Palladium's Price Flies The Gold Price!

  • The markets finally get the memo on the Trade War!

  • The RBA leaves rates unchanged...

Good Day... And a Wonderful Wednesday to you! I know, I know, I said that with today being a Government holiday, that I too would take it as a holiday... But upon further review, there was just too much going on to not write today, so, in the words of Scorpion... here I am... rock you like a hurricane! I doubt I'll rock anyone, but... I could very well wake up a reader with something so I have to work toward that! Rosemary Clooney greets me this morning with her version of Winter Wonderland...

OK... Yesterday, I ranted about how the stock jockeys and economists had gotten the message from the G-20 meeting all wrong... This is what I said yesterday: I don't know if I've even seen more misinformed writers and markets than now. The agreement between Trump and Xi was to not "add additional tariffs for 90 days", not what everyone else seems to think, that Trump and Xi agreed to end tariffs and thus the Trade War! That's simply not the case, but yet the stock jockeys rallied stocks... The Trade War still exists, and if anything the Trump / Xi agreement simply prolonged the Trade War...

Well, I guess they finally got the memo for stocks lost about 800 points yesterday, and the dollar got sold... The Trade War is still on the table folks... It's almost as if the past couple of days of trading stocks were a trap... Traps can be ugly, painful and make you wish you hadn't been tricked, or goaded into buying.. Of course stocks could rally today and the stock jockeys will be back waving the flag to buy... That there's nothing wrong, etc. I've told you all before that stocks, historically, do not perform well in a recession... So, are we already in a recession? Longtime readers know that I've contended that we had remained in a depression all these years, due to the 90 + Million Americans still looking for a job, and those long soup kitchen lines were no longer needed because now the money was mailed to the recipients... So, if everyone can't see the effects of all these people out of a job, then problems can't exist, right?

OK... enough of that... I can feel my blood pressure climbing! The Reserve Bank of Australia (RBA) met yesterday, and did indeed leave their key interest rate unchanged, as I told you it would... RBA Gov. Phillip Lowe had this to say about the prospects of a rate hike any time soon... "With the economy expected to continue to grow above trend, a further reduction in the unemployment rate is likely," governor Philip Lowe said in his statement. "The stronger labor market has led to some pick-up in wages growth, which is a welcome development."

Well, the RBA takes the rest of the year off, and won't meet again until Feb 2019, so by the time they meet again, the RBA will have a complete picture of what's going on... Basically, I believe they missed their opportunity to hike rates earlier this year, and that by the time February comes around, it could be pretty sketchy for a rate hike...

The euro drifted even though the dollar was getting sold yesterday, which is pretty rare, given the euro is the offset currency to the dollar. I realized yesterday that I had made a big deal last week about the European Central Bank's (ECB) Financial Stability Report that printed on Friday, and then forgot to even mention what happened! UGH! So, here we go... Recall, I had said that this report could be the green light to the ECB to completely remove stimulus...

Well, from what they said, you'd be scratching your head and trying to figure out where they learned Greenspeak... (former Fed Chairman Al Greesnspan's ability to say stuff that nobody understood) here's what I pulled from the ECB's website:

A growing economy and a more resilient banking sector continue to support financial stability in the euro area. However, vulnerabilities in global financial markets continue to build, with political and policy uncertainties on the rise. – ECB Financial Stability Report 11/30/18

So, there are still questions about when the ECB will completely remove their stimulus... they are still on the docket to stop bond buying on 12/31/18... And next will be their negative deposit rates... And then and only then, will the euro be free to appreciate VS the dollar!

With the markets finally understanding that the Trade War is still on the table, the Global Growth flag wavers went home to lick their wounds, and with Global Growth back on the questionable list, the Aussie dollar and kiwi both saw some profit taking, I still believe that commodities will be the cat's meow next year, so don't panic with your A$'s and kiwi. At least that's my opinion and I could end up being wrong...

Longtime readers know that I've been on top of this deficit spending glut in the U.S. for years, shoot even a decade and more! And I was asked why I thought it was bad for the dollar, when Japan is the king of deficit spending and the yen hasn't collapsed yet? Ok... good point... And one that I'll attempt to differentiate between the two... You see, as I've explained through the years, the Japanese debt is, for the most part, held "in-house"... In other words, Japan's debt is contained within Japan, for the most part... In the U.S., that isn't the case... We depend on the kindness of strangers, as they imitate Blanche... And therein lies the problem for the dollar... You see, the U.S. needs foreigners to buy our Treasuries so that we can finance out deficit spending... And Japan doesn't depend on the kindness of strangers... Not that what they've done with deficit spending is anything to put on a pedestal and honor! But that's the difference... OK?

