Italy Shows Up On The ECB’s Doorstep With A Bag Of Problems

A Pfennig For Your Thoughts

August 13, 2019

* Gold rebounds, stocks get whacked, and currencies are dull
* Chuck gives us his thoughts on the Trade War…

Good Day… And a Tom Terrific Tuesday to you! Geez I had a tough day yesterday… Every now and then the chemo I take gets to me and whacks me out for the day, and yesterday was one of those days… I never know when this will occur, and sometimes think that the chemo had more potency that day, but then it’s all in pills and those are regulated, right? This is why I wouldn’t be able to hold a job any longer, as I couldn’t be depended on to show up when the chemo whacks me out… I did that (worked while feeling bad) for 9 years, and I doubt that anyone ever really knew when I was having a bad day. But I’m just too worn out now to do that ever again, so… I’m retired! A little young to do that, but… it is what it is… Three Dog Night greets me this morning with their live version of their song: Easy To Say No…

Well, not much happened in the currencies markets yesterday, but… The Dow was down almost $400 on the day… Gold gained $14, and the euro found its way back above 1.12… The 10-year’s yield slid further down the slippery slope to 1.65% from 1.68%… I see now that there are lots of writers climbing on my bandwagon that claims that the 10-year’s yield will revisit it’s low of 1.38% a few years ago… Welcome aboard, what took you so long to see this? Oh! You were drinking the Kool-Aid and refused to believe me? Oh well… better late than never!

It sure looks as though the Trade War between the U.S. and China is going nowhere but down a deep abyss… Here’s how I view all this saber rattling going on… Presidents before Trump where on a mission from God to give China everything they wanted, and now Trump thinks he can reverse all that in a few short years? You’re fighting a losing battle with the Chinese… They are a Communist Country that will have their leaders in place for years to come, at least until they die, and well, here in the U.S. the President has 4 years, and 8 if they’re lucky, or unlucky I must add… So, figure it out, this Trade War is going to end up hurting everyone but, the Chinese won’t allow it to change anything, they’ve been through worse, right? But here in the U.S. the time will come when the Trade War will have to be cancelled, because the American people are suffering… I’m just saying…

I told you yesterday that we were expecting a heat advisory for the day… The local newspaper had a great line… They said, “Beelzebub called… he wants his weather back”… Now that’s funny!

OK… The publishing guru and writer extraordinaire, Bill Bonner, had a great letter yesterday when he talked about Gold VS the Dow… After years of ultra-low interest rates, 3 rounds of Quantitative Easing, and a Fed hell bent and whiskey bound to keep the party going in stocks… “Over 20 years – 1999 to 2019 – and despite more stimulus than the world had ever seen, the Dow rose only 143%.

If you held gold, on the other hand, you multiplied your money more than five times. It was not U.S. industry that triumphed in the 21st century. It was gold… old, dumb, immobile gold.”

Man… way to put it out there Bill! I know people that know me, and know that I love Gold… And they will make little jokes from time to time… I don’t let them get to me… Thin Lizzy had a song with the lyrics that went like this, “if that girl doesn’t want to know, forget her”… And so I think, if they don’t want to know about wealth accumulation, and a hedge against inflation in both the economy and the dollar… then forget them! HA!

Hey, speaking of Gold… Did you see that Lola, aka Goldman Sachs told their clients that Gold will hit $1,575 in 3 months and $1,600 in 6 months? Well, they did… and you know me and my feelings toward Lola… What Lola wants, Lola gets, right? So, you can usually bank on what Lola tells her clients what’s about to happen… I’m just saying…

Well, I’ve heard some downright stupid thoughts through my years, but none more stupid than those spoken by Mark Cuban… He recently said, that “Gold & Bitcoin are equally useless” Well, while I believe in the future of blockchain, and the need for A digital currency, I do not believe that Bitcoin will be that choice… But Gold is useless? Well, he is a younger guy and therefore he’s never experienced runaway inflation like we had here in the late 70’s and early 80’s… Oh, and what did Gold do during those years of runaway inflation? It soared in price… that’s what!

So, I guess since he’s never experienced inflation he had no use for an inflation hedge… But what about an accumulation of wealth? He certainly has experienced wealth, during his years, and to not use Gold as a hedge or as a form of wealth, is just beyond me… You know that Shark Tank show he’s on? Well, I think he just jumped the shark tank….

OK, in case you’re wondering this hasn’t turned into a strictly Gold newsletter… So… Well, the hits keep coming and going straight to number 1 for Russia… Last night I received a note that Fitch had upgraded Russia’s Credit Rating to the highest level it has been since 2014 (before the sanctions!) And what did Fitch see that made them make this change? Well, I’m glad you asked! Russia posted a surplus with reserves at $600 Billion! The ruble should take this news and run for stronger levels VS the dollar, folks… I’m just saying…

But guess what the ruble did overnight? You probably got this right… It weakened… Wait! What? The forces of evil at work here folks. that’s all I can think of…

Remember those great Vacation movies with Chevy Chase? In the Christmas Vacation movie the Griswalds have family members arrive for the holiday, and they cause many problems… Well, Germany being the largest economy in the Eurozone, has relatives like the Griswalds… This time, like many times in the past, it’s Italy… They’ve shown up on the European Central Bank’s doorstep with a basket full of problems… This stuff from the likes of Italy, Greece, Portugal, Spain, just keeps giving….
It’s a real shame, that a country like Germany can’t just say, forget you all! Go back to your devalued currencies and wham bam politics and Central Banks and see if we care! But they can’t, so they welcome their unruly relatives to dinner, and hope for the best, plan for the worst! – Jack Reacher!

