Author: admin

January 5, 2021

* Currencies see some profit taking on Monday… 

* Gold & Silver kick the dollar’s tail and take names later… 

Good day… and A Tom Terrific Tuesday to you! Another day here in S. Florida, where it was sunny and warm, albeit not as warm as the previous days, but still short-sleeve shirt weather! And if I haven’t told you before… I simply love it! OK, I know I’ve told you before, I was just having some fun… Which I didn’t have going through the Pfennig Replies box yesterday… I’m afraid that my humble little letter has entered into the Twilight Zone… Imagine if you will, a newsletter writer, who is forced to read nasty replies from people that want him to stop writing!   I told them… I won’t stop, but I can make certain you don’t have to read the letter any longer! I refuse to allow people who shout loudest to dictate what I talk about! That’s the way it’s done these days, if you don’t go along with the crowd, you’re immediately called a racist, a homophobe, an idiot, etc.  And I’m not going to allow that to happen to me!  Ok…  One of my all-time fave bands: Poco greets me this morning with their song: Bad Weather….

So, now that I’ve gone through all that…  The currencies saw some profit taking yesterday, as the day went along… The euro had traded past 1.23, but ended the day at 1.2257…  Gold on the other hand was kicking tail and taking names later, and ended the day up $44 to close at $1,943, and Silver ended the day up 84-cents to close at $27.31….  And as usual on a percentage basis, Silver outperformed Gold… the percentage gains were Gold 2.33%, and Silver 3.19%…   Doesn’t that just beat all the drums? I mean $44 is much greater than 84-cents…  but it is what it is…

So, what got into the price of the metals yesterday?  Well, you see we ended the year with the best performance years in a decade, and that was just a precursor to what’s going to be a “golden year”, in my opinion… Currency printing, zero interest rates, and debt that is becoming a major problem, will all contribute to the “golden year”…  And yesterday’s price action was just giving notice of what kind of year this is going to be for Gold (& Silver)

In the early trading today Gold is up another $7 and Silver is up 22-cents, so the push higher for metals continues… 

I did receive lots of Happy New Year emails, so thank you… And one of them asked me to add the price of Copper to the Market prices roundup…  But there are 4 prices for Copper… and they are:

Bare Bright Wire (stripped/shiny)	$2.85
#1 Tubing (clean tube/ clean fine wire)	$2.75
#2 Tubing (paint/solder/burnt wire)	$2.60
Tin Plated (wire/bus)	$2.60

So… which one should I use?

OK… back to the markets…  The stock market bubble keeps getting more air blown into it…  How on earth does one make a call on this asset class? Trading here is beyond reason, and the P/E ratios continue to grow wider and wider… You know how to stop all this?  Talk me into investing all my sidelines cash into stocks…  That would be the kiss of death for the market… I know, because it happened in 1999…  Oh, you forgot about the dotcom crash?  I just came to realize that a lot of stock market participants weren’t old enough to be in the market for the dotcom crash of 2000…. They only know a rallying market…. Yes, we had a short-lived hiccup last March, but the Fed saw to it that the hiccup was drowned with cash, and voila! Hiccup was over!

Enough on that! I’m not a stock jockey, and have never been one either!  Although I did spend my first 6 years in the financial markets in brokerage houses…  And then I did start a brokerage in my basement… I held a brokerage and two principle licenses during my time in the business…

Let’s see… I’ve talked about the metals, and stocks, and currencies, what’s left to talk about? Oh! Bonds!  Well, I think this could be the year that the 10-year finally yields 1.00% once again… Inflation is stirring folks… and the bond boys will be the first to say it really does exist, and they will move the yields higher… The only fly in that ointment is just how many bonds the Fed will he buying in 2021… That figure could very well tip the scales toward continued yields that on a real yield basis (including inflation) are negative… 

I believe that the threat of bond buying by the Fed is what has kept the bond boys from moving yields higher to date…. The Fed increased their Treasury buying by 79% last year…  And previously I reported that the Fed now owned more Treasuries than the public…

The price of Oil slipped by about a buck yesterday…  I think when Oil traders heard the news that I heard that only 4 Million Americans have been vaccinated so far, that their dreams of renewed demand got squashed!  But… In the overnight markets the price of Oil has risen above $48 once again… 

Now, I do believe that I’ve touched on everything in markets!  And it’s time for…. Chuck’s view on what’s could happen in 2021….  Are you ready?

I’m just kidding, because if I gave you my thoughts on what could possibly occur in 2021, you wouldn’t need to come back and read the letter any longer! 

The Dollar Index is trading this morning at 89.63, just a couple of blips above where it was yesterday morning…  In the overnight markets the selling of the dollar continues…  You see… in the Asian and European markets, traders there can sell dollars without fearing retaliation by the Fed, or the Plunge Protection Team (PPT)…  I’m just saying…

Remember when I told you how the Chinese were boycotting the steel imports from Australia, because they got their feelings hurt by something that Australia said?  Well, a month later, the Chinese realized that they had cut their nose off in spite of their face, and that they needed the steel imports, and so very quietly, they began to accept the imports again… The Aussies never budged from their position, and you’ve got to give them kudos for that!  So, all in all we’re just moving along as before here… No saber rattling, or name calling needed… 

The U.S. Data Cupboard gets back online today with a real economic data print, the Dec. ISM (manufacturing index)…   Yesterday we saw the color of a 2nd tier print, Construction Spending, which as expected fell in December… I read something yesterday, that Construction workers segment is being hit very hard by the virus…  And that’s definitely coming into play here with this data… 

To recap… The currencies saw some profit taking yesterday but have rebounded in the overnight markets, as the dollar is back on the chopping block. Gold gained $44 yesterday! Chuck gives his reasons that he believes this is going to be a “golden year”…   Chuck throws his hands in the air, and discusses stocks… Bonds, and Oil…  The economic data for December will begin to stream in starting today…  

For What It’s Worth….  Since I spent a good part of the letter today talking about the stock market, I found this article to be a sister article to that discussion, and it can be found here: “Look Out Below”: Carl Icahn Issues Major Warning On Markets, Warns Rally Will End In “Painful Correction” | ZeroHedge

Or, here’s your snippet: “It has been a difficult year – and decade – for billionaire investor Carl Icahn, who despite making $1.3 billion by shorting malls via CMBX 6, a trade we first pitched as far back as 2017 as the Big Short 2.0, failed to make waves with any other prominent investments and in fact has been anecdotally net short during the market’s historic surge in the past two years.

Yet despite a spotty recent investing track record, the 84-year-old legendary corporate raider remains bearish on the fence about the market’s ludicrous ascent, as he made clear in an interview with CNBC’s Scott Wapner in which Icahn warned of the possibility of a significant decline for stocks, and predicted that “wild rallies” in the market always meet a dramatic end.

“In my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below,” Icahn warned ominously adding that “another thing they have in common is it’s always said, it’s different this time. But it never turns out to be the truth.”

The relentless gains prompted some less bullish Wall Street strategists to warn of imminent turbulence: as we reported earlier, Morgan Stanley chief equity strategist Mike Wilson repeated his earnings from late last year, and said in his first note of the year on Monday that the market was “ripe for a drawdown” as the “risk/reward has deteriorated materially.”

Chuck again…  I loved that he flatly stated that “nobody can predict when it will happen… ”   And anyone that says they can… Well, you need to walk away ….  slowly so they don’t notice you walking away… HA! 

Market Prices  1/5/21: American Style: A$ .7707,  kiwi .7202,  C$ .7848, euro 1.2280, sterling 1.3583, Swiss $1.1367, European Style: rand 14.9202, krone 8.5310, SEK 8.2009,  forint 293.03, zloty 3.6999,   koruna 21.3496, RUB 73.91, yen 102.86, sing 1.3187, HKD 7.7525, INR 73.19, China 6.4692, peso 19.93,  BRL 5.2106,  Dollar Index 89.63,  Oil $48.50,  10-year .93%, Silver $27.53, Platinum $1,089.00, Palladium $2,478.00, and Gold… $1,950.20

That’s it for today…  I watched the sun rise out of the ocean this morning while I was writing…  Very beautiful, indeed!  The wind has died down the last two days, so sitting outside and reading is a little easier, without having to hold down the pages!  Remember last year at this time, I had to drive an hour north to Port St. Lucie to a wound center two times a week? Well, I don’t have that pain in the rear trip to do this year!  I still have two spots on one leg that need dressing, but nothing like last year! Thank goodness!  Long ago in a bank that no longer exists, I brought in a computer system to deal with our bond business, and I met a young programmer that was super! We’ve stayed in contact, somewhat through the years, and yesterday was her birthday! So… Happy Birthday, D.W.! Ok, the letter is shorter today, hopefully that’s the trend going forward! I Crosby, Stills & Nash (CSN) take us to the finish line today with their song: Ohio…   What if you knew her, and found her dead on the ground? Classic 70’s song!  I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!

