The Boys In The Band, Show Up…. UGH!

February 25, 2020 

* Gold gives back $30 of its Monday gains, but still records a profit!

* The dollar bugs still have the conn over the currencies… 

Good day… And a Tom Terrific Tuesday to you! Another chamber of commerce day, weather wise, here yesterday.. I hear word of a cold front moving through this coming weekend. UGH!  It’ll be sunny and 84 for the baseball game today, so I’ll be getting out the SPF!  We received some sad news yesterday, our friends from Houston, that were here, learned that his mom had died. So that ended their Spring Training trip for this year, and brought back sad memories for me from 2017, when I had to leave Spring Training to fly home for my sister’s memorial service. (I still miss you Barbie doll 🙁 )  Def Leopard greets me this morning with their song: Bringin’ On the Heartbreak… 

Well, Gold took a spin on Mr. Toad’s Wild Ride yesterday…  After I signed off and headed north, Gold added $10 more dollars to its overnight price, which put it at $1,691… But then the boys in the band showed up and at the end of the day, Gold had given back $30 of its early morning gain, to only close up $16 on the day…  I had a dear reader send me a note and asked me why I thought the boys in the bank had failed to keep Gold in check…  

I guess I spoke too soon, because I told him that I thought that the price manipulators had been told to “back off”…   but that was not the case yesterday, as they showed up with arms full of short Gold paper trades…  But when I think about Gold’s actual move since last week, it has risen from $1608 to $1,650… so, not a shabby move, I would say… but, still not the icing on the cake move that was there for us yesterday, before the boys in the band decided that enough was enough.

The Coronavirus is still on everyone’s minds, folks… As well it should be, but the safe haven buys of Gold have backed off a bit… But not the safe haven buys of Treasuries! The 10-year’s yield is 1.35% this morning, down from 1.40% yesterday…  The bond boys see what I’m seeing folks, and that is this Coronavirus is spreading, even though the Chinese say they have it under control. And….  using my best Pinocchio voice… “When I look around the room today, I see great potential. You have potential, and you have….    HA!

The dollar bugs still have the con with the currencies…  This latest surge in the dollar really has me scratching my bald head…  It defies logic, and I hate it when that happens! For I’m all about logic, folks… But as the old saying goes, the markets can remain irrational longer than you can stay solvent…  Not that we’re completely all in on that saying, it does play well in the sandbox right now.  

Shoot Rudy, even the Russian ruble is mixed up in this dollar strength move, and the price of Oil has steadied a bit, which should provide some support for the ruble, but noooooooooooo!  The dollar bugs really have all the answers right now, so like I said last week, we had better batten down the hatches, or look for bargains, because when the currencies are cheaper VS the dollar, is the time to buy, because…. You can buy more of them!

 The Aussie dollar (A$) is getting whacked due to its relationship with China, and when the A$ gets whacked its kissin cousin across the Tasman, the New Zealand dollar / kiwi, sells off in sympathy  with what’s happening to the A$. 

We are coming up on Summer, and the summer vacation time, right? Well, this will be a good time to travel to Europe or the S. Pacific as things in these countries will be much cheaper!  And no… I’m not starting a vacation travel service company in my retirement! HA! 

Yesterday in the Eurozone, we saw the color of some economic prints from the German Think Tank, IFO…   And their Business Climate and Outlook reports didn’t show any major moves downward, and to me they looked pretty flat, so  the euro did manage to eke out a small gain VS the dollar yesterday.  

And one has to question just what the heck is going on over in Japan these days… First, last week they get some very damaging / weak economic reports, and this week, they print some that show strength! Wait, What? The Japanese really think they can pull the wool over our eyes?  Japan and the yen is a basket case, has been, is still and will remain one, folks… So, don’t be confused, like the chameleon in the box of Skittles yesterday! 

Here in the U.S. the Data Cupboard is still lacking any real economic reports, but we will see the latest Case/ Shiller Home Price Index (HPI) today… For about 5 months, previous, and up until two months ago, Home prices were dropping each month, but then there was a reversal, and now we’ll see which direction they are really headed… ‘

To recap… The dollar bugs still have the conn with the currencies, and even a strong currency like the ruble has succumbed to the dollar bugs’ pull…  Gold had a great day going yesterday climbing up to $1,691, that is until the boys in the band showed up, and by day’s end Gold had only booked a $16 gain, and is down another $8 this morning…   But the pressure on the bond yields remains strong, with the 10-year Treasury’s yield falling to 1.35% this morning… 

For What It’s Worth…  I think it was yesterday, or lest it was recently, that I said that the stock jockeys think the Fed has their backs…  I questioned their thinking, but realized it was what was supporting the stocks… Well, this article on Zerohedge.com talks about how the Fed won’t be able to support stocks, and it can be found here: https://www.zerohedge.com/markets/no-fed-wont-save-market-heres-why

Or, here’s your snippet: “The greater the excesses, speculative euphoria and moral hazard, the greater the reversal.

A very convenient conviction is rising in the panicked financial netherworld that the Federal Reserve and its fellow dark lords will “save the market” from COVID-19 collapse. They won’t. I already explained why in The Fed Has Created a Monster Bubble It Can No Longer Control (February 16, 2020) but it bears repeating.

Contrary to naive expectations, the Fed’s primary job isn’t inflating stock market and housing bubbles, though punters are forgiven for assuming that, given the Fed has inflated three gargantuan bubbles in a row, each of which burst (1999-2000, 2007-08 and now 2019-2020).

The Fed’s real job is protecting the banking/financial sector from a richly deserved and long overdue implosion. Blowing speculative asset bubbles is a two-fer, enabling rapacious, parasitic financiers and banks to profit from debt-serfs borrowing and gambling in rigged casinos (take your pick: student loan casino, housing casino, stock market casino, commodities casino, currency casino, etc.).

Blowing guaranteed-to-burst bubbles also generates a bogus PR cover, the Fed’s beloved “wealth effect,” an idiots’ delight belief that the greater the speculative bubble, the more tax donkeys and debt serfs will spend, spend, spend on defective junk and low-value services they don’t need–in essence, speeding up the global supply chain from China et al. to the local landfill, all in service of Corporate America profits.”

Chuck Again… Yes on the web site there’s a picture of Fed Chairman in a Superman outfit, pretty funny…  I thank Ed Steer for posting this article this morning, so I could check it out!

Currencies today 2/25/20 American Style: A$ .6594, kiwi .6320, C$ .7519, euro 1.0834, sterling 1.2965, Swiss $1.0221, European Style: rand 15.2231, krone 9.3686, SEK 9.7477, forint 311.73, zloty 3.9725,    koruna 23.3116, Silver $18.41, Platinum $966.25, Palladium $2,657.37, and Gold… $1,650.46

That’s it for today…  Now, mark you calendars… I’m going to be on my annual spring Training vacation next week… So no Pfennigs all week!  A day game today at Roger Dean! The defending World Series Champion Washington Nationals will be there…  Blues and Blackhawks tonight! There was a time when getting a ticket to that game would have near impossible!  The Blackhawks are still a rival that the Blues fans love to see lose…  And then there’s our XFL Battlehawks! I read yesterday that their first home game is a sellout, and resale tickets are being offered at $200 a ducat! Do you think that folks in St. Louis miss their football team?  HA! OK,  Eric Burdon and the Animals take us to the finish line today with their rock classic: We Gotta Get Out Of This Place…  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself! 

Chuck Butler

A Global Flight To Gold & Treasuries Is Among Us!

February 24, 2020

* Gold soars on Friday and this morning!

* Dollar is still well bid VS most currencies… 

Good Day… and a Marvelous Monday… Next week, I’ll be on vacation, my annual spring vacation from writing, so this is just a warning! Well, Spring Training games finally began for me on Saturday. I had my annual emotional moment when I come up the stairs onto the concourse level and see the plush green field for the first time each year. I know in my heart of hearts that it’s only by the grace of God that I get to attend spring training each year, and so it was on Saturday, that I got to smell the hot dogs grilling, the popcorn popping and the beer guy selling his beer. And I thought to myself, Man, you are a lucky person, Chuck… My beloved Cardinals won their first spring training game VS the Mets, who back in the 80’s we referred to as “pond scum” And with that bit of history, The Killers greet me this morning with their song: Somebody Told Me…

Well, gold stole the show on Friday last week, soaring higher by $23 on the day, and  when I looked at the shiny metal, this morning, it was up another $37… So Gold has gapped higher by huge chunks in the past few days, folks… and trades this morning with a $1,681 handle… It’s all about the fears pf the Coronavirus spreading… Now there are reported death from the virus in Italy… It’s spreading folks… and the safe havens like Gold & Treasuries are the place to be… Gold is soaring and Treasury yields are dropping like flies… Just last week the 10-year’s yield was 1.56% and this morning it is 1.40%… Just a public service announcement here folks… that when bond yields go down, the price of the bond goes up, and vice versa… So with the yield on the 10-year dropping, that means that the price of the bond is soaring… just like Gold!

The currencies rebounded from last week’s selling on Friday, and the euro regained the 1.08 handle and beyond… I really, in my heart of hearts knew that last week’s selling of the euro was overdone, and the recovery proves that. The Safe haven currencies that used to be in play when things like this happened were yen, francs, euros. Gold and Treasuries have been changed to: Gold and Treasuries, and somewhat dollars… Although on Friday the dollar bugs got their rears ends handed to them! 

Why have euros, francs and yen all been omitted this time in safe haven buys? Well, they all three have negative deposit rates and yields, and last week Japan’s GDP got trashed! So… Gold and Treasuries are the picks to be the real safe havens right now, and why not? Gold doesn’t have yield, but it also doesn’t have negative yield, and Treasuries are in rally mode… So, what are you waiting for?

This is a “global flight to Gold and Treasuries” folks… and you will notice that I didn’t mention stocks… To me, the stock phenomenon has run its course, Yes, there are famous analysts out there that will tell you that as long as the Fed has the stock markets’ back then everything will be seashells and balloons…  But…. I disagree with them, this virus thing seems to be the black swan that has been hovering over the markets and economies like the Sword of Damocles for years, has finally swam into our lake… 

I hear you brother… Gold and Treasuries have taken off and now you feel it’s too late to back up the truck and buy them… Ahhh, grasshopper, all I’ll say to that is, if you read this letter, you’ve been warned for months, so I have no sympathy for your plight, but… I  do believe there’s more to go, in this global flight to Gold and Treasuries, so it’s not the absolute too late time, it’s just late, but like the old saying goes, “it’s better to be late than never”… I’m just saying.. 

