What About The $22 Trillion Deficit National Emergency?

A Pfennig For Your Thoughts

February 19, 2019

* December Retail Sales print negative…
* Currencies rally on the bad data in the U.S. …

Good Day… And a Tom Terrific Tuesday to you! What a great weekend here in S. Florida, weather-wise, and perfect for a 4 day weekend for yours truly! There were tons of data releases on last Friday, so we’ve got to talk about those, the National Emergency , and more bricks in the wall… All that and more in today’s Pfennig! Our Blues are really playing some very good hockey these days, having won 9 in a row, and haven’t lost in February, so far! I’m thinking that it could be a case of getting hot, too early, and I sure hope I’m wrong, but the playoffs don’t start until the second week of April… I’m just saying… Not that I’m complaining about their winning streak! Bob Marley greets me this morning with his song: Three Little Birds…. People don’t worry, about a thing, cause every-little-thing is gonna be alright…

Sounds like some of the economists, that keep saying that debt doesn’t matter… Last week, the President announced a National Emergency as the border situation got worse. I’m wondering what happened to calling a National Emergency on the debt… We have reached $22 Trillion and it took only 10 months to gain the last $1 Trillion… And if you ask me… we have 2 National Emergencies… But since Trump has added to the debt party, he can’t be excluded from the former presidents that added to the debt in a Big Way, and failed to call if a National Emergency… That’s all I have to say about that today, for I’ve been beating the drum, and calling out the National Debt as a problem for a long time… Oh, and now there are something like 16 states trying to block the President’s National Emergency… Didn’t I tell you a couple of months ago, that nothing was going to get done in the next two years? I’m just saying…

The currencies on Friday, held on to the moves they had made on Thursday, and with the U.S. out yesterday, the currency market was thinly traded, with little movement. So, the majority of the move by the currencies against the dollar, came on Thursday, the day that December Retail Sales finally saw the light of day, and they were as bad as the BHI had indicated they would be, with Core Retail Sales down -1.8%….. In December… in the month that we shop till we drop… Retail Sales were a negative -1.8%… When you add in car sales they got better, but not by much, falling -1.2%…

All in all, it’s just another brick in the wall…

And to add insult to injury for the dollar bugs….. Our friends at OPEC (NOT!) have cut production of Oil again, and those curbs on production, has pushed the price of Oil above $56…

So, there’s been a ton of data in the past few days, And we’ve added quite a few bricks to the wall of bricks that represent economic data reports that are pointing to a recession in the future… We might as well go through them… First of all on Thursday, PPI (wholesale inflation) printed for January was -0.1%… So, no increase of inflation in the pipeline, which should be on the Fed Head’s minds as they prepare to shut down the rate hikes next month…

On Friday, it was more of the same, and more bricks in the wall… Industrial Production in January printed negative -0.6%… The decline was driven by an 8.8 percent decline in motor vehicles and parts, with assemblies falling from the best pace in more than two years to the weakest reading since May. The year has started out in the red as far as economic data is concerned and the markets are beginning to notice… (a note to them from me… Hi guys, glad you could join in the discussion)
For all those that keep saying this is nothing, it’s going to get better, and this is the best time…I have this to say… What we have here is a failure to understand… To not see the trees in the forest, and to have drank the Kool-Aid…

Gold had a good day on Friday gaining more than $9, and yesterday even without the price manipulators at their desks, Gold gained $3 more dollars on the day… And is up another $3 in the early trading this morning…

Speaking of Gold… Last week I highlighted an article in which metals company, Johnson-Matthey commented on the supply and demand of Platinum and Palladium as being the reason they’ve done well…. I then received an email from a dear reader asking to ask Johnson – Matthey to also comment on Gold & Silver… Well, I guess if I had their email address I would… But to put it to the test on the number of short trades on the books, Silver continues to be the number 1 metal that has the most short sales, so much so, that it would take 185 days of Silver production to match the number of ounces of Silver that have been sold short…

Palladium continues to soar higher and higher each day… Friday, it was up $25 and yesterday it was up $24, and is working up a sweat in the early morning trading today… Heavens to Betsy, what on earth has gotten into Palladium traders? Palladium has outperformed everything in the past two years… Everything! stocks, bonds, commodities, other precious metals, cryptocurrencies, and whatever investment invention that the propeller heads have come up with now… I guess, I should have listened to myself, when I wrote about how I agreed with a metals company CEO, who said that Palladium was going to bypass Platinum… It has done that, and much, much more!

