Pieces Of The Puzzle, Revealed..

Chuck Butler’s… A Pfennig For Your Thoughts

  • It’s a dollar day
  • Russia leaves Recessionville!
  • While the U.S. heads there!
  • Gold can’t seem to find a bid!

July 3, 2017….

Good day… And a Marvelous Monday to you! Welcome to July too! Pfennig Tradition is very clear on the first working day of July, and thanks to Uriah Heep, we start it like this… There I was, on a July morning… I was looking for love, with the strength of a new day dawning, and a beautiful sun… Well, it’s raining outside this morning, so I don’t think I’ll see a beautiful sun today, but yesterday and Saturday were simply beautiful! I’m coming to you live from Bull Shoals Lake, in Arkansas this morning. Oh, the places that the Pfennig has been written from through the years! Neil Young greets me this morning with his song from the album of the same name: Harvest…

Well, last week, we finished the first 6 months of the year, and the dollar had its worst 6-month start to a year since 2006! But, all the negative sentiment toward the dollar isn’t going to stop the dollar from having “days” of rebound… And that’s exactly what we have going on this morning. The Dollar Index has rebounded to back above 96 (last week it had fallen from a 97 handle to a 95 handle). Last night when I tested the WIFI here, at the host’s lake house, which by the way has a beautiful view of the lake, the euro was 1.1415, but this morning it is trading 1.1370-ish…

It’s a strange move given all the recent negative sentiment toward the dollar, folks, but these things happen, as the dollar bulls try to reverse the trend, and this won’t be the last time it happens, as the winds of change sweep across the dollar…  The currencies, minus the Petrol Currencies, are down today, and Gold is down again this morning, and  the U.S. Treasury 10-year yield has really begun to move higher and is 2.31% this morning…

But… the price of Oil is stronger and is trading with a $46 handle this morning, with all the talk this weekend going on about how the rout in the Oil price is over… I doubt that seriously, it may well be over for now, but unless the whole process of rising price brings on the shale producers, who then glut supplies, thus causing a dive in the Oil prices, has changed, then I don’t see how Oil gets out of this process…

As far as the Petrol Currencies that includes: Russian rubles, Norwegian krone, Canadian loonies, and Brazilian real, are concerned, they’re loving the mini-rally for the price of Oil… And this morning, the Russian ruble has taken its place as the lead dog of this group once again…

Speaking of Russia….

I can hear the people of Russia now… They’re saying… “sanctions, schmanctions!” Why? Well, it was reported on Friday that Russia’s economy grew 3.1% and their industrial growth was even better at 5.6%, I do believe that both of these were VS prints a year ago… take these two excellent prints, and add in the Industrial Production print that saw IP grow at 4.8% in May, and what you have are great indications that the Russian economy is surging out of their recession, with vigor! No dilly-dallying around here folks, get on the growth train and ride it our of recessionville… The Russian economy will be passing the U.S. economy going in opposite directions!

Speaking of the U.S. economy… If you joined me on Twitter last Friday, you already know this… Personal Spending dropped in May from 0.4% in April to 0.1% in May… The U.S. Consumer has tapped out! I’ll have more on the U.S. economy in a minute or two, but I just had to get that out there… If you missed class on Friday, and nowadays I can tell just how many of you do miss class on a particular day, I’m on Twitter now, and if you would like to receive periodic mid-day updates on things in the markets then go to Twitter, and find me at #ChuckOButlerJr…

Well, what about this dollar strength today? is it for real? Well, the answer to that question is a big fat yes, but for today only!  As I explained above, we’ll see these “dollar days” from time to time now that the overall sentiment toward the dollar has shifted over to the euro.  Wanna know why I believe the strong dollar trend is over?  Well, if you watch the dollar’s performance in the past few months, when  positive economic data prints, the dollar can’t seem to muster any positive traction, but when negative economic data prints, the dollar gets sold quickly…

For instance, today’s Data Cupboard has the June ISM (manufacturing Index) that is expected to rise, but the dollar has already seen a mini-rally overnight, so I doubt it gets much traction from that positive print… But, when we come back from our Independence Day Holiday, which falls on a Tuesday, and we get back on Wednesday, we’ll see May Factory Orders, and they will be even more negative than April’s -0.2% print! And I expect we’ll see the dollar get sold on that negative print!

