Powell Ties The Dollar To The RR Tracks!

A Pfennig For Your Thoughts
January 31, 2019

* Currencies rally along with Gold & Silver!
* Chuck does lots of explainin’!

Good Day… And a Tub Thumpin’ Thursday to you! Once again, in my new found better health, I’ll be doing some Tub Thumpin’ myself this afternoon… I hope you can too! We had a nice dinner, out, with our friends from down here last night… A grand time was had by all! I got home in time to watch my Mizzou Tigers on TV, lose yet another basketball game… Oh well, that’s my team, through thick and thin… And these past few years for basketball have been quite thin! Our Blues haven’t played since last weekend, and don’t play again until this coming weekend! Doucette greets me this morning playing his song: Mama Let Him Play…

Well, the Fed’s FOMC meeting yesterday came and went without a rate hike, and from what I heard from Fed Chairman, Jerome Powell, we might have to get used to these kinds of sans rate hikes meetings, and by 2020, he believes we’ll see a rate cut! Talk about tying the dollar to the railroad tracks… Ala Snidely Whiplash… And the beautiful Nell…

And the currency traders saw the same thing I saw, and started selling dollars… for what good are they, if the Fed is going to stop hiking rates, and by next year, be cutting rates? Not very good, if you ask me!
The Fed Heads seem to be reading the Pfennig these days, for they are finally seeing the economy for what it is… But Powell wouldn’t go without mentioning that he still believes the economy is “somewhat strong”… Here’s a sample of what Jay had to say… “We are now facing a somewhat contradictory picture of generally strong U.S. macroeconomic performance alongside growing evidence of cross-currents. Common sense risk management suggests patiently waiting greater clarity.”

So, the currencies rallied and Gold added about $8 on the day… The euro is nearing 1.15 again, and the Aussie dollar (A$) soared above 72-cents on the day. Could this be the beginning of a long term run in the currencies VS the dollar? Well, if the next move by the Fed is a rate cut, then I would say chances are… cause I wear a silly grin, the moment you come into view… No wait! I apologize Johnny Mathis, but these chances are that the rate cut could very well spell out bad things ahead for the dollar…

If this plays out like I think, and so far, it’s been playing out just like I said it would, then we’ll see starts and stops in the currencies and metals, and eventually the dollar bugs will give up, and a full blow weak dollar trend could very well be the result… However, having said that, I must also admit that I’ve seen a couple of false dawns in the past, so I won’t exactly go out on a limb too far with this…

On a sidebar… late last week, LinkedIn sent out a 20 year work anniversary for me at EverBank… I thought I had changed my job on their site, but I guess I hadn’t put in an “end date”, for of course EverBank is no longer around, so it would be difficult for me to have celebrated 20 years there, and 2… I was shown the door 2 years ago! I’ve received quite a few congrats on your work anniversary notes, only to have to tell them the honest truth… Oh, and I’ve entered an “end date” now, so hopefully we don’t experience this next year with 21 year anniversary notices!

OK… Back to the markets… The Bond Boys think that there will be no more rate hikes, as the yield on the 10-year Treasury dropped to 2.66%… This has got to be helping mortgage rates drop, but at this point, the housing sector is circling the bowl once again… Will it get flushed down? Good Question, and one that I’m not ready to answer just yet… I’ll just say I’m warming up my singing voice!

I received a lot of notes in the Pfennig Replies box the past two days regarding my thought the other day that maybe, just maybe, cause you never know, the U.S.’s claim to have 8,100 tonnes of Gold, may be exaggerated… I had people telling me I was wrong, and that Ft Know held 100oz bars, of which you don’t see people walking around with those… Well, if I’m so wrong… Why won’t the “audit Ft. Know” go off smoothly? Why does it take months to get one’s safekept Gold back from the Fed, and when you do receive your Gold, the serial numbers on the bars don’t match those that were put into safekeeping all those years ago? I could sit here all day and come up with reasons why we need to audit Ft, Knox…

Remember Koos Jansen? I used to talk about him all the time, because he had his finger on the pulse of physical Gold in China… Well, I haven’t checked on Koos Jansen very often until this week, and wouldn’t you know it… www.bullionstar.com has an article printed by Koos, talking about the audits that have been performed at Ft Know… Let’s listen in…
“Among other problems, since inspections commenced at Fort Knox in 1974:
• Most physically verified and sealed vault compartments have been re-opened, for which the auditor can provide no valid explanation.
• Auditing personnel has proven to be utterly incompetent and did not follow the auditing policies and procedures.
• Repeatedly metal has been excluded from verifications.
• Many of the audit and assay documents have been destroyed.
• The US government goes to great lengths in withholding information and spreading false information.
In conclusion, the audits have been executed with an inadequate degree of integrity.