The price of Oil recovered a bit to a $54 handle in the past 24-hours after the Saudi’s revealed that their production cuts have held steady… The problem for the Saudi’s and the rest of the Oil producing countries, is not the production cuts they made, but the lack of demand for Oil… It seems that people all over the world decided to leave the station wagon or SUV at home and take a plane to their vacation destination this summer, or they did a staycation…

The Petrol Currencies of Russia, Norway, Brazil, Canada have seen a mixed bag of performance since the drop in the price of Oil. Rubles and loonies have held steady, while the krone and real have seen some major selling. In the krone’s case, as long as the euro is having problems obtaining a bid, the krone will be hit from both the euro weakness and the price of Oil weakness… A double Whammy if you will!

Here in the U.S. The Federal Budget printed, and I have something on that for you in the FWIW section today… I do have something else to talk about that’s related to debt, and how it will all lead to disaster for the economy, so let’s do this…

I was going through Twitter yesterday, and came across a map of the U.S. that the fabulous Danielle Di Martino Booth posted. The Map showed each state’s citizen’s average credit card debt… And the number of months it would take to pay off that debt using 15% each month of disposable income to make the payment… OK, Guess which state had the highest number? If you said Alaska, you would be correct! Remember now that’s the average… So, Alaska’s lack of population compared to other states, doesn’t help their average, unless the majority of the holders held less than $10,825 of credit card debt… And it would take 14 months to pay that off using 15% of income each month… Oh, and those credit cards always have very favorable interest rates that they charge on the balance each month, don’t they? NOT! How does one get ahead in life with a burden that requires 15% of their income each and every month? What about shelter? Clothes? Food? Insurance? A Car? I’m just saying…

And now I read that Truckers are having a difficult time paying on their gas cards… Uh-Oh…

To recap… Gold rallied, stocks got dumped, the 10-year continues to slide downward with its yield, and the currencies continue to be dominated by the dollar… How much longer this can last is the $64 question today… Mark Cuban is jumping the shark tank… And Credit Card debt here in the U.S. is getting out of hand…

For What It’s Worth… A dull night led me to the laptop and to peruse stories that would be FWIW worthy, and then like clockwork, longtime reader Bob, sent me this… It’s about the U.S. Federal Budget and can be found here:

Or, here’s Your snippet: “The federal government spent a record $3,727,014,000,000 in the first ten months of fiscal 2019 (October through July), according to the Monthly Treasury Statement released today.
While spending that record $3,727,014,000,000, the government ran a deficit of $866,812,000,000.

Before this year, the most that the federal government had ever spent in the first ten months of a fiscal year was in fiscal 2009, when the Treasury spent $3,576,745,930,000 (in constant June 2019 dollars, adjusted using the Bureau of Labor Statistics inflation calculator).

Total federal revenues in the first ten months of fiscal 2019 equaled $2,860,202,000,000. That was less than the total revenues the federal government collected in the first ten months of fiscal 2017 ($2,866,978,570,000 in constant June 2019 dollars) and fiscal 2015 ($2,868,253,370,000 in constant June 2019 dollars).

Federal individual income tax revenues in the first ten months of fiscal 2019 equaled $1,428,904,000,000. That was less than the individual income taxes the federal government collected ($1,438,381,490,000 in constant June 2019 dollars) in the first ten months of fiscal 2018.”

Chuck Again… Remember when the Tax cut went through a year or so ago, and I said then, that for you and me we wouldn’t see much of a change, but for businesses they would use the reduced tax liability to purchase company stock and not put it back into their respective companies… And by doing so, they sidestepped additional taxes… How much longer can this debt accumulation go on?

Currencies today 8/13/19 American Style: A$.6770, kiwi .6450, C$ .7544, euro 1.1217, sterling 1.2086, Swiss $.9675, European Style: rand 15.3284, krone 8.9195, SEK 9.5444, forint 288.65, zloty 3.8634, koruna 23.0161, RUB 65.41, yen 105.17, sing 1.3880, HKD 7.8467, INR 71.35, China 7.0591, peso 19.62, BRL 3.9614, Dollar Index 97.39, Oil $54.77, 10-year 1.64%, Silver $17.43, Platinum $865.45, Palladium $1,435.64, and Gold… $1,526.14

That’s all for today… Well… the dog days of August are here, for major league baseball players that is… They need to suck it up and get to work, if they are going to make the playoffs! I about lost my religion the other night when Dexter Fowler slid into second and was called out. The replay showed clearly that he was safe, but after reviewing it the umpires called him out… I immediately went on Twitter to complain… Why on earth would we waste our time with replay if it’s not going to reverse a call that was wrong? I just don’t get it… Is it there to get the call right, or not? As you can tell I’m still steaming mad! OK, calm down Chuck, it’s only a game, right? HA! Well, Jefferson Starship takes us to the finish line today with their song: Count On Me… (I find that the older I get the more I like the music of Marty Balin of the Starship)… I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

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