It’s Only Numbers…

Chuck Butler’s: A Pfennig For Your Thoughts
August 31, 2017

* Gov’t says Consumer Spending is strong!
* Chuck says, not so fast there!
* Gold can’t find any traction again…

Good Day… And a Tub Thumpin’ Thursday to you! What a poor display of major league baseball by my beloved Cardinals yesterday, as they lost a very important game. When you give the team your playing 3 unearned runs, and lose by 1, it’s time to reexamine what’s going on… I’m going to warn you up front this morning, that I’m in no mood to deal with dolts, and Central Banks, and Gov’ts that attempt to pull the wool over our eyes this morning… So, I’ll be a little hard on the Beaver this morning… If you don’t like it when I’m in “one of those moods”, and prefer a sunshine and lollipops letter, then come back tomorrow and take a chance that I’ll have moved on from this mood… I’m just saying… Steely Dan greets me this morning with their song: Rikki, Don’t Lose That Number..

Front and Center this morning I want to wish everyone in the area where a Chemical Plant has had two explosions overnight, a safe day… Please be safe…

Well, it was another one of those days yesterday, the euro couldn’t find any traction, Gold couldn’t either, and that means all the other currencies and metals couldn’t find traction either! Man, until you see the power of Lola, AKA Government Sachs, and their words, you just don’t realize how they can move markets… On Tuesday we had Lola come out and tell their clients and anyone else that was listening on Bloomberg TV, that the dollar was very, very attractive… And since then the euro has fallen from 1.2070 to the 1.18 handle yesterday… And Gold, which had climbed to $1,331. And change on Tuesday morning, has fallen back to $1,313, where it closed yesterday… Not humongous moves, more like speed bumps, but a pause in the trajectory of these two anti-dollar assets.

Yesterday we even had some good economic news from the Eurozone, and even that wasn’t enough to put some sand under the euro’s tires for traction. Eurozone Consumer Confidence rose to the highest level in a decade last month… That’s right a decade! And their flash estimates for Eurozone CPI (consumer inflation) showed an increase from the previous month, which should bode well for today’s print of the actual CPI…

Hmmm, a decade ago… now that got me thinking… 10 years ago at this time, I was still walking with a walker, I had not graduated to a cane yet. I was still at home recovering from two back to back cancer surgeries… Little Delaney Grace, and boy was she little, was only a couple weeks old, when Dawn brought her to the hospital to see me after they discovered blood clots in my surgically reconstructed leg. But enough of that… The rock song at this time of the year in 2007, was by 3 days Grace, titled: Never Too Late… I’ve got to admit, I don’t really think I ever heard that song before… In 2007, we were still celebrating the 2006 World Series Championship by my beloved Cardinals. And our debt in this country stood at $9 Trillion… 10-years later we are knocking on the door of $20 Trillion… and that’s just the current debt, not the unfunded liabilities which according to the Debt Clock is $107 Trillion, and according to professor Lawrence Kotlikoff, the unfunded Liabilities are more than $200 Trillion!

See how I do that? You’re reading along about what went on 10 years ago, and the suddenly, smack, dab, out of left field comes a Chuck tirade about Debt… Simply amazing if you ask me… HA!

A lot of the dollar’s move yesterday came courtesy of the revised 2nd QTR GDP report, to which, I say, lies, lies, and more lies! The Gov’t said that 2nd QTR GDP grew at a faster pace than expected, all the way to a 3% annualized rate… Now, if you could believe everything the Gov’t. tells you, that would be a good number.. .But where in the world did they get that number? Retail Sales for the quarter were dismal, Consumer spending was just as bad, and things like Factory Orders, Durable Goods Orders, etc. were all equally bad! I have friends that said that they were the slowest they had been in their jobs during the 2nd QTR, for years! But, here we have the Gov’t trying to convince us that GDP in the 2nd QTR grew to 3%, because Consumer spending grew at 3.3%! Wait! What? That’s right, that’s the garbage they are trying to jam down our throats, people! I just said that Consumer Spending in the quarter was not good, but according to the folks that put together the numbers for the GDP report, they saw Consumer Spending being strong! Hogwash I say, simply Hogwash!

Unfortunately though, the markets are not very bright, and they took this report and swallowed it hook, line and sinker! And I’m just a lonely boy out here in the Midwest, trying to explain what happened, and how the report is hogwash, but I’m not the “markets”… So, go ahead and think that this is all good for the dollar, and the economy and further rate hikes… But what happens if this Friday’s Jobs Jamboree doesn’t meet expectations? What happens if it falls very short of those expectations, which right now call for 175,000 jobs to have been created in August? Uh-oh… it’ll be back to the drawing board won’t it? So, even though I’ve sworn myself off of caring about the BLS jobs report once a month, I will be paying close attention to this one… I wonder how many jobs the BLS will add to their surveys using hedonic adjustments this month?

OK, slow down here Chuck, it’s just numbers, and you learned at an early age that numbers can be massaged, cooked, and worked to say two or three different things…

The “boys in the band” must have been worn out from the 433,000 Gold contracts they traded on Tuesday, as they still had a large number of contracts traded yesterday, but not as gaudy as the 433,000 on Tuesday… Instead they put through 287,000 contracts, which is nothing to ignore for sure! But the price of Gold lost less than a buck at the end of it all on day yesterday, and this morning it has opened up in the early morning trading down a couple of bucks and is currently at $1,311.60, as I write.

The geopolitical tensions did not back off yesterday, and that is keeping Gold from succumbing to the “boys in the band” and their short Gold paper trades.

