Singapore Summit Ends, Market Take A Wait-n-see” Stance

A Pfennig For Your Thoughts

June 12, 2018

* Currencies and metals are stuck in the mud!
* Hey, buddy, I’ve got a hot tip for you!

Good Day… And a Tom Terrific Tuesday to you! Whew! I’m one worn out writer this morning! A late night for me, and then my chemo drug decided that it was not going to be a good night for sleep… UGH! But, I’m running on adrenalin this morning, from that nice win last night that I got to witness with friends from the Old EverBank… A Big Thanks to Barry for the invite! Well, we’ve got a lot to cover today from the Big Singapore Summit, so let’s get moving, eh? Blackfoot greets me this morning with his song: Highway Song.. A good driving song!

Well, President Trump came out of the Singapore Summit (SS) with a big smile and words for the press that he was satisfied with the meeting, which when he has the smile on his face, it’s usually a tell-tale sign that he’s like the cat that swallowed the canary… And Kim came out of the meeting a self-proclaimed “new man”… They also had a signed agreement that N. Korea would begin denuclearization, which was hailed by the press… Ahem, press, you might want to temper that enthusiasm, as there was no date / deadline for this denuclearization… I’m just saying…

So, while the press is all ga-ga over the initial thoughts for the SS outcome, the markets are taking a “wait-n-see” stance, which I would think would be the prudent thing to do given they weren’t privy to what was said inside the room where the SS was held.

The currencies and metals saw little movement since yesterday morning. The Dollar Index has only move 5 ticks in the last 24 hours, and Gold gained a whopping $1 yesterday! So definitely a “wait-n-see” stance for the markets. The 10-year Treasury’s yield remained steady Eddie at 2.96%, and the price of Oil found some bids and was able to move higher in the $65 handle, but no great moves here either.

In the U.K. today, they are taking some votes on BREXIT items that could be very damaging to PM May’s direction for BREXIT… And pound sterling has really been feeling the effects of two arrows fired at it recently… The first arrow came in the form of Bank of England Gov. Carney, admitting that rate hikes will have to wait, and 2. All these questions about BREXIT, and the “unknowns” which I’ve taught you through the years, are always damaging to a currency.

There’s little news on the monetary front from the Eurozone, which will see a European Central Bank (ECB) meeting this Thursday. This will be a BIG meeting for the ECB, as the markets are expecting the to begin the process of a unwind of their stimulus, with a narrative on how the ECB will go about it and when it can begin… Anything short of that, and the euro will get thrown under the bus once again… But if the ECB delivers the goods, the euro could flourish…

Well, Gold… Boy there sure are some stories out there right now about the shiny metal, and all of them present a different scenario for Gold. I have one them highlighted in the FWIW section today, so be sure to check that out… But the thing I want to highlight here is the fact that my spider sense is tingling and I’m of the opinion that “something BIG” is going to happen this summer that’s going to propel Gold much higher… I certainly don’t have the contacts that I once had across the industry to confirm this feeling, but let’s just say I’m of a strong opinion that “something Big” is going to happen this summer here…

So, I have a question for you… If a friend of yours came to you and told you that he heard that Gold was going to be propelled upward this summer, would you go inside and ask your wife or husband, if they know how you could buy some Gold? Well, I’m your friend, right? (I certainly hope so) So, take this as me whispering this to you in the driveway… That’s all I’m saying about that…

I was perusing Twitter yesterday, and came across something that the great economist, David Rosenberg, said about the Jobs report from two Fridays ago. First off, Rosenberg, is one of the most credible economists out there folks, and anything he says should be listened to… And this is what he pointed out from the jobs report… “The most important behavioral statistic today in the jobs report was the quit rate, which hit an 18-year high. Workers are telling their bosses where to shove their lousy pay. Profit margins at risk of facing the big squeeze!The most important behavioral statistic today in the jobs report was the quit rate, which hit an 18-year high. Workers are telling their bosses where to shove their lousy pay. Profit margins at risk of facing the big squeeze!” – David Rosenberg

Through the years the economists that I follow have changed names quite a few times… Years ago, it was Stephen Roach that usually had my attention, and then along came others like Danielle Di Martino Booth, and David Rosenberg. Notice the absence of one Paul Krugman? Good, because he’s no fave of mine! Except when he would make dumb quotes that I used to capture for Presentations!