Chuck Butler

January 4, 2021

*Book squaring on 12/31 stopped the dollar selling… 

* But that only lasted one day… Gold is up $35 this morning! 

Good day… And a Marvelous Monday to you! The first Monday of 2021…  Today, would have been my Dad’s birthday, so I’m thinking of you today, Dad…  Well, did you have a fun and safe celebration for New Year’s Eve?  I didn’t think I would make it to midnight, but I did, receiving my second wind around 10:30pm… We were entertained by a fellow condo owner, who played guitar and sang to us all night. And not once was I tempted to ask him if I could “sit in”…  Well, the two College football teams that will play in the National Championship Game next week, are Alabama and Ohio St. And the NFL playoffs are set… We’ll all have football overload next weekend! America starts us off in the new year with their song: Lonely People…  

Ok, so I said what I said last Thursday morning, because that’s how it looked at that time… I’m talking about my bold claim that the dollar was ending the year on a sour note…   turned out to be in error… Now, while it was not a good year for the dollar, on Thursday, the selling of the dollar came to stop and just like that! The dollar bugs were dancing in the streets once again…  But I have to tell you that I don’t think that this is any reversal of trader sentiment that has come over the markets of selling dollars… It had to book squaring, like I talked about on Thursday… And today, we’ll see just how that will play out… My thought, as I look at what the overnight markets did, is that it’s back to selling dollars once again today…

Gold did gain $3.70 on Thursday, and Silver lost 29-cents. Gold closed 2020 with one of its best years in a decade… And was just below$1,900 at $1,898, to close the year.   This is a BIG week for Americans, as the Senate will vote on accepting the electoral college’s finding. There’s also a HUGE protest / demonstration being planned in D.C. on Wednesday, to protest the election results… I’ve never seen this all play out before, so I’ll be interested in seeing what happens…  But that won’t have too much to do with what the dollar does this week. Or, could it? Only the Shadow Knows….

So… As we start 2021, it’ll be interesting to see if the same old economists dust off their suits, and come out to tell us that it will be a good year for the dollar?  Or, will they come to their collective senses and say otherwise?  I saw an article yesterday where the author tried like heck to get his readers to believe that he believed the dollar would rebound VS the euro, as the two Central Banks in play (The Fed and ECB) see their policies diverge…    You know, this gets me because, I’m sure his editor told him to come up with a story about how the dollar will rebound…   Good Try… But it’s not going to work… Because the “players” that make that determination, the traders, hedge funds, Pensions, Corporations, etc. I would bet a dollar to a Krispy Kreme that they didn’t read your article… And besides, a trend is a trend…  And if you’re a non-dollar investor, then the trend is your friend, as long as it’s the end of the strong dollar trend!

You know, I’m not trying to be biased here… I present the facts and then comment on them…  For the last 9 years, I’ve talked more about debt accumulation, ZIRP, QE, and stimulus packages, that should have damaged the dollar’s value, but didn’t… Because… The dollar was in a strong trend, and when that happens, as we saw the last 9 years,  it would take more than those things to damage the dollar…

And then about one-half the way through the strong dollar trend, I came to realize that we ere never going to return to fundamentals again… Well, maybe “never” is too strong of a word, but it sure does feel like it will be “never”…  Instead, it’s all about trader sentiment… I’ve talked about this trader sentiment since that time…  I mean look at what’s going on these days… We have the euro on a multi-month rally that has brought the single unit from 1.08 in May 2020, to 1.22 (1.23 before the book squaring last Thursday) , and the Eurozone fundamentals are bad, very bad…. And traders don’t care, they’ve made a commitment to selling dollars, and that’s what they have on their collective minds!

In the overnight markets last night the dollar has gotten placed back on the chopping block… Gold is up more than $35 this morning, and the euro has just about recovered all the ground it lost last Thursday, with the single unit kicking at the door of 1.23…  This price action in the dollar proves to me, I don’t know about you, but to me, it tells me that I was right about the book squaring, as we return to dollar selling on the first day of 2021… 

We’ll get to the currency roundup or Market Prices segment soon enough this morning, but when you get there you’ll notice that everything looks quite different these days… Shoot Rudy, even the Mexican peso is on the rally tracks!  

The Dollar Index has fallen to 89.53 this morning…  It’s long been said by people who watch the Dollar Index like a hawk, that should the Index fall below 88, then the dollar won’t recover for a very long time…   Well, it certainly looks as though that’s where the dollar is headed so strap yourself in, keep arms and legs inside the vehicle at all times, and hold on, because we’re going on a ride! 

The price of Oil is pushing higher once again, and this morning it trades with a $48 handle…  Everyone is getting the feeling that “soon” we will get back to operating an economy that isn’t attempting to walk with crutches…  I’m not so sure that’s going to happen so quickly, or efficiently, so we’ll have to wait-n-see…  But this renewed hope is what’s fueling the rise in the price of Oil… Oil traders are thinking that a return of demand is in the cards..  I guess we’ll see, eh?

The U.S. Data Cupboard gets back online this week starting tomorrow with the Dec ISM (manufacturing index), and will culminate with the Jobs Jamboree on Friday this week.  I’m sure as we go along this month with the December data prints, that they will build on the negativity of the November prints, and we will see the negative affects of shutdowns, and say at home orders in some states…  I got a kick out a Tweet I saw this past weekend, from the Gov. of S. Dakota… 

OK, so S. Dakota never shutdown their economy, they didn’t make people stay at home, and their economy remained open…  Kudos to Kristi Noem Gov. of S. Dakota, for expressing her views that right now, with the mess of economies in California, New York, etc. that her state is probably the owner of the strongest economy in the Union…  

There are some other data prints this week that are worthy of looking to… All of them are December prints, and they include: Construction Spending, Auto sales, Factory Orders, and the ADP Employment report, along with the usual fare of Weekly Initial Jobless Claims…  

And to repeat, I don’t think that any of these December prints are going to be strong in any way… They’ll all show the effects of economic shutdowns, and stay-at-home orders…  And IF once of these December prints do show strength, you’ll know that it was massaged, manipulated, and cooked by the number crunchers… 

To recap…. Chuck spoke too soon last Thursday, and book squaring probably was the culprit behind the 180 degree turnaround in the dollar on the last day of the year. It would have taken a month of book squaring to allow the dollar to have a good year, but since that didn’t happen, the dollar ended the year with its worst performance in quite a few years… Chuck goes through some of his thoughts as to what he believes is going to happen to the dollar going forward… And the dollar is right back on the chopping block this morning, as the overnight markets have gone right back to selling dollars… Gold is up $35 in the early trading today! 

For What It’s Worth….  I was going through Bloomberg on Sunday, and then Ed Steer’s letter came through, and he highlighted an article I has just read on Bloomberg! It’s about how Gold just put in a very good year’s performance in 2020, and it can be found here: https://www.bloomberg.com/news/articles/2020-12-31/gold-heads-for-best-year-in-a-decade-with-dollar-on-the-ropes

Or, here’s your snippet: “Gold posted the biggest annual advance in a decade after a tumultuous year, with gains this month aided by the dollar’s decline to the lowest since April 2018.

Bullion hit a record in August as investors feared an unprecedented wave of stimulus by central banks and governments would lead to currency debasement and inflation. Holdings in bullion-backed exchange-traded funds set an all-time high in October.

While prices ebbed as the roll-out of vaccines injected optimism into financial markets, the dollar’s continued weakness has helped support gold into the year-end.

Looking ahead, there’s little consensus from Wall Street’s biggest names on bullion’s direction. Morgan Stanley sees gold and other precious metals coming under pressure as financial markets normalize and longer maturity bond yields rise. Meanwhile, HSBC Holdings Plc sees gold climbing higher on continued uncertainty.

Much of gold’s performance next year will depend on whether the eventual return to normality is outweighed by ongoing stimulative policies. Led by Chair Jerome Powell, the U.S. Federal Reserve has signaled that its ultra-easy monetary conditions will last throughout 2021. Efforts to pass further fiscal stimulus through the Senate have hit another roadblock.

“Gold’s main drivers — weaker U.S. dollar and low real interest rates — are likely to provide support” even as vaccines are distributed around the world, said Vasu Menon, executive director, investment strategy, at Singapore-based Oversea-Chinese Banking Corp. With the lower-for-longer Fed, “it is too early to throw in the towel on gold,” he said in an e-mail.”

Chuck again…. And let us not forget to mention that what ever the price manipulators decide to show us what’s up their sleeve… will directly affect the price of Gold, short term…  or in spurts, as we’ve seen in the past!  

