The Dog Days Of Summer.

* Antipodeans get sold!…
* Currencies drift with no direction .
* Gold gets sold $8 on Monday!
* The Mogambo on a Tuesday!

And now. Today’s A Pfennig For Your Thoughts.

Good Day. And a Tom Terrific Tuesday to you! Well, the week of no “real economic data” starts its second day today. Have you ever heard of the dog days of summer? Sure you have! Well, in most cases the term is referring to the August days in baseball, especially when they used to play so many day games. Well, many years ago, when I first began trading currencies for the Mark Twain Bank, I soon realized that the term also applies to the currencies and markets in general. And we’re soon coming up on August, and the dog days of summer for the currencies and metals. Yes, greets me this morning with their song: Soon, which if I remember correctly, is the all-time best rock song to listen to with good headphones. I was always a big fan of Yes.

So, what does the dog days of summer for the currencies and metals bring us? Not much, if anything it brings us low volumes of trading, no major moves, and long drawn out days that don’t amount to much. That’s my view of August. But then back “in the day” I used to go on my two week summer vacation in August, just like the Germans! So, I wasn’t around for a lot of the month. But the Good Lord Willing, and the Creek don’t rise I’ll be here for most of August this year! I know, I know, I’m dragging this out too long this morning.. But I wanted you to know what’s in store for us in the coming weeks..

Well, the major movers overnight are the antipodean currencies of Australia (A$) and New Zealand (kiwi) who moved down throughout the night independently of each other. So, let’s start with the A$. The Reserve Bank of Australia (RBA) issued their July meeting minutes last night, and you would have thought they threw a cat among the pigeons instead! The meeting minutes confirmed the easing bias that was present when the RBA met and then held a brief statement period after the meeting, where they left rates unchanged. These minutes, really set off the sell signal for traders, who are now all on board with the thought that the RBA will cut rates in August. From no thought of a rate cut in August, to an “all-in” on a rate cut in August in one set of meeting minutes. Central Bankers. I shake my head in disbelief that the markets still think they know what they are doing. I had better move along to New Zealand or else I’m going to say something about Central Bankers that will get me into trouble..

OK. It wasn’t meeting minutes that sunk kiwi overnight, instead the Reserve Bank of New Zealand (RBNZ) issued a consultation paper proposing changes to the loan-to-valuations on mortgage loans. As I’ve told you previously about 100 times (I exaggerate of course!) they have a housing bubble in New Zealand, and so this consultation paper addresses this housing bubble in an attempt to reduce the risks to financial stability of the whole sector. Now, to me, this doesn’t appear to be anything other than a request for responses to a problem , and is not the “answer” or the “fix” or the “change in procedure” that could change things, it’s simply a request for responses, and that sent kiwi to the woodshed. Doesn’t make any logical sense to me, and you know me, I’m all about logic.

The currencies other than the antipodeans are pretty range bound, already practicing for their August roles. The price of Oil remains with a $45 handle, and Gold got sold yesterday to the tune of an $8 loss, but is up $4 in early morning trading. The Data Cupboard only has Housing data later today, so I just don’t see how currency traders are going to get any clear direction today, and so therefore, I will put down that this is a range bound day, with little drifting. There! I just now pretty much made sure that this will be a wild and crazy day, because I said it was going to be the opposite of that! HA!

Tonight, the IMF is going to issue their World Economic Outlook Update. Oooooh, I can hardly wait! Like a kid on Christmas Eve day, knowing the magic happens tonight! Ok, well, maybe not quite like that! In fact, if I hadn’t read it somewhere what the IMF was doing, I might well may not have even noticed it. But since I did, I thought it would be good to talk about Chuck’s World Economic Outlook Update!

In the words of my good friend, The Great Mogambo Guru. We’re all freakin’ doomed! Did you hear me? I said, we’re all freakin’ doomed! And that my friends, is Chuck’s World Economic Outlook Update! Speaking of the Great Mogambo Guru, In his letter that gets posted to the Daily Reckoning ( we can find golden tidbits of his work, like: “For example, the overvalued stock market, the overvalued bond market, the overvalued housing market, overextended banks, overextended governments, overextended government promises, overextended businesses, and overextended citizens all adding up to incomprehensibly enormous and ludicrously large debt loads, etc.) will come crashing down in a stinking, staggering, stupefying monstrous, huge, honking heap of utter, utter ruination.” – the Mogambo Guru.

And who got us in this mess? The Central Banks. The Central Banks should have told the politicians, “no”, when they wanted to deficit spend until debt was up to their eyeballs.. Instead of telling them “no” they aided the lawmakers efforts to bring gloom, despair, and agony on us, with money printing, bond buying, zero and negative interest rates, and easy credit. One day, the people will realize what a mess that has been created by the people they vote into office, and the people they don’t vote into office. But it will be too late, baby, now it’s too late. (Carol King) and that’s when you’ll be glad you didn’t let them take you down the debt rabbit hole.

Whew! That really sounded like a Butler Patio speech, to me, Chuck. You had better be careful or you’ll be rewriting this letter because all of it was Nixed! Yes, I walk a gray line, but as long as I don’t say any one person’s name is responsible, then I should be good to go!