Reuters is reporting today that If President Trump follows through on his threat to start the withdrawal process for the North American Free Trade Agreement, (NAFTA), Mexico will walk away from renegotiation talks, Mexican Foreign Minister Luis Videgaray says. Trump has said he will probably have to terminate NAFTA to get what he wants from Mexico and Canada. Remember Ross Perot? Remember his 1992 run for President, and his famous quote about, “do you hear that giant sucking sound” when talking about NAFTA? He had it right 25 years ago, but he didn’t play the saxophone, and was different looking, so he was pushed to the side…

The Chinese renminbi continues to climb and get stronger with every fixing these days…. Last night’s fixing saw the renminbi fall below 6.60, which it hadn’t seen since spring 2016, and then it was moving steadily upward with every fixing… The renminbi is a European priced currency, so as the price goes down, it gains more value VS the dollar, and vice-versa.

So…. What’s going on with the renminbi? Why is seeing appreciations at each fixing these days? Well, first of all, the capital flows out of China have subsided, and come to a small amount each day, which means you don’t have tons of sell orders of the renminbi each day. And then there’s this… China loves to use the renminbi as a political tool, and right now with all the talk about tariffs on Chinese exports, I think, and here I go again with the Chuck thoughts, but I think that China is pushing the value of the renminbi stronger, so that when the U.S. announces the tariffs, China can devalue the renminbi as a statement of protest but in the end, the renminbi would be just right back to where it was when the appreciations began. Far fetched? We’ll have to wait-n-see, eh?

We already went through the GDP report that printed yesterday out of the U.S. Data Cupboard, but there was another print that also helped the dollar on the day… The ADP Employment Report showed that 237,000 jobs were added in August! WOW! I’m so sure that there’s much more than this in the BLS Jobs report tomorrow, and I’m still thinking that it’s going to be disappointing… even with the jobs added out of thin air by the BLS!

Today’s Data Cupboard has two of my fave economic prints… Personal Income and Spending… This report will represent the activity from July… June’s Personal Spending grew at only 0.1%. So, this July print will be interesting, since the Gov’t said that consumer spending was up 3.3% in the 2nd QTR, July’s print had better be very large, or the Gov’t’s lies, will be exposed… We’ll also see Core Inflation for July, and it won’t register much, I’m sure…

To recap… More dollar buying on a few things that went the dollar’s way yesterday… 1. Government Sachs’ favorable words for the dollar still rung a bell with traders, 2. 2nd QTR GDP ratcheted up to 3% annually, and 3. ADP says 237,000 jobs were created in August… Chuck is in “one of those moods” this morning, so no sunshine, rainbows and lollipops in the letter today…

For What It’s Worth… I found this on Ed Steer’s letter today (www.edsteergoldandsilver.com) about Capitalism, and you can find it here: http://www.internationalman.com/articles/capitalism-a-new-idea

Or, here’s your snippet: “Capitalism, whether praised or derided, is an economic system and ideology based on private ownership of the means of production and operation for profit.

Classical economics recognises capitalism as the most effective means by which an economy can thrive. Certainly, in 1776, Adam Smith made one of the best cases for capitalism in his book, An Inquiry Into the Nature and Causes of the Wealth of Nations (known more commonly as The Wealth of Nations). But the term “capitalism” actually was first used to deride the ideology, by Karl Marx and Friedrich Engels, in The Communist Manifesto, in 1848.

Of course, whether Mister Marx was correct in his criticisms or not, he lived in an age when capitalism and a free market were essentially one and the same. Today, this is not the case. The capitalist system has been under attack for roughly 100 years, particularly in North America and the E.U.

A tenet of capitalism is that, if it’s left alone, it will sort itself out and will serve virtually everyone well. Conversely, every effort to make the free market less free diminishes the very existence of capitalism, making it less able to function.

Today, we’re continually reminded that we live under a capitalist system and that it hasn’t worked. The middle class is disappearing, and the cost of goods has become too high to be affordable. There are far more losers than winners, and the greed of big business is destroying the economy.”

Chuck again… Pretty interesting read…

Currencies today 8/31/17… American Style: A$ .7887, kiwi .7147, C$ .7765, euro 1.1855, sterling 1.2878, Swiss $.9665, … European Style: rand 13.0433, krone 7.8325, SEK 7.9980, HUF 258.46, zloty 3.5935, koruna 22.02, RUB 58.58, yen 110.59, sing 1.3596, HKD 7.8254, INR 63.89, China 6.5912, peso 17.79, BRL 3.1625, Dollar Index 93.10, Oil $46.13, 10yr 2.15%, Silver $17.48, Platinum $988.34, Palladium $938.25, and Gold… $1,311.60

That’s it for today… I was so frustrated with the baseball game yesterday, that I had to make a visit to my local watering hole! UGH! The next two nights my beloved Cardinals will be in S.F. so the games will start late, and I won’t be able to stay up to watch them… Today is the last day of August! Summer is almost over, boy that went fast, didn’t it? So, I guess, I’ll See you in September, see you when the summer’s through! HA! this time of year, I love to pull out the movie: Weekend at Bernie’s, and laugh until it hurts… Scott McKenzie takes us to the finish line today with his song: San Francisco… I love the city of San Francisco, but I doubt I ever get back there again now that I don’t travel to speak at conferences any longer… the things you give up when you “retire”… And with that, I bid you farewell, but first wish that you go out and have a Tub Thumpin’ Thursday! Be Good To Yourself! Oh… and one more thing… It’s a Good Day to have a Good Day

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts
a) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.