a must see game for me and by boys each year, and even Kathy went with us sometimes! But that contract ran out, which was a good thing for Illinois, because my Missouri Tigers beat them every year! I know, because I was there! The Gin blossoms greet me this morning with their song: Until I Fall Away…

The old saying on the trading desk was “when Chuck’s away, the currencies rally”… Well, that held trud yesterday, as the currencies fought back and won back most of the ground they had lost the previous day… No real direction here folks… I would suggest that we stay on the sidelines and wait for a sign that there is real direction…

In the overnight markets there wasn’t much movement… I was looking at the currency screen this morning and when I came across the Japanese yen, I thought… “It’s been 111 something, for what seems like a long time… The euro gets whacked by the dollar bugs, but yen remains 111 something…

The other currency that caught my eye this morning is the Swiss franc… The franc has very quietly, and stealthlike, moved higher inch by inch for the last month, and this morning it has gained to the $1.03+ level. So, when you put the franc alongside the yen, you sort of get the picture that currency traders are fearful of what’s going on in the world, and are clinging to so-called safe havens…

To that end… Yesterday, both Citibank, and Goldman were sending out warnings about lower earnings that in their opinion were on their way… But to add to that, Well, it’s not just me that sees dark clouds ahead for the U.S. economy… Apple and Samsung are experiencing inventory stockpiles not seen since before the 2008 Financial meltdown… That was a Bloomberg story on Tuesday, that caught my eye, and made me think back ten years… Did you know we’re coming up on the 10 year anniversary of the shut down of Lehman Brothers? That shut down is pointed to as the snowflake that started the avalanche… Albeit being a rather large snowflake, don’t you think? But then again IT WAS a rather large avalanche, wasn’t it?

As Paul sang to Paulette…. Are you ready? And she replied: yes, I’m ready… Which would mean that she’s placed current stop loss orders on stocks, bought Gold & or Silver, and are ready for the coming tide…

Every day, a longtime reader of mine, Bob, sends me lots of stories to read, and I eventually get to all of them and some of them end up being FWIW section articles. But yesterday, Bob sent me (Thanks by the way!) a very good article that will be featured in the FWIW section today, but as just a teaser I thought I would give you a line from the article: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.—“
People around the world are beginning to realize that there just too much debt in the world, and at this point most believe the majority of this debt will never be repaid… Defaults will be the new trending word going viral, folks… And then you’ll thank me that you bought some Gold or Silver… I’m just saying…

One of my fave economists, Danielle Di Martino Booth, has been pointing out that inflation is getting ready to go on a moon shot ( my words), And the Fed Chairman Jerome Powell is doing the right thing by hiking rates now… I don’t know if I agree with that thought 100%, but… she used to be an insider at the Fed, and knows more about this stuff than I can claim to know! What I do know is that if she’s correct, then buying Gold at these current levels seems like an obvious thing to do, no?

Speaking of the shiny metal… Gold gained $5 yesterday, and it up $8 in the early morning trading today. There comes a time in a person’s life when they feel like the whole world is crashing down on top of them… They soon realize that it’s not going to happen and they work out whatever was the problem that caused them to feel that way. But with our problem, which is too much debt in the world, the problem is never going to get “worked out”!

Well, I’m full of you know what and vinegar this morning, now, aren’t I? REO Speedwagon sang a song years ago, with words that went like this… I can’t stop this feeling any longer… Well, that’s me in a nutshell… I’ve been talking about debt problems for so long now that I’m sure you dear longtime readers have become comfortably numb when I go on a debt rant… But…

With every day that passes, the Debt loads get larger and larger… Debt with the government, States, and consumers… And where does the foundation of this debt pyramid begin to crack? When consumers begin to default on their loans… Uh-Oh… net bank chargeoffs for bad credit card debts have soared 16% year-on-year!