The week culminates with the Jobs Jamboree on Friday… And here’s another piece of the strong dollar trend ending, puzzle…  Did you know that the dollar has slumped in 9 of the past 10 Jobs Jamboree’s even when there as a “better than expected print”…  I put that last part in prentices because, well, Longtime Readers know that I point out all BLS jobs reports as “questionable”…  But I think that’s an important piece of the puzzle folks… That the dollar can’t find any love even with data should send some love the dollar’s way…

I received some good traction from the Tweet I sent out on Friday, so keep them coming! But like I said, I won’t be sending Tweets out all the time, only when something happens mid-day that warrants a Tweet! And while I’m at it here… Tomorrow is a Holiday, so no Pfennig tomorrow… And Wednesday is also a travel day for me, back home, so no Pfennig on Wednesday either, but I’ll be back loaded for bear on Thursday! With Factory Orders printing on Wednesday, it might warrant a Tweet!

Well, Gold just can’t seem to find a bid these days, and I believe something “fishy” is going on… The overall sentiment toward the dollar has shifted, and when that happens Gold usually benefits. But not this time… You don’t think that the powers that be, know the U.S. economy is heading to Recessionville, and the dollar is about to go on a long trend of being weak again, so they want Gold to start from a lower base do you?

Nah, that couldn’t happen… wink, wink…  So,  Gold  closed Friday at $1,241.20 spot, down $4.20 from Thursday’s close. And the shiny metal is down about $7 in the early morning trading today… UGH!  I just keep saying to myself… “It’s the summer doldrums, Chuck.. The summer doldrums”…  And that take my mind off all the other dastardly things that pop into my head about what’s going on with Gold right now!

Like I said above, the U.S. Data Cupboard has the ISM print today… I find this interesting, in that the ISM (manufacturing index) continues to be the lone bright spot for the U.S. economy, while the Factory Orders, Durable Goods and Capital Goods Orders, all print negative, and Retail Sales fall each month, and Personal Spending falls like a rock…  So, how can the ISM continue to rise, with everything around it printing either negative, or very weak?

To recap… It’s a “dollar day” and the currencies, minus the Petrol Currencies, who have their own little rally going, are down along with gold and bond prices (Yields up, prices down). The price of Oil continues to add to its mini-rally and trades with a $46 handle this morning. Russia prints some very good data on Friday, thus showing they are coming out of their recession with vim and vigor! Chuck points out why he believes the strong dollar trend is ending…

For What it’s Worth…  Well, the world is now $217 Trillion in debt… That’s right… And of course that doesn’t take into consideration unfunded liabilities…  How in the World can this every be paid off?  it can’t, unless we have defaults along the way…  I hate to have to bring this story to you, but… Most people just don’t care, they think it matters nothing to them that the world is in so much debt… UGH!  My friend, and publishing guru, Bill Bonner calls these people “sheeple”…  that sounds about right, eh?

Anyway, here’s a link to the story on the $217 Trillion in debt… http://theeconomiccollapseblog.com/archives/the-world-is-now-217000000000000-in-debt-and-the-global-elite-like-it-that-way

Or, here’s your snippet: “Global debt levels have surged to a record $217 trillion in the first quarter of the year. This is 327 percent of the world’s annual economic output (GDP), reports the Institute of International Finance (IIF).

The surging debt was driven by emerging economies, which have increased borrowing by $3 trillion to $56 trillion. This amounts to 218 percent of their combined economic output, five percentage points greater year on year.”

Chuck again… I just shake my head in disbelief at these numbers folks…  it’ll all end up in tears one day… Not today, or tomorrow, but one day…

Currencies today 7/3/17… American Style: A$ .7657, kiwi .7295, C$ .77, euro 1.1375, sterling 1.2965, Swiss .9612, … European Style: rand 13.1590, krone 8.3652, SEK 8.4745, HUF 271.41, zloty 3.7249, koruna 22.9896, RUB 58.87, yen 112.94, sing 1.3814, HKD 7.8080, INR 64.88, China 6.7770, peso 18.16, BRL 3.2784, Dollar Index 96.04, Oil $46.01, 10-year 2.31%, Silver $16.52, Platinum $916.22, Palladium $845.68, and Gold… $1,234.10

That’s it for today… I can smell the coffee brewing!  A Big Thanks to our former neighbors, Kevin and Lisa Yanker, for allowing us to invade their lake house!  We had technical problems this morning that’s why this is so late in the day. Well, my beloved Cardinals are looking a little better these days, as they took 4 of 6 from the two division leaders this past week… I had a flare up of my plantar fasciitis on Friday, you should have seen me trying to walk, which is already strangely done since I use a cane to support my right side when I walk! But it’s all better now… just a flare up… The Turtles take us to the finish line today with their song: It Ain’t Me Babe, the old Bob Dylan song..  and with that, it’s time to go, so please go have a Marvelous Monday, and Be Good To Yourself!

Chuck Butler

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