The other currencies than the euro, have been taken down in the overnight markets, with the Canadian dollar/ loonie, and to a lesser extent, the  Russian ruble, have maintained their respective prices, but currencies like the Mexican peso, Hungarian forint, Czech koruna, and especially the Aussie dollar (A$) have lost a lot of ground to the dollar bugs…  So, in essence the dollar remains well bid, except against Gold… 

There’s not much in the way of real economic data in the U.S. Data Cupboard this week folks…  We’ll have to wait until Thursday before we see Durable and Capital Good Orders, which have been negative to poor performances for months now, and I don’t see them changing colors like a chameleon…   

On a sidebar, my good friend Dennis Miller sent me a note last week with some great sayings on them, and one of them said, “I’m as confused as a Chameleon in a bag of Skittles”    HAHAHAHAHAHA! 

OK, to recap, and yes, I know this is short, but I have my weekly visit to the St. Lucie wound center this morning, so this has got to get out the door with me following it to make it on time!  But the recap is simply that there’s a Global Flight to Gold & Treasuries that’s going on folks, and Gold and Treasuries are soaring higher! Gold is up $37 already today!  Chuck believes that the Coronavirus is the proverbial Black Swan for the markets and economies, that doesn’t bode well for anything other than Gold and Treasuries… 

For What It’s Worth…  OK, I forgot to mention in the U.S. Data Cupboard discussion that the Markit version of the PMI (manufacturing index) dropped like a rock in January to below 50!  and the folks at Zerohedge.com picked up the commentary on it, and that article can be found here: https://www.zerohedge.com/economics/treasury-yields-plunge-record-lows-us-pmi-collapses-contraction

Or, here’s your snippet: “Markit’s U.S. Manufacturing bucked the surprising surge in ISM Manufacturing in January and preliminary February data was expected to confirm this slowing trend (with Services steadily expanding).
• U.S. Feb. Services Flash PMI 49.4; Est. 53.4
• U.S. Feb. Flash Manufacturing PMI 50.8; Est 51.5
• U.S. Feb. Flash Composite PMI 49.6 vs 53.3

‘hard’ data – actual economic flows – has been weakening for 4 months, and February appears to have been catch-down time!  

New orders received by private sector firms fell for the first time since data collection began in October 2009. The fractional decline in new business stemmed from weak client demand across the service sector and the slowest rise in manufacturing new order volumes for nine months. Private sector companies continued to struggle to attract foreign client demand as new export orders fell for the second month running.

Finally, we note that the composite output at factories and service providers fell by 3.7 points to 49.6, the lowest level since October 2013, when the U.S. government shut down.”

Chuck Again… Well this poor performing data helped to send Treasury yields down, but the Global flight to Gold and Treasuries is what’s driving the yield drop… But poor PMI data doesn’t hurt, that’s for sure!

Currencies today 2/24/20 American Style: A$ .6606, kiwi .6327, C$ .7626, euro 1.0821, sterling 1.2903, Swiss $1.0201, European Style: rand 15.1282, krone 9.3672, SEK 9.7861, forint 312.34, zloty 3.9752,    koruna 23.2882, RUB 64.04, yen 111.33, sing 1.4017, HKD 7.7947, INR 72.00, China 7.0262, peso 19.12, BRL 4.3878, Dollar Index 99.57, Oil $51.25,    10-year 1.40%, Silver $18.81, Platinum $968.41, Palladium $2,670.65, and Gold… $1,681.16

That’s it for today…  Watched two baseball games this weekend, back in my favorite place to be Roger Dean Stadium for a day game!  Our Blues had a good game last night and now that’s 3 wins in row after their “rough spot”…   Can you believe that February is almost over? Next week is March, my fave month!  Friends all gathered around the pool here last night, and some great conversations were had… The good thing with my friends is that they never ask me my opinion about the markets or economies, for they know I would go into a rant that would leave them speechless! HA! OK, time to get going… Grand Funk Railroad takes us to the finish line today with their song: We’re An American Band…  I hope you have a Marvelous Monday and please be Gold To Yourself! 

Chuck Butler

 

Gold Gets Firmly On The Rally Tracks!

February 19, 2020

* dollar bugs continue to slice and dice the currencies… 

* But I did tell you this could happen this week, and to batten down the hatches! 

Good Day… and a Wonderful Wednesday to you! Another beautiful day here yesterday, unfortunately, for me, I was unable to get outside until late afternoon… It was one of those days, when I can’t seem to wake up, so I slept… And slept… and slept… What the body wants, it needs to get is what I say! I missed dinner, and by the time I woke up, it was too late to eat it, so… I had some soda crackers and a Gatorade and called it dinner. We have company coming to stay with us on Friday, so I had better get this out of my system now! Did you know that chemo stays in your system for up to 4 weeks? I do… unfortunately! OK, enough about me! Our Blues are still having problems putting the biscuit in the basket, but they pulled out a victory last night to stop their losing streak. 10cc greets me this morning with their song: Dreadlock Holiday…

Ok, when is this dollar bug rampage going to end? Yesterday, the dollar bugs were back to slicing and dicing the euro, and brining it down to 1.1801 when the books were handed over to Asia… In the overnight markets the euro slipped below 1.08… Which means the dollar is moving higher once again today! 

Gold on the other hand stuffed the dollar bugs under its arm and took the dollar bugs for a ride, up $20 on the day, and ended the day at $1,601 ! Remember Gold’s last visit to $1,600 didn’t last but a day, so will this time see Gold add to its gains from yesterday, or give them back… If the early trading is any indication, Gold is doing just that, adding to its gains yesterday, I might add, as it is up $7 in the early trading today! 

So, what goosed Gold higher yesterday by $20? Well traders finally saw some proof that the Coronavirus is going to disrupt everyone’s economy. Apple announced yesterday that they would NOT meet the expectations for 1st QTR revenue, and they blamed it on the disruptions caused by the Coronavirus. I asked the question the other day about when Traders would see the need to go to safe havens, and I guess we got our answer yesterday!

Stocks actually got sold yesterday! Can you believe that one? I didn’t when I heard it on the news, so I went to my trusty finance app on my phone, and there it was all in red… So, the shift to safe havens is upon us, folks… You know the old song about how Blondes have more fun? One of my fave economists, David Rosenberg, had a play on that yesterday when he spoke on his twitter handle, and said, “bonds have outperformed stocks, showing that bonds have more fun”…

So… the question on my mind this morning is how far will traders take Treasury yields? The 30 year Treasury fell below 2% yield yesterday, It was back at 2.00% this morning, but that was quite a significant move, folks… I know we always pay attention to the 10-year’s yield, because that bond is used to price mortgage rates, but when long-term bonds see buying like this, the bond boys are telling us something… And what it is, is this…. That the economy is heading to dumpsville, and bonds are the place to be, along with Gold… (I added the Gold!)

OK, the currency traders left the Aussie dollar (A$) alone yesterday, as their focus returned to marking down the euro. The Russian ruble, after spending last week dealing with a slip sliding away price of Oil, has recovered a bit, after seeing it’s price go above 64, it has settled back in the 63 handle, where’s it’s basically been for sometime now.

Speaking of the price of Oil… One would have thought that with the Coronavirus fears spreading, that the demand for Oil would go south, but Oil is one of those safe havens folks, and so it is that the price of Oil has risen this week from $50 to $52… the question remains, in my mind that is, How can the dollar bugs be so brazen after the double whammy in economic reports late last week? In case you’ve forgotten, Industrial Production in the U.S. contracted for the 7th consecutive month, with a negative print for January, and the Baltic Dry Index (BDI) fell to 1986 levels!

The U.S. Data Cupboard today has the Fed’s meeting minutes from the last FOMC meeting. I read where traders are interested in seeing the color of the Fed’s Balance Sheet… I wonder what it is they think they’re going to find, other than a Balance Sheet that’s bloated to the gills with Treasuries and pushing the lid of its previous size…  Maybe they’re thining that my some twist of fate or magical mystery tour, that the Fed has been lying to us and their Balance Sheet hasn’t grown to levels that shouldn’t even be being discussed!  

Hey, coming from the trading brotherhood, I can attest that Traders normally believe just about anything, and will trade it with a knee jerk reaction, until somebody looks under the hood. Many times they have to reverse their knee jerk reactions, but in some cases they are one step ahead should it all turn out the way they first thought!  

The Producer Price Index (PPI) (wholesale inflation) prints today, but this one doesn’t qualify in my book, for a real piece of economic data…  But it’s always interesting to see the folks that put together PPI tell us there’s no wholesale inlation in the pipeline… What a croc!  The Fed is printing dollars at a hectice pace, folks…  I guess it’s a good thing that the Fed decided years ago to stop issuing Money Supply numbers weekly… 

The Money Supply numbers used to be a BIG DEAL on a bond trading desk, as it was used as an indicator for bond pricing direction. We used to gather around the Telerate monitor and all bet shiny quarter on where we thought Money Supply would print… I recall I won a good number of those bets… As Money Supply was my bag, baby! 

To recap… the dollar bugs continue to mark up dollars and sell the currencies, but Gold has bucked the trading trend in currencies, and has taken the dollar bugs for a ride all the way to the $1,600 handle.  The Coronavirus is starting to spook the markets, just as I thought it would eventually, and eventually began yesterday! Stocks actually sold! I know it’s difficult to believe that one, but it’s true!

For What It’s Worth…  OK, for any newcomers to class… The Gov’t goes into debt, to finance the debt they issue Treasuries. and foreigners line up at the auction window and buy them to hold in their reserves… Late last year I told you about how Russia had sold their Treasuries in reserve, and well, now China seems to be going down that same road…  The article that explains what China is doing can be found here: https://www.zerohedge.com/geopolitical/china-dumped-most-us-treasuries-18-months-december

Or, here’s your snippet: “Foreign central banks have sold U.S. Treasuries for the last 16 months (the last inflow was Aug 2018). 

In fact, foreign central banks have only bought Treasurys in 6 in 63 months since Sept 2014.

China was December’s biggest seller, followed by Brazil, Luxembourg, and Canada.

China has dumped Treasuries for 9 of the last 10 months with December’s $19.3 bn sale the largest since July 2018.