Market Prices 1/4/21: American Style: A$ .7776,  kiwi  .7207, C$ .7878, euro  1.2294, sterling 1.3658, Swiss $1.1370, European Style: rand 14.5820, krone 8.5080, SEK 8.1875, forint 293.69,   zloty 3.5972,   koruna 21.2576, RUB 73.92, yen 102.91, sing 1.3173, HKD 7.7523, INR 72.98, China 6.5295, peso 19.77,  BRL 5.1924,  Dollar Index 89.53,  Oil $48.53,   10-year .92%, Silver $27.33, Platinum $1,102.00, Palladium $2,498.00, and Gold $1,934.20

That’s if for today…  Well, my beloved Mizzou Tigers Basketball team suffered their first loss last week, but then came back strong on the road to defeat Arkansas…  Let’s hope they bottle what they put together that last game for the rest of the season… Well, I’m here in my winter home, where it has been sunny and warm, since we arrived last Wednesday….  I love it!  I sit outside by the ovean, in the sun soaking up Vitamin D, reading a book, with my ear buds in listening to music… It doesn’t get much better than that folks!  Well, I had a setback with my blood sugar count. I didn’t succumb to the temptations of all the sugary sweets at Christmas, but I did intake a few more carbs than usual, so it’s back to a strict diet now… UGH!  We watched a nearly full moon rise out of the ocean a couple of nights in a row. The orange orb, that then lights up the sky…  The Rev. Al Green takes us to the finish line today with his song: Love and Happiness….   I love the intro of that song!  I hope you have a Marvelous Monday, and Please Be Good To Yourself!

Chuck Butler

December 31, 2020 

* Currencies & metals have a good week 

* McConnell plays the part of the soup Nazi… 

Good Day… And a Tub Thumpin’ Thursday to you! It’s New Year’s Eve! Well, I’m here in my winter home once again… I left rainy, chilly St. Louis yesterday morning, and arrived here a few hours later, and it was partly sunny and 80! My kind of weather! Well, President Trump’s $2,000 offer of checks to be sent to citizens, was shot down by the Senate… So… no $2,000 check for you! So, when did the Senate get a coming to Jesus nerve and turn down spending money we don’t have to spend?  Ok, did you have a Great Christmas? Mine was good… family gathered like we do every year…  And the little kids…  I simply loved watching them! Last Wednesday, the grandkids, sans little Evie, came over to the house to bake Christmas cookies with Mimi… (Kathy) I took some videos of the baking extravaganza and when I need a laugh, I’ll pull up those videos! 10cc greets me this morning with their song: Dreadlock Holiday…

While Chuck’s Away…. As they used to say on the currency desk… “The currencies rally!” So, as I’ve offered before, if you would like me to go on permanent vacation, just say the word…  I could be easily talked into taking one for the team here… You know… I’m really flying blind here this morning, as I usually send myself some notes when I’ve been away for a week, that remind me of things that went on that I need to talk about, but not this time…. I was too busy celebrating Christmas! And then the next day after Christmas was Kathy’s birthday…  So, let’s see what I can find to talk about here…

The dollar continued to get sold last week, holiday or not… Yesterday, with the news that while the stimulus checks weren’t $2,000, the outlook for the economy continues to weaken, and the outlook for a recovery from the virus doesn’t  look like it’s going to be coming to a Theater near you, any time soon, and mark my words here, the new administration will go back to the wishing well and ask for more money soon enough…  And therein lays the problem, as I told you back when he first checks went out, that it was setting a bad precedence, in that, once you give somebody something for nothing, they will expect more, and more, and more, etc.    And so we are in our second of those “mores”…

I keep thinking about McConnell playing the part of the Soup Nazi.. “No $2,000 check for you!”  On a sidebar, wasn’t the Seinfeld show one of the greatest ever? 

When I arrived at my winter home, I plugged in my laptop, connected to the wifi, and pulled up the currency prices to see the euro reach 1.23…  That was late yesterday afternoon… And this morning, the single unit is trading    a little weaker at 1.2280…     The Dollar index, which early last week , tried to rally, has fallen below the 90 figure….  And looks to be in some real trouble…  Traders are starting to see the future for the dollar, which is troubled to say the least. And don’t look now, but the news this past weekend was that China’s economy has passed the U.S.’s economy as far as size…  And make sure you make notes about all those economists that kept saying that the 4^th QTR GDP would be strong… Because, they are going to be proven very wrong…  And with those wrong thoughts will be the ones from the other set of economists that said that a collapse of the U.S. dollar was not going to happen…

So, as we close out 2020 (thank goodness finally!), we have the dollar bugs on the run, we have the currencies led by the euro kicking tail and taking names later, and we have Gold back on the rally tracks…  A good sign for the currencies and Gold to start out the New Year,  which will not have to work very hard to beat 2020 in the race for what was a better year… 

There are three bubbles blowing bigger and bigger right now folks…  Home Prices…. Stocks…. And Bitcoin…  Will those bubbles bust in 2021?  Well, that remains to be seen, and I don’t have an answer for you, but I will say that I wouldn’t be surprised to see at least 1 of these 3 bubbles bust in 2021… I don’t have a crystal ball here, nor do I know something about these 3 that everyone else doesn’t know… I’m just making an educated guess about how long they’ve been blowing, and using my experience in watching these things come to an end…

Well, did you hear that Russia not only just reaped a record year in crop yields? And that they, in spite of the continuing economic sanctions Russia will post a positive 2.7% GDP for 2020… Hey! They’ve been hit by the Plandemic just like everyone else… So, posting a 2.7% GDP for 2020 is quite an achievement.  And the path of the Russian ruble shows that traders are sitting up and taking notice. At the beginning of this month the  ruble was trading with an 80 handle… and to end the month it’s trading with a 74 handle..

OK, before I get accused of being a Russia cheerleader…  I’ll move on to another currency that has really been the cat’s meow lately… And that is… drumroll please…  The Aussie dollar (A$) fell to a low of 57-cents back on March 20… ( I was at Roger Dean Stadium watching my beloved Cardinals and not paying attention to the currencies one iota) and last night, the currency traded above 77-cents… Oh, and remember that saber rattling exercise we went through a couple of months ago, when China announced that they were going to boycott imports of Aussie steel?  The Aussies have held their position and the Chinese are finding that they desperately need those shipments of steel… So, what could have become a major problem for both countries, turns out have been a tempest in a teacup… And the A$ moves on…

Of course maybe these two currencies I’ve just discussed aren’t your cup-o-tea… Well, when the dollar makes its final move into the new weak dollar trend, you’ll have your choice of currencies to own, and look to make a part of your diversified investment portfolio!

Gold had a good day yesterday… The shiny metal gained $15.90 to close at $1,895.30… And Silver put in another day of good moves gaining 46-cents to close at $26.76…  Silver has been the hot commodity lately, despite the fact that there are so many short contracts out there that it would take 190 days of production to equal the ounces sold short in those contracts. One of these days, someone with some gray matter will realize that this short selling more ounces than are above ground is wrong, immoral, unethical, and just plain stupid, and will stop this from going on… and when that does happen, or I guess IF that should happen, Silver will skyrocket to the moon… A real moon shot baby!  But until then, we have to settle for these, what I call, rally disruptions..

In the overnight markets last night, the euro slipped a little, probably profit taking once it hit 1.23, and Gold is down a buck, and Silver is down 22-cents… Year -end bookings will take place today, and already took place last night overseas… Square them up boys! I can hear the head accountant yelling out to the boys and girls on the trading desks in the big banks…  

The U.S. Data Cupboard has been lacking this past week, but with the Christmas holiday, and now the New Year’s holiday, I guess we shouldn’t expect much more than what we got, which was the year on year Case/Shiller Home Price Index… And circling back the 3 bubbles I called out above, Home Prices for Oct on a year on year basis increased 8.4%! 

So, riddle me this Batman… We’ve got over 20 Million people collecting unemployment, which means they don’t have a job… We’ve got millions more that have fallen off the unemployment books because their benefits ran out…  We’ve got the country running scared of a virus…. And through all that Home prices are soaring!   You know, I realized something the other day, and that I’m getting all of my daily exercise these days, by shaking my head in disbelief! HAHA!

To Recap…  It has been a good time for the currencies and metals while Chuck was on his winter vacation…  The President’s attempt to get $2,000 checks out to people in need, didn’t have a snowball’s chance in hell of getting through the Senate, who have become penny pinchers? Oh, one can only hope, but I doubt it seriously!  Chuck’s call that the dollar has begun a new weak dollar trade, continues to tread water, he’s just waiting for the damn to break on the dollar bugs…

Before we head to the Finish line today, I wanted to mention some of the people that we lost this past year that I followed….  Like Bob Gibson, Lou Brock, Dick Allen… Al Kaline, Whitey Ford, and just this week Phil Niekro…  We lost great musicians like Charlie Daniels, Leslie West, Chad Stuart, and more… Don’t know who Chad Stuart was?  Remember Chad & Jeremy?  Sean Connery aka James bond… And then Dawn Wells, and Melody Patterson, two of my faves!  Mary Ann, and Wrangler Jane!  I know I missed mentioning probably quite a few important names, but… These are the ones that when I heard they had passed I stopped what I was doing and thought about them…

For What It’s Worth…  You know, I worked in a few banks in my life… starting in 1979, with the old First National Bank of St. Louis…  Where I met my good friend, Ed Bonawitz…  What I’m getting at is I’m glad I don’t work for a bank now… Banks are sure getting black eyes from all the pounding they brought on themselves, and since the year 2000 Banks have been charged $195 Billion in fines…  For some that were dinged, they simply wrote it off as The Cost of doing Business…  But for some others they had to suck it up and take their blows…  Well, I have an article for you today that talks about these fines the banks have paid since 2000, and it can be found here: Cost Of Doing Business: Big Banks Have Paid $195 Billion In Fines Since 2000 | ZeroHedge

Or, here’s your last snippet of 2020: “Often times when the “too big to fail” banks are caught with their hands in the cookie jar (or placing the entire global economy on the precipice of collapse, as was the case in 2008), nobody goes to jail and the banks wind up paying a hefty fine and putting the “youthful indiscretions” behind them. This inevitably leads to jokes about how paying fines is part of the cost of doing business for big banks.