The U.S. Data Cupboard continues to be lacking any real economic data, but it will print the stupid CPI (consumer price index) today, which should show that on an annual basis, the Fed has finally achieved their goal of sustaining 2% inflation… I can’t begin to go through all the heavy lifting the Fed did to get here… But it was a HUGE AMOUNT! And was it really worth the effort? I mean wouldn’t inflation begin to creep higher on its own without the Fed’s help? Of course it would, it’s a part of the economic nature of things. But I digress here, and need to move along…

I told you yesterday that the Emerging Markets were getting whacked on a daily basis these days, and that the rot on the vine had spread to the more mature Emerging Markets… And then this morning I saw a report on Bloomberg where they listed the top 5 Emerging Markets Currencies to steer clear of, for Bloomberg believes these 5 currencies are the most risky… So, here’s the top 5… Brazilian real, Russian ruble, Mexican peso, Turkish lira, and S. African rand…

It’s a shame that the ruble is being thrown in with these other risky currencies. All the work the Central Bank of Russia (CBR) has done to offset the sanctions placed on them by the U.S. and European Union, is being ignored right now… that’s just not right… but it is what it is, folks…

To recap… The Big Singapore Summit ended with the press going ga-ga over the smiles on the faces of the leaders of the U.S. and N. Korea. The markets however, have decided to take a “Wait-n-see” stance, which Chuck thinks is prudent… The currencies hardly moved, Gold only gained $1 on the day, and the price of Oil remains in the $65 handle. I had a dear reader send me a note yesterday saying that I had forgotten to list the price of Oil in the currency roundup for two consecutive days! Well, I won’t forget today! HA!

For What It’s Worth… Back to normal today… Here’s an article that talks about how we could be nearing Peak Gold… Well, if that’s the case, that beeping sound is the truck backing up to load up on physical Gold… However, Peak Gold remains to be seen. Here’s the link to the article…

Or, here’s your snippet: “Goldcorp (GG -0.1%) Chairman Ian Telfer is the latest industry exec to predict the world has reached “peak gold,” saying that mine production will continue to decline because all the major deposits have been discovered.

“Gold produced from mines has gone up pretty steadily for 40 years,” Telfer tells the Financial Post. “Well, either this year it starts to go down, or next year it starts to go down, or it’s already going down… We’re right at peak gold here.”

“Are we not looking for it? Are we bad at finding it? Or have we found it all? My answer is we found it all. At US$1,300/oz. gold, we found it all. I don’t think there are any more mines out there, or nothing significant. And the exploration records indicate that,” Telfer says.

Barrick Gold is “shrinking fast,” Telfer says. “We’re sort of going sideways. Newmont’s going sideways.”

Chuck again… Well, like I said above, if what they’re telling us is factual and truthful and I don’t have any reason, other than the fact that these are leaders of company’s that make more money the higher the price of Gold goes, to doubt them, then beep, beep, beep…

Currencies today 6/12/18… American Style: A$ .7606, kiwi .7028, C$ .7685, euro 1.1778, sterling 1.3382, Swiss $1.0154, … European Style: rand 13.1839, krone 8.0138, SEK 86225, forint 271.25, zloty 3.6307, koruna 21.7617, RUB 62.52, yen 110.25, sing 1.3349, HKD 7.8467, INR 67.47, China 6.3996, peso 20.61, BRL 3.7054, Dollar Index 93.60, Oil $65.94, 10-year 2.96%, Silver $16.88, Platinum $907.18, Palladium $1,020.35, and Gold… $1,297.52

That’s it for today… Well, Happy Anniversary to my beautiful bride of 42 years today… I’m not supposed to talk about Kathy in the Pfennig, so I’ll just say Happy Anniversary and move along… I was thinking yesterday, the 42 years ago, I drove a Cadillac Eldorado, a real monster of a car for sure… I was at least 100 lbs lighter than I am now, had hair, and certainly wasn’t worried about cancer… The Peter Frampton Live album was the top seller that year, and I spent a lot of time listening to Wings over America… by Paul McCartney and Wings… Three Dog Night takes us to the finish line today with their live version of : Eli’s Coming And with that, I’ll send you on your way to a Tom Terrific Tuesday, and please Be Good To Yourself!

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