Japan remains the largest foreign holder with $1.15 trillion, having added $115.2 billion over the year, but even they sold in December…”

Chuck again…  You have to wonder, well at least I have to wonder, what’s taken China so long to get around to selling some of their Treasuries, considering that their economy has been sinking to new depths, and now it is being shaken to the core, with the Coronavirus…  I don’t think China has bad intentions here, just freeing up some cash to put to work in their economy… 

Currencies today 2/19/20 American Style: A$.6691, kiwi .6397, C$ .7560, euro 1.0797, sterling 1.2994, Swiss $1.0167, European Style: rand 14.9407, krone 9.2852, SEK 9.8006, forint 311.26, zloty 3.9550,   koruna 23.0823, RUB 63.74, yen 110.44, sing 1.3922, HKD 7.7706, INR 71.45, China 6.9962, peso 18.58, BRL 4.3388, Dollar Index 99.49, Oil $52.80,   10-year 1.56%, Silver $18.31, Platinum $1,012.57, Palladium $2,757.75, and Gold… $1,608.40

That’s it for today and this week…  You know, when the Pfennig was first published by the Aden Forecast, I told Pam Aden that I intended to write 4 days a week, and eventually go to 3 days a week…  I really hadn’t planned to do that now, but with the doctor situation I have to… So, Sorry about that…  Well, I woke up enough to watch both our Blues and Missouri Tigers win their respective games last night… I’ve gone to YOUTUBE TV, which allows me to see my St. Louis stations, which means I no longer have to hook up my Ipad to the tv to watch my Cardinals and Blues when I’m down here!  I think all the sleep is out of me this morning, so that’s a good thing! As it looks like another beautiful day again today outside!   The Cardinals’ pitcher that reported injured to Spring Training, will miss the fist month of the regular season… UGH! Next man up!   I think I’ve told you this before but here it is again, I simply love Al Stewart’s music! And this morning Al Stewart takes us to the finish line with his song: On The Border…   I hope you have a Wonderful Wednesday, Tub Thumpin’ Thursday, and Fantastico Friday, and please Be Good To Yourself!

Chuck Butler

 

 

When Will Safe Havens Be Bought Up By The Truck Loads?

February 18, 2020

* dollar bugs continue to put pressure on the currencies

* Jim Grant says the Fed is now the lender of first resort… Oh my! 

Good day… And a Tom Terrific Tuesday to you! In case you’re wondering about me, my visit to the wound center yesterday, was good, as more healing is taking place. On Mondays I don’t see the doctor, instead seeing a nurse who changes the soft cast on my leg. But I can see it healing, finally! It was a true Chamber of Commerce day here yesterday, and I spent a good amount of my day outside, under an umbrella. I know when my spring training buddies show up next week, they’re going to question where my tan is… But the chemo I take causes me to be very susceptible to the sun’s rays, and I would have sun burn in a matter of minutes… And I can not stand sun screen on my skin! Yes, I put it on, but I totally dislike doing so! Chris Isaac greets me this morning with his song: Wicked Games…

Well, the dollar bugs seemed to be worn out from their taking down of the euro on Friday last week, and left the single unit alone… Instead they directed their furor to the Aussie dollar (A$). To the A$’s credit though, it didn’t lose as much as the euro did on Friday last week, but it did fall back below 67-cents, as the Coronavirus begins to take chunks of different respective currencies get in their way…. And if the A$ gets old, its kissin’ cousin across the Tasman gets sold too…. UGH!  Like I said yesterday, and then gave you time to think about it, I would be very afraid of this virus spreading to Africa or India or both!

And I told you yesterday that the 1 to 2 buck loss that it had booked in the early morning was easily reversed, and while that’s no what happened, Gold is up $7 this morning, so no worries…. You’ve got to question what’s on trader’s minds these days, as the Coronavirus goes deeper into our society, and the so-called Safe Havens are getting bought, but Gold gets left out in the cold… So, maybe not a question in your mind, but it sure is in mine! And one day… we won’t need to ask this question any longer… Got Gold?

And yes, I know, my mom used to tell me, my teachers used to tell me, my wife always tells me, my kids tell me too…. I have a strange way of thinking of things… So, I have that going for me… But to my defense, I’ve never thought that my way of thinking about things was “strange”… More logical to me! For I’ve always used logic as my way of thinking how things ought to be… I’m just saying…

OK… back to the task at hand… Yesterday, when I was telling you that Industrial Production here in the U.S. printed negative, I forgot to tell that the for the last 7 months, it has contracted…. And yet no one on a trading desk seems to have a care about these things… It makes you wonder doesn’t it?

Or the repo mess that I haven’t talked about in a few days… In Ed Steer’s Saturday letter that can be found at www.edsteergoldsilver.com he had highlighted an interview with the great analysts, James Grant, that was on CNBC… I have just a snippet of what Mr. Grant said, but… it says enough!

“Jim Grant astutely notes that as banks and the federal government increasingly come to rely on the Fed for funding through the repo market and ‘Not-QE’ program respectively, the Fed is becoming the lender of first resort in our economy, not the lender of last resort.”

The Fed in my mind is completely out of control… and I saw a cartoon last week that I shared with my good friend and former Big Boss, Frank Trotter… it showed two fireman that had outfits on that noted them to be from the Fed, and they were spraying something on a fire, but the something they were spraying was gas coming from a gas can! That, right there, tells you everything you need to know about the Fed…

However, there is a chance that the Fed could be receiving a breath of fresh air in the form of Judy Shelton, of whom I’ve talked about before, and will be before the committee to approve or deny her nomination to the Fed Governors this Thursday… Why, as you may fave forgotten, would Judy Shelton be a good Fed Governor? Ahhh, grasshopper, come sit and hear about story about a woman named Judy, that is a Gold Bug! She has long advocated the return of a Gold Standard, and has been a frequent contributor to the GATA folks…

If she is approved, the next question will be will she lose her Gold Bug status being a member of the Fed like Big Al Greenspan did when he was brought to the Fed after learning at the knee of Gold Bug Ayn Rand? Big Al forgot all about his lessons and his love for Gold and put them all in the trunk of his new car that the Fed provided him, (I made that up about his car, but wouldn’t doubt it one second) , never to be take out until he had retired from the Fed….

Well… like I said yesterday this is a real zero for the U.S. Data Cupboard this week, and yesterday, being a holiday, there was none to print, and today’s version will only have some speeches by the Fed Heads…   There was some news on the retail front that I think begins to tell the story of a recession… First up, Pier 1 filed for bankruptcy…  This shows you that the yuppies aren’t spending… And second, Walmart issues a warning about earnings…  this shows you that the moms and pops aren’t spending…  the next shoe to fall will be when the high-end stores begin to show cracks in their respective foundations…  That will mean the deep pockets folks have gone home to play polo and have stopped spending… 

To recap…. the dollar bugs backed off their full frontal attack on the currencies on Monday, but still saw some downward movements in the currencies, although they were not as pronounced as they were on Friday, last week. Gold couldn’t find a way out of a $2 Buck loss, but is back on the rally tracks this morning up $7.   Chuck is wondering when the traders will begin to really fear the Coronavirus, and flee for safe havens by the droves… 

For What It’s Worth…  Well, I found this article this morning, in Ed Steer’s letter, once again… Thank goodness for Ed Steer, when I’m in a bind and need a FWIW article! OK, this is a rambling on about preparing for the next financial crisis, and it can be found here: https://internationalman.com/articles/the-benefits-of-economic-collapse/

Or, here’s your snippet: “I first began to predict a major economic collapse back in 1999. Although I understood that it was at least fifteen years off and possibly more, I believed that it would be wise to begin to prepare for it then, as the actual date of collapse could not be predicted. (Better to be a few years early than even one day too late.)

Not surprisingly, back then, this prediction appeared to most people to not only be unlikely, but laughable.

Today, we’re a good bit closer to the onset of an economic crisis and it now not only seems possible, but quite likely to an increasing number of those people who are paying attention.

And not surprisingly, as so many people are now realizing the inevitability of such a crisis, they’re also realizing that they should have been preparing for it. Preparation for a major event such as this requires a fair bit of time and many people are belatedly coming to realize that they may be caught with their pants down when the initial crashes begin.

Whenever the inevitability of such a debacle is first recognized, the first reaction for most people is to dive into denial, saying, “It simply can’t happen. Nobody would let it happen, because nobody benefits.”

Chuck again…  I too was way ahead of the last financial Crisis, as I pointed out the coming collapse in housing in my white paper dated 2003!   And then, like now, I think it’s very important that you are prepared for such an event… Like Jeff Thomas said, “Better to be a few years early, than one day late!”  So…. Got Gold? 

Currencies today 2/18/20 American Style: A$ .6685, kiwi .6397, C$ .7542, euro 1.0826, sterling 1.3040, Swiss $1.0195, European Style: rand 15.0490, krone 9.3168, SEK 9.7498, forint 309.62, zloty 3.7498,    koruna 22.9611, RUB 63.40, yen 109.71, sing 1.3920, HKD 7.7684, INR 71.47, China 6.9782, peso 18.63, BRL 4.3087, Dollar Index 99.18, Oil $51.18,    10-year 1.54%, Silver $17.89, Platinum $980.71, Palladium $2,535.68, and Gold… $1,588.08

That’s it for today…  It was late last night, and I was doing some reading, and suddenly my phone lit up, a text message, and then another, and another and this went on for 10 minutes… My watering hold buddies are all on a group text, and they were all worked up about something last night, I sat here laughing so hard!  OK… no new injuries to report from Cardinals’ Camp… I think I’ll go over to the fields today, and see what they are working on. 17 years ago when I first started being down here longer for spring training, I would go to the back fields, and there wouldn’t be 50 people back there… Nowadays, there are so many folks you can’t get a seat in the stands!  So, on second thought, I think I’ll skip the back fields today…  See how easily I can talk myself out of doing something?  HA!  The Allman Brothers take us to the finish line today with their song: Dreams… I hope you have a Tom Terrific Tuesday, and please Be Good to Yourself! 

Chuck Butler

Batten Down The Hatches & Look For Bargains!

February 17, 2020

* Dollar bugs take a cent of the euro’s value on  Friday! 

* Gold reaches a record high VS the euro! 

