U.S. Data Returns This Week… Watch Out Dollar!

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

February 26, 2018

* S&P upgrades Russia’s Credit Rating!
* Bank fraud pushes rupee down…

Good Day… And a Marvelous Monday to you! And welcome to the last couple days of February. I have to say that February has been a fantabulous month, weather-wise down here… Yesterday, was an absolutely beautiful day, which I spent at the ballpark watching my beloved Cardinals in a spring training game VS the World Champion Astros. The only black mark on the day was that the Cardinals laid an egg for their fans. But sitting there with friends, Jack and Lorraine was so delightful that I forgot about how badly our pitcher was pitching! Billy Squier greets me this morning with his song: In The Dark…

This should be short-n-sweet this morning, as there’s just not a lot going on… These past few trading days have seemed like we’re already in the Dog Days of August… But we’re not, so we had better figure out what’s going to light a fire under the Currency traders! It could come from the handful of real economic data that we get this week, that looking over it, I don’t see anything that’s going to support the dollar’s rally last week. In fact, the dollar is getting sold this morning, as traders prepare for a week of sub-performing economic data from the U.S.

Gold, after losing a few shekels on Friday, has bounced back in the early morning trading today by nearly $12 (11.90)! And the price of Oil continues to climb up off the mat, and trades this morning with a $63 handle. This morning, we have the currencies led by the Big Dog euro, moving higher VS the dollar, but as it stands right now, the moves aren’t HUGE.

One currency that’s struggling is the Indian rupee, which not only has had to deal with the announcement of additional and extended Stimulus, but also a major Indian Bank fraud that was discovered last week. The fraud involved import export loans, and the discovery has led to a closing of the ranks for the import export loan business in India… And that is not a good thing for the rupee!

The antipodean currencies of Australia and New Zealand, are back on the rally tracks this morning. It’s always a sunny day for me when these two currencies are on the rally tracks… And last week was tough for me to watch as traders sold these two on the thought that the U.S. Fed would be hiking rates 4 times in 2018, starting with March, and that would eliminate the yield differential that these two have on the dollar right now.

But, calmer heads have prevailed and they have decided to wait to see what new Fed Chairman Jerome Powell has to say when he gives the lawmakers his testimony on how the economy is doing later this week.

So… Did you hear the BIG NEWS from Russia this past weekend? The Ratings agency, S&P, raised its estimation of Russia’s sovereign credit rating from BB+ to BBB-. This is good news for the Russian Federation as it continues to realign its economy in response to the various sanctions that the West, mainly the United States, keep imposing on the nation. Sanctions? What Sanctions, I can hear Russian President, Putin saying… or singing that old county song by Johnny Paycheck… Take This Job and Shove it, but changing the words to: Take those sanctions and shove it!

The Russian ruble traders responded favorably to the S&P upgrade, and we could very well see the ruble trading with a 55 handle should Oil keep tracking higher.. The ruble has come a long way from the depths of collapse a few years ago, but still has some major wood to cut to get back to the levels it traded before the conflict in Ukraine came about… Back “in the day” the ruble traded steady around 35…

I read an article this morning that the writer was saying that the U.S. National Debt had risen more than $1 Trillion in the past 6 months! YIKES! So, I immediately fired up the U.S. Debt Clock at usdebtclock.org and while we can’t do anything about water under the bridge, we sure could wrap a tourniquet around the bleeding, right? The Debt Clock tells me that if all things remain the same that the National Debt will be $23.3 Trillion in 4 short years, an be equal to 106% of GDP…

There’s a caveat there that I must point out, and that’s the fact the its in the words “if all things remain the same”… Which I don’t believe they will, we’re bound and determined to have a recession in the next 4 years, and that will throw a spanner in the works of a rising GDP, which would in turn increase the percentage of Debt to GDP…

I guess ;we shouldn’t worry about the rising debt, right? No, I haven’t gone to the dark side on debt.. I’m being facetious given the remarks from U.S. Treasury Secretary Mnuchin over the weekend… Check this out…Treasury Secretary Steven Mnuchin brushed aside signs that investors are nervous about rising prices and criticism that growing debt will harm U.S. economic security, declaring that President Donald Trump’s policies won’t cause inflation. Really? You must be kidding me with that statement, Mr. Mnuchin! But there’s more where that came from!

