Russia Continues To Back Up The Trucks For Physical Gold!

• Currencies moved steadily higher last week...

• FOMC week... 

Good Day... And a Marvelous Monday to you! Well, I finally came home to stay, at least for a couple of weeks! I had a fabulous time last week, as we visited good friends that live in the Hamptons... And then on Friday, some of my former colleagues visited me at my local watering hole... It was great to see Tim, Ty, Chris, Dane, and Danielle again! My beloved Cardinals swept the Giants this past weekend. There are only 6 more games left in the regular season. UGH! This baseball season went way too fast for me, as it seems to me that it was just a month or so ago, I was attending Spring Training Games! Seals & Crofts greet me this morning with their song: Diamond Girl.. 

Once again the old saying on the trading desk about "Chuck's away, the currencies rally" was in play last week, as the euro climbed steadily to tend the week trading well into the 1.17 handle. The economic data here in the U.S. continues to be weaker by the print... And the dollar has seen some major selling in the past week because of that weaker data, and... The news that China has deep sixed the Trade Talks, because of the continued rhetoric of more tariffs... 

But the dollar selling could very well come to halt this week, as the Fed's FOMC will meet on Wednesday, and announce another 25 Basis Points rate hike to bring the Fed Funds rate to 2.00%... I can remember the dollar getting pounded the last time rates were this low, but at that time they were heading downward, and not upward like they are now. 

I was recently interviewed by good friend, Dennis Miller, for his letter: Miller On The Money... and he asked me if I thought the criticism of the rate hikes by the President would make the Fed think twice about hiking rates going forward, and I responded that I didn't think so... I said that Fed Chairman Jerome Powell would probably be more inclined to hike rates now, to show the markets that the Fed is independent and not influenced by the White House... 

So, with that in mind... The Fed will hike rates on Wednesday, that, I'm pretty darn sure of... But will that be the end of the rate hikes? Well, when the economic data shows weaker and weaker prints, the Fed heads will have a difficult time proving they need to hike rates further... I was perusing Twitter and one of my fave economists, David Rosenberg, had this to say...

" The US consumer is so strong that in the past 3 months sporting goods and hobby store sales are -13.6% SAAR; dept stores are -6.9%; autos are -4% SAAR; clothing and accessories are -2.2%; and both building materials & furniture sales are flat. Imagine what a recession looks like!" - David Rosenberg

In the Eurozone this morning, September Business Climate as measured by the think tank IFO printed and was pretty much bang on last month's print, and beat the expectations for this month! A good showing, for the Eurozone. Later today, European Central Bank (ECB) President Mario Draghi will give a speech, and the hopes are that he will have gone back and sharpened his pencil a bit on the timeline he gave for the a rate hike a couple of weeks ago. 

The ECB has already begun to narrow the bond buying program they've been offering for a few years now, and by all accounts this bond buying program will end by the year-end... Bloomberg had some thoughts on this and I'll let them take it from here: 

"Next week, lenders must repay €9 billion ($10.6 billion) outstanding from cheap loans the ECB doled out in 2014-2016, when the bloc was teetering on the edge of deflation. Next month, the central bank will cut its monthly bond-buying program by 15 billion euros, and stop altogether at year-end.

In a speech on Thursday, ECB Chief Economist Peter Praet presented a model that projects excess liquidity -- the cash beyond banks' immediate needs that is sloshing around the financial system -- will peak at about 2 trillion euros around the end of this year and drop below 500 billion euros in 2022."

I'm glad that the ECB believes that liquidity is not a problem in their union... because I do believe that it's going to be a BIG problem for the U.S. soon... But then that's just me thinking outside the box... You know the box that everyone else is in, and thinking that everything is sunshine and lollipops, and that debt is never going to hurt us... 

If you follow the currencies in the currency roundup each day, you'll probably do a double take on the Honk Kong Dollar (HKD) or honker as traders call it... I can confirm right here, right now, that it's not a fat fingered typo! It's tru, it's tru, I did see a putty tat! and... a 0.6 percent rise in Hong Kong’s dollar on Friday! 

Hong Kong's foreign-exchange market suddenly came to life on Friday, propelling the local dollar to its biggest gain in 15 years. In a city that keeps its currency on one of the world’s tightest leashes, swings greater than 0.4 percent have only happened three times since Hong Kong widened its trading band in 2005.

