Has China Already Begun To Be AWOL From The Auction Window?

A Pfennig For Your Thoughts

May 22, 2019

* Dollar Bugs still rule the roost…
* Blues Win!

Good day… And a Wonderful Wednesday to you! I’m still feeling the wrath of cellulitis in my leg, but for right now, it seems to be bit better… Blues Win! Blues Win! Blues Win! And they won the Western Conference Finals 4 games to 2, and advance to the Stanley Cup Finals, of which the Blues franchise hasn’t played in in 49 years! The last time they played in it I was 15… and they played the Boston Bruins, the franchise that they’ll play this year too! WOW! Now I’m getting nervous… The Blues need 4 more wins… come on boys, skate! Let’s Go Blues! Cardinals and Royals were rained out, and play a double header today, something you just don’t see much of any longer, and in fact, it won’t be a true double header, as after the first game, they’ll clear the stadium out and start the 2nd game a few hours after the first one… (You know, gotta get that ticket revenue, you can’t be giving away a home game!) Kansas greets me this morning with their song: Play That Game Tonight…

Well, another day, another day of dollar strength… I know I sound like a broken record, which I can use that phrase again, with the return of vinyl records! But the trading each day is what it is, and it’s full of dollar bugs ignoring everything that’s going on, and pretending that it’s all sunshine and lollipops out in the real world…

Yesterday, here in the U.S. we had Existing Home Sales for April, disappoint for a 2nd consecutive month… And the dollar bugs didn’t even wince, shrug, or bat an eye… Gold lost $3 and some change, the euro is weaker still this morning, and the U.S. Treasury 10-year yield is 2.41%… the yield has been inching higher in recent days, which means there’s more selling of Treasuries than buying of them… A report last week told the story of how China’s U.S. Treasury holdings had dropped to the lowest level in some time last month… Uh-Oh… Could we already be seeing China exercising the nuclear option I talked about yesterday? It’s difficult to call at this point, but it sure seems to be at the scene of the crime…

Well, it appears that the end of May is near… And no I’m not talking about the month! I’m talking about PM May, who once again has placed her PM-ship on the line with the acceptance of the latest BREXIT deal, which most observes believe doesn’t have a snowball’s chance in hell, So, goodbye PM May, we hardly knew ya… And every day the pound gets whacked a little more because of this dang BREXIT thing…

The daily march higher for the price of Oil stopped yesterday, hit a speed bump, whatever, but the price slid downward for the first day in a about 10 days… I would think that the saber rattling with Iran would have pushed the price of Oil much higher than it did… But I guess I’m happy it didn’t… It’s like I’m torn between two lovers here… I would prefer, for my wallet’s sake, that the price of Oil remained weak… But in my heart of hearts I know that without manipulation, the price would be higher… I don’t like manipulation of any kind, free floating, markets are my bag baby!

The U.S. Data Cupboard will yield the Fed’s FOMC Meeting Minutes from their last meeting in April this afternoon… I think the markets are bracing themselves for a wild and wacky Meeting Minutes… I also think they’re going to be disappointed, that is unless you want to hear the same old B.S. about a strong and robust economy…

The MarketWatch people sent me a note yesterday about the 16 reasons why Americans can’t save money… They include: tattoos, vacation, college, restaurants, opportunity lost, cars, credit cards, lottery (this one I questioned, but then read that the lowest income sector spends more on lottery tickets than any other sector), clothing, shoes, tchotchkes and stuff, and the list goes on… the point here is that many of these things we need, but do we need the very best of them? So we need that Cadillac hybrid SUV, instead of a regular SUV? (I know you’re trying to do the economy good, right? ) So, hopefully, you get my point, otherwise you’ll fall victim to these spending habits that keep you from saving for retirement… And shouldn’t that be the goal? it was for me…

Basically, I watched my dad work and toil in his job for 7 days a week, every day until he was 65, then he was diagnosed with cancer and died 5 years later, never getting to enjoy his retirement… I swore to myself then that the same thing wouldn’t happen to me, and I began to save for my retirement, I was 40 years old, so I was late to the game, but it didn’t matter to me…