I don’t know about you, but I don’t get a warm and fuzzy when I read that! And therefore I’m still questioning whether or not the U.S. Gov’t has the physical Gold they say they do…

I also received a lot of email from readers that questioned idea that I put forth on the reason the Pacific Gas & Electric (PG&E) filed for bankruptcy, and therefore I need to explain… Yes, I knew that the PG&E had filed bankruptcy to protect them from all the lawsuits that will come their way as a result of the forest fires in California late last year. The Point I was trying to make is that they had $50 Billion in debt, that now under the Bankruptcy law, that they will now be excused from paying off… I thought that this would hurt the economy of California, which is the in the top 5 of economies of the world!

OK… too much explainin’ to do this morning Lucy! And no… You can’t go to the club! Waaaah…. Well… The U.S. Data Cupboard is still a big data vacuum , but with the Government employees going back to work this week, all those data prints that have been delayed will get printed… Tomorrow is supposed to be a Jobs Jamboree Friday… And yesterday, the ADP Employment Change report for January printed and was way down, from December, which was 263,000, and January was just 213,000…

If the jobs numbers from January do get printed tomorrow, I would expect them to have fallen quite a bit from December’s blowout month of 312,000, which of course, included tons of temporary jobs for the Christmas season… I’m thinking somewhere around 175,000… And the spin doctors will be out in force, talking about the bad weather keeping the number much lower…

To Recap… Well, the Fed’s FOMC meeting ended with no rate hike and with a short speech by Fed Chairman Jerome Powell. And it was this short speech that got the dollar tied to the railroad tracks, ala Snidely Whiplash, while the currencies and metals ran over it… Powell was talking about how the rate hikes might be on pause for a while and that he see the first rate cut in 2020… That’s right… it’s bang on what I’ve been talking about for some time, although, I said that by the end of 2018, the talk would be about reversing the rate hikes, so I was a month early…

For What It’s Worth… This is different today, in that it’s a video that I want you to watch, and not a website to visit to read an article… This video is from Mike Maloney, giving the reasons why we’re about to see QE4, and QE5… The only thing I would argue with him on, is the use of the term Quantitative Easing or QE… I was told a couple of years ago, that Congress told the Fed they didn’t care what they called it, but that they couldn’t use the term QE again…

And I might add, if the Fed has to resort to QE4 and QE5, out the window goes their remaining thread of credibility… For how does an economy that’s supposedly “strong and robust” go from that to needed money printing, bond buying, or demonetization of the debt? Again I hear Ross Perot in my head, saying… Do you hear that sucking sound? That’s the Fed’s credibility being sucked out the window of the Eccles Building!

Anyway… here’s the link where you can watch this presentation… please have your speakers on, and allot the time to view it… https://www.youtube.com/watch?v=U6fVLXALJPw

Chuck again… not that I went anywhere! But Mike Maloney is guy that people should listen to… He’s normally talking about Gold & Silver, so that’s why he tied this video to those assets… But this talk of the economy needing more stimulus is old news on the Butler Patio… I’m just saying…

Currencies today 1/31/19: American Style: A$.7275, kiwi .6912, C$ .7613, euro 1.1485, sterling 1.3138, Swiss $1.0072, European Style: rand 13.3005, krone 8.4092, SEK 9.0266, forint 275.12, zloty 3.7213, koruna 22.4242, RUB 65.86, yen 108.65, sing 1.3455, HKD 7.8466, INR 70.99, China 6.7138, peso 19.13, BRL 3.7108, Dollar Index 95.38, Oil $54.07, 10-year 2.66%, Silver $16.07, Platinum $820.56, Palladium $1,373.00, and Gold… $1,322.46

That’s it for today, and this week… The Artic Polar Vortex sure has a grip on the Midwest, where temps remain very low and dangerous, according the weather people… In my old job, we had a foot bridge from the parking lot to the building, and it used to be so darn cold crossing that bridge this time of year… I can honestly say I don’t miss that one iota! It was another of those bad nights for my teams… I already talked about the Mizzou loss, but the St. Louis U. Billikens also lost last night. UGH! So, this Sunday is the Super Bowl.. Who are you going to root for? I despise both teams for different reasons, so I doubt I pay much attention to it at all… But I guess I despise the Patriots more than Rams… I’ll watch it, for the commercials! HA! Yes, that’s the ticket! OK… Steely Dan takes us to the finish line today with the title song of my fave album from them… Aja… A perfect morning song I must add….. With that taken care of, it’s time to tell you that I hope you have a Tub Thumpin’ Thursday and Fantastico Friday tomorrow! And while having all that fun, please Be Good To Yourself!

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