ECB announces date unwinding details
Palladium takes flight!
Ringing A Bell For Life!
Good day... and a Happy Friday to one and all! I'm hoping this is going to be a very good Friday, so I'm going to go ahead and proclaim it to be a Fantastico Friday! I don't have any major plans for the weekend, and maybe, just maybe that means something fun will pop up! I plan on seeing my friends this afternoon, so that'll be the start! Man on man, I've got to tell you that listening to the cable news stations for a long period of time will drive you crazy! Well, at least it was driving me crazy yesterday, as Kathy's mom was here and watching MSNBC continuously, and I was about to lose my mind listening to all the crap! Oh well, life goes on... Elton John greets me this morning with his song: Mona Lisas and Mad Hatters...
The currencies just couldn't find any traction to move higher yesterday, but, didn't give up their gains from the day before, so that's a good thing... I do suspect though that today will be a day of Shouting from the rooftops, that all is well with the U.S. economy, after Sept. Retail Sales print. I talked to you about this print yesterday, and how it will be fueled by new car sales to replace all the flooded out cars from the hurricanes. And the markets won't care that it's probably a one and done, or maybe a two and done, if the car buying carries over to Rocktober...
They're going to shout it out loud that everything is fine, and they're ready for the rate hike in December, which will have traders buying dollars,...
The writing is on the wall for the dollar, folks, but for now we have to deal with this dancing in the streets and all that...
And getting back to the thought about car sales... Well, if we use just GM as the example, one would think that the car sales will not carry over to Rocktober, as GM announced plant shutdowns yesterday, in Detroit, no less! Apparently, GM has over 1 million cars sitting on dealer lots right now... That's an inventory problem... But as my dad taught me years ago... and this can be used in reverse here... There's no such thing as a "shortage" of something, it's merely in need of a price adjustment.
But, as we all know, Automakers don't make much money on new cars... They make it on the financing... Using financing companies like: Dewey, Cheatum, and Howe... So, to "adjust the prices" of the new cars sitting on the lots, would mean deep losses to the Automaker... Hello, Houston... We seem to have a problem here..
The European Central Bank (ECB) announced this morning that they will present their plan for unwinding their balance sheet on Rocktober 26th... And immediately, the rumors began to fly around about how large the bond buying cuts will be. I read one estimate that the ECB is considering cutting their bond buying in half in 2018... Now that would be quite aggressive, and warranted in my view. But, we'll have to wait until 10/26/17 for the details... Let's hope they are at least 1/2 as aggressive as the rumors!
Germany and Italy printed their September CPI's (consumer inflation) this morning and both saw inflation remain steady Eddie at 1.8% in the month... the euro has added a shekel or two to its price from yesterday morning on the inflation prints, but other than that, yesterday and the overnight markets have been a real dud... Although, like I said above, I truly expect that all to change around 7:30 CT this morning.
I see where James Rickards decided to undercut my thoughts on China yesterday... As a reminder, yesterday I was talking about how China was in talks with Saudi Arabia to get the Saudis to agree to sell their Oil to China using Chinese renminbi... A major blow to the U.S. and its Petrol dollar... Now, I didn't say anything about the value of the renminbi increasing, and I do want to point out that a month or so ago, I did point out that the Chinese were allowing daily appreciations to the renminbi, and I threw out the thought that they were doing that in preparation of a devaluation of the renminbi.. OK, we've got those parameters set.. .let's listen to what James Rickards had to say in the Daily Reckoning
"Investors should soon brace for a financial earthquake from China that will reverberate around the world.
Based on far smaller yuan devaluations in August 2015 and December 2015, the repercussions of a new devaluation will not be confined to China. The U.S. stock market crashed over 10% on both prior occasions.
An even larger correction could be expected when the maxi-devaluation comes. A flight to quality in gold is another predictable result." - James Rickards
Rickards is basing his devaluation call on something that's called the "impossible Trinity", and it all makes sense to me. Check out the DR for a full explanation of the "impossible Trinity"..
Gold had a "nothing day" only gaining $2 on the day, and for once the story in precious metals yesterday wasn't about Gold. Instead it was about Palladium! A couple of weeks ago, Palladium passed by Platinum (in price) and continues to amaze people following the metal, as yesterday Palladium was up $27 at one point, with the metal finally closing up $15 on the day, but that's $12 off its intraday high! Darn paper trades! Oh well, Palladium is up another $7 in the early morning trading today, so another wild day for the metal could be in store!