“There are a lot of ways to have the economy grow,” Mnuchin said in an interview aboard a train to Philadelphia on Thursday, where he toured the U.S. Mint. “You can have wage inflation and not necessarily have inflation concerns in general.

He also said he isn’t concerned about foreign investment in new U.S. debt, which analysts expect will exceed $1 trillion this year… I just shake my head in disbelief and disgust at the thought process that’s going on here…

The U.S. Data Cupboard gets restocked this week, and we’ll begin seeing real economic data tomorrow with the January print of Durable & Capital Goods Orders, which I believe will fall in line with the negative prints of Retail Sales last week. Then as the week goes on we’ll see the color of the Home Price Index, the latest revision of 4th QTR GDP, which I believe will be another downward revision. On Thursday we’ll see Personal Income & Spending, but have to wait an extra week for the Jobs Jamboree, which is usually the first Friday of a new month, but will print March 9…

I’ll be on vacation then from writing… As a reminder, I’ll be gone starting March 9, through March 23… I know you’ll miss me (HA!) but I’ll miss you more!

To recap… Have the Dog Days of August come early? Probably not, as the lack of data last week, put a crimper on trading activity, but that all changes this week, and Chuck thinks the data will be no friend to the dollar this week, and traders seem to be in line with his thinking, as the dollar is getting sold this morning. Gold is up $11.90 in the early morning trading and the price of Oil continues to rise… S&P upgraded Russia’s credit rating, and the ruble is on the move…

For What It’s Worth…. Since today I highlighted Russia, this article continues to add to that highlight, and talks about how Russia is adding Gold, while the U.S adds debt, and can be found here: https://www.washingtontimes.com/news/2018/feb/22/russians-are-hoarding-gold-while-us-piles-up-debt/

Or, here’s your snippet: “It’s a little-known fact in the West, but Russia has very little sovereign debt.

In fact, if you ignore the corruption and misallocation of capital in the Russian economy, you could make the case that Moscow has been more financially responsible than Washington over the last several decades.

The Bank of Russia skillfully raised rates to head off further devaluation of the ruble during the recent recession, and the Kremlin is famous for building up rainy-day reserve funds during the oil boom years, pots of money they have heavily relied on during the period of Western sanctions and the collapse of oil prices on international markets.
In fact, after draining the funds for use to plug holes in the federal budget, the Kremlin has once again started building the funds back up, albeit very slowly.”

Chuck again… And don’t forget that while the Central Bank of Russia (CBR) has been cutting rates, as their inflation drops, that the ruble still enjoys higher than the average bear interest rates…

Currencies today 2/26/18… American Style: A$ .7876, kiwi .7340, C$ .7920, euro 1.2343, sterling 1.4068, Swiss $1.0716, … European Style: rand 11.5510, krone 7.8056, SEK 8.1340, forint 253.94, zloty 3.3774, koruna 20.5535, RUB 56.11, yen 106.58, sing 1.3148, HKD 7.8239, INR 64.73, China 6.3350, peso 18.60, BRL 3.2370, Dollar Index 89.55, Oil $63.49, 10yr 2.86%, Silver $16.76, Platinum $1,061.50, Palladium $1,061.50, and Gold… $1,342.20…

That’s it for today… a little longer than I anticipated when I began, but oh well… How about my adopted team for the Winter Olympics, the U.S. Men’s curling team won Gold! A awful weekend for our Blues, who were shut out twice, UGH! This is the time of year when hockey teams should be building toward the playoffs, but our Blues seem to be in a real funk… Uh-Oh! I experienced my annual emotional moment when I first see the baseball diamond yesterday… Good thing Kathy and our guests had walked ahead of me… We begin to see the visitors from St. Louis trickle down here this week, next week my spring training buddies will be here, then Alex, will visit, and kids and grandkids, and then Spring Training will be over and it will be time to head home for Easter! Mitch Ryder and the Detroit Wheels take us to the finish line today with their rocking song: Jenny Take a Ride, that goes into C.C. Rider… a real foot stomping song for sure! OK, let’s go make this a marvelous Monday and be sure to Be Good To Yourself!

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

) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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