Let’s Play A Game of Kick The Can… Down The Road!

Chuck Butler’s: A Pfennig For Your Thoughts
September 7, 2017

* Let’s try this again in December?
* Russian inflation falls to record low!
* Currencies rebound in the overnight markets…

Good day… And a Tub Thumpin’ Thursday to you… I’ve got a right out of the starters blocks appointment this morning with my oncologist, and then my usual every two weeks infusion. So, I’ve got to get this out the door this morning and be on my way… I personally like the “first to the gate” appointments with doctors, because… That way, you don’t show up and have to wait because the doctor is “backed up”… So, let’s play a game of kick the can, but add, down the road… That’s my focus today… that and Irma… I feel so helpless here… knowing that my little place is going to get hammered… Oh, well, I hope Bob Marley’s song that greets me today takes over my mind today… the song is: Three Little Birds… People don’t worry, about a thing, cause every little thing is gonna be alright…

I knew in my heart of hearts that when it came down to the cheese that binds, that the U.S. lawmakers would find a way to kick the can down the road, which is exactly what’s going on, or better yet, what’s been proposed by the President, and endorsed by the Democratic leaders… And that is to pass a three-month government spending bill and raise the debt ceiling for the same amount of time. That would put the next timetable of problems at December 15th… Oh great, right before Christmas, we’re going to be dealing with the debt ceiling again… Just raise it! Because that’s what you’re going to do in the end anyway! You bunch of irresponsible, only wanting to get reelected bunch of dolts! And I say that with the utmost respect for them as people, but not as lawmakers…

I’m sorry I lost my composure there for a minute… I’m not usually that mean, but when something gets under my skin, well, I lash out. So, let’s just move on from here, and forget that I said all that…

The currencies and metals didn’t have such a good day as the previous day, yesterday, as I guess there was some profit taking in the gains the currencies and metals had made… I looked up at one time during the day to see the Aussie dollar pushing toward 80-cents again, and thought, “well that’s all fine and dandy until the Reserve Bank of Australia (RBA) comes in and sees that!” Well, they came in, and…. the A$ continued on through 80-cents! So, there! RBA! It was just like the “old days” when the markets decided that they wanted to move an asset, they moved it, and didn’t worry about any Central Bank intervention!

The euro, however, wasn’t so much loved yesterday as the A$… The single unit, without any meaningful data to move it, saw a lot of profit taking, and while it didn’t move down much from yesterday morning’s 1.1947 figure, it did move down…

But that was yesterday… In the overnight markets the dollar has gotten taken to the woodshed, and the currencies and metals have regained the ground the lost during the day… I guess the foreign traders saw the deal to kick the can down the road, for what it was, and decided that the dollar wasn’t going to gain on that kind of news!

For the most part, all of the currencies are participating… those that weren’t invited to the rally party include: kiwi, francs and yen… And once again we could play, “one of these currencies is not like the others” here, and come up with kiwi, who at least has a Central Bank that most likely will be hiking rates by year-end or 1st QTR of next year. The other two currencies’ Central Banks are so far from that point, they would need binoculars to see a rate hike in their future!

Did you hear the news? Fed Vice Chairman, Stanley Fischer announced his retirement from the Fed effective October 13th, just a mere month away… Fischer was in the “inner-circle” that Janet Yellen formed when she became Fed Chair… Fischer, Dudley, Yellen and Brainard… This “inner circle” made all the decisions, and then let the other voting members in on the vote…

When I was an alderman in my little river town, we were never allowed to have separate meetings outside of the public… I’m just saying…

Well, the retail Armageddon continues as the GAP announced yesterday that they will close 200 Gap and Banana Republic stores in the next 3 years, giving the excuse for the closing as they want to shift its focus to Old Navy and Athleta stores… yeah, and if you believe that one, I’ve got some wonderful ocean front land for sale in Tumbleweed, Az.! They’re closing them because they aren’t making any money! Let’s call a rooster a rooster and not a frying hen! I’m sick and tired of these spin doctors, and not the ones on my iPod, giving us these excuses and stretching the truth, and so on… When I was first diagnosed as a Stave IV metastatic renal cell carcinoma (kidney cancer that spreads) I was told straight to my face, eye to eye, by my very good friend, and primary doctor at the time, Jeff Atkins, that I had cancer. Yes, the news was difficult to deal with, and probably just as difficult for him to deliver, but it’s the only way to deal with bad news/stuff like that!

