What Will The Fed Meeting Minutes Tell Us?

A Pfennig For Your Thoughts

January 9, 2019

* Currencies trade in tight ranges on Tuesday
* Trade negotiations end with negotiators smiling…

 

Good Day… And a Wonderful Wednesday to you! Sorry about yesterday, but I was needed to play Uber driver at the time of the morning, when I’m usually writing… It was another Chamber of Commerce day here yesterday, but I hear a cold front is moving through soon, oh the humanity! It might get to 50 degrees! It’ll be snowing back home, so I’m not about to let 50 degrees get me down! Besides there’s nothing I can do about it… Elton John greets me this morning with his song: Levon…

Well, it was a non-event in the currencies yesterday, the euro traded in a very tight range, and so did all the other currencies, with the only exception being the Aussie dollar (A$) which is still getting bought on the news that China reduced their bank reserve ratio this past weekend, which is, as I’ve told you before, akin to a rate cut, thus fueling the thought that the Global Growth could be on the mend… Now, if the Reserve Bank of Australia (RBA) would get off their duffs and hike rates to squash the housing bubble going on there, we might see a real run in the A$…

The price of Oil continues to rebound and trades with a $50 handle this morning, thus helping the Petrol Currencies of: Russia, Norway, Canada, Braxil and some other smaller players… so, the Commodity currencies were getting well bid, along with the Petrol currencies, all the while the euro held its gains from Friday and Monday in check.

Well, did you watch the President’s Address to the nation last night? I forgot about it, and was locked in to watching my beloved Missouri Tigers Basketball team lose their SEC opener to the 3rd ranked Tennessee team. Our St. Louis University Billikens beat Rhode Island, so it wasn’t a complexly lost night! The U.S. Gov’t remains shut down, which is no sweat off my back, shoot Rudy, they could stay closed forever as far as I’m concerned, because tax returns and wefare payments are still going out, there’s nothing shut down about them!

Have you heard about the newcomer representative that’s calling for a 70% top tax rate? I always knew it would come to this, but no… What? … Really? She’s not calling for the 70% tax rate to pay down the debt? She’s going to do what with it? Oh, my… I can’t even talk about that without genuflecting… So, I’ll just move along…

Seriously, I always thought that the lawmakers would come around to having to deal with the debt that’s probably a month or two of going past $22 Trillion, and they would do that by taxing people heavily… And then finding out that it made but a little dent in the debt total, they would switch to drastic measures… If, you’re ever on the Butler Patio, I’ll tell you what those drastic measures could possibly be, but not here… I’ve learned that you can please some of the people all the time, but if you bring up controversial stuff, you’ll have not pleased very many… And so in effort to retain my dear readers, I’ll let your imaginations take over here…

Gold has returned to its old habit of allowing the short Gold paper traders the upper hand, as it has lost over $7 in the last two days of trading, including this morning’s trading. Gold now trades at a $56 dollar discount to palladium… I’m still waiting for “something big” to take place with Gold… And I don’t like waiting!

OK… I read a very long letter yesterday from the head of the largest hedge Fund, Ray Dalio, and he was talking about the wonder of China’s change in the last 50 years. He also mentioned that the dollar’s days of being the reserve currency were coming to an end. He ended his letter with this thought: “Nothing lasts forever”…

So, it was nice to see that I’m not the lone wolf out there talking about the end of the reserve currency status for the dollar… of course I began talking about it 9 years ago, at the World Money Show in Orlando… I always like to state where I made the first call about the currency regime change because they would have a recording of it, should anyone ever say, “hey, I doubt you called for that in 2010”

Au Contraire Monfrere… And there were some of you dear readers in the audience that day, taking notes… Well, here we are 9 years later (The World Money Show in Orlando was always held in early Feb) And while I doubt that we’ll see the end of the currency regime, which was the title of my presentation that day, before the clock strikes 12 on 12/31/19… I still believe that there will be a change in the currency regime, it’s just taking longer than I expected it to take!

OK… In the U.K., PM May has presented her latest BREXIT deal to parliament for their review, and to either give it the thumbs up or thumbs down. I would think that pound sterling has suffered quite a bit at the expense of bad news from the Brexit negotiations, and therefore it wouldn’t surprise me one iota if the U.K. Parliament approved the deal that pound sterling would rally strongly.. And if the U.K. Parliament rejects the deal, they watch…. out… below… What’s it gonna be boy?