But it isn’t until you aggregate the sums paid over the last 2 decades, which FT did in a report published this weekend, that one can really see just how much these fines actually are becoming a cost of doing business for banks. Over the last 20 years, the six largest U.S. banks have paid out nearly $200 billion in fines and penalties.

Advocacy group Better Markets found that Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo have paid $195 billion, collectively, since 2000. The group claims the numbers show banks behavior deteriorating, as they have endured more fines since the global financial crisis than prior to it.

There were 85 major legal complaints against banks between 2000 and 2008. Between 2008 and 2012, that number was 110 cases, most of which were mortgage related. But since 2012, the group found that there has been another 204 legal actions.

Better Markets chief executive Dennis Kelleher said: “They’re all major legal actions . . . It’s not like it was a ‘broken windows’ theory post-crash where prosecutors are fining every little violation. If they were held to higher standards they all would have been put out of business because the recidivism is really quite shocking.”

He continued: “It’s absolutely shocking that JPMorgan has now pleaded guilty to three separate criminal charges for egregious years-long criminal conduct.”

Banks like JP Morgan are repeating past mistakes, too. In October, the bank paid $920 million for manipulation of the metals market – this comes after the bank admitted AML failings in 2014 and pleaded guilty in 2015 to manipulating FX markets.”

Chuck Again…  Again, I’m getting my exercise here, shaking my head in disbelief…

Market Prices 12/31/20: American Style: A$ .7737, kiwi .7239, C$ .7852, euro 1.2280, sterling 1.3658, Swiss $ 1.1355, European Style: rand 14.6789, krone 8.5144, SEK 8.1579,  forint 296.80,  zloty 3.7104,   koruna 21.3600, RUB 74.19, yen 103.05, sing 1.3213, HKD 7.7524, INR 72.97, China 6.5242, peso 19.89, BRL 5.1975,  Dollar Index 89.63,  Oil $47.96,  10–year .92%, Silver $26.54, Platinum $1,007.00, Palladium $2,416.00, and Gold… $1,894.10

That’s it for today… Well, I guess many people had to cancel plans for big New Year’s Eve parties… And we won’t be home to host an after dinner party like we’ve done the past few years…  So, how many of you will still be awake at midnight?  I doubt seriously I will be…  We’re going to celebrate with some condo friends around the pool, with social distancing of course!  I was very disappointed that my beloved Mizzou Tigers had to cancel their bowl game because of a virus outbreak… And then to top it off The Tigers basketball team got the snot kicked out of them by Tennessee last night… I know when I last talked to you I said that they had lost the game the night before, but they had actually won it… But no comeback was in the cards last night…  And it was on the Tigers’ home court! UGH! Well, hockey is slated to start in two weeks… That’s a good thing… I think our Blues will be better than the average Bear this year…   Hamilton, Joe, Frank and Reynolds takes us to the finish line today and this year, with their song: Fallin’ In Love….  Baby, Baby fallin’ in love, I’m Fallin’ in love again…  So… be careful out there tonight, this is what Kathy’s dad used to call “Amateur’s Night”…  I hope you have a Tub Thumpin’ Thursday And a very Happy New Year!  And Please Be Good To Yourself!

Chuck Butler

December 24, 2020

Good day…  And a Merry Christmas Eve to you!  Just a quick note before he head to the Christmas letter…  I’m so distraught over the new so-called Covid Response Relief Package… All the pork that’s in it…  I know it’s Christmas Eve, but I’m going to fire off a note to my congresswoman, and let her know that this is NOT what  We The People are asking for, and expecting!  And with that, Have Yourself A Merry Little Christmas is playing, and that about sums it up for me… 

It’s Pfennig Tradition, that I put together a Christmas eve letter for all my dear readers, and so with no further ado…

 

T’was the night before Christmas

And all through the house

The occupants were congratulating each other

For their stimulus, but  not me

I’m such a grouch!

The debt level in this country

Has gotten out of control

But I’ve cried wolf for years

And still the spenders are on a roll.

It’s time to forget all that

And that’s a fact! 

The stockings were hung by the Chimney with care

In hopes that St. Nicholas would soon be there.

My grandkids I hope are all nestled in bed

With visions of playstations, and games

Dancing in their heads…

When on my laptop screen I saw such clatter

I had to click on to see what was the matter

$900 Billion more is being printed from thin air

And no one in Washington DC seems to care…

People that don’t make much will soon get a check

Let’s hope it keeps them from becoming a wreck!

I went to the window to yell at the walls

And outside were carolers singing Deck The Halls…

And then with a blink of an eye what did appear?

But a miniature sleigh and 8 flying reindeer!

This must be Santa, with gifts for all the girls and boys

I hope he has something for me

And I’m not talking about toys…

I’m hoping that he has cleared the air

Of this virus, and we can get back to life

Instead of going outside on a dare…

I’m hoping that 2021 is full of joy and happiness

So that we can forget 2020

But that won’t be so difficult, no less…

Now I’ve forgotten all about the markets

And the manipulations, and dolts and twits

It’s time for Christmas, and besides those

Things give me the fits!

My grandkids are ready to see what Santa brought them

And I whistled and shouted and called them by name

On Delaney, On Everett, On Braden, and little Evie

To the living room we go to open our gifts

But remember please that the greatest gift of all

Is what we call Christmas Day… When

The Good Lord was born… 

So, with all the calamity going on

I sneak out of site,

And say a prayer that this scene can go on forever…

And then I saw Santa and his reindeer, take off

And I heard him exclaim

Merry Christmas to all, and to all a Good Night!

Chuck Butler, Christmas 2020

PS… I always include a little message at this time, so here goes..

May the light & warmth of the season bring comfort & joy

To your family and friends this Christmas Season…

December 23, 2020

* The dollar rallies on Tuesday…

* But the rally sure smells like yesterday’s fish… 

Good day… And a Wonderful Wednesday to you! I realized it this morning as I typed the date, that I’m usually already on vacation and I don’t recall the last time I wrote on December 23rd! So, you’ll have to help me through today, for this is unchartered waters for me! HA! Another new book arrived yesterday, it’s titled: Slanted, by Sharyl Attkisson, it’s about how the media became so slanted / biased and worthless in my opinion… I’ll save that one for the plane ride next week…  Beegie Adair plays her piano and her trio does their version of the song: What Are You Doing New Year’s Eve?  to greet me this morning… 

Just what the heck was going on in the markets yesterday caught me by surprise, and I spend most of the afternoon looking for reasons why the dollar rebounded, Gold got sold, and Consumer Confidence was actually down?  Now that’s a strange combination if you ask me!  Why on earth would traders, investors, hedge funds, etc. pile into dollars, when Consumer Confidence weakened this month? Well, I think that might have a little to do with how the euro rose on the data print outcome, but then soon fell when the European Central Bank (ECB) announce new stimulus plans without lowering deposit rates further into negative territory. Traders were thinking that the ECB was due to go more negative with rates, and they were disappointed when the ECB didn’t.  

Ok, upon further review… That makes no sense to me either! If I were a trader, and I saw that the ECB didn’t lower rates further into negative territory, I would say, “Bully for the ECB, and buy euros”, especially knowing that in the U.S. they saw existing housing sales decline last month, and Consumer Confidence weaken this month…  But NOOOOOOO! That’s not what happened! I wanted to go outside and throws my hands to the sky, and yell, SERENITY NOW! But, it was a bit chilly out, so I just pretended to do that at my desk here in the basement…

Come to think of it, I don’t know if I ever told you this or not, so sorry if I did, but it was at this writing desk, in my basement, is where I started the groundwork for the old EverTrade Direct Brokerage Co. And had it ready to go to the NASD in Kansas City, for review and approval to open…  So, besides the Pfennig which has been written here many times through the years, first when I was retired the first time in 1998… And now that I am officially retired since 2018….   Here’s my career in a nutshell… 5 years at Stifel Nicolaus, 1-year at RG Dickenson (Des Moines), 2 years at First National Bank of St.Louis, 14-years at Mark Twain Bank (where the Pfennig began), 2-years at Mercantile Bank (who bought Mark Twain Bank) and finally, 19 years at EverBank…  with about 6 months of retirement in 1998… Before starting the brokerage company in my basement that year!