Moving on before I get on the soapbox and really start hammering away at something… 3 months ago, it appeared the CBR was ready to cut rates a few more times in 2017… But at their last meeting I found it to be a bit suspicious that they held rates steady Eddie… And now this… Russia reported yesterday that their inflation had fallen by 0.5%, % in August, which brought the annual rate to 3.3% a record low for the post Soviet Union era.. Now that’s good news for ruble investors, because, it means that inflation isn’t eating away at their investments. I’ve said it before, and I’ll say it again, now… Elvira Nabiulina is the best Central Banker going right now… However, she doesn’t get such high marks in Russia from the media and economists that think that she could have been all over inflation in Russia sooner than she did…
I guess these guys making these claims don’t recall that the ruble was on the ropes and ready to say “no mas” to the markets, when Ms. Nabiulina stepped in to defend the currency with high rate hikes, which eventually helped strengthen the currency, and gave the economy the one-two punch against inflation that it needed, with the left hook being the stronger currency, and the right being the put away punch of the higher than the average bear interest rates. In my eye, Ms. Nabiulina hasn’t done any wrong… But then I’m just a country bumpkin out here in the Midwest… Nobody is a smart as those guys on Wall Street! HA! As if! I would like to think that I’ve forgotten more about things like margins, than they’ll ever know! And that’s that!

The ruble didn’t really move on that news, which surprised me, given that the thought here is that inflation has fallen… One has to wonder if interest rates will retain their HUGE positive differentials to not only the dollar, but euros, yen and just about any other liquid trading currency that isn’t pronounced: real…

Gold struggled yesterday… and so did Silver, Platinum and Palladium… When all signs point to higher ground for all these previous metals… But in the overnight markets Gold has recovered the $5.90 that it lost yesterday to close at $1,333.50… There were another 280,000 contracts traded in Gold yesterday… I read yesterday that the GLD ETF, added a HUGE amount of Gold to their supposed holdings… Yes, I said “supposed” because I’m not convinced the trust company the manages GLD actually has the physical Gold to match the positions… I know, that would be illegal for them not to have the match… And I’m not accusing them of doing something illegal, I’m just saying that I’m not convinced that it’s all there…

The Peoples Bank of China (PBOC) got back to the appreciation table at last night’s fixing and had a a nice strong appreciation for the renminbi. Boy, did China throw a Cat among the Pigeons this week when they announced that ICO’s (initial coin offerings) were illegal or what? It’s the first blow to the cryptocurrencies in a while… I was reading the Daily Reckoning yesterday and James Rickards was explaining the difference between an atom bomb and a hydrogen bomb, that N. Korea tested over the Labor Day Weekend… Here’s the piece of his explanation that scared the bejeebers out of me… from the D.R (www.dailyreckoning.com)
“Finally, a hydrogen bomb gives North Korea the ability to unleash an electromagnetic pulse (EMP). In this scenario, the hydrogen bomb does not even strike the Earth; it is detonated near the edge of space. The resulting electromagnetic wave from the release of energy could knock out the entire U.S. power grid. Good luck with your bitcoins in that scenario.
Got gold?” – James Rickards

My article for the Dow Theory Letters subscribers last week, was on the cashless society, and I actually talked briefly about the cryptocurrencies, and mentioned how our power grid has been under attack for years, and then Rickards writes that about the EMP… Tonight’s letter is the history of Chuck, how I arrived at my thought process on economics, and everything else… I know, I know it costs money to read my letters there, but come on, a 3 month trial is only $68!

Thanks to my longtime friends, and now publishers, Mary Anne and Pamela Aden, they are now sending the Pfennig to their Aden Forecast subscribers… I welcome you to the Pfennig… Please, remain readers and hear me now and listen to me later… I’m one to call a heart a heart, and a club a club, I don’t beat around the bush, and I certainly don’t hole the Fed Reserve members in high regard, going back to Big Al Greenspan! The Aden research Group is a great place for my Pfennig, and I hope you become loyal readers and send me notes pro or con regularly!

