Once Again He’s Baaaccckkkk!

A Pfennig For Your Thoughts

August 13, 2018

* The dollar bugs continue to dance in the streets!
* But the U.S. economic data is weakening…

Good Day… And a Marvelous Monday to you! What a very nice vacation I just finished up having! Simply marvelous! Lots of fun, with a heaping helping of rest and relaxation! Good for the body and soul, especially for a chemo patient! I remain in S. Florida, for an extended stay, as I need to be here while some work is being done on our new place. I feared this would happen, so I did pack my laptop upon leaving 2 weeks ago…

Since I left, we celebrated my darling granddaughter’s birthday… Little d, or Delaney Grace turned 11 this year… She was born the same summer I was diagnosed with cancer, so I’ll always know how old she is! Funny, I actually kind of don’t remember much from before Little d was around… The Beach Boys greet me this morning with their song: Surfer Girl…

Alrighty then… I guess the old thought/ saying they used to have on the trade desk, that when Chuck was away, the currencies rallied, just doesn’t hold water any longer, now that I’m no longer on a trade desk… The currencies continue to be ram rodded by the dollar bugs, who are still of the belief that these interest rate hikes are going to go on forever… They are so euphoric over the prospect of endless rate hikes, that they’re missing the weak data that’s already showing up across the board…

Yes, it’s tru, it’s tru, I did see a putty tat! And on top of that I have seen most of the data that’s printing for July coming in and not meeting the expectations and some being very weak… And… In a case of “I told you so”… I read a report last week that showed that only 8% of the people that received a tax cut are going to use their money to make a major purchase…

And on the flip side, Corporations are doing just like I said they would do with the tax savings, they’re buying back their own stock…. So, there’s no “happy days are here again, the skies above are clear again” for the economy from the tax cuts like Americans were sold, I mean told…

On top of that… guess what else is beginning to show signs of fatigue from the rate hikes already in place? Housing… I don’t make this stuff up folks… just last week it was announced that Mortgage apps sank 3% in the Aug 3rd week, down now for four weeks running, and the YoY trend has collapsed 17% from year-ago levels. Oh, the humanity! And wait till you get a load of what I have to tell you about the recent Jobs Jamboree!

On August 3rd, 2018, the Labor Department’s Bureau of Labor Statistics (BLS) reported that July payrolls rose 157,000. However, in their back door CES Birth/Death report, where they reveal how many of the 157,000 jobs were an estimated number of new jobs they hope were created by new businesses they think might have started up in July, net of jobs lost from businesses that closed their doors in July, they reported that 146,000 of the 157,000 were in fact a guess. That means the U.S. Economy generated 11,000 “counted” new jobs in July… Now, I’ve been through all this birth/death model stuff before, but if I were ever to have a BLS official on the Butler Patio, I would ask them this… “Why do you make these assumptions that there were more business births, than deaths, when a couple of years ago, it was proven that all the while the BLS was adding jobs each month from thin air, that there were more business deaths than births for the last 10 years! So, why may I ask do you do this?

So, I’ve gone through all this so early today, because I’ve had time to think about these goings on… The dollar bugs dancing in the street, while Rome is burning in the background… It’s there for everyone to see, but right now, the dollar bugs aren’t paying attention to that, and so, we have a stronger dollar…

Mind you, I didn’t say, “Strong dollar”, because it’s not really strong per se, given the fact that even with the euro falling to a 1.14 handle, the single unit is still stronger than the dollar… keep that in mind, as you scroll through the currency roundup today…

Of course the leaders of the Eurozone, Australia, New Zealand, Switzerland, Japan, and others could make this easier for their respective currencies to stand up to the dollar, if they would do something about their interest rate structure! I’m really singling out the Eurozone, Australia and New Zealand here folks…

It seems like we’ve been waiting forever for the European Central Bank (ECB) to get off their duffs and begin to reverse their stimulus policies… It may never happen… It’s like a watching a pot of water on the stove, and waiting for it to boil…

And here’s where I put my tail between my legs and wimper on home, hoping no one stops to give me whack! Last year about this time, I wrote about all the goings on in New Zealand, and how the Reserve Bank of New Zealand (RBNZ) were making overtures about the beginning of a rate hike cycle that could begin in the first quarter of 2018… I jumped all over those overtures to say that this was an opportunity for investors to get in before the rate hike occurred… Well, we got in… and we’re still waiting for that rate hike… And, unfortunately for us, the RBNZ stated last week that they don’t see rates changing this year or next year… Wait, What? How did they go from what was believed last year at this time, to what they believe now?