Well, the U.S. / China trade talks continue past last Friday’s original deadline, as an extension was granted, and there were “leaks” from the negotiators, that things were going smoothly.. Hmmm… I’d say hogwash! If things were so hunky dory, why did you need an extension of time? All these bad economic reports from January and late last year, are showing that I was correct in saying that the Trade War would hurt both countries, the U.S. and China…

And over in the U.K. BREXIT talks continued, but there’s nothing here to report, as I doubt little progress has been make… This is going nowhere folks, and pretty soon, there will be calls to end it all, and go back to the way things were before the BREXIT vote… At least that’s how I see it happening…

But, pound sterling is held hostage to the BREXIT happenings, so if I see the whole thing collapsing, then I would steer clear of pound sterling, but that’s just me…

I had a dear reader ask me to talk about the Singapore dollar (S$), so I would be happy to do so, as I’ve not mentioned it in a long time… My bad, I guess… As I’ve talked about in the past, the S$, moves in tandem with the Chinese renminbi, as the two respective countries compete for exports, and neither country can afford to allow their currency to get out of whack with the other…

Keeping that thought in mind… The Chinese renminbi has actually been better in recent weeks, which means the S$ is also performing better VS the dollar… I’ve talked about this in the past, but for new readers… In Singapore they do something that I believe all countries should adopt… Their Monetary Authority of Singapore (MAS) uses a band that the currency trades in that’s tied to inflation… The only move the currency’s trading range in the band if inflation moves… They use the currency’s strength to fight inflations, an not willy nilly interest rate moves!

There’s not much in the U.S. Data Cupboard today, except for the Fed’s Meeting Minutes (FMM) from their last meeting that will print this afternoon… In December, the Fed hiked rates, and ever since they talk as if they were sorry they did so… And the Data reports from the last quarter of 2018, and into 2019, have reflected that there is a problem, Houston… So, it will be interesting to see if the Fed Heads were talking about these problems last month when they hiked rates, or if they were still looking at the economy though rose colored glasses… I’m thinking that they still ahd their fashionable rose colored glasses on in December, and the FMM will show that to be the case…

To Recap… The currencies rebounded last Thursday, and have been trading in a tight range since, as the markets have been thinly traded since… But all that changes today, and the only piece of data today is the Fed’s Meeting Minutes. Last week, December Retail Sales were negative -1.8%… Yes, that’s in December… That’s not a good thing folks, and Industrial Production fell out of bed in January! Our wall of bricks that represent bad economic data reports, received quite a few bricks in the past week…

For What It’s Worth… I received this email from the GATA folks over the weekend, and then Ed Steer highlighted it, so the double shot of this report was enough for me to make it my FWIW article today. It’s about how since Glass Stegal was abolished, Banks are falling by the wayside, and can be found here: http://wallstreetonparade.com/2019/02/4823-u-s-banks-have-disappeared-since-1999/

Or, here’s your snippet: “At the end of 1999, the year that President Bill Clinton and his Treasury Secretary Robert Rubin brokered the deal to repeal the Glass-Steagall Act of 1933 and allow the casino investment banks on Wall Street to gobble up deposit-taking banks, there were 10,220 federally insured banks and savings institutions in the United States. Today, that number stands at 5,397, a decline of 47 percent according to the Federal Deposit Insurance Corporation (FDIC). What exactly happened to those disappeared banks?

We examined FDIC data to see if the sharp falloff in bank numbers was from failures or mergers. We found that the vast majority of the decline resulted from banks being absorbed in mergers. By the end of 2005, six years after the repeal of Glass-Steagall, the U.S. still had 8,832 federally insured banking institutions. But in just that year alone, 315 banks were lost to mergers. By 2010, the number of U.S. banking institutions had dropped to 7,657 with 197 institutions absorbed that year through mergers. In years 2015, 2016 and 2017, there were a total of 786 federally insured banking institutions absorbed through mergers.

The loss of competition in banking services has unleashed an unprecedented concentration of the life savings of Americans being held as deposits at a handful of behemoth Wall Street banks which simultaneously engage in high risk securities and derivatives trading – the very combination that led to the epic Wall Street banking collapses in 2008 and the 1930s.”

Chuck Again…. Well, let’s see… I’ve worked at 4 banks in my life and none of the 4 are still in business… Maybe I was to blame? HA! As if… I know the last place I worked, I played a big part of keeping the lights on in 2008… But that’s all in the past… in other words, nobody remembers, or cares…

Currencies today 2/19/19 American Style: A$.7117, kiwi .6826, C$ .7550, euro 1.1310, sterling 1.2932, Swiss $.9960, European Style: rand 14.1573, krone 8.6152, SEK 9.3627, forint 281.50, zloty 3.8300, koruna 22.7467, RUB 66.20, yen 110.80, sing 1.3563, HKD 7.8485, INR 71.40, China 6.7638, peso 19.25, BRL 3.7161, Dollar Index 96.88, Oil $56.13, 10-year 2.66%, Silver $15.83, Platinum $811.81, Palladium $1,483.46, and Gold… $1,330.19

That’s it for today… Just watched the sunrise over the ocean with a cloudless sky… simply beautiful… We’re in our new digs here, but the window coverings haven’t arrived yet, so the sun shines through… I’m going to head over to Roger Dean stadium today, to watch some spring training drills by my beloved Cardinals… You would be surprised to see how many people will be there… I guess there are more baseball nuts like me around! Dave Loggins takes us to the finish line today with his 70’s song: Please Come To Boston… I hope you have a Tom Terrific Tuesday, and continue to Be Good To Yourself!

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