Dollar buying continues

  • Dollar buying continues... 

  • BOC leaves rates unchanged... 

  • Chuck explains dollar buying.. 

Good Day... And A Tub Thumpin' Thursday to you! The Pfennig won the coin toss today, much to my chagrin, as I was looking forward to catching a few more zzz's this morning... But here I am, and I'm ready to rock you like a hurricane! Not! I took a step backward yesterday, as Tuesday was a pain free day, and I got cocky and thought I could ditch my walker and go back to my cane yesterday.. Bad thought! I guess I need to be more patient... Stevie Wonder greets me this morning with his song: I Wish... which is from my fave album by Stevie Wonder... Songs in the key of life.. 

The buying of the dollar which began on our Tom Terrific Tuesday, continued throughout yesterday and overnight, with the Dollar Index rising from 93.11 a couple of days ago to 93.77 this morning. Or, you could very easily see that the dollar has the conn right now, by looking at the euro, which has fallen from near 1.20 last week to 1.1780 this morning... 

So... what's all this dollar buying about I hear you asking? Well, I think it's investors getting in ahead of the final Tax Bill is approved, for in that Tax Bill is a provision much like the one that we had to suffer through in 2005, where U.S. Companies doing business overseas will be able to repatriate earnings held in the overseas country back to the U.S. at a reduced tax rate... 

From what I've read, the numbers go like this: The President's numbers have the total holdings overseas at $4 Trillion. It is estimated that 70% of that total is already held in dollars, which leaves 30% or $1.2 Trillion that's held in a foreign currency, that could be converted to dollars and returned to the U.S. That would be a HUGE positive move for the dollar, folks... But it would be a one and one deal... I suspect that the majority of the conversions would take place in the first quarter of 2018. 

But that's a HUGE number to get converted, so that's what I think is happening right now... Investors that see this coming are getting in ahead of the deal... Of course the Senate Tax plan still has to be reconciled with the House Tax plan, and be on the President's desk by year-end... We are approaching the Christmas break, and that could very well be a roadblock for the approval before year-end... 

Before we get to Christmas though, we have to get through the passage of a Budget here in the U.S. Tomorrow is the deadline that was put in place when the lawmakers couldn't agree on anything a couple of months ago, except to extend the talks to 12/8/2017, which happens to be tomorrow! 

I fully expect the lawmakers to pass another extension tomorrow to keep the Gov't from shutting down, which is nothing more than kicking the can down the road, folks... Like the GEICO commercials.. Kicking the can down the road, it's what we do... 

Alrighty then, I'm going to move along here, because I could feel my blood pressure rising while talking about our lawmakers inability to pass a budget... 

The Bank of Canada (BOC) met yesterday, and left rates unchanged, but sent the loonie downward with their comments following the rate announcement. Seems the BOC is worried about rising inflation, but with no rate hike to combat that worry, the markets immediately believed the BOC will be behind when inflation begins to take off... And that meant the selling of the loonie, which lost nearly 1 full cent yesterday. 

The Aussie dollar (A$) and kiwi were also on the selling blocks yesterday, as traders are looking at their positive rate situation to the dollar, and seeing it narrow, as these two currencies' respective Central Banks are in now hurry to hike rates, and that will leave their positive rate advantage to the dollar at risk... 

The price of Oil has really drifted downward this week, after a report showed that U.S. gasoline supplies were more than ample. And with the price of Oil slipping, the Petrol Currencies get sold in sympathy to the falling Oil price. Our friends (NOT!) at OPEC continue to adhere to their self-induced reduced production levels, but all that does is give the U.S. shale producers the thought that they could rule the world... And their production goes sky high... The OPEC members truly thought that by now their production cuts would yield an Oil price of more than $60... Instead they are dealing with a slipping Oil price of $56 and change.. 

But the slippage in the price of Oil is peanuts compared to the slippage in the price of Gold lately... The shiny metal lost another $3 in trading yesterday, which wasn't that bad, but has lost over $9 in the early morning trading today... UGH!

Somewhere, probably in Russia and China, they are not so upset with this drop in the price of Gold, due to their continued buying of the shiny metal... 

Is all this selling in Gold just a move ahead of the price reset that James Rickards talks about? I sure hope so!  

The U.S. Data Cupboard had the ADP Employment Report for November yesterday, and it disappointed the markets... The expectations for the data was that it would show 235,000 jobs created in November, but instead it only showed 190,000... So, like I explained previously, this ADP report is supposed to give us an indication of what the BLS comes up with tomorrow... 