Ok, I know you didn’t open the letter today to read about my career stops!  But I started down the rabbit hole of talking about my basement, and voila! I let my fat fingers take the conn!

So, traders, investors, hedge funds, and money takers, why on earth, when the U.S. dollar sports zero interest rates, and real negative rates when you figure in inflation, a printing press of dollars that’s running 24/7 these days, and no less problems with the COVID-19 virus than the rest of the world, would you step to the plate, and buy dollars yesterday?  Or, maybe it wasn’t you that did the buying, maybe, just maybe, cause we’ll never know, it was the Plunge Protection Team (PPT) doing the buying once again…

So, the euro started the day up at 1.2242, jumped to 1.2252 on the Consumer Confidence news, and then fell to 1.2162 like in a New York Minute!  And for this reason, I’m saying it was the PPT that came in and threw down the spikes in the road so the euro would get a flat tire running over them. For investors, traders, hedge funds, and money takers, don’t all trade at once during a day… Get my point here?  And then with further proof of PPT buying, by the end of the day, the euro was back to moving higher and closed the day at 1.2192…   Go figure, right?

But the overnight markets took the euro back down to 1.2160, and Gold is up a couple of bucks along with Silver who has gained 30-cents early this morning…  I’m not getting any vibes from this overnight market as how today will go… I’m sure the boat load of data that’s coming out this morning will have something to do with how today goes! 

To borrow a line from Styx, in the song Too Much Time On My Hands… it goes like this:       

Is it any wonder I’ve got too much time on my hands
It’s ticking away with my sanity
I’ve got too much time on my hands
It’s hard to believe such a calamity
I’ve got too much time on my hands
And it’s ticking away, ticking away from me

With the dollar moving higher it affected the price of Gold…  And Gold lost $17 on the day, with a price movement that looked a lot like the euro’s.   at about 10:30 am Gold dropped from $1,870 to $1,860, in less then 30 minutes…  One shot downward, and then Gold leveled out the rest of the day to close at $1,860.00…  So, there was some fishy stuff going on here too… 

So, the price of Oil took a hit too yesterday losing about 1.50%, and the $47 handle… It was just last week that the price of Oil had reached a $48 handle, but the news of a new strain of the Covid virus in the U.K. has really knocked the snot our of the price of Oil…  You know, yesterday, I said what if there’s a new strain of the Covid virus that the vaccine doesn’t work against?  I really wasn’t wishing that to happen folks, I was just throwing the thought out there…  And then later in the day, I hear that Dr. Fauci, he who has been wrong on everything so far, said that a new strain from the U.K. may already by on our shores…  So, let’s hope he’s as wrong on that as he has been on everything else…

Speaking of Fauci and Dr. Birx…  Did you hear that Dr. Birx, is going to step down from her Covid team position because… Now get this… She made a big deal out of not having big Thanksgiving dinners with guests… And then she went and had one of her own! She’s been fielding so much flak on that so she’s stepping down…   I guess she got the idea from Calif. Gov. Newsome, who mandated that people stay home and then went to a huge dinner party at a restaurant, no less, and partied without masks!

Ok, back to the markets… I’m really on edge right now… It’s a good thing I start my winter vacation tomorrow!  So, Silver didn’t fare very well yesterday either losing $1.03 to close at $25.22, and had the same trading pattern as Gold, and euros…  With the euro losing ground, that meant the other currencies would lose ground on the day too.. The Aussie dollar (A$) fell to .7517, from the .7562 it held in the morning…  And the Petrol Currencies got waylaid once again because of the drop in the price of Oil…

Someone asked me in the Pfennig Replies box that if everyone is using their credit cards for purchases now, why would going to digital currencies be bad?  And then I read a report that says the younger crowd, never, really carry cash…. 

So, I’ve been through this before, but here are the top three reasons that going digital would be bad for you, me, and the guy down the street with his house lit up like the guy on the Geico commercial!

1.The last of your civil liberties would be taken away from you… No longer would you be able to pay cash for something that you didn’t need for anyone to know about…  I know my wife tells me that that would be no big deal to her, because she does nothing wrong…  but that’s not the point dear… your freedom is being stripped away from you bit by bit by bit, and it all started with the Patriot Act back in 2001…

2. Banks would have a new way to generate income… Banking fees…  Fee income is important to a bank when loan profits go down, and they’ve been down for some time now, As I told you above I’ve worked in banks for a very long time, so, I know this to be a fact… When loan profits fade, the higher ups call all the fee income departments and tell them to ramp up fee income…

3. And when the bank sends you a notice that they are going to begin to charging you “X” for having to change over to digital banking, and you get hot under the collar, and decide you want to change your bank, but then find out that all the banks are doing the same (nocollusion here folks, just walk away) and it won’t help you to move your balance to a different bank, then the light bulb above your head will come on, and you’ll say, I wonder when the next banking fee letter will come with a new fee…  

So, I’ve got a pocket full of things that make digital banking bad folks, so don’t get me started again on that!

So, today is the day that the U.S. Data Cupboard goes all in on us with data prints… We’ll see, in this order.. the weekly Initial Jobless Claims, which last week were 885,000… the forecast for this week is 875,000, but I doubt that’s going to be correct.  Then we’ll see Durable Good and Capital Goods Orders for November, followed by person Income and Spending for Nov. and to finish it up we’ll see Core Inflation for Nov.  New House Sales will also print… I would think they went down due to the price increases going on in housing…

To recap…. It was one of those days when Chuck yells SERENITY NOW!  As the dollar got bought by the boat load, in a very short period of time… PPT trading? Thatt’s how it appears to Chuck…  Gold also was sold on Wednesday down $17 on the day, with Silver down $1.03…  The craziness of the manipulated markets seems to go on forever doesn’t it? And I’m not just talking about Gold & Silver, I’m talking about all markets being manipulated…   You can’t tell me that stocks with a P/E ration that’s beyond reasonable aren’t being manipulated by the cartel, I mean the Fed!  You can’t tell me that bond yields at their all-time lowest aren’t being manipulated by the cartel, I mean the Fed…  And so on…

For What it’s Worth… Well here’s another excellent article by Pam and Russ Martens of www.wallstreetonparade.com. You will recall them pointing out that the slush fund called the Exchange Stabilization Fund (ESF) got a boat load of funds in the last Stimulus Bill, and according to these great investigative writers, the ESF was a big beneficiary again! This article can be found in its entirety here: The Language Toomey Inserted into the Stimulus Bill Enshrines a $681 Billion Trading Slush Fund for Mnuchin with the NY Fed (wallstreetonparade.com)

Or, here’s your snippet: “The language that Republican Senator Pat Toomey inserted into the final stimulus bill (Consolidated Appropriations Act, 2021) appears below. It not only restricts the Federal Reserve’s ability to extend some of its current emergency lending programs that help small and medium size businesses and state and local governments beyond December 31 of this year (while leaving Wall Street bailout programs alive for at least another 90 days) but it also enshrines the autonomy of the U.S. Treasury Secretary to operate a massive slush fund – the Exchange Stabilization Fund (ESF).

Most Americans have never heard of the Treasury’s Exchange Stabilization Fund. It was created in 1934 to provide support to the U.S. dollar during the Great Depression. The ESF has grown from $94.3 billion in assets prior to Trump taking office to a balance of $681 billion as of October 31, 2020. As recently as March 31, 2007, the ESF had assets of just $45.9 billion.

But instead of turning over the full $454 billion to the Fed, Mnuchin turned over just $114 billion for the Fed’s emergency lending programs, as confirmed by the Congressional Research Service on December 17.  Since what the Treasury Secretary does with the ESF “may not be reviewed by another officer or employee of the Government” according to its dodgy statute, the public has no idea as to what Mnuchin actually did with the balance of $340 billion in his slush fund from the CARES Act.

While there has been widespread media attention to Toomey’s effort to kneecap the Fed’s emergency lending programs by inserting language into the stimulus bill, there has been no mainstream media attention to Toomey’s effort to memorialize both Mnuchin’s and (potentially) future Treasury Secretaries’ ability to have a slush fund to intervene in markets. The Treasury Secretary has, effectively, become a Plunge Protection Team of one.”

Chuck again…  It’s amazing that I’m not insane at this point folks… But here’s an early Christmas gift for you… If you need to read some market news while I’m on vacation, simply go to that website, I highlighted above and there’s a list of their articles there for you to read… Enjoy! 

