A Return To Fundamentals? Don't Kid With Me!

 

  • Gold soars on rising inflation data
  • Rising Debt levels become a concern... 

  
Good Day... And a Tub Thumpin' Thursday to you! WOW! What a day yesterday, not only for the weather here in S. Florida, but also for Gold and some of the currencies! I was sitting in my chair on the beach yesterday afternoon, 83 degrees, sunny, umbrella blue skies, and a light sea breeze to keep the sun from biting, and as I sat there relaxing, which is what I needed to do, I thought to myself... Maybe I died and went to heaven... It is my profound hope that everyone finds their "beach" in their lifetime.. Neil Young and Crazy Horse greet me this morning with a song from their Live at the Fillmore East Album: Down By The River... It's a 12 minute version... 

The currencies this morning are on the warpath VS the dollar, and it all began yesterday. Initially, the dollar rallied after the stupid CPI (consumer inflation) printed (+ 2.1% yoy), but then traders and money managers realized that this was not a good thing, and that we could very well be heading into an abyss, with rising inflation and rising Debts... Yes, believe it or don't, but the thought of unsustainable debt levels in the U.S. are back on the table with traders, etc. 

It sure took them a while to come around, but they here they are, and the rising debt levels appears to have them scared to death! Could it possibly be that we've returned to the thought that longer term, fundamentals tend to gain more credence here and investors put more emphasis on current account surplus currencies? Just like in the days of old?

Well, bust my buttons! While it appears to be the new conversation going on in the markets, I'm from Missouri, and I'll have to be shown that this is lasting trend/ pattern/ thought process, because we've seen these false dawns of returning to fundamentals a few times in the past 9 years...

But if it is for real, then I'll be one BIG FAT HAPPY CAMPER! Because I would no have to judge the level of sentiment that traders have for currencies and metals! That sentiment B.S. will be out of the way, and we can get back to valuing currencies and metals on their fundamentals! WOW!  

OK, I teased you a bit at the top with my mention of the move in Gold yesterday, so let's go to the tape... Gold traders saw the move in the CPI, and put their foot to the metal on the price of Gold, and the shiny metal rose nearly $40 at one point in the day, but the short Gold paper traders brought it back to a $20.90 gain on the day, still a shiny star sticker placed on Gold yesterday! Imagine waking up this morning and seeing that Gold had gained nearly $40 yesterday, You would do a double take on the figure, right? Well, we almost had that, but 382,000 contracts traded on the day, contained some short trades that brought it back to the hemisphere... 

But, I'm not going to complain, much that is, about the short Gold paper traders, Gold gained $20.90 yesterday, so let's focus on that! 

And the price of Oil recovered nearly $2 in the past 24 hours as the build up of Oil supplies took a hit and weren't as strong as suspected at last glance, and that gave the price of Oil an opportunity to take advantage of that and the fall in the Dollar Index, to gain nearly $2 on the day, to trade with a $60 handle again. 

The anti-dollar assets were very perky yesterday, with Gold, Oil and euros all gaining VS the dollar. Euros were the laggard of the three though, and only able to gain about 1/4-cent on the day... Think about it folks... IF, we are going to return to fundamental valuations, the Eurozone isn't exactly, a surplus region, and has their own warts to contend with, but... having said that, the euro does remain the offset currency to the dollar, and that has its benefits, like being able to rally when the dollar gets sold, even if the Eurozone's warts are showing! 
 
The New Zealand dollar/ kiwi, which I highlighted yesterday for its stealth-like move higher in recent trading days, continued to move forward yesterday, and is closing in on 74-cents at .7380 this morning... The question that hangs over kiwi right now, is when will the Reserve Bank of New Zealand (RBNZ) get their interest rate powder wet? Late last year, I was convinced that the RBNZ would be hiking rates by the end of the first QTR of 2018. They've still got a month to go, but I'm not hearing any "talk about a rate hike coming" from New Zealand, and that has me worried, but... That's a worry for another day... Let's take the stealth-like moves higher in kiwi and be happy! 

Another currency that is defying gravity right now is the Japanese yen... What on earth do traders see in pushing the currency envelope across the table with yen? I don't see it, other than, the fact that IF I'm correct and the dollar has entered a new weak dollar trend, then I get the fact that yen is rallying, because the major currencies are the first to show life when a new trend is introduced to the markets... 

