Tentative Deal To Avert Gov’t Shutdown Is On The Table…

A Pfennig For Your Thoughts

February 12, 2019

* The dollar climbs to a two-month high…
* Pitchers & Catchers report today!

Good Day… And a Tom Terrific Tuesday to you! Another day on steroids and I’m almost out of the woods with regards to pain in my left elbow from the gout. Only two more to go, and then I should be pain free, which would be a good thing, because the steroids will have run out! I really thought I would stir up a hornet’s nest yesterday with my rant on the socialists growing in this country… But, so far, so good in the Pfennig Replies box. I did have multiple back and forth emails with my former boss from Mark Twain Bank Days, Ed Bonawitz, who wanted to impart some of his thoughts on me… I returned the favor to him! Big Head Todd and the Monsters greet me this morning with their song: Tomorrow Never Comes…

Well, news last night that the U.S. lawmakers might be able to avert another Gov’t shutdown, had the overnight markets all excited as school girls, when the idol comes to town! The dollar bugs continued to come out of the wall boards, and buy dollars, and what looked to be a good run in the coming for the euro just two weeks ago, when it was trading over 1.15, has gone bad, and the euro is now trading below 1.13! And all the other currencies are following the Big Dog down the slippery slope having traded places with the dollar, that was on the slippery slope just two weeks ago!

And now yesterday, the International Monetary Fund (IMF) had decided that their outlook for Global Growth needed to be brought backwards, for these reasons: trade tensions and tariff escalations, financial tightening, uncertainty related to (the) Brexit outcome and spillover impact and an accelerated slowdown of the Chinese economy… Now let me see how many of these I’ve talked about already for months now…

1. Readers of the Aden Research that were Dow Theory Letters subscribers saw my cartoon about tariffs months ago, and what I thought they would end up doing to the U.S. economy… And of course, I told you dear Pfennig readers so many times, I’ve sounded like a broken record!

2. I’ve been warning about the BREXIT stuff for months now…

3. Fed rate hikes have been a target of mine since the first one that came down the pike 3 years ago…

4. And a Chinese slowdown… Well, if trade tariffs were going to hurt the U.S. economy, they sure were going to do the same for the Chinese economy… This is a case of what’s good for the goose is good for the gander, folks…

So, all 4 boxes have been checked, Chuck… Looks like you were months ahead of all those highly paid economists at the IMF! Well, I would pat myself on the back, but I don’t want my gout getting inflamed again!

About 10 days ago, I talked about how it appeared but it wasn’t certain that the Eurozone economy was heading back to recession, and that the Chinese economy was too, and that those two would drag the U.S. economy into a recession faster than most think it will hit the U.S.

I do believe however, that we’ve seen the last of the Fed rate hikes for now… There won’t be one in March, and it’s my belief that Fed Chairman Powell, is ruing they day that he hiked rates in December… One of my fave economists, David Rosenberg, had this to say on his Twitter page last night… “Pundits are comparing today to 1998. Greenspan cut rates aggressively in the summer and fall that year. Powell has done what exactly except admit verbally he made a mistake last December?” – David Rosenberg on Twitter…

And I also believe that it would be prudent thing to do for Powell and the other Fed heads to stop, hey, what’s that sound, everybody knows what’s going down… For What It’s Worth – Buffalo Springfield…

Well, all this talk about this stuff sure puts a guy in a gloomy mood… But I won’t let it get me down, it’s only castles burning, and besides… Pitchers and Catchers report to Spring Training today! YAHOO! I read where the entire projected infield have already been in camp and practicing, which I would think was a prudent thing to do, given the Cardinals led the league in errors last year! And that’s NOT Cardinals baseball, folks… My spring training tickets are one row and aisle away from the President and GM’s seats… And I let them know last year that I wasn’t happy with the defensive play, and that was in Spring Training! They acted like they didn’t hear me, but… as my wife says, I have a voice that carries and probably the left fielder bleachers heard me!

One time, I had to give a presentation without a microphone, as it had gone on the fritz… I spoke to a room of 250 without going hoarse!

Ok, back to regular programming… Gold didn’t lose any more ground yesterday after losing $9 in the early morning trading, and did manage to come back to close down $6 on the day… and this morning Gold has just about gained back that $6 loss with a more than $5 gain in the early trading… Up one day, down the next, this is driving me to my wit’s end!

Here’s some good news for Gold though… The battle to end taxation of constitutional money has reached the federal level as U.S. Representative Alex Mooney (R-WV) today re-introduced sound money legislation to remove all federal income taxation from gold and silver coins and bullion.