Market prices 12/23/20: American Style: A$.7550, kiwi .7071, C$ .7761, euro 1.2167, sterling 1.3417, Swiss $1.1228, European Style: rand 14.6260, krone 8.7278, SEK 8.3174,  forint 298.07,  zloty 3.7005,   koruna 21.6700, RUB 75.32, yen 103.55, sing 1.3343, HKD 7.7526, INR 73.76, China 6.5447, peso 20.08, BRL 5.1361,  Dollar Index 90.48,  Oil $47.11,  10-year .92%, Silver $25.52, Platinum $1,010.00, Palladium $2,358.00, and Gold… $1,864.30

That’s it for today and until 12/31… but don’t forget to look for my annual Christmas Pfennig…  when I made my appt. to get my teeth cleaned I wasn’t aware that my favorite dentist, Holly Ellis, was going to be on vacation! UGH! I told my wife, “but that’s why I go to the dentist to see Holly”… She said deadpan, “you can change your appt.”…  Ah, the joys of knowing someone for nearly 50 years… Well, my beloved Mizzou Tigers couldn’t hit the side of barn with a basketball last night and but still won. I coached a 2n grade basketball team  one year and they shot better than 21%!!!!!  Notice I said “one year”… that was enough for me… Conference play begins in the new year… So good luck to SLU, and Mizzou…  The college football playoffs have been announced, with Alabama playing Notre Dame, and Clemson playing Ohio State…  And the winners of those games will play for the National Championship… pretty cool way they determine that nowadays… Remember the Old BCS?  The grandkids are coming over today to bake Christmas cookies with their Mimi (Kathy)… That should be a riot, and I think I’ll take some videos of the action, while I’m here…  Well, I’ve heard just about every smooth jazz Christmas song a few times this year, on the Pandora station… But that doesn’t stop me from listening to it all the time… The Stephen Kummer Trio takes us to the finish line today with ttheir version of: The Christmas Song…  One of these days I’ll list my favorite Christmas songs…  Songs like the Christmas Waltz, and so on… that’ll be fun…  And fun and exciting times are what I hope you have this Christmas…  And please be Good To Yourself…   remember don’t forget about my annual Christmas Pfennig that will show up in your email box…  

Chuck Butler

December 22, 2020

* One and done for dollar strength… 

* It’s the same-o, same-o, trade with China… 

Good Day… And a Tom Terrific Tuesday To You! Well, yesterday was… Monday, Monday, can’t trust that day… And it proved to be just that! More on that in a minute…  I don’t know about you, but the Big Build Up of Christmas this year, just isn’t there for me… I love the Christmas season, and what it does to people, but, without being out and about with people, I can’t tell if the Christmas spirit has touched them or not… Did you hear that some dimwit on CNN said that we should cancel Christmas? Man, it is a good thing I don’t watch CNN, or else I would have been screaming at the TV, and the neighbors would be calling the gendarmes, and the men in white suits to come take me away! They’re coming to take me away a-ha, they’re coming to take me away! Somehow, I get the feeling that the scenario I just described will be in my future, as my brain finally explodes from being right about all these dirty deeds done dirt cheap! The Stephen Kummer Trio is playing their version of the song: I’ll Be Home For Christmas… It’s almost as good as The Celtic Woman Lisa, and her version of the song…  

Everybody is talking about change…  and how this is going to change and how that’s going to change, and so on… And it reminds me of a saying I once heard, here goes… “Change is inevitable, except from a vending machine”…    My dad used to tell me, that “In change lies opportunity”…  And I guess that’s right…  But do we have to have so much change so quickly?  I’ll leave that right there and get to the markets, but we’ll be talking about a lot of change in the coming months folks, so look for those opportunities…

So, when I left you yesterday, the dollar bugs were fighting back… But that ended in the U.S. markets, and soon the dollar was back on the chopping block VS the currencies, as the day went along… Gold kept trying to get its head above water, but was unable to and end the day down $4…  and  closed at: $1,8 76.70…   It wasn’t economic data that turned the dollar’s fortunes around on a dime, there was only one piece of data that printed yesterday, and it was one of those regionals that I’m boycotting, and besides those normally aren’t market moving prints…  So, what was a one full day of dollar buying, considering that the dollar buying started Friday afternoon, and went through to most of the U.S. morning, before getting stopped at the border, I’m going to say that my suspicions were validated, and it was a bout of Central Bank intervention… Who’s Central Bank would be the next question… And I’m going out on a limb here and say it was a  joint effort by the Fed/Treasury and ECB…  The reason behind this has many items, but one that I’ll share with you is this… Did you notice that the Japanese yen hardly moved?  Well, that tells me that the BOJ either wasn’t invited to the party, or refused to go because of Covid concerns…

I had laid the scenario of why the ECB was sweating bullets about the euro getting so strong previously, right? So… I’m sure the PPT, of which the Fed Chairman is part of, said, “hey, ECB, we’ll throw you a bone, here, and see what happens, maybe traders will get scared and not push the euro so high going forward”…   But, guess what happened instead?  Well, I guess you don’t have to guess, since I just told you above what happened! DUH!  

The Dollar Index at the end of the day yesterday was 90.10, after hitting a high of 90.63 earlier in the day…   And this morning the Dollar Index is trading at: 90.14…  So, little movement in the currencies overnight, and Gold is down a buck or two this morning early, so we’ll see where that takes us today… 

And any further moves upward  in the currencies after this brief and small recovery of the dollar, will all but seal the deal that the dollar is in a new weak dollar trend… It could be multi year, because previous currency trends have been as short as 7 years and as long as 10 years…  Or, with the new way that everything trades, we could have a shorter than normal trend length…  There are no “free markets” any longer, just manipulations… But if the U.S. is signing off on a new weak dollar trend, as I believe they are, for what better way to invite inflation into an economy than with a very weak currency, then who knows how long it will be, maybe until that elusive inflation rate is where the Fed’s want it to be?  Probably, but it will take some time to stop the run-away train that is a short dollar trade.

The price of oil has slipped by about 1/2-dollar as it trades this morning, and the Russian ruble has too slipped, but on just a 50-cent downward move in Oil?  The Brazilian real too has slipped in price, but the Norwegian krone is stronger (due to the euro’s gains), and the Canadian dollar/ loonie is holding steady Eddie…  So, it’s a mixed up world for the currencies this morning… 

In the overnight markets, as I said above the currencies saw little movement, and Gold is drifting.  You know, something that’s on my mind this morning is all the news from the U.K. and I’m not talking about the Brexit negotiations, which aren’t going anywhere in my opinion, but that’s not what I’m talking about. I’m talking about how the virus has taken a turn for the worse there… Sure it takes about two weeks for a vaccine to take effect, and they haven’t had two weeks since being the first to receive the vaccine, so the spread of the virus is getting its foot in the door before the vaccine can stop it… Or… here’s a scary thought, what if, the virus has a new strain already, and the vaccine is worthless against it? 

OK, Chuck step away from the cliff son… Come on down, there’s no reason to jump just yet… Come on you can do it… There… now sit back down in your chair, and tell people that you were just thinking out loud and didn’t mean to go down that rabbit hole…   OK? You‘re good now?  Let’s talk about something else… 

I feel so bad about missing something important last week… I forgot to say Happy Birthday to two former colleagues: Jen McLean, and Ty Keough…  I hope they still love me!  I worked with Jen since she was right out of college… I saw her get married,  and gained weight during her pregnancies! I had grown up following the soccer career of my friend, Ty Keough… I recall him during his playing days with the St. Louis Steamers, having a big afro hair do! Ty was a customer before he came to work with us, so he always had a customer’s best interest at heart…  So, Happy Belated Birthday to these two…

I sure hope I didn’t miss any others recently, as my mind hasn’t been on personal stuff, just all the changes, and goings on in the markets…   You know, in 2001 when I wrote the White Paper titled: The Decline of the Dollar, I was thought to be going crazy, and that there was no way the all-mighty dollar was about to go into a weak dollar trend…  Well, all the facts I had about why that was to be, came to fruition and by Feb of 2002, the weak dollar trend was in full swing…     I don’t have press coverage like I used to have, thanks to David Galland,  and Peter our Press Agent…   And so my call for a new weak dollar trend is kept to you dear readers, and with the FX Street, who still, to this day, post my Pfennig letter to their site, and tweet it out, to anyone that follows them on Twitter.

And I can’t forget the great work done by my publishers, the Aden Sisters, Pam and Mary Anne, who decided last year that their readers of the Aden Research letter should also receive the Pfennig each day… So, those folks also know about the call for a new weak dollar trend… 

The timing of a new weak dollar trend is in order here… The strong dollar trend started in 2011, and so that makes it almost 10 years, which is normally, and historically the longest a weak or strong dollar trend has lasted.  Then you add in that in 2001 the U.S. National Debt was “just” $5.8 Trillion… Today it’s over $27 Trillion…  In the first 10 years after 2001, we added nearly $9 Trillion ($8.99 Tr.)  And in these last 10 years we’ve added $ 12.72 Trillion… Crazy I know, but as I use to say, that citizens of this country had grown Comfortably Numb to these amounts, that now sit at $27.51 Trillion!