A couple of years ago, when I was still on the trading desk I spoke to a trader at I believe, Morgan Stanley, and told her that the next crisis in the U.S. was going to be pushed by a Liquidity Crunch... And I was so happy when longtime reader and good friend, Sharon, sent me this link to an article that features an interview with David Rosenberg, who is thinking along the same lines as me with the liquidity crunch... So, here's the link if you would like to see or hear what Rosenberg had to say...

OK... My mother taught me that you can make some of the people happy some of the time, and I needed to ignore those who aren't happy with what I said... BTW... my mom always thought that I would end up being a sportscaster... Close, mom... but no cigar! OK, anyway, yesterday, when I had kind words to say about former President George H.W. Bush, a reader took exception to my thoughts... See? what I'm talking about when you can't have an opinion these days without someone taking an axe to it? Oh well, I learned well Mom... thank you for all you taught me...

So, the funeral for former President Bush, will be today, and that's why all the government offices are closed for the day, which means no data will be printed, moving it to tomorrow. The ADP Employment Report for November was going to print today, and prelude to the Jobs Jamboree that will happen on Friday.

Well, it happened! Palladium's price bypassed that of Gold... Palladium was up $24 yesterday, and is up another $17 in this morning's early trading... This Palladium price surge is amazing, given that its kissin cousin, Platinum is getting sold... Gold has been unable to keep up with the surge in Palladium's price, and Gold is down a buck or two in the early trading today, after posting a $7 gain yesterday...

I'm told that Palladium's strong run is linked to surging sales of petrol cars globally, in part because consumers are turning their backs on diesel vehicles. Hmm... But I thought that car sales here in the U.S. were slowing down? I guess the key word used here is "globally"... And with that I have to say that I'm a little iffy on this surge in Palladium's price, given that Global Growth is on tenterhooks... I'm just saying...

To recap... They will bury former President George H.W. Bush today, so the Government is shut down, which means no data prints. The markets finally realized that they were walking down the wrong path on the Trade War, and finally listened to Chuck! The currencies drifted on the day, and in the overnight markets, as there are just too many questions in the markets these days for anything other than Treasury Bonds to be bought...

Or, here's your snippet: "Russia has found yet another potential substitute for the dollar in international trade. While Washington is threatening to step up sanctions, freeze Russia's dollar-denominated assets, and even target the country's sovereign debt, Moscow is confidently moving away from the greenback.

The US is 'shooting itself not in the foot, but a bit higher', said Russian President Vladimir Putin commenting on Washington's sanctions and attempts to use the dollar as nothing short of a weapon.

'We do not have the goal to move away from the dollar, we are forced to do this. Let me assure you, we will do this... We just do not want to do anything sudden that would hurt us... We are not leaving the dollar, the dollar is leaving us', the Russian president said, while speaking at the annual 'Russia Calling!' Investment Forum on 28 November."

Chuck Again... Don't look now but the Europeans are looking to get out from the dollar's thumb... So, all these things I've been telling you that were coming, are getting nearer and nearer... Closer he gets, step, by step... BOO! Yeah, it's going to be scarier than that for dollar holders... You see... as I've explained before many times... When the dollar loses value, it's like a tax on U.S. consumers, because we import so much stuff, and consumer buy so much foreign stuff, and they'll be paying more and more for those foreign goods, just like a tax being added...

Currencies today 12/5/18: American Style: A$.7293, kiwi .6917, C$ .7527, euro 1.1355, sterling 1.2788, Swiss $1.0025, European Style: rand 13.7555, krone 8.4963, SEK 8.9748, forint 284.97, zloty 3.7666, koruna 22.8110, RUB 66.56, yen 112.95, sing 1.3669, HKD 7.8114, INR 70.44, China 6.8407, peso 20.43, BRL 3.8410, Dollar Index 96.84, Oil $53.16, 10-year 2.91%, Silver $14.55, Platinum $799.60, Palladium $1,249.29, and Gold... $1,237.25

That's it for today... A bonus Pfennig, eh? HA! Well, it snowed all day here yesterday, but never accumulated on the pavements, so in the whole scheme of things, if it has to snow, that's the best kind! But then I don't have to get up and on the road in the morning any longer, so I don't care! The STLTODAY.com site had pictures of the event I attended on Monday night, and checking it out, there I was, along with friends, Rick and Kevin, and old friend, Jim Thomas! The great voice of Johnny Mathis takes us to the finish line today with his version of the song: Caroling Caroling... That should get you started with some Christmas spirit! I hope you have a Wonderful Wednesday, and Be Good To Yourself!