The BLS report is as useless as the G in Lasagna, to me... For I am aware of a few of the games the BLS plays with the report, and it just makes me sick to my stomach to think that the markets still put their faith in the BLS and trade accordingly... UGH!  I had better stop there before I get all revved up about the BLS.. Come on Chuck, move along... OK... I was this close to ripping them apart at the seams, but I'll save that for another day... 

To recap ... The dollar has the conn, and it appears to Chuck that these dollar buyers are getting in ahead of the passage of the Tax Bill for in the Bill there's a repatriation piece that allows U.S. Corporations doing business overseas to repatriate their earnings at a reduced tax rate, and it could mean tons of currency conversions to dollars, folks... UGH! The BOC left rates unchanged and then opened mouth and inserted foot, and it cost the loonie a full cent in value... 

For What It's Worth... Yesterday I told you about how U.K. PM May was in trouble regarding her views on BREXIT, and to my delight zerohedge.com had an article explaining it better.

Or, here's your snippet: "Cable traders are suffering through a news overload this morning, with the optimism and euphoria which sent the pound to two month highs as recently as 2 days ago fading fast on speculation whether U.K. P.M. Theresa May will be able to engineer a Brexit breakthrough in time. And following overnight speculation that her cabinet may revolt, and what one desk dubbed "headline havoc" this morning in which DUP sources saying that there will be no deal this week, it's looking increasingly in jeopardy.

Overnight The Telegraph and Bloomberg reported that Theresa May is facing a revolt from inside her Cabinet over her plan to keep U.K. regulations aligned with the European Union after Brexit, "a split that threatens to undermine her chances of breaking the deadlock in negotiations." Foreign Secretary Boris Johnson and Environment Secretary Michael Gove "will lead a Cabinet revolt against Theresa May over fears she is forcing a soft Brexit" the Telegraph reported. While this is hardly the first time we've heard this sort of speculation, considering the closeness to the EU Council Summit next Thursday/Friday, the clock is ticking for May to come up with a solution.

That may be tricky because with just days to go until a deadline to get talks back on track and the pound sliding for a second day, May is struggling to get the Northern Irish party that props up her government to sign up to her Brexit strategy. Wednesday had been tipped as the day May could head back to Brussels to resume talks that suffered an embarrassing breakdown on Monday. Explaining the tension, DB's Oliver Harvey believes the question of a December breakthrough is now in doubt after the DUP rejected the proposed compromise over Northern Ireland's status after Brexit, and so scuppering talks. He notes that the failure of the UK to reach agreement is problematic for four reasons. 1) the DUP appears to have drawn a red line over continued regulatory alignment between Northern Ireland the Republic. 2) proposed regulatory alignment between Northern Ireland and the Republic has emboldened leaders of other devolved administrators, most notably in Scotland. 3) the rejection of the deal has emboldened some hard Brexiteers within the Conservative Party, and 4) time is now tight." 

Chuck again... I know that was quite long for a "snippet" but I wanted to make sure you understand the problems that PM May is facing and apply that to how we should continue to steer clear of pound sterling...

Currencies today 12/7/17... American Style: A$ .7520, kiwi .6833, C$ .7797, euro 1.1780, sterling 1.3345, Swiss $1.0073, ... European Style: rand 13.5036, krone 8.2770, SEK 8.4453, forint 267.10, zloty 3.5746, koruna 21.7220, RUB 58.99, yen 112.75, sing 1.3506, HKD 7.8107, INR 64.50, China 6.6135, peso 18.92, BRL 3.2375, Dollar Index 93.77, Oil $56.11, 10-year 2.34%, Silver $15.84, Platinum $898.44, Palladium $1,000.44, and Gold... $1,257.00  

That's it for today... It's Pearl Harbor Day... A couple of years ago, I took a trip to Hawaii, and visited the Pearl Harbor museum... I wish everyone could make that trip, for that's a very "moving experience"... So... today marks the 76th anniversary of the first "day in infamy" for the U.S. I will be taking a minute to reflect on that day today, and I would hope you would too... I'll go back to being careful with my movements today, and store away that cockiness I had yesterday for sure! I told you the other day that I was visited by good friends, Rick and Laura, and today's song that takes us to the finish line is one of Laura's favorites songs... The Scorpions and their song: Still Loving You take us to the finish line today, and with that... I hope you have a Tub Thumpin' Thursday, and Be Good To Yourself!