Good Day… And a Marvelous Monday to you… As usual, I’m getting this done very early this morning so I have time to get north for a doc appt. Well, we had been having a nice run of sunny, warm weather here, but a cold front moved through this weekend, and the temps have only climbed to the mid 70’s… HA! That’ll go back to sunny and 80 by week’s end… Second day of Spring Training and the Cardinals already have reported an injury to a pitcher… UGH! It seems that every spring this happens… The full squad reported yesterday, although the starting infield has been here working with the great instructor, Jose Oquendo… Brewer & Shipley greet me this morning with their iconic rock classic song: One Toke Over The Line…

Well, if you own euros, I sure hope you ducked for cover on Friday, as the offset currency to the dollar saw major selling, or it saw major dollar buying, you can look at it either way… But no matter how you look at it the euro dropped 1-cent in price and trades with a 1.08 handle this morning… There was no real news to cause this drop, or rise of the dollar… Retail Sales were OK, not great, just OK for January, Industrial Production for Jan. was negative and Capacity Utilization dropped, which in my book would constitute a selling of the dollar, but in this day of “opposites” that was not to be… 

I read this weekend that the euro is getting blasted for the Coronavirus… Wait! What? What the hell does the Eurozone have to do with the Coronavirus? Well, the thought here is that should the virus begin to spread world wide, that the Eurozone would get hit next… I would say that if I were doing the forecasting, I would be more worried about the virus spreading to India or Africa… Think about that for a minute and then come back….

Well, stocks throughout the world, sans China, continue to defy gravity, and remain lofty in their prices, with thoughts that they can go higher… This reminds me of the infamous Nero, who fiddled while Rome burned… The goings on in the world are burning, and the stock jockeys continue to play their fiddles… This past week, I was taken aback by the drop in the Baltic Dry Index (BDI)… The BDI has dropped 72% since early December, which was prior to the virus being announced… But given the fact that China’s economy has basically been shut down for over a month now, the shipment of goods from China is nonexistent, and this is quite evident in the BDI… Oh, by the way, the BDI is now at levels it hasn’t seen since 1986… That’s right! 1986…

Industrial Production here and in Europe have gone negative, Factory Orders too have gone negative, but Nero is still fiddling… Bond guys get it… They have marked down the yield on Treasuries in response to the economic data being so weak… But Nero still fiddles…

I get it, folks… I really do… the stock jockeys believe that the Fed has their backs, and so why wouldn’t they continue to mark up stocks?  One would have thought that Fed Chairman, Jerome Powell’s talks last week would have put some questions in their collective minds… I mean when he said something about how the Fed isn’t going to be able to come to the aid of the economy in a deep recession, because interest rates are already low, I would have gasped, taken a step back, and thought, “he’ s scared”…  But, not Nero… he continued fiddling! 

OK, the GATA folks sent me a note on Saturday, that brought up the question that I’ve been asking, and that is what about pensions? Or what about insurance Companies? OK, we’re playing jeopardy here, and the question is: Central Banks think that negative rates are a-OK, but what sectors don’t think that? Oh, and I forget one that’s near and dear to my heart, and that is Senior Citizens, that have savings and try to live off the income without touching the principal… That’s WHO! Can you imagine what’s going on in the finance offices of Pension funds and Insurance companies, who have forecast 7% yields? The note that the GATA folks sent me centered on the Swiss National Bank (SNB) who believes that negative interest rates are a must, and good for an economy… Shame, shame, shame on you SNB, and any other Central Bank that might agree with the SNB!

Speaking of negative interest rates, I read this past weekend that Denmark, which has the deepest negative rates along with Switzerland, is thinking along with Sweden’s Riksbank that it’s time to bring the interest rates out of negative territory… It seems that Swedes and now the Danes have taken a long time to figure out that negative interest rates are the cure-all for what ails an economy… And in fact develops bad habits among the Corporations and other borrowers…

I was going through all the comments on Twitter on Saturday, and came across this one that hits the nail on the head as far as I’m concerned… From Twitter: “Guggenheim’s Scott Minerd 2/13: Global CIO Outlook: “This will eventually end badly. I have never in my career seen anything as crazy as what’s going on right now. It was crazy in 2006 when I was pounding the table saying we were going to have a fin’l crisis of biblical proportions”

Yes, Scott, I too was pounding my fist on the desk saying it was going to be a real mess in Housing, and I was proved to be correct, even though, I was being quieted about this housing debacle by the mortgage company I worked for… A few years later, one of the main guys from the mortgage company said to me, “You were correct, I think I was just drinking the kool-aid.” 

Gold has decent days on both Thursday and Friday last week, and is opening up flat to down a buck or two this morning. Nothing that can’t be reversed easily…  Gold hit a record high VS the euro last week, and is up more than 7% VS euros this year, following its 22% gain VS the single unit in 2019!   In fact, against most of the currencies around the world, Gold has hit record highs in the last year…  Except one… The dollar…  And that day will come folks, you just have to be patient! 

Well, today is a holiday, and see? I’m working! I have to make up for all the days I’m missing for doctor appointments!  OK… well since today is a holiday, there’s no economic data to print today, and for the most part there’s little to sift through the rest of the week. Its’ one of those weeks, that is void of real economic data… On our Tub Thumpin’ Thursday Leading Indicators will print, and that’s it as for as real economic data this week… 

In recent times, that’s been a bad thing for the currencies, as there is no weak data to keep the dollar in check… So, I would warn you to batten down the hatches this week, and if anything, look for cheaper prices in which to buy the currencies you like… 

To recap… The dollar went on a rampage on Friday last week, and took down the euro by more than 1-cent!  OUCH! that’s going to leave a mark!  But Gold had a good two-day end of the week, and set a record high VS euros in the late week trading.  The Coronavirus is really getting some attention, as it should, I might add, but Chuck believes the fears are directed incorrectly, as we should really fear the spread of the virus should it get to India and Africa…  I’m just saying… 

For What It’s Worth… In my never ending attempt to shine the manipulator light on JPMorgan, I bring you this article this morning. I think the good folks at GATA for sending it along to me… This article can be found here: https://www.moneymetals.com/news/2020/02/10/jpmorgan-target-of-metals-price-rigging-001962

Or, here’s your snippet: “The U.S. Department of Justice investigation of criminal activity in the precious metals markets has taken an interesting new turn.
According to Bloomberg, prosecutors are targeting the bank itself and not just the individual traders involved in rigging prices. If convicted, the bank as an institution could be held accountable for years of structured and pervasive cheating.

The DOJ investigation of JPMorgan’s metals trading desk began more than two years ago. It came on the heels of a guilty plea by Deutsche Bank.
Deutsche Bank copped to spoofing prices and agreed to turn state’s evidence. DB then handed over hundreds of thousands of pages of documents, along with chat logs and voice recordings which featured traders gleefully conspiring with one another to cheat clients and other market participants.

Officials used that trove of information and other evidence to charge six JPMorgan traders with crimes. Some already pleaded guilty and made their own agreements to cooperate with the larger investigation.
But last week’s revelations from Bloomberg are the first confirmation that the mega bank is itself in the crosshairs.

Bank of America followed Deutsche Bank’s lead and moved to settle charges. The company paid fines and promised internal reforms. Many expect the extraordinarily well-connected JPMorgan Chase & Co will be granted similar leniency.

There is one interesting distinction in the DOJ’s handling of the bank, however. Officials have charged JPMorgan traders using RICO laws.
The implication is that the bank itself is to be treated as a criminal enterprise. Perhaps this time company executives will not be able to convince investigators the bank is an honest institution with the simple misfortune of having rogue criminal traders among its ranks.
JPMorgan deserves to get more than a slap on the wrist.”

Chuck again… Yes, this is NO LONGER A CONSPIRACY THEORY! Did you read that? Ahem, to my former adversaries that made me stop writing about price manipulation in Gold & silver! Are you paying attention now? I guess I don’t look like I wear a tin foil hat any longer now do I?

Currencies today 2/17/20 American Style: A$.6720, kiwi .6430, C$ .7560, euro 1.0840, sterling 1.3030, Swiss $1.0185, European Style: rand 14.9097, krone 9.2566, SEK 9.7240, forint 308.44, zloty 3.9307,    koruna 22.8715, RUB 63.49, yen 109.90, sing 1.3888, HKD 7.7667, INR 71.21, China 6.9861, peso 18.56, BRL 4.2957, Dollar Index 97.14, Oil $52.06,   10-year 1.58%, Silver $17.80, Platinum $969.21, Palladium $2,461.99, and Gold… $1,581.45

That’s it for today…   A rainy day on Saturday, and yes, we do have rainy days in the land of sunny and 80! So I watched, our St. Louis U. Billikens win their basketball game, and my beloved Missouri Tigers also won their game, but the Blues lost… And then lost again last night to the same team! UGH!  They need the return of Tarasenko very badly, as they can’t put the puck in the net these days!  Well, I’m off to Port St. Lucie this morning, for another trip to the wound center there… I think I’m actually seeing some healing going on, which is a good thing in my book! I’ve had to deal with this for almost a year now!  A full squad reports to Spring Training today! And the first game is this coming Saturday! YAHOO!  Baseball is back! The late Great Dan Fogelberg takes us to the finish line today with his song: False Faces…   I hope you have a Marvelous Monday and please Be Good To Yourself!

Chuck Butler

 

What Was Powell Really Telling Us?

February 12, 2020

* Currencies, except for a few, can’t find a bid… 

* Gold is struggling to maintain its level this week… 

Good Day… And a Wonderful Wednesday to you! I can’t even begin to describe how serious it was last night in Anaheim, when Blues defenseman, Jay Boumeister collapsed on the bench, and had to have medical attention and then carried off on a stretcher.. It happened during a TV time out, so the announcers didn’t know what was going on… I went to bed right afterward, saying a prayer for the Blues defenseman. The game was cancelled… On a lighter note… It was a real Chamber of Commerce day here yesterday, as we grow nearer to Spring Training games, where a friend of ours and former Spring Training buddy, used to always say, that every day here is sunny and 80… Back then we used to only go for a week and would plan it late in March so that all the minor leaguers would be sent down and only the starting players would be playing the Spring Training games. Nowadays, the Spring Training season is over in the 3rd week of March! UGH! Marvin Gaye greets me this morning with his song, which is something I continually ask the Fed: What’s Going On?

Yesterday’s Big Event was the first of two visits to Capital Hill by Fed Chairman Jerome Powell… Powell expressed concern that the risks to the economy, while eased from late last year, remain a concern, and then he said something that hit a nerve with me, let’s see if it does with you… Powell then said, “We are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy,”

Chuck again, OK, here’s what I heard when Powell said what he said… “The Coronavirus could lead to the Fed doling out trillions of dollars around the world once again, like they did, secretly, I might add, to foreign countries”…. That’s my take on what he said, call me crazy, but there is precedence folks… Of course, it’s not what he said, but… I’ve gotten pretty good at reading between the lines of Fedspeak…  

Oh! And Powell did mention that he didn’t think the Fed has the arrows in their quiver to combat another deep recession…  Great! Isn’t that like warning someone you’re going to punch them in the nose, before you really do it?  

