Another Overnight Ambush On The Currencies!

July 11, 2018

* The boys in the band show up Tuesday

* Currencies once again get sold overnight…

Good day… And a Wonderful Wednesday to you! I went out and made sure that I had a Tom Terrific Tuesday yesterday… Did you? I sure hope so, but if not, you can make it up today with a Wonderful Wednesday! I see my beloved Cardinals won last night, when I went to bed the score was 4-2 in favor of the Cardinals. And they wound up with a football score winning 14-2… The Marshall Tucker Band greets me this morning with their song: Heard It In A Love Song…

Well, the currencies didn’t move much yesterday, if anything they firmed up a bit, as the bounce from the dollar in the overnight markets Monday night was brought to an end. Last night in the overnight markets saw the same kind of trading we saw the previous night, with the dollar being bought, for some unknown reason… Oh, there’s the usual suspect of excuses for this dollar buying… The Fed’s on a faster pace to hike rates, a flight to safety, and it’s the king currency, are at the top of the lists of excuses, but to me that’s all they are… excuses, and excuses never won a ballgame for anybody!

All those excuses are nothing but window dressing… curb appeal… lipstick for a pig, and all those other things… Because the traders out there know as well as I do, that a recession for the U.S. is coming, and therefore that wipes out the rate hikes.. In fact, I was explaining to my good friend Duane, yesterday that what we’re probably going to see during the next recession is negative interest rates here in the U.S. So, that would take care of the flight to safety excuse, and then there’s this King Dollar that the dollar bugs love to talk about… Well, if that’s all it has going for it is talk, then as my dad taught me years ago… Money talks, BS walks…

But for now, we have to put up with this stuff, but let it go, because its just a phase… You know like when your child comes home with a mohawk spike in his hair that’s colored orange… No reason to fly off the handle, it’s just a phase and it will pass… This too shall pass… Just be patient, keep your currencies and Gold, and I feel it will all be right on the night! Of course that’s just my opinion and I could be wrong, but I wouldn’t say these things if I truly didn’t believe in them! You can take that to the bank!

So, Chuck, do you really think that negative interest rates are in our future here in the U.S.? Yes, I do… Think about this, the average interest rate that was in place prior to previous beginnings of recessions was 6%, and the average total amount of rate cuts during a recession was 4.03%… And our current Fed Funds rate is 2%? Well, if we just have a normal recession, which I doubt we will because of all the excesses that have built up in the past 9 years, easy credit, zero interest rates and lackadaisical attitude toward debt build up, but if we just have a normal recession, 4% in rate cuts puts us negative -2%… See what I just did with the math there? Man, I am a math whiz, eh? HA!

But seriously, do you see where I’m coming from there? Not many people in the world know these averages, but now you do, dear Pfennig Reader! And I’ll tell you who else knows them all to well… The Fed Heads… Recall a couple of years ago, when then Fed Chair, Janet Yellon, asked for a answer to her question, “Can the U.S. have negative deposit rates” and her answer was yes… I made a big deal out of that then, calling it “greasing the tracks”, and in the next recession, the Fed Heads will be able to pull that off the shelf, dust it off, and implement negative deposit rates!

This is all in the plans for getting you, me and the guy down the street that cuts his grass with his shirt off, to spend our money that we’ve saved and hold in the bank… But here’s where it gets really dark and grim, folks, and if that’s not your bag baby, then skip ahead because I’m going in… Who’s with me? Come on, I don’t want to be like Will Ferrell in the movie where he’s streaking and thought the rest of the crowd was behind him, only to be the only naked guy running down the street!

OK, those that have chosen to come with me to this dark and grim place, had better put your sharp objects away first… Ok? Alrighty then here we go… This is all a plan to eventually go to digital money… a cashless society… here’s the idea hatched in my head several months ago… The recession causes the Fed to go negative with interest rates, and depositors decide instead of spending their cash, they’ll just go to the bank and withdraw it, take it home, and put in under the mattress because at least there it’s not costing you money to have it… The Gov’t sees this as a real problem and decide to make withdrawing your cash a crime, and overnight your dollars become digital units in the bank… Talk about an end to your privacy, civil liberties, and all the other things that make this a great country!

I’m back now… that was quite the ugly trip to the dark and grim location in Chuck’s brain, wasn’t it? But I have one question to ask… Got Gold?

Speaking of Gold… The shiny metal was gaining some ground yesterday morning, and then the boys in the band showed up with their arms full of short Gold paper trades… If you see a graph of the day’s trading in Gold you can point to the exact time of day the boys in the band showed up… So, the early gains were wiped out, and Gold ended up down $2.20 after about 267,000 contracts were traded…

And if I can just circle the wagons and go back to the dark and grim place for a moment… The way I see things, Gold will play a BIG role in the formation of a new currency regime… I’m just saying…

Today’s U.S. Data Cupboard just has the PPI (wholesale inflation index) for June to view today… PPI has really been on a tear, higher that is, so far this year, and I doubt that it took a breather in June, but we’ll see… There’s not a whole lot in the Data Cupboard this week folks.. Tomorrow we’ll see the stupid CPI (consumer inflation) and that’s it… So, the currencies will be left to trade on their own accord the remainder of this week… That’s usually not a good thing for the dollar, but we’ll have to wait-n-see how this all falls out.

I’m still amazed that the major media outlets aren’t making a big deal out of the Consumer Credit (read debt) print from Monday, when it jumped to $25 Billion from $10 Billion the previous month… To me, if I were a paid journalist, I would be looking into this data print, and telling everyone that this is not good…

To recap… The currencies gained a bit yesterday, but gave it all back and more in the overnight trading… Consumer Credit (debt) was shockingly strong at $25 Billion, with credit card debt really soaring… Gold couldn’t hold its early morning gains and ended up down on the day $2 and change… Chuck takes some brave readers to a dark place this morning…

For What It’s Worth… I don’t know how I was able to pull this article, recall me telling you my problems with Bloomberg, but I was, so this is about a firm telling us their “recession flag” is flashing red, and it can be found here:

Or, here’s your snippet: “One gauge of recession risk with a “pretty good” track record over the last half century has just raised a cautionary signal, according to the Leuthold Group.

For the first time since just prior to the 2007-2009 recession, premiums on the lowest-rated tranche of investment-grade U.S. corporate bonds have risen to 2 percent after being below that level, according to data compiled by the Minneapolis-based research group. The analysis looks at the gap in yields between corporate debt rated Baa by Moody’s Investors Service and those on 10-year Treasuries.”

Chuck Again… More and more the big guys are coming around to my way of seeing this economy…

Currencies today 7/11/18… American Style: A$ .7393, kiwi .6793, C$ .7550, euro 1.1710, sterling 1.3245, Swiss $1.0051, European Style: rand 13.4880, krone 8.0645, SEK 8.7790, forint 277.03, zloty 3.6945, koruna 22.1350, RUB 62.20, yen 111.26, sing 1.3605, HKD 7.8488, INR 68.72, China 6.6223, peso 19.02, BRL 3.8473, Dollar Index 94.35, Oil $73.71, 10-year 2.84%, Silver $15.97, Platinum $841.14, Palladium $937.07, and Gold… $1,250.06

That’s it for today… Seeing Dexter Fowler hit a grand slam last night, makes you wonder how good the Cardinals would be if he had hit like that all year? I’m just saying… Duane and Chuck tried a new place for lunch yesterday, that was very interesting and good! Cardinals play one more game on this extended road trip, and then come home! George Harrison takes us to the finish line today with his song: What Is Life? And with that, I’ll let you go today… HA! I hope you have a Wonderful Wednesday, and Be Good To Yourself!

Chuck Butler


Nuria Pujol