Then you toss in the fact that the Fed/ Treasury’s printing press for dollars has been working overtime in recent years, and you’ve got more dollars chasing goods in this country…  yes, the plandemic has caused some severe supply chain problems and lack of funds of people to spend, but Personal Spending is still going strong… (We’ll find out more on that tomorrow)

Ok… enough of all that…  in the U.S. Data Cupboard, we’ll see a final revision to 3^rd QTR GDP, which you may recall was plus 32%, but I had debunked the numbers and showed you how we were still behind the 8-ball when it came to a full recovery of what was lost in the economic shutdown of the 2^nd QTR…  In addition, the always stupid Consumer Confidence report, which is only a pulse of how the stock market is doing, will also print today… 

Tomorrow’s Data Cupboard is going to be chock-full-o-data, with a good number of market moving data prints on the docket…  I for one do not see tomorrow’s data prints working out nicely for the dollar, but we’ll have to wait-n-see, eh?

And you recall all the name calling and blusterous talk about hurting China’s trade in the past couple of years? The trade tariffs, etc.? Well, the numbers are in for last year’s trade with China, and our exports there didn’t amount to 1/3 rd of our imports from China…  So, in the end it’s the same-0, same-o, with China and their trade surplus with the U.S.  For the first 11 months of 2020 is $460 billion, up 21.4% from this time last year, already one of the highest ever recorded.  

To recap… The short-lived bounce in the dollar ended yesterday afternoon, with the currencies staging a rally, which led Chuck to believe that the short term move was Central Bank intervention. He went further to say that it looked like a coordinated intervention between the Fed/ Treasury (they are just one now, right? HA!) and the ECB…  Chuck talks about the beginning of the last weak dollar trend, and thinks that Gold & Silver are digging in their heels and ready to make a move to higher ground…

For What It’s Worth…. Here’s an article that takes us to a site that sells Gold so keep that in mind when reading this article, about Gold. I think it’s a good article, and it can be found here: LAWRIE WILLIAMS: Gold, lies and statistics. (sharpspixley.com)

Or, here’s your snippet: “Gold is, or should be, the ultimate economic bellwether if it was given free rein, but governments, central banks and their allies in the financial sector seem to be doing their utmost to keep the metal’s price under control for fear of unleashing Pandora’s box and bring the whole global financial system to its knees.  A rising gold price is seen as a devaluation of the mighty dollar – the cornerstone of the global financial system for now – so gold price appreciation should go hand in hand with a declining dollar, or vice versa.  The latter is seeing a weakening almost by the day in view of the U.S.’s enormous debt position.  Go figure!

Paul Volcker, who died nearly two years ago was perhaps the most outspoken, and arguably the most successful U.S. Fed chairman – a position he held from 1979 – 1987 under both Democratic and Republican Administrations – in recent years.  He has been seen as the Fed chairman responsible for vanquishing runaway U.S. inflation and was an outspoken critic of gold’s role in global financial markets.  Indeed he is seen as the architect of President Nixon’s gold window closure when he was in the Treasury Department and before his stint as Fed chairman.  He set forth the mantra that the gold price should be controlled through central bank influence – a policy which looks logically to have continued to the current day, although vehemently denied by those who have the ability to implement such programs.  But then who believes such denials?

There are almost certainly continuing moves by governments and central banks to keep gold price rises under control in order to protect their fiat currencies from total collapse in the light of a stratospheric increase in the gold price.  However a steady currency value erosion and a controlled gold price increase may well be on the cards.  Certainly continuing interest rate suppression policies by the major central banks, leading to negative ‘real’ interest rates suggest that this is probably the case.  This does not mean that price suppression by central bank allies in the major futures markets will cease, but it will possibly continue at perhaps a less extreme level than in the past and allow a slow, and relatively steady gold price increase and corresponding ‘stealth’ currency devaluation. If some increase was not allowed then the dam could eventually burst under pent-up pressure and gold might rise out of control bringing the whole financial system crashing down.  Volcker once described gold as ‘the enemy’ and provided one keeps one’s enemy close, and thus under control, matters are unlikely to deteriorate too far.”

Chuck again…  the writer then goes to show some statistics provided by John Williams of shadowstats.com of whom I’ve relied on for data for years!  John Williams is quoted as saying this about Gold… “Holding physical gold protects the purchasing power of dollar assets, irrespective of any near-term volatility in, or manipulation of, gold prices.” 

Market Prices 12/22/20: American Style: A$ .7562, kiwi .7075, C$ .7773, euro 1.2242, sterling 1.3425, Swiss $ 1.1299, European Style: rand 14.5824, krone 8.6423, SEK 8.2617,  forint 295.86,  zloty 3.6845,   koruna 21.5014, RUB 74.60, yen 103.37, sing 1.3336, HKD 7.7524, INR 73.81, China 6.5485, peso 20.01,  BRL 5.1213,  Dollar Index 90.14,  Oil $47.35,  10-year .93%, Silver $25.97, Platinum $1,022.00, Palladium $2,358.00, and Gold… $1,875.40

That’s it for today… So… are you ready to stand in line for your virus vaccine?  Like I said last week, I’m not getting one until my oncologist tells me that there are no side effects on cancer patients…  And I figure that won’t happen until spring…  And even then I’ll still be very leery of this drug, that was rushed through testing (I know they’ve had the groundwork on this drug done previously) and is the first drug to use messenger RNA (mRNA)… We don’t know just yet, how that will effect someone’s system going forward…  Call me crazy, but… this is all mad science to me…  I’m waiting for someone at one of these labs to look up and say, “It’s Alive”!  After thinking about what I said above regarding gaining weight during Jen’s pregnancies, I also gained weight during our little Christine’s 3 pregnancies, I sat right between those two, so I blame my obesity on them! HAHAHAHAHA! It had nothing to do with the Budweisers and burgers, pizza, and fries! HA! Just kidding of course! I blame it all on the fact that I have not been able to be active in any way for over 13 years…  On Rocktober 15^th, I stepped on the scale at the doctor’s office and was blown away at how much weight I had gained… I decided then that I had to slow down my intake, then I was told that I needed to cut out sugar, from my diet, which is also carbs… I’ve lost 45 lbs since that day in Rocktober… But that’s as noticeable on me as removing a bucket of sand from the beach, so I have lots more work to do there!  The Vince Guaraldi Trio takes us to the finish line today, with his version of: The Christmas Song…  I always loved hearing Johnny Mathis sing this song…   I hope you have a Tom Terrific Day today, and will do your very best to Be Good To Yourself! 

Chuck Butler

 

December 21, 2020

* Dollar buying looks like CB intervention to Chuck

* Silver outperforms Gold, Platinum, and Palladium! 

Good Day… And a Marvelous Monday to you! I won’t say that again until Jan.4, 2021… (My dad’s birthday)… These last couple of Pfennigs going into Christmas will be chock-full-o- stuff, for you to read while I’m on my traditional winter vacation…  Well, my beloved Mizzou Tigers laid an egg in Starkville, MS. Last Saturday. UGH! But they impressed someone because they have accepted an offer to play in the Music City Bowl, In Nashville, Dec. 30^th…  So, congrats to coach Drinkwitz and his team. I also watched my good friend Rick’s alma mater, Clemson, destroy Notre Dame, which was delightful for me! I have always rooted for whomever plays Notre Dame…  Little Evie and brother Braden came to spend the night with us Saturday night… Braden and I played a game of chess… He came close to beating me, and he’s only 9! The late great Leon Russell greets me this morning with his song: Delta Lady… 

On a sidebar, a different good friend named Rick, learned of my love of Leon Russell, and now he sends me links to concerts and other recordings that Leon Russell performed on. So, do you think if I told him I loved… oh never mind… that’s silly!

OK.. well, the dollar bugs fought back on Friday, with the euro losing about 1/4- of a cent, and Gold giving back $4.60 on the day… The Dollar Index, which when I left you on Thursday was 89.96,  recovered to 90.01. and had risen even further in the overnight markets to 90.63…. One could say that the currencies had shot up so fast, that they needed to go back and fill in the gaps…  Or, one could say that my thought of a new weak dollar trend beginning is hog-wash!  And that the dollar will come roaring back once the virus vaccine has been distributed to the masses… (of which people over 75, and essential workers are next in line for the vaccine, once medical people get theirs… Son Alex, who is Physical Therapist and is in contact with people all day, every day, says there are no plans in place for he and his colleagues to get the shot, yet… )

Whatever the reason, and I believe it to be the former of the two I presented, we’ll have to hold onto our horses, and not change them in the middle of the stream, until we know for sure.