OK… data wise… Yesterday, in New Zealand, we saw their 1st QTR Retail Sales figure, and while it had dropped considerably from the 4th QTR 2018, it didn’t drop as much as expected, so in the strange way the markets viewed the report as favorable… 4th QTR Retail Sales were 1.7%, and 1st QTR 2019 Sales were 0.7%… but were expected to fall to 0.6%… I’m not so “relieved” that it only fell to 0.7%… I’m disappointed that it fell that much! But kiwi didn’t move much on the data, so once again the strength of the U.S. dollar is outweighing any foreign data that prints…

Well, bust my buttons! Look at what time of the morning it is! I can’t believe this has taken me so long to put together this morning! I think I was daydreaming a bit, and zoned out, during writing! yeah, that’s the ticket! Any-old-way… I’m heading to the Big Finish, will you come with me?

To recap… The dollar bugs still have the conn on the currencies and metals… Existing Home Sales in April fell for a second consecutive month, and the dollar bugs didn’t bat an eye… Today we’ll see the Fed’s FOMC Meeting Minutes… I can’t imagine they have a grenade to throw at the markets from left field here, so let’s move on…

For What It’s Worth… OK, I first want to thank Ed Steer, for pointing me to this article. Ed can be found at www.edsteergoldandsilver.com. this article is written by the great James Grant and it’s about the Fed, so you know it’s going to be a good one, and it can be found here: https://www.nysun.com/national/regime-change-for-the-fed-and-honest-rates/90694/

Or, here’s your snippet: “Ladies and gentlemen, it’s a blemish on the age that so many of us know the name of the Federal Reserve chairman. In a better world, that government functionary would be as obscure as what’s-his-name, the home plate umpire who got no arguments calling balls and strikes at Yankee Stadium the other night.

Who elected the Greenspans, Bernankes, and Powells to be the arbiters of interest rates, asset prices, the rate of inflation and who knows what else? It wasn’t Alexander Hamilton. Nor was it the Fed’s own founders. If the authors of the 1913 Federal Reserve Act could return to earth to inspect their handiwork, the shock might kill them all over again.

Congress envisioned an institution to function in the context of the international gold standard. This meant a dollar defined as a fixed weight of gold. You should have heard old Carter Glass, the congressional father of the Fed, berate the critics who dared to suggest that he was scheming to replace the gold dollar with a scrap of green paper.

Well, Glass himself is to blame for much of the evil that followed. The legislative preamble to the act that Woodrow Wilson signed describes a bill “to furnish an elastic currency, to afford means of discounting commercial paper, to establish a more effective supervision of banking in the United States-and for other purposes.”

These other purposes quickly became the principal ones. No sooner did America enter the Great War than the Fed lent a hand to facilitate the government’s borrowing. By the time the system celebrated its 30th birthday, in 1943, the central bank was pegging interest rates to suppress the costs of financing an even greater war.”

Chuck Again… Longtime Pfennig Readers know that I love to highlight anything that I can from James Grant that’s free! And if you have the time today or tonight, or whenever, I would certainly click on the link above and read the article in whole… I think you’ll come away thinking, “boy that James Grant” knows what he’s talking about…

Currencies today 5/22/19 American Style: A$.6886, kiwi .6504, C$ .7470, euro 1.1168, sterling 1.2667, Swiss $.9923, European Style: rand 14.3620, krone 8.7384, SEK 9.6335, forint 292.28, zloty 3.8530, koruna 23.0863, RUB 64.43, yen 110.40, sing 1.3783, HKD 7.8496, INR 69.71, China 6.9048, peso 19.01, BRL 4.0768, Dollar Index 97.99, Oil $62.58, 10-year 2.41%, Silver $14.47, Platinum $811.48, Palladium $1,311.31, and Gold… $1,275.45

That’s it for today… Up late last night watching the post game shows. This is a BIG DEAL for St. Louis, folks… 49 years is a long time to wait for your team to have a chance to win it all… My sons have never seen the Blues in the Stanley Cup Finals, but Andrew on the other hand has witnessed 3, and Alex 2, Cardinals World Series Championships… Now the Blues need to win one at time to total 4, and this town will light up like Christmas! My good friends, Duane and Rick are bigger fans of the Blues than most people I know, I know today they are smiling like the Cheshire Cat… Elton John takes us to the finish line today with his song: Honky Cat… I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

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