Alrighty then, Gold got sold by $8 yesterday, but is up $4 in the early morning trading. Gold has stalled out on its climb higher that began in January this year. We had seen something similar before the BREXIT vote, but after the BREXIT vote Gold soared for a couple of days, and then the not for profit sellers took control, for they had seen enough! Physical demand is still strong, so it’s got to be the paper trades and the algorithms that the not for profit sellers use causing this stall in the price of Gold. Silver has climbed back above $20 this morning, as that level seems to be a strong line of resistance for Silver ‘s attempt to go higher. But like all lines of resistance, they are there to be broken through!

Speaking of BREXIT, the dust is still settling on the whole vote, which I’ll remind you is non-binding, and that the U.K. Parliament still has the final say, and whether or not they will exercise that final say, is the question that’s on everyone’s minds. But should the exit from the European Union (EU) continue to go without anyone stopping it because the Parliament says so, the U.K. is going to have to deal with a major blow to the economy, because businesses, and consumers and investments are going to be holding back waiting for confirmation of the exit before making any decisions. I expect the U.K. economy to drop like a rock and barely grow from here on out until something is decided in stone. That’s why I said last week that I fully expected the Bank of England (BOE) to cut rates at their meeting. But the BOE left them unchanged. I know that the BOE Gov. Carney, is afraid of what it might look like, given that he had held the thought pre-BREXIT that rates would be hiked, and now he might have to cut them. But he needs to get over that, the economy is in deep dookie. And that will weigh heavily on pound sterling, folks.

The U.S. Data Cupboard had the TIC Flows data yesterday, which used to be a closely watched data set, but not any longer, now that the markets know that the Fed can just print money, and buy the Treasuries that foreigners don’t buy! And don’t buy was the action taken by foreigners for the 5th straight month, when a net $41.1 Billion was the total. That figure is inflated because of U.S. residents were aggressive sellers of foreign securities. But the real key in this data is the fact that foreigners were just modest buyers of Treasuries in May.

Today, we’ll see the Housing Starts data for June. I’m sure it will show a strong number for Housing Starts. Not that this data is market moving, but I’m sure it will get some people all lathered up and ready to go out dancing. That is that’s as long as they didn’t read the article on Bloomberg this past weekend that quotes RealtyTrac that the Housing Market is waving a Red Flag. I’ve got that article for you in the FWIW section today, so there you go a full service provider, that’s me! HA!

To recap. The currencies and metals are range bound this morning, with only two real movers overnight the A$ and kiwi, who sold off independently of each other and for different reasons. Australia’s RBA meeting minutes confirmed an easing bias that sent A$ traders into a tizzy, thinking that the RBA will cut rates in August. Central Bankers! What the heck are they thinking? Oh well. Gold got sold by $8 yesterday but is up $4 in the early morning trading, and the price of Oil remains in the $45 handle. Only Housing Starts data today, so a lot of drifting in the currencies is expected by Chuck.

For What it’s Worth. I found this on Ed Steer’s letter, and he sent me to the Bloomberg, where I could find this article on the Housing Market, that can be found here:

Or Here’s Your Snippet: “Almost nine years after the housing-market bust helped trigger the most recent recession, RealtyTrac senior vice president Daren Blomquist sees the industry waving a red flag.
The same fervent speculation that abetted the housing bubble is showing up in the bloated share of foreclosures snapped up by third-party investors at auction – a record 31 percent in June, according to RealtyTrac data that starts in 2000.
Many of those third-party buyers are “mom and pop” investors with less experience, said Blomquist. At the same time, institutional investors, a subset of the third-party investors who purchase at least 10 properties a year, are ducking out of the market.
“It’s somewhat counterintuitive – as the market gets better and there are fewer foreclosures available, demand for those good deals, those bargains in the market goes up,” said Blomquist. “When you see this high percentage of the properties going to third-party investors, that is a sign that these speculators may be over-inflating the market.”

Chuck again. Remember about 6 months ago when I told you that I was beginning to get that old time feeling again about the housing sector? Well, RealtyTrac agrees with me!

Currencies today 7/19/16. American Style: A$ .7625, kiwi .7295, C$ .7670, euro 1.1080, sterling 1.3285, Swiss $1.0155, . European Style: rand 14.3227, krone 8.4040, SEK 8.5215, forint 283.09, zloty 3.9780, koruna 24.39, RUB 63.91, yen 104.65, sing 1.3458, HKD 7.7575, INR 67.06, China 6.69, peso 18.32, BRL 3.2955, Dollar Index 96.38, Oil $46.15, 10-year 1.49%, Silver $20.42, Platinum $1,092.50, Palladium $640.29, and Gold. $1,339.80

That’s it for today. I was a busy beaver yesterday, and will be today too, was it’s just one of those times of the year when all writing assignments are due the same week! I’ll be typing my fat fingers to the bone! HA! And I have my newest edition of Things That Make You Go Hmmm, from Grant Williams in my mailbox, that I haven’t gotten to yet! UGH! I hope you liked our Sunday Pfennig, from Dennis Miller of I loved it! Especially the song he used: She got the Gold mine, and I got the shaft! HA! Well, the Big Boss to the rescue. The Big Boss, Frank Trotter, told me yesterday that he would make sure there was a Pfennig on Thursday and Friday this week. I don’t know what I would do without Frank. of course this may sound like brown nosing, but he’s been a very good friend of mine for a long time now. We first met in 1981! That’s before the Dead Sea got sick! HA! Alrighty then, enough is enough, Styx takes us the finish line today with their song: Too Much Time On My Hands. That’s not going to be my problem this week! I hope you have a Tom Terrific Tuesday! Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts