Russia Dumps 1/2 Of Their Treasury Holdings…

Russia Dumps 1/2 Of Their Treasury Holdings…

June 20, 2018 Blog 0 Comments

June 20, 2018

* The euro attempts to rebound, but is pulled back down

* David Rosenberg on this Wonderful Wednesday!

Good Day… And a Wonderful Wednesday to you! Another day of extreme heat in my area yesterday. I hear we are supposed to be receiving a break in this heat streak, but I never trust what the weather people say! They always have an “excuse” for being wrong! Well, now, wait a minute Chuck, you always seem to have an excuse when you’re wrong too! Oh, so now I’m a meteorologist? HA! OK, enough of that silliness… Elton John greets me this morning with his song: Levon… He was born a pauper to a pawn on a Christmas Day when the NY Times said God is dead, and the war begun…

And once again yesterday, the euro attempted to tend to its wounds afflicted on it by European Central Bank (ECB) President , Mario Draghi… I do believe that calmer heads saw the euro under the bus, and attempted to pull it to safety… But the sellers were still in charge, and the euro only gained about 1/3rd of a cent… In the overnight markets, there’s been more slippage, as traders overseas attempt to figure out, which country gets hurt worse in the Trade War…

Right now, with China’s HUGE Trade Surplus, it appears that they have more to lose, but then we are talking about China, and they somehow always figure out how to avoid real problems. But since it appears that the Chinese Trade Surplus is at risk, that’s a potential problem for the economy, and slowdown for China’s economy is now being talked about, which is a bad thing for the rest of the countries in the region…

Especially, Australia… The Aussie dollar (A$) has already dropped from the 76-cent level to the 73-cent handle, and now the fund, Blackrock, is calling for the A$ to fall to 70-cents this year on the China slowdown. Recall if you will the last time the Chinese economy slowed significantly, from plus 10% GDP prints to barely reaching 7%, and the A$ got sold from its lofty perch above $1.00 to the 70-cent range… So, we’ve got history here, that can’t be ignored… And like I said the other day, if only the Reserve Bank of Australia (RBA) had listened to me and begun their rate hike cycle late last year, they wouldn’t be facing a currency that just might lose the 70-cent handle!

Gold got sold again, but this time it was by only $3.50 on the day, with 275,0000 contracts traded, again, with a huge amount entered by the short Gold paper traders… David Kranzler is a guy that I’ve tracked through the years, and he has become a real go-to guy on Gold… He wrote the other day, that “physical Gold didn’t get sold”, it was simply “paper Gold” I liked that description, because I’ve said all along that the demand for physical Gold has remained strong, especially from Central Banks, not named the Fed, and the selling was dominated by the paper trades…

I read the latest edition of Jim Rickards’ Strategic Intelligence last night, and in it ( I can give you a hint, as the letter costs money to read) he talks about all the “free money” that the new policy debate in the U.S. is all about… I kept shaking my head in disbelief that this is actually getting air play… Oh well, I’m old and getting older, and don’t really care that everyone in the U.S. could get paid whether they work or not, because right now nearly half of the population gets paid for not working, whether it’s warranted or not… I say that, but in reality, I worry about my kids and grandkids, having to deal with the hyperinflation that something like these payment schemes could cause… I know, I know “that kind of thing can’t happen here!” Well, that’s what everyone thinks, until… well, it does happen here!

Last week it was announced that Russia had dumped 1/2 of their Treasury Bonds holdings… I dive deep into this in my latest Dow Theory Letters piece this week, where I point out that we could end up seeing more of this from countries that believe they are being wronged by the U.S. Trade Tariffs… And David Rosenberg had something to say about this, so let’s defer to David Rosenberg…

Last week, I highlighted a quote by one of my fave economists, David Rosenberg, who is Author of the daily economic report, Breakfast with Dave, and Chief Economist & Strategist at Gluskin Sheff + Associates Inc. And I pulled this quote of his from Twitter… “The end-game retaliation comes via a global boycott of the Treasury auctions. Foreign entities fund half the US fiscal deficit, which is set to double. Imagine the locals funding their own budget gap! This forces the savings rate up at the expense of spending. Recession follows.” – David Rosenberg

Alrighty then… So, men…do you ever sit back and think about nothing? It’s pretty cool thing to do, and if you haven’t tried it, you should make a concentrated effort to do so! It’s when we get out our “nothing box”… I can tell you that women do not like to catch their man doing “nothing”! But here I was this morning, and 30 minutes had passed before I realized that I was not writing, and I was just thinking about “nothing”.. Talk about “clearing your mind”! There’s a YOUTUBE out there of a comedian doing a skit about a “nothing box” I laughed until I cried…

The U.S. Data Cupboard yesterday had some housing data for us that showed a strong print for Housing Starts in May… The Housing Bubble just keeps getting air blown into it… Today’s Cupboard has the 1st QTR Current Account for here in the U.S. And it should be a whopper! But then nobody cares about debt any longer, I’ve become a dinosaur with my warnings of debt accumulation… I guess now I just wait for the BIG Meteor to hit, and wipe me from the face of the earth!

Well, all this “doing nothing” has me behind the 8-ball for time this morning, and I guess I’ll just have to head to the Big Finish from here…

To recap… The sabers are rattling in the Trade War between the U.S. and China, but Chuck fears the Chinese region will be hit too, and that includes Australia. The currencies tried to rebound yesterday, but the overnight markets put up roadblocks. And Gold continues to drop in price, but as Chuck points out today, it’s the paper price of Gold that’s dropping!

For What It’s Worth… Not much in the way of good stuff out there this morning, unless you’re watching GE get bounced from the Dow! But I did come across this on the Bloomberg.com site this morning, and thought it to be interesting… So, just go to www.bloomberg.com and look for it if you want to read the whole article, otherwise…

Or, here’s your snippet: “German Chancellor Angela Merkel and French President Emmanuel Macron came to an agreement on how to move forward with strengthening the euro area, citing a common regional budget, a more robust European Stability Mechanism, and a shared approach to immigration. The leaders want to make it easier to restructure sovereign debt, while also putting pressure on banks to tackle bad debt problems that continue to dog economic growth. The proposals will have to be agreed by other euro members, which may prove difficult, particularly in the case of Italy where a populist government is in power.”

Chuck Again… Yes, those pesky relatives that hold everything up! I’ll just let that one sit there and move along before I get into trouble!

Currencies Today 6/20/18… American Style: A$ .7390, kiwi .6886, C$ .7521, euro 1.1565, sterling 1.3173, Swiss $1.0027, … European Style: rand 13.6782, krone 8.1823, SEK 8.88, forint 279.96, zloty 3.7318, koruna 22.3345, RUB 63.76, yen 110, sing 1.3577, HKD 7.8460, INR 68.05, China 6.4684, peso 20.50, BRL 3.7460, Dollar Index 95.15, Oil $65.10, 10-year 2.90%, Silver $16.27, Platinum $863.11, Palladium $969.03, and Gold… $1,272.96

That’s it For today, and this week, as I’ll be absent tomorrow, getting ready for a bright and early doctor’s appt with my oncologist… I’m going to point out to her the good results of the scans, and she’s going to remind me that the wolf is always at the door, with me, and that I need to remain on the treatment… Isn’t it nice when you already have the appt. laid out? HA! My beloved Cardinals come back, go ahead, give up the lead, and then go back ahead to win late… Crazy game… Day game today, it’s raining outside so maybe the weather will cool down for me to sit outside and watch the game today? Johnny Rivers takes us to the finish line today with his song: Summer Rain… (all summer long we were dancing in the sand, Everybody just kept on playing Sgt. Pepper’s Lonely Hearts Club Band)… In case you forgot that one.. So, let’s go out and make this a Wonderful Wednesday, and tomorrow, a Tub Thumpin’ Thursday, and then a Fantastico Friday! I’ll talk to you again on Monday, so don’t forget to Be Good To Yourself!

Chuck Butler




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