The U.S. Data Cupboard yesterday had the Trade Deficit, which was $43 Billion, and not the $44 Billion I thought it would be… And the ISM Services Index, which rose in August, but did not meet the expectations for the rise in the index number… Today’s Data Cupboard has the stupid Productivity for August… I’m no fan of this data, as you might be able to tell… HA!

To recap… The currencies and metals saw a day of profit taking yesterday, but in the overnight markets they’ve gained back those profit taking losses… Fed Vice Chairman, Fischer announced his retirement, GAP announces more store closings, and it appears the Gov’t will kick the can down the road further, and come back to decide what to do with the debt ceiling in December… UGH! Russia’s inflation falls to a record low post the Soviet Union, and James Rickards joins our discussion this morning!

Before I head to the Big Finish today I want to apologize for an omission I made yesterday.. Please forgive me for only telling you about one technical guru that I use, that’s out there yesterday… I was so happy that my friend and former colleague, Sean Hyman, had sent me a note, that I completely forgot to mention the horse we have in our own stable! His name is Omar Ayles, and he’s our Gold technician at Gold Charts r’ us… And he can be found at www.goldchartsrus.net and this is what he had to say yesterday… “ our strategy this week is to sit back and enjoy the ride. We’ve been waiting for this moment all year long” I would add to that, that we need to back up the truck while we still can… otherwise by the end of next week we could very well see Gold pushing toward $1,400! Of course that’s just my opinion and I could be wrong!

For What It’s Worth… Well this is more Retail Armageddon for you this morning, this time it’s Toy’s R Us in the news, and the article can be found here: http://nordic.businessinsider.com/toys-r-us-considers-filing-for-bankruptcy-report-2017-9/

Or, here’s your snippet: “The retailer is considering bankruptcy as a part of its potential plan to restructure roughly $400 million in debt due in 2018, CNBC reported on Wednesday. Toys R Us has hired lawyers from the firm Kirkland & Ellis to help address the issue of restructuring the debt prior to the holiday season.

“As we previously discussed on our first quarter earnings call, Toys R Us is evaluating a range of alternatives to address our 2018 debt maturities, which may include the possibility of obtaining additional financing,” a Toys R Us spokesperson said in a statement.

As CNBC notes, many companies hire law firms to help restructure debt, and doing so does not necessarily mean that Toys R Us plans to file for bankruptcy in the near future.

Toys R Us has struggled in recent years, as budget retailers like Walmart and e-commerce giants like Amazon have begun selling more toys at greater discounts. Toys R Us’ refusal to slash prices to competitors’ levels contributed to a disappointing 2016 holiday season – a crucial period for any toy seller.”

Chuck again… Who’ll be next? That’s the only question here, because there will be a “next”…

Currencies Today 9/7/17… American Style: A$ .8016, kiwi .72, C$ .8195, euro 1.1983, sterling 1.3071, Swiss $ .9524, … European Style: rand 12.84, krone 7.7753, SEK 7.9586, HUF 255.10, zloty 3.5438, koruna 21.7918, RUB 57.41, yen 108.89, sing 1.3445, HKD 7.8177, INR 63.97, China 6.5283, peso 17.77, BRL 3.1106, Dollar Index 91.89, Oil $48.95, 10-year 2..09%, Silver $17.98, Platinum $1,005.84, Palladium $945.05, and Gold… $1,344.50

That’s it for today… Whew! right near the end of the letter today, my laptop froze up, and I thought I had lost everything I had written… I would have just punted then, because I don’t have the time to rewrite the letter, but not to worry, it was all there! Whew! The NFL gets started tonight, do you have your fantasy team all loaded? My beloved Cardinals found a way to win again last night, and have moved into 2nd place in the division, 4 games behind the Cubs… We have 7 games left with the Cubs… I’m just saying… Chicago takes us to the finish line today with their song: Colour My World… Which was the slow dance song of the early 70’s! And part of the Ballad for a girl in Buchannon, that when I first heard it on my turntable, I was blown away! (circa 1971?) OK, time to go… I hope you have a Wonderful Wednesday, and Be Good To Yourself!

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.