A reader in Queensland, Australia, sent me a note yesterday because there was an article in his newspaper claiming that the Aussie Gov’t doesn’t have enough tax dollars to pay for their expenses… I told him that’s the problem with most countries right now, as I’ve been talking about this Global slowdown with only Russia and Singapore as countries not included in the Global slowdown… I said then that there might be smaller countries that could be included, but their respective GDPs didn’t amount to much…

In the meantime, the currencies didn’t move much yesterday, the Aussie dollar (A$) had the biggest move of the day, riising about 1/2-cent. The Chinese renminbi has been receiving daily appreciations, and I’ve got to find out why…  And the Russian ruble recovered after a brief bout of selling… I kept thinking the euro was going to rally, as it would get some upward movement, only to be knocked back down. Whenever I see trading like that my mind immediately goes to dollar protection…

Speaking of dollar protection, it’s long been a tradition of the (ESF) Exchange Stabilization Fund to keep a lid on dollar depreciation, or weakness… Even during weak dollar periods, the ESF was there to keep the dollar from falling off a cliff to a land of no return… I recall in the middle of the last weak dollar trend, that the dollar index was nearing a level that many analysts thought that if the dollar fell below the level it would be the end of the dollar… And we came oh-so close to that level, only to see dollar buying by someone, somewhere to prevent the fall into the deep dark abysss, from happening…

I also recall back in 2011, when it appeared that the weak dollar trend would go on for many more years, since none of the fundamental reasons it went into the weak dollar trend were corrected, but suddenly, the hidden debts of Greece became a story. Now it’s not like the hidden debts had just popped up on everyone’s radar, for years, the Greeks were able to borrow funds in the markets with bond issuance at the same yield as a German bond! Now you can’t tell me that the markets weren’t aware of some funny business going on here, but they let it go until… And this is where I adlib the story, the ESF pointed out to the Wall Street Journal that Greece’s debts were way beyond their ability to pay them off.

And then the debts of Italy, Portugal, Ireland and Spain all came to light, and the new strong dollar trend was born… thanks to the ESF, I might add… Oh, and the fact that a major U.S. bank had shown the PIGS (Portugal, Ireland, Greece, Spain) how to hide their debts…

OK, enough of that! Gold is the centerpiece of Manipulation to keep it in check… Former Fed Chairman, Paul Volcker even said at one point that Gold was his adversary at the Fed… Really? His adversary? Why not just come out and say, that if Gold rises that it reduces the desire to hold dollars, and the U.S. can’t have that, period.?   Again the book I talked about a couple of weeks ago, titled: Rigged,  written by Stuart Englert, will explain all this and more! 

The U.S. Data Cupboard has a case of shyness going for it, as it really doesn’t have anything for us today, and yesterday’s scheduled 4th QTR Consumer Debt, had a case of stage freight and failed to make an appearance, so maybe it’ll print today…  Tomorrow’s Data Cupboard has much of the same, nothingness, but Friday’s offering will have Retail Sales and Industrial Production, so we get to finish the week with a bang! 

Getting back to my statement above about a Global slowdown, you may recall me telling you yesterday that the U.K. had a ton of data printing on Tuesday. Well, the main piece of data was Industrial Production, which was a modest 0.1%. And in the Eurozone this morning their version of Industrial Production was a negative -4.1% for December…  YIKES! Well, at least this backs up my call of a Global Slowdown, eh? 

To Recap…  The euro kept trying to move higher yesterday, only to be knocked back down at every attempt. Chuck goes into a tirade about dollar protection…  Gold lost $3 yesterday, and this morning it’s down another $1.25…   The A$ is the best performer this week, so far, as the Coronavirus seems to have maxed out…  The Chinese renminbi has been receiving daily appreciations from the PBOC which tells us something…  I’ve got to figure out what that “something” is! HA! 

For What It’s Worth…  Well, well, well, what have we here?  Good friend, Dennis Miller, the Retirementor, sent me a note last night, that had a link to an article that immediately went to the front of the class for a FWIW article today… This article is about auto loan delinquencies and it can be found here: https://wolfstreet.com/2020/02/11/subprime-auto-loans-explode-serious-delinquencies-spike-to-record-but-theres-no-jobs-crisis-these-are-the-good-times/

Or, here’s your snippet: “Auto loan and lease balances have surged to a new record of $1.33 trillion. Delinquencies of auto loans to borrowers with prime credit rates hover near historic lows. But subprime loans (borrowers with a credit score below 620) are exploding at a breath-taking rate, and they’re driving up the overall delinquency rates to Financial Crisis levels. Yet, these are the good times, and there is no employment crisis where millions of people have lost their jobs.

All combined, prime and subprime auto-loan delinquencies that are 90 days or more past due – “serious” delinquencies – in the fourth quarter 2019, surged by 15.5% from a year ago to a breath-taking historic high of $66 billion, according to data from the New York Fed released today:

Seriously delinquent auto loans jumped to 4.94% of the $1.33 trillion in total loans and leases outstanding, above where the delinquency rate had been in Q3 2010 as the auto industry was collapsing, with GM and Chrysler already in bankruptcy, and with the worst unemployment crisis since the Great Depression approaching its peak. But this time, there is no unemployment crisis; these are the good times:

But demand for subprime auto loan ABS remains high. And as long as there is demand from investors for the ABS, there will be supply, and losses will continue to get scattered around until a decline in investor demand imposes some discipline.”

Chuck again… Yes, the article also explains that these delinquencies aren’t happening because the economy has gone into the dumpster, this is all a function of giving loans to people have no ability to pay them back… Sounds like the mortgage mess from 2007 doesn’t it? 

Currencies today 2/12/20 American Style: A$.6747, kiwi .6483, C$ .7537, euro 1.0914, sterling 1.2984, Swiss $1.0261, European Style: rand 14.7960, krone 9.2182, SEK 9.6203, forint 310.67, zloty 3.9038,   koruna 22.8198, RUB 63.63, yen 109.95, sing 1.3861, HKD 7.7684, INR 71.24, China 6.9707, peso 18.63, BRL 4.3228, Dollar Index 98.74,  Oil $50.77,  10-year 1.61%, Silver $17.58, Platinum $964.72, Palladium $2,337.00, and Gold… $1,566.64

That’s for today, and this week…  I told you last week for the time being that my Thursday mornings were going to be driving north to the wound center early in the morning, and that will be the case for the time being…  I want to send out a BIG HAPPY Birthday to two of my fave people in the world…  First up today, is… Lisa Yanker!   And tomorrow, my good buddy, Duane will be celebrating his birthday, so Happy Birthday, Duane!  Happy Birthday to you, happy birthday to you…. And then Friday will be Valentine’s Day… for you young lovers you’re running out of time… I’m just saying…   Elvis Presley takes us to the finish line with his song: One Night….  One night with you, is what I’m now praying for….   I hope you have a Wonderful Wednesday and will Be Good To Yourself!

Chuck 

 

Powell Heads To Capital Hill For Back To Bank Testimonies…

February 11, 2020

* Dollar bugs take a pound of flesh from the euro

* Oil countries are talking about more production cuts… 

Good Day… And a Tom Terrific Tuesday to you! Another night of watching the Super Moon rise up over the ocean, last night… Only this time there was a thick marine layer of clouds and we didn’t see the moon until it was higher in the sky… No sports from my teams that I follow, was on TV last night, so I tried to watch shows that really could not hold my interest… Silly and not real, would be my description of them. I read last night that the St. Louis Battlehawks, the XFL team that played on Sunday, received the highest TV rating among XFL teams… The game was on here, and I watched some of it… Reminds me of what I would call, “graduates of college football”… Midnight Oil greets me this morning with their song: Beds Are Burning…

For the most part yesterday, the currencies suffered more lost ground to the dollar bugs, as there was no economic data here in the U.S. to bring the ongoing problems with the economy to trader’s minds. So, for another day, traders decided to keep the dollar bugs dancing in the streets. And today, I would think we could expect more dollar bugs with the conn… For the only data due in the U.S. is Consumer debt for the 4th QTR… We all know it’s going to be HUGE, so no real surprise there…

In the overnight markets, more flesh was skinned from the euro and it trades with a 1.09 handle this morning.  What did the euro do to deserve being treated like a rented mule?  Nothing… but when the dollar rallies like it has, the euro suffers, as a result of being the offset currency of the dollar…

The price of Oil actually slipped below $50 yesterday, and caused all kinds of negative reaction from the Petrol Currencies led by the Russian ruble.  Our friends (NOT!) at OPEC are talking another production cut to help the price of Oil before it slips to a deep abyss…  At first, the Russians balked at another production cut, but have seemed to come around in recent days… Well boys what’s it gonna be? You had better make a call soon, before the bottom drops on the price of Oil! 

In the U.K. this morning, they unload a truck load of data prints all in one day! There are too many to name/ list them all, so I won’t try, just know that there’s a truck load of them! The European Commission will issue their economic outlook for the Eurozone… This should either help or hurt the euro… Outlooks, to me, are like opinions, and rear-ends, everyone one has one… But traders like to think that they look forward, even though they are the worst knee-jerk reaction sector there is!

Gold held ground yesterday, which was interesting, to me that is, and maybe to you, which is why I’m telling you this… The World Health Organization Chief, issued a statement that said that news of the Coronavirus spreading to other countries is just the “tip of the iceberg”… Uh-oh! THAT… was an Uh-Oh moment folks, and one that should have sent Gold soaring like it did last month when it skipped a lot of levels and traded above $1,600 for a day… In the early trading this morning, Gold has lost $3, so the WHO Chief’s statement hasn’t registered with traders… hmmm…. Gold closed yesterday up $1.80 at $1.572… 

JP Morgan might be having to deal with its 4th indictment for Gold & Silver manipulation, but it sure isn’t stopping them from doing what they are being accused of, that we all know they are guilty of… That’s a lot of Chutzpah in my book folks… My former colleague, Chris Gaffney used to have a saying, “its easier to ask forgiveness, than it is to ask for permission” I think the boys in the band at JPMorgan have changed that to, “it’s easier to keep doing wrong, than to try to correct it”…

Remember last week when I said that the ISM Manufacturing Index , which had risen back above 50, didn’t make any sense to me, and I was sure there was some fidgeting with the data? I had a dear reader send me a note and tell me that his son is in the equipment manufacturing business and he said that there was no such thing as a bump in manufacturing in December… So, take that with as many grains of salt you wish, but remember this about all future data prints… We’re less than 9 months from the Presidential election… I’m just saying…

So, the biggie on the U.S. Data Cupboard docket this morning is the visit to Congress by Fed Chairman Jerome Powell…  He repeat this tomorrow in his two day visit to capital hill… this is formerly called the Humphrey-Hawkins bill, that required the Fed Chairman to testify to both the House and Senate. The bill expired many years ago, but Fed Chairs have kept the tradition going. I’ll give them that!  