So, what gives with this sudden move in the honker? Apparently there are quite a few theories behind the move... But the one that I'm thinking is the most feasible is that China is going to issue debt in Honkers... Which would mean to buy the bond, the buyer would have to convert whatever currency they own to honkers, and since bonds deal with much larger sizes that stocks, this could be HUGE for the honker! 

Gold didn't have as good a day as the currencies did on Friday last week, and ended up losing more than $8 on the day... The shiny metal is flat in the early morning trading today, so that's a good sign... I think! HA! I read of the weekend that Russia imported more than 1 million tonnes of Gold in the last month... Amazing what they are doing with their Gold accumulation, isn't it? 

And the price of Oil which was beginning to rise again when I left for my mini-vacation last week, continued to rise as the week went along... And then President Trump tweeted that Oil prices should be lower, and Oil traders immediately pushed the price of Oil higher! And with this new $71 handle is giving the Petrol Currencies a new life... So, currencies that include the Norwegian krone, Russian ruble and Canadian loonie, are perking up...

The Swedish krona has really been a on a nice upward movement in recent weeks... I held back talking about it at first to make sure it wasn't another false dawn... But something has gotten krona traders feeling good, and this move took place just when it appeared the krona was going down for the count... go figure, right?

To recap... The currencies had a good week last week, and are moving in the right direction VS the dollar, but Chuck thinks that might not last too much longer with the FOMC scheduled to hike rates on Wednesday this week. Gold got sold on Friday, but the Russian are still importing truck loads of physical Gold... And the economic data here in the U.S. continues to show weakness, and David Rosenberg tells us of a few that he's watching...

For What it's Worth... My last DTL piece talked about derivatives, and how the debt problems here in the U.S. have only gotten worse since 2008, and then I came across this article that talks about the same stuff, it's by Nomi Prins.

Or, here's your snippet: "In some ways, we seem much better off now. Employment is at record highs in most developed nations outside the Eurozone. Global economic growth has picked up overall and stock markets have recovered.

Indeed, many stock markets around the world have regained or passed their former record highs. Asset prices are booming.

But that only tells half the story. That’s because the last financial crisis was about debt and debt levels have increased substantially since 2008. The entire “recovery” was built on debt.

From 179% before the financial crisis, the global debt-to-GDP ratio has jumped to 217% today. Companies and governments have piled on more debt than before. Emerging-market debt, led by China, is also at a record. The big banks are even bigger, and remain “too big to fail.”

Eliminating all that debt is the ultimate solution for avoiding another crisis. That’s because if interest rates drift higher, it can lead to problems in debt repayment, followed by defaults, followed by crisis as defaults spread like a contagion. But there’s no magic bullet for doing that."

Chuck Again... I had lunch with a long time Pfennig Reader last week, (thanks Sharon!) and she asked me what other reads she might take to that tell the truth like I do... I told her about David Rosenberg, and Danielle Di Martino Booth, but failed to mention Nomi Prins…  

Currencies today 9/24/18... American Style: A$ .7275, kiwi .6672, C$ .7725, euro 1.1765, sterling 1.3140, Swiss $1.0426, European Style: rand 14.2307, krone 8.1254, SEK 8.7817, forint 274.86, zloty 3.6555, koruna 21.7760, RUB 66.47, yen 112.62, sing 1.3640, HKD 7.8085, INR 72.55, China 6.8554, peso 18.86, BRL 4.0500, Dollar Index 94.11, Oil $71.95, 10-year 3.08%, Silver $14.34, Platinum $831.63, Palladium $1,059.85, and Gold... $1,199.59 

That's it for today... Today is the Queen's Birthday, so we have that going for us today! HA! It's just me and Alex for the next two weeks... And he leaves early in the morning and doesn't return until late evening... So, I have the days to myself again... I bought a new book that's titled: Contra/ Krugman... by Robert Murphy... He takes Paul Krugman and rips his theories and statements to pieces... I love it! The Moody Blues take us to the finish line today with their song from the Seventh Sojourn Album: Isn't Life Strange... And with that it's time to go, so please go out and make this a Marvelous Monday, and Be Good To Yourself!