Why on earth would I be questioning my call of a new weak dollar trend? Silly me! I know better than to question my calls! They are from years of experience, knowledge, logic, and the guts to make one! Just like in 2001, when I wrote the white paper, Decline of the dollar... No one, and I mean no one was talking about the almighty dollar declining, but little old me! 

Oh, well, I digress there, where were we? Oh... Did you see the color of the January Retail Sales here in the U.S. yesterday? My oh my, just when everyone thought the U.S. economy was getting stronger, except me of course, because I know any economic strength is coming because of low interest rates, stimulus, and Fed intervention... But just when the sheeple were thinking that everything was going to come up roses, January's Retail Sales printed a negative -0.3%!!!!! And even when you take the slumping auto sales out of the equation, Retail Sales were flat in January...

I would think that all those credit card purchases made in Nov and Dec for Christmas and other holidays, saw their bills arrive in January, and the receivers of those bills, gasped and wondered how their purchases led to such HUGE bills! And they decided to hunker down in January, and apply for another credit card so they can make the payment on their current one!

So, the rot on Retail Sales' vine helped the Dollar Index to fall into the 88 handle yesterday... Today's U.S. Data Cupboard has some real economic data for us to view, leading off with two of my fave prints: Industrial Production, and Capacity Utilization. I would look for both of them to struggle in January, which won't be a good thing for the dollar to have to swallow this morning... 

We'll also see the PPI (wholesale inflation) for January, and this is where the inflation begins folks... I'm somewhat surprised that the forecasts are for a flat PPI last month... Hmmm... Betcha a dollar to a Krispy Kreme, that PPI shows some gain in inflation...  

To recap... U.S. stupid CPI showed a 2.1% yoy gain yesterday, and suddenly the markets began to panic, and drove Gold higher on the day, and the currencies followed Gold's lead. Today's data could mean more damage for the dollar, as fundamentals seems to have returned to the forefront of trading in currencies... Imagine that!   

For What It's Worth... I thank longtime reader, Bob, for sending me this article that once again points out manipulation in the markets with this time being the stock market and the Fed being the manipulator. It's well worth the time to read, and can be found here: http://wallstreetonparade.com/2018/02/rumors-grow-that-the-u-s-fed-is-propping-up-the-stock-market/  

Or, here's your snippet: "It’s not every day that three well-credentialed men are willing to put their names and reputations behind the allegation that the U.S. Federal Reserve is rigging the stock market. But that’s exactly what happened yesterday. Paul Craig Roberts, a former Associate Editor of the Wall Street Journal and Assistant Secretary of the U.S. Treasury under President Ronald Reagan joined with Economist Michael Hudson and Wall Street veteran Dave Kranzler to write that “it appears that in May 2010, August 2015, January/February 2016, and currently in February 2018 the Fed is rigging the stock market by purchasing S&P equity index futures in order to arrest stock market declines.” 

Chuck Again... The games people play now, every night and every day now, never meaning what they say now, never saying what they mean - Joe South... I told you last week that the PPT (Plunge Protection Team) had saved the stock market and the dollar... I don't make this stuff up folks... 

Currencies today 2/15/18... American Style: A$ .7925, kiwi .7380, C$ .80, euro 1.2467, sterling 1.4040, Swiss $1.0807, ... European Style: rand 11.6780, krone 7.8055, SEK 7.9493, forint 249.85, zloty 3.337, koruna 20.3423, RUB 57.31, yen 106.70, sing 1.3129, HKD 7.8218, INR 63.93, China 6.3412, peso 18.50, BRL 3.27, Dollar Index 88.84, 10-year 2.93%, Silver $16.81, Platinum $1,002.33, Palladium $1.019.25, and Gold... $1,353.00 

That's it for today... That was some awful news from Florida yesterday with a crazy person killing 17 people at a school... My thoughts last night were with the families of those that died but also had to experience that awful scene... Have you been watching the Winter Olympics? I have no idea why, but I get into the curling... The U.S. men's and women's hockey teams lost yesterday... UGH! No professionals playing this year, that's got to take you back to the Lake Placid team, and one of my fave movies of all time: MIRICLE  Ok... Paul McCartney and Wings takes us to the finish line today with their song: Band On The Run... I hope you can get out and make this a Tub Thumpin' Thursday, and remember to Be Good To Yourself!