What I won’t give them is their lack of transparency and the scam they are running with the repos… and bond buying, that’s not QE… If I were an elected official either in the House or Senate, I would be raising my hand, doing my very best Arnold Horshack,  “me, me, call on me!”  And I would ask him to explain what the heck is the gist of the repo market, and then follow up with why on earth does the Fed NY feel the need to fund the casino banks?  And when the Fed Chairman hemmed and hawed and tried his hand a Greenspeak (former Fed Chairman Al Greenspan) to confuse the lawmakers, I would clap my hands and break the spell, and bring everyone back to the question at hand!  That’s what I would do folks… So, who wants to vote for me to go to Washington, D.C.? 

Ha! As if! I wouldn’t even think about running for office, much less get elected! I don’t have the patience to deal with this ship of fools that is our Congress… I’m just saying… 

St. Louis Fed President, James Bullard is also speaking today… Bullard is a dove, and it will be interesting to see if he gives any indication of what the Fed might be doing with interest rates…  For a Fed Head, I like James Bullard, but I don’t think that hearing that I like him, would make his day, do you? HA!  

To recap… The  euro dropped one cent in the overnight markets, as the dollar bugs are really dancing in the street, due to no data being printed in the data cupboard. Gold gained $1.80 yesterday, but is down $3 in the overnight markets, and the price of Oil fell below $50 briefly yesterday, and is back above the figure this morning, as our friends (NOT!) at OPEC are discussing another production cut. And Fed Chairman Powell, makes his first of two visits to Capital Hill today… What will be asked of him will be what I’m looking to hear… 

For What It’s Worth…  I found this on Ed Steer’s letter this morning, so thanks to Ed for finding it! This article questions the ability of the IMF to be the lender of last resort and it can be found here: https://www.telegraph.co.uk/business/2020/02/09/global-task-force-sounds-alarm-dangerous-dollar-crunch/

Or, here’s your snippet: “Central banks have lost control of global liquidity. The dollarised international financial system has become treacherously unstable and vulnerable to a sudden reversal in capital flows.

Yet the International Monetary Fund is a diminished force and no longer has the firepower to act as the world’s lender of last resort in an emergency. That is the stark conclusion of a G20 task-force of leading currency experts.

A surge in offshore dollar lending — increasingly through opaque security markets — has exploded to $18 trillion and has overwhelmed the safety buffers of the existing financial architecture. The concern is that a continued surge in the value of the US dollar — potentially triggered by the coronavirus epidemic, or any other black swan catalyst — could bring this to a head.

“The risk of an unexpected and unplanned reversal of abundant global liquidity hangs over the world economy. Strong contagion across markets could make the endogenous dynamics of global liquidity very dangerous,” the panel warned in an advisory report for G20 ministers, the Financial Stability Board and the IMF.

A decade of ultra-low interest rates and quantitative easing has flooded the globe with highly unstable forms of funding denominated in dollars, with no guarantor standing behind them. Glaring currency and maturity mismatches have accumulated.

This structure is prone to an abrupt “dollar crunch” should borrowers in China, east Asia, emerging markets, or even parts of Europe suddenly start scrambling for scarce U.S. currency to repay bonds and loans in a crisis.”

Chuck again…  One might wonder why I decided that this article was FWIW worthy… Well, if Central Banks have lost their ability to  control liquidity, then the Fed is the biggest Central bank and the one that we care about the most, and that’s why its here… 

Currencies today 2/11/20 American Style: A$.6707, kiwi .6394, C$ .7522, euro 1.0916, sterling 1.2923, Swiss $1.0227, European Style: rand 14.8773, krone 9.2472, SEK 9.6516, forint 309.76, zloty 3.9021,   koruna 22.8246, RUB 64.01, yen 109.85, sing 1.3871, HKD 7.7644, INR 71.20, China 6.9842, peso 18.67, BRL 4.3191, Dollar Index 98.80, Oil $50.48,  10-year 1.58%, Silver $17.73, Platinum $969.01, Palladium $2,328.65, and Gold… $1,569.28

That’s it for today…  The wind appears to have died down here, which means the ocean isn’t as angry as it has been the last two days.  I received an email message from one of my fave analysts/ writers, Grant Williams, who thanked me for mentioning him in the Pfennig! WOW! That’s two days in a row of surprises for me… First it was Barron’s and now Grant Williams that reads the Pfennig! WOW!  I guess I had better sharpen my writing skills, eh? The Righteous Brothers take us to the finish line today with their song: Just Once In My Life…  I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

The Dollar Bugs Dance In The Streets Once Again…

February 10, 2020

* Currencies give back their gains after jobs report… 

* Jerome Powell to testify to Congress twice this week! 

Good Day… And a Marvelous Monday to you! A nice warm weekend down here in the south, but with lots of wind, making it difficult to be at the beach… I know, I know, these are not 3rd World problems! Our Blues lost again Saturday night after leading 2-0… UGH! They’ve gotten into a real rut, and need to pull themselves out of it soon! My beloved Missouri Tigers beat Arkansas in basketball on Saturday, while the St. Louis Univ. Billikens lost to Dayton… We celebrated the Super Moon rising up over the ocean last night with some condo friends… A fun time was had by all! I have to go north again this morning (every Monday and Thursday for the next month), so this should be shorter than usual… But I can’t promise!

Well, I didn’t hear a knock on my door, or receive any threatening emails or calls from the Gov’t to stop my attack on JPMorgan… But just to be sure, I don’t, I’ll not talk about them today, instead I’m going to take a shot at the Fed… The Fed’s repo market operations saw the bidding on the money the Fed was offering over subscribed , twice last week… And not by a buck or two either… I’m talking Billions of dollars that the banks said they needed… On Tuesday, the Fed offered $30 Billion and the banks wanted $59 Billion and change, and the same thing happened on Thursday… This is getting way out of hand folks… Something’s got to give, and to me I would think it’s the dollar, but then I’m just a country bumpkin, and not some Ivy league, slick backed hair, hot shot economist… Besides, I don’t have any hair!

The Fed Chairman, Jerome Powell, is going to speak to speak to the Senate Banking Committee on Feb. 12 (Wednesday) this week to answer a list of questions the committee sent to him regarding the repo operations… I’ll betcha one shiny quarter right here, right now, that no one on the banking committee demands to know who is receiving all this cash…. So… he’ll go there, and dance around with his answers, that he’s now had a few days to rehearse!

Well, all these shenanigans with the Fed and the Casino Banks, hasn’t hurt the dollar yet… And on Friday last week, the dollar rallied and took back the lost ground from the previous day. On Wednesday when I last talked to you, the euro was 1.1023, and the A$ was .6759… And by the close on Friday the euro was back to 1.0965, and the A$ .6690… Friday was the Jobs Jamboree blow the expectations out of the water, and added 225,000 jobs according to the BLS… wink, wink… The Jan. Unemployment Rate rose to 3.6% from 3.5% in December.

That news sent the dollar bugs dancing in the streets… A little later in the morning on Friday, Consumer Credit (read debt) for December printed, and showed an increase to $22 Billion from $12 Billion in Nov. Now that used to be the kind of news that would have rocked the dollar to the core, but not any longer… We’ve all become Comfortably Numb, with debt figures, now haven’t we? Well, maybe not you and me, but traders sure have… You know, when I began my career, in the brokerage business I used to talk to the bond traders all the time… Those guys had the intestinal fortitude to say when things didn’t look right, and would show you with trades to reflect their feelings… Not any longer… Every market is manipulated… What you don’t think the stock market is manipulated? Oh, Please! What do you think the Fed’s Repo system is doing? What do you think the Fed’s rate cuts are doing? And tax cuts are doing? They all have their hands in the cookie jar of stock manipulation, folks…

Gold, on Friday gained a whopping $3 and some change… But this was after gaining $9 on Thursday, so at least some of the ground Gold lost last week when it got it’s price engineered downward. I wonder how many people got their dander’s up over the article I gave you to read on Wednesday last week from Pam and Russ Martens of Woll Street On Parade? I know I did! OK, seriously, who uses the term “gets one’s dander up” any longer? I guess an old fogey like me, that’s who! HA!

The U.S. Data Cupboard is lacking data prints for the most part this week, and we won’t see real economic data until Friday, when January Retail Sales and Industrial Production and Capacity Utilization print… In the old days, the dollar would get punished for weeks of no real data like this, but in today’s world of opposites… Well… you know…

To Recap… The dollar rallied strongly on Friday after it was announced that the U.S. created 225,000 jobs in January… Smoke and mirrors folks… I’m just saying… The currencies gave up most of the ground they had gained last week, on Friday. Gold, however, gained $3 and change, that could be added to Thursday’s gain of $9… Chuck is surprised that he’s not received a letter from the Gov’t telling him to back off JP Morgan… So, he went for the Fed’s rapidly reducing credibility today!

Before we head to the Big Finish today…  WOW! Talk about putting a smile on my face! Saturday morning, my former colleague at Mark Twain Bank, Neil George, sent me a note giving me congrats on being picked up by Barrons… Barrons? WOW! Apparently they like what I said last week about the U.S. not making the grade with shepherding the reserve currency of the world… For those of you who missed class that day, and want to see what Barron’s printed, that was originally in my Pfennig, here you go: “By having the reserve currency of the world, the U.S. is supposed to be above all others at shepherding their economies and balance sheet to keep the currency strong…

“The report card on the U.S.’s efforts to shepherd their economy and balance sheet to keep the reserve currency strong, is not a good one, folks… The U.S. current debt stands at more than $23 Trillion, and the Unfunded Liabilities are $127 Trillion… Add those together… that’s how well the U.S. has done folks… If I were the teacher they would get a hard F! But that’s not all the debt we have in this country… Corporate debt is $15.5 Trillion, or 74% of GDP…. State and local debt is $1.6 Trillion, and Consumer debt is $13.86 Trillion… This is really bad folks… so go ahead and think the dollar is going to remain strong forever… One of these days, all this debt is going to come back and bite the dollar in the rear.”

Neil tells me it was in Wednesday’s Barron’s in the market section, page 11…   I was unaware that Barron’s read the Pfennig! WOW!

