Trade War Begins To Get Real Ugly…

A Pfennig For Your Thoughts

August 26, 2019

* Gold soars on Fed’s waffling…
* Trump Practices singing a Brenda Lee song…

Good Day… And a Marvelous Monday to you…. I know, I told you no Pfennig this morning… But I had so many thoughts this weekend I didn’t want them to have to wait… So, this will be quick and dirty, just some of my thoughts this weekend…. A pretty darn fantabulous weekend, weather-wise, and baseball wise here in the Midwest, even if we did get some rain yesterday… Where did the historical heat from the dog days of August go? It sure wasn’t around this past weekend, or from the forecasts for the week, not this week either! Something strange is going on here… But not as strange as what went on in Jackson Hole, Wy. This past weekend… I have a quick question… Would you like to be in Fed Chairman, Jerome Powell’s shoes, right now? He’s getting calls from Central Banks around the world that they are in trouble, The Trade War with China just went into super drive, The economic data for your country is faltering, and the President is claiming it’s your fault! You’re damned if you do cut rates, because critics will say you knelt down and kissed the ring of the President, and if you don’t cuts rates, you fear you’ll be so far behind the recession 8-ball… Food for thought this Marvelous Monday! Jefferson Airplane greets me this morning with their song: Volunteers…

With kudos to the great Brenda Lee…. I’m sorry… So sorry… That I was such a fool… I didn’t know that (Trade Wars) could be so cruel… Yes, I changed it to meet my needs… But I can hear President Trump humming the music to the great Brenda Lee song… For this past weekend, he was asked about if he had regrets with the Trade War with China, and he answered, “Yeah, sure why not. Might as well. Might as well. I have second thoughts about everything.”

In case you’ve been living under a rock… China slapped another round of tariffs on the U.S. and our timing couldn’t have been worse, as 3 tanker ships filled to the brim with Oil have already set sail for China… and the U.S. President sent out a message to U.S. Companies that moved their businesses to China, to “get out”… I doubt that he can make these companies leave China, but I’m sure things could get pretty difficult for them if they decide to stay… I’m just saying…

The currencies finally made a mini-move on Friday VS the dollar, as the winds of change were blowing in from Jackson Hole Wyoming… Bank of England Gov. Mark Carney, with his bag o’ promises, called for a global money to be used instead of the dollar… Wait? What? Our most trusted ally, (the U.K.) has their central banker calling for a replacement for the dollar? My O My… things really do begin to change here, huh?

And Gold? It rallied about $32 on the day to $1, 526… WOW! So, as I painted in the opening paragraph, the markets now see Powell’s dilemma and feel for him, by whacking a chunk out of the dollar’s armor on Friday… Oh and in the overnight markets, Gold was up another $18 last night, to 1,544, but things have settled down as the overnight sessions went along, and Gold is only up a buck or two this morning…

More and more, economists, writers, observers, pundits, etc. are getting on my bandwagon that a recession is near… It’s so close I could spit in its backyard! And so all those that thought the Fed was wrong about their rate cut in July, are taking back their words and saying that the Fed needs to get out in front of the recession and cut again soon! And all this talk sure has the dollar bugs on the run to safer wall boards since Thursday when we last talked… So, maybe, just maybe, cause you never know (famous words of Joaquin Andujar), the President will get his wish and see a cheaper dollar…

Of course, what happens most of the time is that once the tracks are greased for a short trip down the slippery slope, the train keeps going… and before you know it, we’re in a weak dollar mulit-year trend once again! I say once again, and use the term to mean the 4th weak dollar trend, since 1971, when President Nixon, took us off the gold standard. 1971-78, 1985-95, 2002-2010, and the next one would be the weak dollar trend periods… How long the next one lasts is anyone’s guess, but if you had me surrounded by people at a campfire, I might say it would never recover, and the financial system that we all know and love (well, not everyone, but they don’t have a clue anyway) will be replaced by something new and shiny…

Of course, I can’t remember the last time I sat around a campfire… So, getting me there would take some gargantuan feat! HA!

Did you hear what France’s PM did at the G7 meeting his country hosted? If not… Guess who came to dinner? Unbelievable! The Iran leader was there, as Macron’s guest, unbeknownst to Trump, or anyone else… Sort of like sneaking Elvis through the back door! If I were the President, I would have stood up, and made a big deal out of walking out of the room… But that’s just me and temper showing!