I'm hesitant to talk further about the currencies small gains this morning because of what I see on the horizon after Retail Sales prints this morning... It's time to batten down the hatches, or get to the storm cellar, and don't peek to see if it's all clear, I'll let you know in the Pfennig on Monday if it's all clear! So, since today is all about the Data Cupboard, we might as well head there, eh?
The U.S. Data Cupboard does have the aforementioned Retail Sales for Sept. today, and that should be quite the show this morning.. In addition we'll see the stupid CPI (consumer inflation) that the markets sill pay attention to, but doesn't mean I have to! And I can't forget the Consumer Sentiment report which will also print this morning... The Consumer Sentiment report is such a waste of time in my opinion...
To recap... It's all about the Data Cupboard today, with Sept. Retail Sales the main attraction, which Chuck has explained will be boosted by new car sales that are replacing the flooded out abandoned cars from the hurricanes. And then Chuck points out that GM has an inventory problem, so the car sales boost to Retail Sales may only last one month... Germany & Italy print 1.8% CPI's, and the ECB announces the date they will give the details of their bond holdings unwind..
Before we head to the Big Finish today, I wanted to highlight something that's going on here in St. Louis... A huge Billboard, along HWY 44 in the city, had a gigantic bell added to it, and every time a child with cancer goes through their final chemo treatment, they get to ring that bell! Isn't that a great way to honor these kids, who did nothing to their bodies, but were afflicted with this awful disease... I know what I've been through for 10 years, and can't even imagine what they've been through in their young lives! So, Kudos to the people at Siteman for doing this, I just get all emotional thinking about a kid's last chemo treatment day...
Or, here's your snippet: "Four months ago, when looking at the latest S&P/Experian data, we first reported that credit card defaults had surged the most since June 2013, a troubling development which ran fully counter to the narrative that the economy was recovering and the U.S. consumer's balance sheet was improving.
The troubling deterioration prompted Moody's to pen its own report titled "Spike in Charge-off Rates Indicates a Slide in Underwriting Standards" and as Moody's analyst Warren Kornfelf wrote, the steep increase in credit card charge-off rates in 1Q'17 and 4Q'16 was the largest since 2009, and indicates that "strong underwriting standards in place since the financial crisis have deteriorated, potentially rapidly.
" Then, following JPM's results earlier today, we showed that this concerning trend had persisted, with JPM reporting the second highest net credit card charge-offs in Q3 since the summer of 2013, and only a modest decline since the previous quarter.
It wasn't just the charge offs however: there was another red flag in JPM's results this morning in addition to the sharp 27% drop in the bank's FICC revenues: with charge-offs spiking, it was only a matter of time before both JPM and its peers was forced to provision substantially greater credit losses ahead of potential pain in the future, and as we showed first thing this morning, JPM did just that when it hiked its credit loss provision from $1.2 billion in Q2 to $1.45 billion in Q3.
" Chuck again... Doesn't reading that just make you want to go count your Gold to make sure you have enough? I'm not kidding here, when these major banks are increasing their loan loss reserves, they are doing it because they feel they have to, not because they want to!
Currencies today 10/13/17... American Style: A$ .7845, kiwi .7148, C$ .8020, euro 1.1832, sterling 1.3265, Swiss $ .9745, ... European Style: rand 13.3737, krone 7.8905, SEK 8.1036, forint 261.08, zloty 3.5991, koruna 21.8030, RUB 57.68, yen 112.08, sing 1.3542, HKD 7.8073, INR 64.93, China 6.5882, peso 18.91, BRL 3.1692, Dollar Index 93.07, Oil $51.52, 10year 2.32%, Silver $17.26, Platinum $938.46, Palladium $982.77, and Gold... $1,296.50
That's it for today... Another devastating home field loss in the playoffs for the Washington Nationals last night... The St. Louis "kid" Max Scherzer tried to stop the bleeding but only made things worse, and a big rally stopped short and the Cubs move on to play the Dodgers. Our Blues 4-game win streak to start the season came to an abrupt halt last night in Florida... UGH! My beloved Mizzou Tigers travel to play Georgia tomorrow night... Georgia is undefeated, and highly ranked, it would take a football miracle to upset them... You know... today seems like it will be a good day, to have a good day... The Rolling Stones take us to the finish line today with their song: Brown Sugar... (Mom, he's doing it again! HA!) That's all for this week, I hope you have a Fantastico Friday! And Be Good To Yourself!