U.S. Gives Russian Aluminum A Path Out From Sanctions

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

April 24, 2018

* The dollar continues to swing its mighty hammer
* The price of Oil closes in on $70…

Good Day… And a Tom Terrific Tuesday to you! Well, it finally happened… I told you yesterday that the waking up several times each night had returned, as one of the evil side effects of the chemo drug I take settles in. Well, last night, I was awake for a lot of it, and then about 4 this morning, I fell asleep and when the alarm went off an hour later, I turned it off and made an executive decision, to go back to sleep… I really didn’t think I would ever do that, but I did it this morning, and thus, the tardiness of the letter… Journey greets me this morning with their song: Only the Young…

I think that subconsciously I just didn’t want to face the music of what the news overnight was telling us… The dollar is still swinging its might hammer, and even with the price of Oil closing in on $70, the currencies can’t muster any kind of rebound. The currencies look sick, and the dollar looks like it could do this all day, every day… It won’t, but you get the idea…

The Big News overnight is that the U.S. has thrown a life-line to Russia’s Aluminum sector. Here’s the skinny on the whole thing, which to me sounds as if the U.S. is targeting an individual and not a company.. I’ll let the folks at Zerohedge.com to take it from here for this description of what’s going on here…

“That didn’t take long: just one day after we reported that “in a surprise twist”, most of Europe was pushing the Trump administration to ease Russian sanctions due to growing concerns of stagflation and outright recession should supply chains remain crippled, on Monday morning the U.S. appears to have caved, and in a notice the Treasury announced it would provide sanctions relief to the world’s largest aluminum maker outside of China, United Co. Rusal, if Oleg Deripaska relinquishes control and sells his controlling stake, while extended the deadline for companies to wind down dealings with Russian aluminum producer.
In the notice, the Treasury said that for Rusal, “the path for the United States to provide sanctions relief is through divestment and relinquishment of control of Rusal by Oleg Deripaska.” – www.zerohedge.com

So, the price of aluminum, which the president was attempting to prop up with his tariffs, dropped like a rock as the supply of Aluminum would get large given the sanctions being dropped…

Gold lost another round to the price manipulators yesterday, and after 277,000 contracts traded, the shiny metal posted an $11 loss for the day, closing at $1,324.00. What in the world is going on here? I would like to say that I’m not losing any sleep over it, but maybe I am! UGH!

So, guess what’s in the news from the Eurozone this morning? If you guessed that yet another round of debt problems have shown up at the European Central Bank’s (ECB) door, you get a Gold Star! It seems that the banking sector in the Eurozone has more bad loans than you can shake a stick at, and while the ECB was planning on bringing a requirement for the Banks to add to their loan loss reserves, the Italians, you knew it would be the Italians, right?, balked, and now the ECB is going to shelve this requirement, and instead attempt to have Bank Supervisors work on brining the bad loans up to date…

I laughed at that decision because if it were as easy as a bank supervisor calling the owner of a bad loan on the telephone and asking them to deposit a large amount of money, then they wouldn’t have the bad loan problem to begin with! But silly people do silly things, right? or as Forrest Gump said, Stupid is and Stupid does…

Anyway… the euro continues to slide VS the dollar, and this news of bad loans that total more than $1 Trillion, hasn’t helped the single unit one iota…

So, I mentioned above that the price of Oil was closing in on $70, as it trades with a $69 handle this morning. This rise hasn’t helped the Petrol Currencies any, as the leader of the Petrol Currencies, the Russian ruble, can’t muster a rally on a day when Oil rises, and they’ve been given a path to remove Aluminum sanctions…

That pretty much, right there, indicates the strength the long dollar trades are… And when the dollar is trading like this, the pimples on the currencies become large zits! Take the Indian rupee for example, the last couple of weeks, the rupee has been slip sliding away, and it’s all been about the banking scams that have been going on there… But, with the rupee slip sliding away, it was confined to small moves, that is until the dollar started swinging its mighty hammer again, and then suddenly, the rupees problems get a floodlight shined on them and they become a real problem!