For What It’s Worth…  There are so many articles about the  repos, the debt, the presidential campaign, and so on today… So, I reached into my bag of tricks and came out with this little ditty…  I told you above that the Consumer Credit (read debt) had catapulted to $22 Billion in December, right? Well, this article tells the story about how the number got so high, and it can be found here: https://www.zerohedge.com/economics/how-americans-paid-record-holiday-spending-credit-card-debt-exploded-december

Or, here’s your snippet: “Well, we were right again: the answer was revealed on Friday afternoon when the Fed reported the consumer credit change for the last month of 2019, and of the decade… and it was a doozy.
With analysts expecting a $15BN increase in consumer credit, the actual print was a whopping $22.1 billion, bringing total consumer credit outstanding to a new monthly all time high of $4.2 trillion.

However it was the composition of this number that sparked raised eyebrows across Wall Street, because while consumers added a rather subdued $9.4bn in non-revolving credit, i.e., auto and student loans, it was the $12.63 billion surge in revolving credit that explained not only November’s modest drop in credit card debt, but the record holiday spending in 2019, which – as we now know – was to a record extent thanks to credit card debt. In fact, as the chart below shows, it was the biggest one month increase in credit card debt since 1998! 

And so, for yet another month, Americans sank ever deeper in debt just so their obsession with purchasing things they don’t need nor cad afford – obviously – can be satisfied. Although in a world in which central banks and politicians now openly encourage excessive spending and living beyond one’s means, who can blame Americans for doing just as all monetary and fiscal officials demand of them…”

Chuck again… Same-o, Same-o, as far as I’m concerned, no one ever learns a lesson, and repeats the same mistakes over and over again, thinking that “this time it will be different”…  

Currencies today 2/10/20 American Style: A$ .6691, kiwi .6405, C$ .7521, euro 1.1050, sterling 1.2918, Swiss $1.0226, European Style: rand 15.0180, krone 9.2376, SEK 9.6548, forint 306.29, zloty 3.8929,   koruna 22.8417, RUB 63.78, yen 109.80, sing 1.3887, HKD 7.7653, INR 71.27, China 7.0000, peso 18.74, BRL 4.3186, Dollar Index 98.63, Oil $50.31, 10-year 1.57%,  Silver $17.79, Platinum $974.30, Palladium $2,368.26, and Gold… $1,571.89

That’s it for today…  In the famous words of Mike, moon man, Shannon, “it’s a beautiful full moon tonight, I hope it’s a full moon where you are”…  I hope you got a chance to see the Super Moon/ Snow Moon last night, it’ll be in the sky again tonight…  Cardinals Pitchers and Catchers report on Wednesday this week, full camp on Friday, and the first spring training game will be next Saturday, the 22nd…  It’s like the 22nd of December for me!  It’s so close I can almost taste it!    Let’s get those Blues back on a roll! The Eagles takes us to the finish line today with their early song: Ol’ 55…  “Well my time went so quickly, I went lickety splitly, out to my Ol’ 55” I hope you have a Marvelous Monday and please Be Good To Yourself!

Chuck Butler

 

Gold Gets Whacked On Tuesday!

February 5, 2020

* currencies, bonds, & Gold all get sold on Tuesday… 

* A Vaccine for the Coronavirus is in the works… 

Good Day… And Wonderful Wednesday to you! I have to apologize to one and all for my whining yesterday about how I felt… I shouldn’t have gone into detail, and should have said instead, that “it was a tough night for yours truly” OK… now that’s out of the way, and in case you’re wondering I got the wink an nod to go off the chemo for a week… So, by about the time I start to feel human again, it’ll be time to go back on… I’m still of the belief though that this chemo medicine has run its course with me… I’ve been taking chemo for nearly 13 years and this is the 5 different chemo drug that’s I’ve taken… And I’ve been on this one for 2 years… This is when I contact MD Anderson for their advice as to what is the newest renal cell carcinoma drug available… I think that this morning’s song is telling me something… It’s the great, godfather of soul, James Brown and his song: Get On The Goodfoot…

Oh, and this is the last letter this week folks… I have to be at the wound center very early tomorrow… So no Pfennig tomorrow… sorry… 

Well, the currencies can’t stand prosperity… every time in recent months that they appear to be ready to roll VS the dollar, that probes to be a false dawn… They may still build on their gains last week, but it will have to come after giving back some gained ground, like they did yesterday… I say the “currencies” as a general statement, there was a currency or two that gained yesterday. The Aussie dollar (A$) is one of them, and the other is the Russian ruble.

A longtime reader asked me last week what was the # currency VS the dollar last year, and I responded that I believed the Malaysian ringgit was the number one, but it was a very illiquid currency that was difficult to own… And then yesterday, I learned that the Russian ruble was the number one currency of the top 20 currencies in the world, for 2019… The ruble’s return, currency only, was 12.46%… If you owned it the entire year you can add another 4.5% for interest… So, it’s total return was over 17%!!!!

And it should be the best perfoming currency for years to come, until they get back to the level it traded VS the dollar, (35) before the conflict with Ukraine a few years ago, when the currency plummeted…

You know the more I read the more I learn that more and more countries are weaning themselves from their dependency on the U.S. dollar… Russia and China are the leaders of this move, but until the U.S. experiences a failed auction of Treasuries… This movement will take years to come around, but the trend is in, folks… And can you blame these other countries? By having the reserve currency of the world, the U.S. is supposed to be above all others at shepherding their economies and balance sheet to keep the currency strong…

The report card on the U.S.’s efforts to shepherd their economy and blance sheet to keep the reserve currency strong, is not a good one, folks… The U.S. current debt stands at more than $23 Trillion, and the Unfunded Liabilities are $127 Trillion… Add those together… that’s how well the U.S. has done folks… If I were the teacher they would get a hard F! But that’s not all the debt we have in this country… Corporate debt is $15.5 Trillion, or 74% of GDP…. State and local debt is $1.6 Trillion, and Consumer debt is $13.86 Trillion… This is really bad folks… so go ahead and think the dollar is going to remain strong forever… One of these days, all this debt is going to come back and bite the dollar in the rear…

The early morning selling of Gold yesterday, carried through to the rest of the day, with the shiny metal losing $23 on the day, to close at $1,553…. OUCH! Now that’s going to leave a mark! But… as I always say, these brief sell offs in Gold give the procrastinators or the Johnny come lately to investing, the opportunity to buy at much cheaper prices than was we saw late last week!

For if you believe that Gold will remain at these levels forever, you’ll end up being wrong… Remember a few years ago, when Gold dropped to $1,100 and change, and a very well know investment analyst, said that Gold would go to $700? Well, instead of dropping further at that time, it began to rebound, and then late last year it took a big step to the $1,500 level… You know, I wonder where that , well known investment analyst, has gone? I haven’t heard from him in a few years now….

OK… enough of that! Did you hear that a cruise ship off the coast of Japan, has been ordered to remain there and not dock, because there have been some confirmed cases of the Coronavirus on the ship? Talk about the virus beginning to spead? Basically every person on that ship could have been exposed to the virus… I would thing that news like that would boost the price of Gold, euros, francs, yen, and bonds… But in this day of opposites, Gold, euros, francs, yen and bonds all suffered from selling… Go figure, eh? 

And speaking of the Coronavirus, a British scientist believes he has developed a vaccine to combat the coronavirus. By the time it gets through all the hoops and goes to manufacturing, it will be too late to help with the outbreak this time, but… At least the next time, there will be an answer, apparently, that is… 

I don’t think the news of a vaccine to combat the Coronavirus, had anything to due with the boys in the band taking down Gold yesterday, but I’m sure there’s an excuse list out there that the boys in the band are reciting from that has the vaccine as one of the reasons they took Gold down, I mean they really whacked Gold…  

The U.S. Data Cupboard yesterday had December Factory Orders, and I said yesterday that given the recovery in the ISM data, that I would expect that Factory Orders also recovered from their negative print in November…  And recover it did, apparently that is, for I’m unaware of fidgeting in this number, but given that all other numbers have some fidgeting, one would think that this one did too…  The December print was 1.8%, that wasn’t enough to bring Factory Orders out of the red y-t-d for 2019…  So, the poor readings will continue, with the December print a brief escape… That’s how I see it anyway!

Today’s Data Cupboard has the ADP Employment Report for January, and the precursor to Friday’s Jobs Jamboree, is expected to show 175,000, which is in line with December’s print… I would think that the January temp help for December was all gone, and that the January jobs number will be lower…   

To recap…  The currencies, for the most part, suffered through a day of dollar buying on our Tom Terrific Tuesday. Gold got whacked, royally, and that whacking is going to leave a mark!  The A$ and rubles were the only rallying currencies…  All the real data for December, ISM, Durables, Factory Orders, etc. all showed improvement, but couldn’t bring the annual numbers out of the doldrums… 

For What It’s Worth… Well the improvement in the data for December wasn’t enough to pull each respective data print out of the doldrums, and… it wasn’t enough to keep Macy’s from cutting jobs and shuttering stores… The article about this was found on zerohedge.com and can be found here: https://www.zerohedge.com/markets/macys-cut-2000-jobs-and-shutter-125-stores-amid-significant-structural-change 

Or, here’s your snippet: “Macy’s announced Tuesday that it had adopted a three-year plan designed to stabilize profits and continue company growth. The new plan calls for a radical $1.5 billion cost-cutting program that will axe upwards of 2,000 jobs and shutter 125 stores across the US.

The retailer, which operates 680 stores under the Macy’s and Bloomingdale’s brands, said the closure represents an 18% reduction in its brick and mortar footprint. The layoffs of about 2,000 corporate jobs will account for 9% of its workforce. There’s also a plan to close several offices. 

Macy’s said the cost savings would generate about $600 million in 2020 and $1.5 billion annually by 2022.

“We are taking the organization through significant structural change to lower costs, bring teams closer together, and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile, and better fit to compete in today’s retail environment,” Macy’s CEO Jeff Gennette said in a statement.
Gennette said the company’s “least productive” stores would be cut first. There are already 30 stores in the process of closing, he added.

Under the consolidation program, Macy’s NYC will become the company’s sole corporate headquarters. Offices in San Francisco, Cincinnati, and Lorain, Ohio, will be closed within the next three years.”