The Monetary Metals Tax Neutrality Act (H.R. 1089) backed by the Sound Money Defense League and free-market activists – would clarify that the sale or exchange of precious metals bullion and coins are not to be included in capital gains, losses, or any other type of federal income calculation.

“My view, which is backed up by language in the U.S. Constitution, is that gold and silver coins are money and are legal tender,” Rep. Mooney said.”

I pulled that from LinkedIn last night… and now it’s all over the internet… so have fun with that Mr. Mooney… Let’s see if the hamburger that’s been thrown at the wall, ends up sticking to it! Yes, that good old Constitution… I guess somebody in D.C. still reads it, and knows what it says! HA! I still keep my portable Constitution with me that was given to me by the good folks at Hillsdale College, where the Constitution is still taught!

Ok… more to talk about here… It’s not all gloom and doom for every currency as the dollar bugs have their way with the euro and others… The Russian ruble has gained more than 3% VS the dollar this year so far… That’s only 6 weeks into the new year, so if we do some algebra, that would mean the ruble would be up more than 25% in a year! Well, calm down here Chuck! Currencies don’t normally move in a linear fashion… So, let’s just stick to the ruble is up so far this year, and things are looking good for this to continue…

OK, before we head off into the sunrise… The tentative deal to avert a Gov’t Shutdown is NOT the deal that the President wanted to see, so this is going to be sticky folks… and for that I can’t believe the dollar bugs are so excited about it… What happens if the President sticks to his guns and says no to the deal? All this excitement turns to disappointment, and well, I would think that all this dollar buying that has brought the dollar to a two-month high, would be reversed… Just a thought from the cheap seats…

The Data Cupboards around the world are busy with all kinds of non important data prints… But there is an ECOFIN meeting in the Eurozone today, I don’t expect any grenades from left field here… but thought I would mention that it’s going on…

Here in the U.S. the Data Cupboard is back on board today, after yesterday’s vacation. But the only thing I see for us today that would move markets is a speech by Fed Chairman Jerome Powell, which will be gone through with a fine tooth comb to see if he still shows and says dovish things…

To Recap… The dollar bugs are as excited as school girls when the teen idol comes to town, as there is a report that there could be a tentative deal to avert a government shutdown… It’s not the deal that the President wanted, so this is going to be interesting folks… hold onto your hats! In the meantime the dollar bugs are buying dollars by the truck load, and the dollar is at a two-month high… The IMF downgrades its global growth outlook, and Gold goes up one day down another…

For What It’s Worth… I’ve been following this trial regarding price fixing in Gold, and the GATA folks sent me a note last night telling me that Deutsche Bank had been told to pay $60 Million to settle the price fixing case… You can read it all here : https://www.reuters.com/article/us-deutsche-bank-settlement-gold-idUSKBN13R2N1

Or, here’s your snippet: “Deutsche Bank AG has agreed to pay $60 million to settle private U.S. antitrust litigation by traders and other investors who accused the German bank of conspiring to manipulate gold prices at their expense.

Deutsche Bank denied wrongdoing. The bank in October agreed to pay $38 million to settle similar litigation over alleged silver price manipulation.

Amanda Williams, a spokeswoman for the bank, declined to comment. Lawyers for the plaintiffs did not immediately respond to requests for comment.

The case is one of many in the Manhattan court in which investors accused banks of conspiring to rig rates and prices in financial and commodities markets.

Chuck again… Well, as I’ve always said, these fines are nice, but they are just looked at as a “cost of business” for the firm paying the fine… Nothing will ever change, until people start getting sent to jail for these crimes!

Currencies today 2/12/19 American Style: A$.7087, kiwi .6735, C$ .7557, euro 1.1276, sterling 1.2853, Swiss $1.0088, European Style: rand 13.7783, krone 8.6872, SEK 9.2716, forint 282.06, zloty 3.8370, koruna 22.9222, RUB 65.64, yen 110.55, sing 1.3575, HKD 7.8480, INR 70.70, China 6.7764, peso 19.26, BRL 3.7363, Dollar Index 97.05, Oil $53.26, 1o-year 2.68%, Silver $15.82, Platinum $790.38, Palladium $1,391.07, and Gold… $1,313.53

That’s it for today… well, today is Lincoln’s Birthday… And it was also the birthday of my oldest sister, Brenda, who passed away way too young from cancer. I think of Brenda a lot especially when February comes along… Or when I hear a song that used to play when she was teaching me to slow dance… OK, Pitchers and Catchers report today… And by Friday the whole squad will be in camp! YAHOO! Our Blues play the Devils tonight in St. Louis and attempt to keep their winning streak going… OK… Foghat takes us to the finish ling today with their classic rock song: Slow Ride… I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

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