Central Banks, and Central Bankers… If I ever had the opportunity to meet up with them in an alley! No wait, Chuck, you’re a broken down, partially handicapped old man, that’s had his strength zapped by 11 years of 5 different cancer medicines, you’re in no condition to “meet up with someone in an alley!” Oh, thanks… Boy, that’s just what I needed a stark reminder of how the mighty have fallen… OK… let’s say, that I would yell at them! HA!

Has Gold bottomed out? The recent trading of the shiny metal seems to indicate that could be the case, but I’m reminded of what I wrote about before I went on vacation, and that is that China had taken control of the COMEX and was pushing down the price of Gold along with their renminbi to offset the tariffs, which would lead me to believe that as long as the Trade War is going on, Gold will be subjected to further price manipulation by the Chinese, who get the wink and nod from the U.S. Gov’t to do so…

And to further my thought… Gold is down $8.50 in the early morning trading today, so the daily beatings may have taken a break last week, but they’re bound to pop up again…

I had to laugh when I read an article this past weekend, that the GATA folks sent me, that said that China says it’s not doing what it’s doing to the renminbi… HAHAHAHAHAHAHAHAHA! What? do the Chinese think we’re all a bunch of dolts, and twits that don’t understand that their currency is a managed currency and if it gets weaker they made it go weaker? I laughed so strongly that I spilled my coffee…

They’re not doing to the renminbi what they are doing… You have to laugh, right?

The price of Oil has backed off it’s highs from last month, and has settled into a $67 -$68 range… Not the higher levels I thought we would see while the price of Oil was running higher last month, but still pretty good, compared to its slumped price of a couple of years ago. Have you heard about this new kind of Oil? Brandt Oil? It supposedly is chock full-o-energy that allows a car to get ultra-improved gas mileage… Can’t wait for that take place, because I’ll be down the road at the Lincoln dealership waiting for my new Navigator to pull up for me to drive away! HA!

The U.S. Data Cupboard is on a brief vacation the first two days this week, but on Wednesday, the Cupboard explodes with economic data! We’ll see the likes of Retail Sales, Industrial Production, Capacity Utilization, Unit Labor costs, Productivity, and more! All in one day! WOW! So, with no real data today and tomorrow, the dollar will continue to be well bid…

To recap… The dollar bugs continue to dance in the streets… But Chuck is pointing out many pieces of data that are beginning to show signs of fatigue from the already in place rate hikes… The price of Gold has appeared to have bottomed out, but Chuck thinks that’s a head fake… And what’s with this new kind of Oil that Chuck’s talking about?

For What It’s Worth… Well, I’ve talked and talked and talked about how debt is slavery through the years, and I’ve been tracking this Consumer Credit (read debt) data each quarter with a keen eye on the increases… Well, this article spells all this out with a nifty graph so you can see the increase and not just read numbers and get perfectly numbed by them… It can be found here: https://wolfstreet.com/2018/08/08/the-state-of-the-american-debt-slaves-q2-2018/

Or, here’s your snippit: “Total consumer credit – or less soothingly, consumer debt – rose 4.8% in the second quarter from a year earlier, or by $176 billion, to $3.87 trillion (not seasonally adjusted), the highest ever, according to the Federal Reserve. This includes credit-card debt, auto loans, and student loans, but not mortgage-related debt. Given how passionate Americans normally are in spending money they don’t have – that 4.8% increase is moderate: In 2011, increases exceeded 11%.”

Chuck Again… I love it when you can pull data right from the Federal Reserve… They counted the beans but apparently don’t pay attention to them, eh?

Currencies today 8/13/18… American Style: A$ .7275, kiwi .6575, C$ .7605, euro 1.1388, sterling 1.2750, Swiss $1.0055, European Style: rand 14.4310, krone 8.3735, SEK 9.1520, forint 284.80, zloty 3.7840, koruna 22.5456, RUB 67.57, yen 110.35, sing 1.3765, HKD 7.8496, INR 69.82, China 6.8465, peso 19.23, BRL 3.8683, Dollar Index 96.42, Oil $67.61, 10-year 2.86%, Silver $15.18, Platinum $813.75, Palladium $896.68, and Gold… $1,202.05

That’s it for today… I’d like to say it was good to be back in the saddle again, but I’ll leave that for you to decide! I wasn’t keeping track of the actual days and I completely allowed one of my long time friends’s birthday slip by… Happy belated Birthday, Mike… We’ve known each other and have remained good friends since the 2nd Grade… Lordy that was a long time ago! Speaking of a long time ago… This month in 1969, the Beatles were breaking up, and I was in 3 a-days football practices, man was I in some kind of shape back then! I often wonder just how I lost all of that, as I dip a chocolate chip cookie in my coffee… HA! R.E.M. takes us to the finish line today with their song: Drive… I saw this band live back in 1995, they were really hot back then… I hope you have a Marvelous Monday, and remember to Be Good To Yourself!

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