Chuck again…  Just another of the brick and mortar companies that are seeing less and less of foot traffic in their stores… But it’s not just the stores folks… We’ve seen Oil companies file for bankruptcy, and on and on… 

Currencies today 2/5/20 American Style: A$ .6759, kiwi .6485, C$ .7529, euro 1.1025, sterling 1.3054, Swiss $1.0295, European Style: rand 14.7168, krone 9.1920, SEK 9.5767, forint 304.65, zloty 3.8583,   koruna 22.7357, RUB 63.26, yen 109.58, sing 1.3800, HKD 7.7629, INR 71.09, China 6.9981, peso 18.61, BRL 4.2452, Dollar Index 98.05, Oil $50.74,  10-year 1.63%, Silver $17.61, Platinum $977.06, Palladium $2,488.80 (this metal is up $56 this morning!) and Gold… $1,553.71

That’s it for today… A Big Snow storm and cold front was moving through St. Louis later this morning. So Kathy changed her flight that was supposed to leave around 4pm to one that left at 5.50am and got out of Dodge before the deluge! (no telling her I talked about her!)  I traded emails with Ty Keough last night, he sounded upbeat… And doing better! The power of prayer reveals itself once again!  The Cardinals are moving their equipment south which means sprint training is nearing… we are now just 8 days away from pitchers and catchers reporting… YAHOO! The KC Chiefs will hold their parade today… It will be bitter cold in KC, but I doubt those long suffering fans will feel it!  The Kinks take us to the finish line today with their song: Sunny Afternoon…   I love this line: Now I’m sitting here, sipping on my ice cold beer, lazing on a Sunny Afternoon! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

The PBOC Takes A Large Chunk Of Renminbi!

February 4, 2020 

* Currencies for the most part drifted yesterday… 

* Chuck explains Gold Swaps/ leases…  

Good Day… And a Tom Terrific Tuesday to you! Another Chamber of Commerce Day here yesterday… I wasn’t feeling 100%, or even 75%, but I struggled to get outside, and the sun sure felt good and warm. Just how I like it! I believe that the chemo that I take daily, has gone bad on me… I’m continually fighting stomach problems, while the tumor in my mouth remains unchanged in size… I went to dinner last night with my good friend, “Martini Gus” and I had to have ½ of a “petit ribeye” wrapped to take home, because I almost became violently ill, but drank a lot of ice water, and got through it… My appetite is going to the wayside, I can’t put anything that has carbonation or spice in my mouth. So, I sent off a note to my oncologist last night asking her if I can go off the chemo for a week or so to get my system straight… Knowing how much she loves me, (HA!) I’m sure she’ll give me the wink and nod… Three Dog Night greets me this morning with their song: Mamma told me not to come…

Well, I didn’t do much after my trip north yesterday, and neither did the currencies as there was no follow up to the overnight selling of currencies and buying of dollars… the euro is trading in the same clothes as yesterday, and the poor Petrol Currencies can’t seem to find a bid these days, especially with the price of Oil slip sliding away… This morning Oil is trading with a $50… One more day of selling of the black Gold, Texas Tea, and we’ll be below $50 and the shale folks will be closing down their rigs, as this seems to be the level that sends them home, as I’m sure the cost of getting the shale Oil our of the rocks is much more expensive than traditional ways. If I’m wrong about that, just chalk it up to me not knowing that much about the oil sector…

The key Petrol Currency is the Russian ruble… And I found this on the Russia Today site yesterday…. “There’s a lot going for the Russian economy as 2020 kicks into its second month. Russia’s government reshuffle is seen as removing austerity constraints and speeding up the financing of Putin’s ambitious national development programs. In his speech to the National Assembly, Putin signaled the end of austerity on social spending, Russia being the only country in the developed world, which is now seriously increasing social spending (among other things, increasing pensions double the rate of inflation and initiating massive child support programs) while everyone else is cutting.”

That’s all fine and dandy, but the ruble is a Petrol Currency, and as long as the price of Oil stays down, so too will the ruble, even if, the Russian economy turns the corner and starts running on all eight!

The biggest mover overnight was….  drumroll please…. The Chinese renminbi, and the move was not a good one!  The Peoples Bank of China (PBOC) must be feeling the markets’ fears about the Coronavirus spreading even wider, because they took a huge chunk out of the renminbi in one fell swoop! The renminbi is trading back to 7 and change this morning, and now that the Trade negotiations are no longer a black cloud over China, and the U.S. has dropped the “currency manipulator” tag from China, the renminbi gets chopped!  Typical Chinese reaction, if you ask me… 

The other Big mover yesterday and again this morning is Gold…  The shiny metal lost $12 yesterday, and is down another $7 this morning…  One day a safe haven the next day not so much, eh?  The high price for Gold yesterday was $1,598… But it closed at $1,576…  As I said yesterday, either the exchange stabilization fund (ESF) or the Plunge Protection Team (PPT) was working overtime to make certain that the dollar remains strong… 

Speaking of Gold… I read last night that Russia is probably going to be named the #1 producer of Gold for last year, taking the title away from China. Whether Russia gets the title or not, the point is that both Russia and China do NOT sell the Gold they produce, so therefore the numbers that are used to denote the total Gold each respective country has in reserves is undercooked by a large margin… 

Which in my opinion, has the makings of a very difficult scene for the non-Russia & China countries when the current financial system collapses from the weight of debt and derivatives, and each country comes to the table to reorganize the new financial system, and shows their hand at how much Gold they have…  That’s when it will occur to everyone that the old adage of: He who has the Gold, Makes the rules…  will hit them like a V-8 forehead slap!  I’m just saying…

There’s this thing called Gold swaps…  or leases…  The banks that hold Gold see it as a non-interest bearing possession, and so they look for a way to swap it for cash, that they can lend out at huge mark-ups. The problem with that is that the outfit that bought the Gold in the swap, no longer owns it they sold it in pieces to a thousand different customers…  So the bank, let’s say the Fed Reserve, has an IOU for Gold in their vault, which I don’t think is going to carry much weight at the reorganization table… 

Which is why I don’t understand why congress won’t pass the “audit the Fed” bill…   No wait, I do understand, what I don’t understand is why Congress doesn’t have the intestinal fortitude to pass the bill…

Well, I was wrong (mark that down!) about the December ISM (manufacturing index) as it did recover back above the 50 mark, after two previous months of below 50 prints…  I don’t know if this data is fidgeted, but it sure seems a bit strange to me that after last month’s print was even deeper below 50, that the trend was in, and it would continue to drop, but then out of left field comes a rebound! Just like that!  Go figure, eh?

Today’s Data Cupboard has the December Factory Orders, which in November were negative, but given the recovery in the ISM, one would have to think that this data too, will recover…   

We will end the week with the Jobs Jamboree for January… I just don’t see this being a good report folks… But then I really don’t care about the numbers any longer… They are cooked, massaged, recooked, and massaged again until the BLS gets the number they want…   The FWIW section article I had for you yesterday proves what I’ve been saying for years now that it doesn’t matter how many jobs were created, what matters is whether or not they were high paying jobs, and not min. wage jobs, which from the article seems to be saying has been happening… 

To recap… The currencies drifted on Monday, but the biggest mover overnight was the Chinese renminbi, which lost a large chunk of value in one fell swoop. The fear of the Coronavirus spreading even wider caused the mark down, along with some other items that Chuck discusses above. Gold also was a big mover yesterday losing $12 and is down another $7 this morning… Safe Haven one day, and not so much the next day, eh? Chuck feels is the work of either the ESF or PPT…

For What It’s Worth… I’ve been pretty reliant on news from Pam & Russ Martens who pen the great website: www.wallstreetonparade.com I’ve learned so much from them, and today’s letter from them sure hits home on something that I’ve alluded to in the recent past, regarding the Fed… So, you can find their article here: https://wallstreetonparade.com/2020/02/fed-chair-powell-has-gone-rogue-on-repo-loans-and-the-volcker-rule/

Or, here’s your snippet: “ The Chairman of the Federal Reserve, Jerome (Jay) Powell, regularly states at his press conferences that the Federal Reserve is there to serve the interests of the American people. But his actions regularly undermine the credibility of that statement in a manner not all that dissimilar to Alan Greenspan, whose Fed chairmanship oversaw the gutting of Wall Street banking regulations and ended just before the greatest Wall Street collapse since the Great Depression.

Powell goes out of his way to present himself at his press conferences as the quintessential public servant whose only mission is to perform the mandate set out by the elected representatives in Congress while his actions strongly suggest he is a wily rogue agent for Wall Street’s cartel of bank trading houses.

Congress set out its mandate for the Federal Reserve and its fellow regulators to follow when it comes to monitoring and disciplining Wall Street banks in the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted on July 21, 2010. The legislation was meant to rein in the greed, corruption and illegal trading activities of Wall Street banks that had led to the financial crash and Great Recession — where 8.7 million Americans lost their jobs and 10 million American homes were lost to foreclosure from 2006 to 2014.

One of the key provisions of Dodd-Frank instructed the Federal Reserve that it would be on a short leash going forward in terms of secret, multi-trillion dollar bailouts of Wall Street’s trading houses. Without the approval or even awareness of Congress, the Federal Reserve, predominantly through the Federal Reserve Bank of New York, had showered $29 trillion in cumulative loans to bail out Wall Street’s trading houses from the end of 2007 through the middle of 2010. The Federal Reserve fought a court battle for years to keep that information secret from the American people. That was on Federal Reserve Chairman Ben Bernanke’s watch. But this is what has happened on Chairman Powell’s watch.”

Chuck again…. A great article about how crazy the Fed and Fed NY have gotten, and how they are disobeying the rules that congress set for them… I just shake my heard in disbelief, and disgust…

Currencies today 2/4/20 American Style: A$.6718, kiwi .6461, C$ .7532, euro 1.1050, sterling 1.3277, Swiss $1.0322, European Style: rand 14.7090, krone 9.2405, SEK 9.6240, forint 304.62, zloty 3.8715,    koruna 22.7640, RUB 63.77, yen 109.05, sing 1.3708, HKD 7.7659, INR 71.20, China 7.0086, peso 18.71, BRL 4.2639, Dollar Index 97.89, Oil $50.76,   10-year 1.57%, Silver $17.73, Platinum $978.03, Palladium $2,399.60, and Gold… $1,569.62

That’s it for today… A beautiful sunrise this morning right outside my sliding door…  Being here, I get  to watch the sunrise over the ocean, and the moonrise over the ocean, sometimes the vision is amazing! I simply love it! Looks like another good day outside, so I’ll head out there as soon as I finish my crossword puzzles I do each morning after writing the Pfennig, except days I have to head to a doctor appt…   Not much else going on to write about, except I would like everyone to say a prayer for my good friend Dennis Miller, who received some devastating cancer news this week… And while you’re at it, say a prayer for my friend, Ty Keough, who’s in ICU right now…   And get this… The song that takes us to the finish line today is the Doobie Brothers singing: Jesus is Alright…  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler