Is Currency Manipulation Next?

A Pfennig For Your Thoughts

August 22, 2018

* Currencies & metals have another day in the sun!
* July data prints continue to underwhelm…

Good Day… And a Wonderful Wednesday to you! Another win out in LA for my beloved Cardinals last night. Good stuff… There will not be a Pfennig tomorrow, as it is a travel day for me, and early in the morning I’ll be on my way to the airport. Which reminds me that I need to get all packed tonight, so I’m ready to go, and no sleeping past the alarm tomorrow! When I make these travel plans, I normally find that the best flights are early morning, and I think, that’s Ok, I’m usually up, but then when it comes time to execute the travel plan, I wonder, what I was thinking! HA! Another 80’s song is greeting me this morning, so cue it up Rick! Madness greets me this morning with their song: Our House…

Well, I spent a good part of yesterday’s letter telling you about the President’s attempt to quash the Fed Rate Hikes… And today I’m changing gears to currency manipulation… I told you that President Trump wants a cheaper dollar so that U.S. exports were more competitive. And now it appears that seeing that criticizing the Fed isn’t getting him anywhere, I’m thinking that Trump, who has called out China and the Eurozone for currency manipulation, is going to start pressuring the Treasury and whomever else he can to get the dollar weaker…

I think currency traders and investors are feeling this too, and that’s what has the dollar on the run for 3 consecutive days now. The currencies and metals all enjoyed another day in the sun yesterday, and in the overnight markets… The Big Dog euro, continues it’s climb out of the cellar and is within spittin distance of 1.16…

The biggest mover Vs the dollar has been the Chinese renminbi, as the Chinese attempt to reverse the mark downs they had put on the currency earlier this month. Ever since they made the remark that “We’re not doing what we were doing to the renminbi” the currency has reversed its path. And with the revival of the renminbi, is Gold…

Gold added another $5 to its price yesterday, and is closing in on $1,200 again… I’m still leery of any gains in Gold, that the price manipulators could be lurking around the corner, waiting for an opportunity to strike! But so far so good… I was talking to my good friend Dennis Miller of www.milleronthemoney.com the other day about Gold… and we agreed that there are ways to have a “Gold affect” in stocks that pay dividends, but react along with Gold… It’s an interesting concept, but for me, I’m an old stick in the mud, and prefer to own the shiny metal…

The price movements of Gold & Silver are no Big Deal to me… Because I’m not looking to sell my Gold & Silver! As I told Dennis, I plan to leave these stores of wealth to my grandkids… And one day my grandkids will say, “man, that guy was sure smart”…

OK… let’s get back to the markets… The U.S. Data Cupboard finally gets restocked today, and will have Existing Home Sales for July and the Fed’s Meeting Minutes from their last meeting… But like I said on Monday, we’ll have to wait until Friday for any real economic data, when Durable and Capital Goods orders will print for July… I won’t be around on Friday, but I can tell you this… In my humble opinion I can’t believe that Durable & Capital Goods Orders in July will be good for those that believe the economy is “strong and robust”… The July prints have all been pretty underwhelming, not meeting expectations with some printing negative, as I believe Durables will print on Friday…

So far, the economy is doing exactly what I said it would do, a few months ago, when I first told you about how the 2nd QTR GDP would be north of 4%, but that it would be like the star that burns brightest before it flames out. And the July data prints have all played along with my thoughts on the economy…

Just too much debt folks… too much effort that’s needed to deal with the debt, to allow an economy to put together consecutive periods of good growth… Longtime Readers will recall me always talking about how the U.S. was turning Japanese… The U.S. is turning Japanese, yes, I really think so! (thanks to the Vapors!) But think about that for a minute…

Hasn’t Japan through the years seen these short periods when everything looked like it could turnaround for them, only to see that fade over and over again? Too much debt… And now the U.S. is going to enter that phase, as it follows Japan down this debt road to disaster…

But I’m not going to go any further into that discussion, because… I don’t want to be a gloom and doom guy… I also don’t want to be the boy who cried wolf… I just want to point out things that could affect your investment portfolio and lead you to the diversification trough…

And having the President start down the road to currency manipulation is something that you should know about, and you won’t hear about it on the evening cable news until the dollar is down 20% and things are looking pretty iffy for the currency.. But then it will be too late for investors attempting to diversify… I’m just saying…

And when I say diversify, I mean to allocate a portion of your investment portfolio with currencies and metals… Look… I’m no longer associated with a trade desk, so I don’t have a dog in this hunt any longer, and I’m still telling you to diversify with currencies and metals… I don’t know any other way to get this message across to you…

To recap… The currencies and metals enjoyed another day in the sun yesterday, and in the overnight markets, booking small gains VS the dollar for the 3rd consecutive day. Chuck believes that the focus has moved from the President criticizing the Fed to the President wanting to manipulate the dollar weaker to effect trade. If that’s truly the case here, then you had better be backing up the truck to the currencies and metals dock… I’m just saying…

For What It’s Worth… Well, I’ve told you about how China has developed a payment system outside of the U.S.’s control, and now this call from Germany… it sure does seem like the dollars hegemony is beginning to weaken, doesn’t it? This article can be found here: https://www.zerohedge.com/news/2018-08-21/germany-calls-global-payment-system-independent-us

Or, here’s your snippet: “Germany’s foreign minister has called for the creation of a new payments system independent of the United States as a means of rescuing the nuclear deal between Iran and the west that Donald Trump withdrew from in May.

Writing in the German daily Handelsblatt, Heiko Maas said Europe should not allow the United States to act “over our heads and at our expense.”
“For that reason it’s essential that we strengthen European autonomy by establishing payment channels that are independent of the U.S., creating a European Monetary Fund and building up an independent Swift system,” he wrote.”

Chuck Again… I’ve said all I’ve got to say about this… But remember, we as a country brought this on ourselves with all our debt and getting into people’s business…

Currencies today 8/22/18… American Style: A$ .7355, kiwi .67, C$ .7685, euro 1.1592, sterling 1.2889, Swiss $1.0173, European style: rand 14.2248, krone 8.3669, SEK 9.0746, forint 278.48, zloty 3.6950, koruna 22.1990, RUB 67.18, yen 110.33, sing 1.3663, HKD 7.8497, INR 69.86, China 6.8431, peso 18.85, BRL 3.9876, Dollar Index 95.13, Oil $66.69, 10-year 2.82%, Silver $14.79, Platinum $794.83, Palladium $919.55, and Gold… $1,197.04

That’s it for today, and this week… And, I’m not sure about Monday, if I’ll be back home or not, as I’m leaving Friday for a weekend get away. But if I am back home, you’ll receive a Pfennig! And if I’m not, you won’t! And then next week, we’ve got some serious things to talk about, but I’ll leave for that next week… I’m so pleased with the turnaround in the Cardinals play… And it’s not just the winning… But better baseball, good pitching, good defense, baserunning, situational hitting, fundamentals… Win or lose it’s fun to watch my team again… Welcome back, I’ve missed you! The band Styx takes us to the finish line today with their song; Crystal Ball… I hope you have a Wonderful Wednesday, and for goodness sakes, please remember to Be Good To Yourself!

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