So, get your journals out, and record this day as the first day that I said that the cracks in the debt foundation, are beginning to form…
Yes, most of the world has debt up to their collective eyeballs, and I worry about that, but I’m more worried about my homeland debt… It’s growing like an unattended weed, and it’s only going to get worse… Please hear my warnings on this folks…

The U.S. Data Cupboard begins to get everyone ready for the Jobs Jamboree tomorrow, with the ADP Jobs report for August on the docket to print today. You know, something slipped my mind last week when Durable Goods printed… Durable Goods Orders have printed negative 3 of the last 4 months! Doesn’t anyone at the Fed or the White House look at this and say, “something is wrong here?”

Before I head to the Big Finish today, I have this little ditty for us to share today… I found this on Reuters… “Pricing practices within American Express Co’s foreign-exchange unit is being probed by the Federal Bureau of Investigation (FBI), the Wall Street Journal reported, citing people familiar with the matter.

The investigation is in its early stages and is focused on whether the foreign-exchange international payments department misrepresented pricing to clients in order to win their business.”

To recap… The currencies fought back to win back most of the ground they lost earlier this week. I just don’t see any conviction by traders to take currencies in one direction for longer than it takes to drink a cup of hot coffee! Chuck is having an adverse reaction to all the debt in the world, especially here at home… You’ve just got to wonder when it all comes crashing down on us….

For What It’s Worth… Well, I advertised this article up top to be a good one, so hopefully it doesn’t disappoint… The article is about global debt and can be found here: http://www.savannahnow.com/news/20180903/global-debt-soars-along-with-fears-of-crisis-ahead

Or, here’s your snippet: “Ten years after the worst financial panic since the 1930s, growing debt burdens in key developing economies are fueling fears of a new crisis that could spread far beyond the disruption sweeping Turkey.

The loss of investor confidence in the Turkish lira, which has surrendered more than 40 percent of its value this year, is only a preview of debt problems that could engulf countries such as Brazil, South Africa, Russia and Indonesia, some economists say.

“Turkey is not the last one,” said Sebnem Kalemli-Ozcan, an economics professor at the University of Maryland. “Turkey is the beginning.”

For now, few experts think that a broader crisis is imminent, though Argentina this week asked the International Monetary Fund to accelerate a planned $50 billion rescue as the peso crashed to a historic low. But the danger of a financial contagion that could hit Americans by crushing U.S. exports and sending the stock market plunging should be taken more seriously in light of a massive increase in global debt since the 2008 downturn, the economists said.

Total debt is a whopping $169 trillion, up from $97 trillion on the eve of the Great Recession, according to the McKinsey Global Institute.

While previous debt crises involved U.S. households and, later, profligate European governments such as Greece, this time the concern centers on companies in emerging markets that borrowed heavily in dollars and euros.”

Chuck Again… Well, if you read it, you’ll know why I was so hyped up about debt this morning… It only takes one default to beget another, and then another… I’m just saying…

Currencies today 9/6/18… American Style: A$ .7188, kiwi .6590, C$ .7588, euro 1.1625, sterling 1.2933, Swiss $ 1.0316, European Style: rand 15.3515, krone 8.4023, SEK 9.0990, forint 281.00, zloty 3.7183, koruna 22.1268, RUB 68.22, yen 111.28, sing 1.3753, HKD 7.8494, INR 71.90, China 6.8303, peso 19.29, BRL 4.1521, Dollar Index 95.13, Oil $68.77, 10-year 2.90%, Silver $14.30, Platinum $789.62, Palladium $986.23, and Gold… $1,205.25

That’s it for today… I think I’ve finally recovered from the Holiday Weekend! I’ve been dragging the line every day this week, but today seems better… Man, those pesky Nationals… They just wouldn’t give up, and kept coming back each game my beloved Cardinals played them. The Cardinals took 2 of 3 from the Nats, but it was like pulling teeth! Lots of home runs by the Cardinals in this series… Hmmm… The wishful love of my life, Stevie Nicks takes us to the finish line today with Fleetwood Mac’s iconic rock song: Landslide… I hope you can get out and make this a Tub Thumpin’ Thursday, and remember to Be Good To Yourself!

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A Pfennig For Your Thoughts