The negotiations on Trade between China and the U.S. ended yesterday, but time they ended with a bit of optimism… So, they’re telling us there’s a chance at an agreement? A slim chance, but a chance nonetheless, and from a spark a flame can ignite… In the meantime, we’re stuck with a Trade War that’s really beginning to take its toll on the economy and the Data Cupboard has the latest economic prints to prove that…

The U.S. Data Cupboard had some weak data yesterday… Recall that I had said that there could be some healing with Factory Orders, due to the negative -2.1% print in Rocktober, but the November print was still negative at -.2%… And the servicing index fell to 57% in December from a 60% in November… That makes it a dynamic duo for the ISM indexes, as both manufacturing and nonmanufacturing both had huge falls in the index number in December…

Today’s Data Cupboard has just the Fed’s Meeting Minutes from their last meeting to print… The markets will be looking over these minutes for any signs of weakness in the call for a rate hike last month. Wouldn’t it be cool if the minutes actually had this conversation that I’m making up in them?

” OK, let’s see a show of hands of the voting members who think this is the last rate hike in this cycle” OK, thank you, I find it amazing that it was unanimous! – Chuck’s take on what really happened at the Dec. Fed Meeting… But we won’t see any of that, because those minutes get edited before they print…

To recap… The currencies traded in tight ranges yesterday, but did move forward on the day. The biggest mover was the A$, but Chuck thinks that there could be really big moves in the A$ if the RBA would get off their duffs and hike rates. Gold slipped in price once again, and is now trading at a $56 dollar discount to Palladium? China and the U.S. ended their trade negotiations with a smile… And PM May’s BREXIT deal goes before the U.K. parliament… What’s it gonna be boy?

For What It’s Worth… U.S. Consumer Debt continues to grow larger and larger, folks… it’s beyond recognition now, and something has to give… This is an article about just that and it can be found here: https://www.zerohedge.com/news/2019-01-08/us-consumer-credit-hits-all-time-high-amid-surge-student-and-auto-loans

Or, here’s your snippet: “After a surprising slump in the use of revolving debt in September, when US consumers unexpectedly paid down a total of $23 million (revised) on their credit cards, followed by a sharp rebound in credit card usage in October, moments ago the Fed reported that in November, the surge consumer credit continued, rising by $22.1 billion, above the $17.5 billion expected, after October’s whopping $25 billion increase as non-revolving credit surged by the most since December 2017. The surge in borrowing in November brought the total to $3.979 trillion, new all time high, largely on the back of a newfound love with auto and student loans.

After a brief, one-month dormancy in credit cards usage in September, American consumers have clearly returned to doing what they do best – spending money they don’t have – with revolving credit jumping by $4.8 billion, one month after it surged by $9.3 billion. The latest monthly increase brought the total credit card debt to a new all time high of $1.042 trillion.

But the big reason behind the November surge in consumer credit was nonrevolving credit, i.e. student and auto loans, which soared by $17.4 billion, the highest monthly total since 2017, and bringing the non-revolving total to a new all time high of $2.937 trillion.”

Chuck Again… Debt like this is so dangerous to an economy, folks… I can’t stress enough that this cannot continue to grow at the current pace or any pace for that matter! I have no idea what people are thinking with taking on all this debt, other than they believe that the Gov’t will bail them out… I’m just saying…

Currencies today 1/9/19: American Style: A$ .7163, kiwi .6766, C$ .7552, euro 1.1450, sterling 1.2722, Swiss $1.0199, European Style: rand 13.9625, krone 8.5239, SEK 8.9392, forint 280.87, zloty 3.7525, koruna 22.3766, RUB 66.88, yen 108.90, sing 1.3565, HKD 7.8393, INR 70.35, China 6.8512, peso 19.34, BRL 3.7241, Dollar Index 95.89, Oil $50.78, 10-year 2.73%, Silver $14.63, Platinum $821.95, Palladium $1,337.78, and Gold $1,281.09

That’s it for today… Since I was AWOL yesterday, I didn’t get the chance to congratulate Clemson for their football championship… Good friend, Rick, was at the game, I told him before the game that I thought he was too old to be seen running on the field if Clemson won! HA! I’ve been remiss the last couple of weeks in not repeating my call for the Cardinals to sign Bryce Harper… Come on, open up the pocketbook and make the deal! I’m all alone here for a few days… no biggie… I’m getting quite used to being alone for periods of time! The Searchers take us to the finish line today with their song: Love Potion #9… I took my troubles down to madam Ruth, you know the gypsy with the gold capped tooth… Love it! And with that I’ll seen you on your way to hopefully a Wonderful Wednesday where you continue to Be Good To Yourself!

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