OK, so the currencies rallied on Friday, but they couldn’t hold onto those moves in the overnight markets… (profit taking? Or the PPT at work?) This Trade War has got to stop before somebody loses and eye! It’s all fun and games until that happens right? And I for one know it’s no picnic in the park to be minus one eye!

I was asked to answer some questions on a survey… And I said, “STOP THE TARIFFS, THEY ARE CAUSING A GLOBAL RECESSION! I’m sure the folks that put those things together, cut that out of my reply! Oh, and just read that the stock futures are down big this morning, which doesn’t bode well for a recovery in the stock market today, after losing 623 points on Friday… Hey, with what I’ve told you previously about historically speaking stocks perform miserably during a recession, maybe, we’re already in the recession?

New Home Sales last month dropped like the stock market, a very ugly day for New Home Sales… And later this week, we’ll see another revision in the 2nd QTR GDP… I expect this revision to be yet another cut in the previous figure of 2.1%… It might even be as large of a cut as -0.3%, to 1.8%… The final revision should end up around 1.5%…

To Recap…So, that’s all I have for you today… Gold is soaring, the currencies have gotten up off the canvas, and doing some rope a dope with the dollar this morning… The Trade War has gone ballistic, The Fed didn’t feel the need to come to the economy’s aid, just to prove they aren’t under Trump’s orders… And the data continues to be bad…

For What It’s Worth…. OK… this article came to me via my friends at GATA… The people that have made it their worthwhile to prove price manipulation in metals… Them, along with Ted Butler (no relation that I know of), Ed Steer, Chuck Butler, and others have long been thought of as “Conspiracy Theorists” and that we wore tin foil hats… But no longer folks! These following words are from the death bed of Bart Chilton, form regulator for the CFTC, the folks that should be shutting down the like of JP Morgan et al, for their blatant manipulation of metals, but never got around to it… So, here’s what Bart had to say in the end…

“They did ultimately get down to the position [limit],” he recalled. “But it was at that time that they were so large, that I made the comment about how large a particular bank was in the market. Which sort of shocked people. And it shocked me, quite frankly, that it was so large.”

In the end, the evidence was compelling, but not enough to nail anyone to the wall.

“We just didn’t have the traders, and we didn’t have the market participants dead to rights. But we had lots of stuff. And we had real stuff that would have played really well in court… But the damning part had to be backed up by other requirements of evidence under the law. And we didn’t get all of that.” _ the late Bart Chilton, of the CFTC… from the GATA folks…

Chuck Again… I can’t begin to tell you how many times I was called to a lecturing to me about writing about conspiracy theories….. I wonder what those people think now… Oh, I don’t care, I’m happy doing what I’m doing, but I wonder what it will be like when one day our paths cross again, and they have to say… “Chuck, you were right, we were wrong”

Currencies today 8/26/19 American Style: A$ .6766, kiwi .6380, C$ .7518, euro 1.1115, sterling 1.2234, Swiss $.9805, European Style: rand 15.2593, krone 8.9848, SEK 9.6696, forint 296.00, zloty 3.9250, koruna 23.2063, RUB 65.97, yen 105.90, sing 1.3878, HKD 7.8440, INR 72.05, China 7.0949, peso 19.90, BRL 4.1229, Dollar Index 97.96, Oil $54.81, 10-year 1.53%, Silver $17.59, Platinum $863.51, Palladium $1,476.26, and Gold… $1,528.64

That’s it for today… A sweep of the Rockies by the Cardinals this past weekend, along with a sweep of the Cubs by the Nationals, has my beloved Cardinals in first place by 2.5 games over the Cubs… There’s still plenty of games to be played, so come on boys, keep your foot on the gas! I see my oncologist this morning, bright and early. I haven’t seen her for 2 months, I’m still here! Some things never change, like the small tumor in my jaw… or the wound on my leg… She’ll take one look at me and have déjà vu from two months ago! I’ll start this week sprucing up the backyard, and get ready for a day of BBQing on Friday, and Saturday! We thought our friends from New Jersey, were going to join us this year for the BBQ, but they had to change plans, so that’s not going to happen… UGH! OK… The Ozark Mountain Daredevils takes us to the finish line today with their song: If You Wanna Get To Heaven…. You’ve got to raise a little Hell! (And brother have I been doing that most of my life! HA) I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler
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A Pfennig For Your Thoughts