The Russian ruble isn’t the only Petrol Currency getting sold in the face of a rising Oil price this morning… The Norwegian krone, Canadian dollar/ loonie, and Brazilian real are all seeing their values go down this morning. UGH!

The U.S. Data Cupboard saw the Markit ISM (manufacturing index) rise in March to 56 from 55… Yesterday we saw the Eurozone manufacturing index also rise, so this seems to be a global thing right now, and not just a U.S. thing. Today’s cupboard brings us the stupid Consumer Confidence for this month, and the Case/Shiller Home Price Index for Feb, which I’m not sure matters to anyone what home prices were doing in February, which seems like a year ago to me!

To recap… Chuck slept in, and the Pfennig is later today… Shame, shame, shame! The dollar continues to swing its might hammer, and all the currencies are getting sold this morning. Gold lost $11 yesterday but is up $3 in the early morning trading today. And the price of Oil is closing in on $70… but it’s not help to the Petrol Currencies, yet…

For What It’s Worth… I thank longtime reader, Bob, for sending this link my way… It’s James Kuntsler and his view of the U.S. economy, which I have to say is bang on in my opinion, and it can be found here: https://www.zerohedge.com/news/2018-04-23/kunstler-america-has-become-alzheimer-nation

Or, here’s your snippet: “We really have reached limits for an industrial economy based on cheap, potent energy supplies. *The energy, oil especially, isn’t cheap anymore. The fantasy that we can easily replace it with wind turbines, solar panels, and as-yet-unseen science projects is going to leave a lot of people not just disappointed but bereft, floundering, and probably dead, unless we make some pretty severe readjustments in daily life.

We’ve been papering this problem over by borrowing so much money from the future to cover costs today that eventually it will lose its meaning as money – that is, faith that it is worth anything. That’s what happens when money is just a representation of debt that can’t be paid back.

This habit of heedless borrowing has enabled the country to pretend that it is functioning effectively. Lately, this game of pretend has sent the financial corps into a rapture of jubilation. The market speed bumps of February are behind us and the road ahead looks like the highway to Vegas at dawn on a summer’s day.

Tesla is the perfect metaphor for where the US economy is at: a company stuffed with debt plus government subsidies, unable to deliver the wished-for miracle product — affordable electric cars — whirling around the drain into bankruptcy. Tesla has been feeding one of the chief fantasies of the day: that we can banish climate problems caused by excessive CO2, while giving a new lease on life to the (actually) futureless suburban living arrangement that we foolishly invested so much of our earlier capital building. In other words, pounding sand down a rat hole.”

Chuck Again… And in the whole article he really goes off on stuff, but you get the drift… This House of Cards built on deficit spending is really becoming a problem folks… Whew! I’m tired!

Currencies today 4/24/18… American Style: A$ .7611, kiwi .7124, C$ .7792, euro 1.2216, sterling 1.3955, Swiss $1.0227, …. European Style: rand 12.32, krone 7.8861, SEK 8.4998, forint 256, zloty 3.4380, koruna 20.8225, RUB 61.67, yen 108.81, sing 1.3220, HKD 7.8467, INR 66.42, China 6.3069, peso 18.84, BRL 3.4267, Dollar Index 90.90, Oil $69.06, 10-year 2.97%, Silver $16.68, Platinum $917.28, Palladium $972.18, and Gold… $1,327.40

That’s it for today… I apologize for the tardiness of the Pfennig, but I’ll go with the old saying today of: Better late than never, eh? Cardinals and Metropolitans for a three games series starting tonight… It’ll be interesting to see if the Cardinals can beat a team other than the Reds… I got dragged all over God’s creation yesterday looking at things, and my hip pain flared up on me last night, it’s still feeling a bit iffy this morning, so I had better nip that in a bud! And with that, Neil Young and Crazy Horse take us to the finish line today with their live version of: Cowgirl In The Sand, recorded at the old Filmore East… It’s 17 minutes long… I hope you have a Tom Terrific Tuesday and 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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