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Analysis

The Sky Won't Snow, The Sun Won't Shine

  • Currencies make small moves...

  • S. African rand soars on election results...

  • More problems for Toys "R" Us

Good Day... And a Tom Terrific Tuesday to you! Well, I'm back to being later this morning, sorry... But when I can get sleep without alarms going off to tell it's time for another antibiotic infusion, I take the opportunity and run with it! HA! That's funny sight, me running! In the great Eagles song, Desperado, they sing about how the sky won't snow and the sun won't shine... That describes the past two days around here, to a T! If the sky is going to look like this it might as well snow! Of course I say that now, because I'm stuck at home and don't have to go out in it! Seals and Crofts greet me this morning with their song: Summer Breeze... Now doesn't that sound good right about now?

The potential wild swings in the currencies and metals this week, didn't exactly get off to a strong start yesterday, as there just wasn't much conviction to move either of these two assets. Gold did gain $6 and change on the day, but $6 of that was in the early morning trading, so the rest of day only yielded some pocket change...

The dollar wasn't able to gain any ground on the day, and the euro climbed back above the 1.18 handle.. The euro alternative currencies like the Hungarian forint, Polish zloty, and Czech koruna all had strong moves on the day, and to me that's always an indicator of a run on the dollar, but... these thee, that I coined the phrase and called them "Euro-Wannabes" about 15 years ago, need to add to those gains for their moves to be considered serious..

Aussie and kiwi held their gains from the past couple of trading sessions throughout the overnight market sessions, and look to add to those previous attained gains. Remember what I kept telling you months ago about how the Reserve Bank of New Zealand (RBNZ) had indicated that they would begin to hike rates in 2018, but the markets weren't paying attention, and it gave us investors an opportunity to buy "ahead of the markets", which wasn't something that we got to do very often...

Kiwi has seen a recent bout of selling, because of the narrowing rate advantage VS the green/peachback, but if the RBNZ is actually going to begin to hike rates in 2018, and we're now within a fortnight of turning the calendar to 2018, the focus shifts to kiwi...

I was all prepared to talk about the positive move in the S. African rand yesterday, and then got to the end of the letter, and well, forgot it! UGH! I was prepared to tell you about how the rand had rallied nicely ahead of the general election for a new leader of the ruling party. Seems traders and investors were bullish that their candidate, Cyril Ramaphosa, would win the election VS the current leader's wife. I don't have to tell you that this was really going out on a limb, as the polls showed the election to be quite close. But you have to give those taking positions in rands credit for being so bold... Some might say, That's stupid Charlie Brown... But they made a call and put their money behind it... I'll give them credit for that!

And... It paid of for them, as Ramaphosa won the election and is now sitting pretty to be the next President of S. Africa... And the rand continued to book gains on the news. I've never been a fan of the rand, as it is quite volatile. But when it's good, it's good, and when it's bad, it's bad.. I used to say that I wouldn't touch rands with your ten foot pole! But like I said, when it's good, it's good... In this case though, I would be careful, as these rallied on political gains usually don't have legs to go very long in the race...

Take the Indian rupee... Remember when the hoopla was all about how the rupee was going to soar on the election of Modi? But eventually, that all settled down. I did notice yesterday that the rupee had finally moved below the 64 handle... Hmmm...

In other currencies... I wonder what Swiss National Bank (SNB) President, Jordan, is thinking with this recent move higher in the Swiss franc? The SNB met last week and kept everything, negative rates, and all, in place. And yesterday, Jordan reminded the markets that the SNB has no plans to remove any of the stimulus that's in place right now. I think that the markets have developed a deaf ear with regards to what Jordan has to say... And that's a bad thing for a Central Bank... I'm just saying...

Well, I told you above about how Gold gained $6 and change yesterday above, but forgot to tell you that the shiny metal is flat to down a few shekels in the early morning trading today... I wonder what James Rickards is thinking right now, after his call for a Gold price reset by year end... Hmmm... We're running out of days, right?

The U.S. Data Cupboard is full of housing data early this week, but there's something else I want to talk about here with regards to data and the economy, and that is that, Bloomberg reports that Toys "R" Us is considering closing at least 100 U.S. stores - and as many as 200 - in the face of weak holiday sales. According to Bloomberg's sources, the store closures are coming after a sharp contraction in sales which declined 15% this Christmas-shopping season from a year earlier. OMG!

Remember when Toys "R" Us filed Chapter 11 in September, and they told the markets that once they restructured their debt that everything would be kosher? Well, I guess not... And during the Christmas shopping season?

To recap... The dollar is drifting, and some of the currencies are taking advantage of that drifting in the dollar. The S. African rand is soaring after the markets' choice of candidates won the election to lead the ruling party. The euro has climbed back above 1.18, and Chuck points out the moves in the euro Wannabes... Gold gained $6 and change yesterday, and Toys "R" Us appears to be having some major problems!

For What It's Worth... I found this on Ed Steer's letter today, and thought it to be FWIW worthy. It's about Bitcoin, so it should grab your attention... And the article was put out by the good folks at GATA, so there's no link to it, but I've got the gist of the article here:

And here's your snippet: "Bitcoin.com is one of the world's largest bitcoin sites, having grown its profile thanks to the insane price surge of the cryptocurrency this year. But its co-founder and CTO, Emil Oldenburg, a Swedish native, is extremely skeptical of bitcoin's future.

"I would say an investment in bitcoin is right now the riskiest investment you can make. There's an extremely high risk," he says in an interview with Swedish tech site Breakit.

"I have in fact sold all my bitcoins recently and switched to bitcoin cash," says Oldenburg, referring to the problems with bitcoin's high transaction costs and lead times.

"The old bitcoin network is as good as unusable."

While buying, selling or trading in bitcoins is not an issue today, according to Oldenburg, the problems surface when bitcoin transactions are recorded on the blockchain, the digital ledger that records each transaction.

The problem centers on the limited amount of transactions per second you can make in the bitcoin network, which in turn depends on the formation of the memory "block size" that store the transactions. This, according to Oldenburg, makes for a very illiquid and unusable cryptocurrency."

Chuck again... Uh Oh...

Currencies today: 12/19/17... American Style: A$ .7671, kiwi .7006, C$ .7773, euro 1.1820, sterling 1.3351, Swiss $1.0142, ... European Style: rand 12.7239, krone 8.36, SEK 8.4235, forint 264.82, zloty 3.5490, koruna 21.70, RUB 58.66, yen 112.75, sing 1.3468, HKD 7.8184, INR 63.93, China 6.6128, peso 19.06, BRL 3.2909, Dollar Index 93.58, Oil $57.52, 10-year 2.42%, Silver $16.19, Platinum $915.10, Palladium $1,022.28, and Gold... $1,264.50

That's it for today... Well, I believe that Kathy is coming home tonight... Please don't tell her I talked about her! So, to Jen and Christine, I made it, I survived by myself, and you didn't think I would be able to! I even had added problems to deal with these past 10 days, but here I am! I have been beating my head against the wall trying to think of a good present for Kathy, and I've got nothing! She's one of those people that if she wants something she buys it... She doesn't wait for birthdays, etc. Speaking of birthdays, her birthday is the day after Christmas... Our first Christmas together, I made the mistake of buying her a present and saying, Merry Christmas and Happy Birthday.. She informed me that was not acceptable, and I've been good about that every since... That was Christmas 1972... WOW! OK, The Cure takes us to the finish line today with their song: Pictures of You... And with that, it's time to go... I hope you have a Tom Terrific Tuesday and Be Good To Yourself!


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