In the overnight markets the dollar buying has increased its fervor, and now it’s beginning to look like Central Bank intervention to me, for the dollar has really pushed back with force against the currencies. The euro this morning has lost almost 1-cent since last Thursday. And like I said above the Dollar Index has recovered to 90.63…  Gold in the overnight markets has lost $3, but Silver has gained 36-cents to move over the $26 handle… This is quite impressive, given that both Platinum and Palladium have gotten the snot kicked out of them overnight, and Gold is fighting to keep its head above water, and we have Silver kicking tails and taking names later…  Pretty impressive… 

Well, there were lots of stories over the weekend about the direction that the President-elect is going to take us…  I have one of those articles in the FWIW section today, So keep it right here, and don’t touch that dial!  Another one is one I’m going to talk about now…  The long awaited 2^nd Covid Relief Package was signed by Congress yesterday, and it is in the amount of $900 Billion…  Of course that’s $900 Billion that Congress doesn’t have to spend, so the currency will be printed out of thin air, with no backing, as it has since August 1971.  To use Bill Bonner’s term… This is nothing but fake money… Another feature of the Relief Package is extended unemployment benefits, which were scheduled to expire on 12/31/2020…  Yes, in 10 days…  they would have expired without being extended with this package…  I hate to be the bearer of bad news here folks…  But putting money into hands of people with no stipulations, could end up being a not-so-good-thing -to-do…  But I’m sure the government people behind this relief package know more than me, and so I’ll just move along here for these aren’t the droids we’re looking for!

Oh, and the free passes the renters and mortgage owners have been receiving were also extended, but only for 1 month…  I guess the negotiators thought the new President could handle that one! And, I’m sure shootin’ believin’  partna… that there will be no evictions on his watch…

$900 Billion added to our debt, in a keystroke on a computer keypad…   I read last week that Twenty-five percent (25% or 1/4 ) of all US Dollars to ever be in existence were created in the last nine months. And that’s before they added another $900 Billion!  You know, folks… I’ve been talking about the ill-effects of Deficit spending, and Debt Accumulation for about 20 years… Before that, It always seemed to me that the debt that we, as a country, had, could be dealt with, sanely…  But then I noticed that no one in Congress was ever talking sanely about debt, and it was then that I figured that we could allow the dollar to get very weak, thus inviting inflation into our economy and inflate away the dollars, or… we could raise taxes…  Notice I didn’t say stop deficit spending, because that had a snowball’s chance in hell of ever happening! 

Now, I believe that the accumulated debt (Over 27 Trillion) is too large to inflate away… I also believe that it’s too large to raise taxes to pay for it… That leaves one choice, and that is to default on the debt and start over…  I’ve gone on record saying that I believe that this will happen around the world because, except for Russia, the rest of the world has gone bonkers with debt accumulation too…  And if the new administration listens to their far left colleagues, we’ll get to the point of defaulting at a faster pace than we are on now.    I’m just saying…

I know, I sound insensitive about this Relief Package, and I apologize for that. I realize there are people and small businesses out there that need help…  But, I always remember what Ronald Reagan once said, about the scariest words spoken, are: “I’m from the government and I’m here to help”… And what good does saving a business now do, if in 6-month to a year, the whole shootin’ match collapses and folds like a cheap lawn chair?

Ok, let’s stop talking about debt accumulation!  I think that the numbers have gotten so large, that normal people can’t fathom what it takes to make $900 Billion…   So, let’s move on…

10 years ago, or so, we would get calls from people all the over the country asking us if we would sell them Iraqi dinar, for they had read that it was going to be revalued…  I had instructed the people on the trade desk that we should gently break the news to the callers that there were no plans for a currency revalue…  One time when I was in Panama at a conference, a gentleman came up to me and told that he had inherited his family business, and that he put all their cash into Iraqi Dinar, for he knew that it was going to be revalued, and wanted to know my thoughts about that… I said to him, “you did what? I believe that the dinar is a worthless , for investment, currency, and that there would be no revalue, and that he should see if he can get out of that trade”… He was not happy with me to say the least!   Oh… and there was this tidbit in the weekend’s news…  Iraq’s central bank increased the sale price of U.S. dollars to banks and currency exchanges to 1,460 dinars, from 1,182 dinars That a DEVALUATION folks!    Not a revaluation!  I wonder what all those folks that kept calling us and telling us the revaluation was real and was going to take place on “x-date”, are thinking now….  Should have listened to me… That’s I’m saying about that!

The U.S. Data Cupboard last week was very disheartening if you are a person that believes all is going along nicely here in the U.S. It was also disheartening for the dollar bugs who saw the dollar fall to its lowest level since 2018… And this is just the beginning in my opinion…  So… The Weekly Initial Jobless Claims blew away the expectations of 862,000 and came in at 885,000… When I left you last Thursday, I said, “what would happen if the claims were greater last week?” I said, I thought the dollar would get sold and that’s exactly what happened…  The Continuing Claims also rose from 19.04 Million to 20.64 Million… So, as usual I’ll give you MY Unemployment Rate of 13.76%…  For comparison purposes, the BLS says Unemployment is 6.7%…   And I would think my rate was conservative, given all the people that have fallen off the Unemployment roster, because their benefits ran out…

And that was Thursday, when the dollar got sold, and Gold was up $20.80, and the currencies moved higher VS the dollar, but, as I said above, on Friday, the dollar bugs fought back, and moved the dollar modestly upward against both the currencies and metals. And in the overnight markets the dollar bugs are back to having the conn…  I would think only for a day, because this is a Monday, Monday can’t trust that day! 

There wasn’t much else, in the way of economic data, reported last week, except for Leading Indicators, which were weaker than Rocktober’s indicators, coming in at .6% VS .7% previously….  Leading Indicators and Capacity Utilization are really the only two pieces of data that are forward looking, or tell you about the future… Everything else is in our rear view mirrors…

Before we head to the Big Finish…  I wanted to point out a link to an article on the Daily Reckoning, that’s a brief video, where the changing of folding cash to digital currency, is discussed in video format… If you don’t have time for the video, trust me on this one, I’m not the only person out there that’s now saying the U.S. Gov’t will be changing over to digital currencies…  www.dailyreconing.com you’ll have to look for it, they post so many articles…. It’s by Nick Giambruno….  Shoot Rudy, I recall when they used to post my Pfennig the site and included me as one of their “writers”…  but that was then and this is now…

To recap…  The dollar bugs fought back on Friday, after seeing the dollar get sold down on Thursday, after the Initial Jobless Claims printed an 885,000. In case you’ve missed the last two weeks of Claims numbers, they happen to be going in the wrong direction, which is upward…  There wasn’t much else to deal with and so the Thursday gains got chopped a bit on Friday…  Chuck points out that after all these years, the Iraqi dinar is NOT getting revalued upward, instead it just got devalued downward! And of course Chuck opines on the Covid Relief Package… 

For What It’s Worth….  You know, I’ve heard some real dumb ideas come from politicians and economists over the years, but the Universal Basic Income idea is really stupid!   So, I just wanted to make certain that you knew I didn’t endorse this guy’s thought, but also thought that it was good to see who’s making these calls as if they went to Jupiter to get more stupider!  The link to the article is here: Former Goldman CFO Calls For Universal Basic Income “To Stave Off Revolution” | ZeroHedge

Or, here’s your snippet: “In an interview with The Business of Business, host Gregory Ugwi asked Chavez if he agrees with Rep. Alexandria Ocasio-Cortez (D-NY), who says “there should be no billionaires in the US as long as there are poor families,” adding that venture capitalist Paul Graham says that income inequality is a “natural part of capitalism, and a sign that the process is working.”

Chavez, a Democrat donor (most recently Pete Buttigieg’s presidential bid), agreed that the income gap is a consequence of capitalism, but said “at the same time, it isn’t an inevitable feature of capitalism that the inequality be as extreme as it’s getting. There have been long periods in American history where there was always inequality – but it wasn’t this kind of inequality.”

He also isn’t a fan of AOC, saying “I am not in AOC’s camp – at all. I didn’t vote for her, I wouldn’t vote for her. I hear her, and she’s just not saying anything that makes any sense to me.”

“At the same time, I’m a big proponent of a universal basic income.

My personal view is that if you’re just being pragmatic and looking at inequality – and not thinking about some abstract concept of justice – you don’t want the inequality to be so extreme that it leads to revolution. So you ought to be prepared to pay to decrease that probability.

This is what I say to, you know, friends who you might call ‘oligarchs,’ right? Why it would make sense for everybody to have some baseline income and why we should all pay for it.”

Chuck Again…  What a dolt… And he ran a business at Goldman Sachs?  Give me a Break!

Market Prices 12/21/20: American Style: A$ .7577, kiwi .7038, C$ .7762, euro 1.2172, sterling 1.3290, Swiss $1.1268, European Style: rand 14.8282, krone 8.7495, SEK 8.3182,  forint 296.38,  zloty 3.7087,   koruna 21.5802, RUB 73.40, yen 103.56, sing 1.3376, HKD 7.7528, INR 73.96, China 6.5360, peso 20.39, BRL 5.1010,  Dollar Index 90.63,  Oil $47.28,  10-year .90%, Silver $26.20, Platinum $993.00, Palladium $2,342.00, and Gold… $1,877.90

That’s it for today…  Well, our St. Louis U. Billikens are no longer unbeaten… They lost on the road in Minnesnowta, last night… UGH!  We had some sunny days this past weekend, but it really didn’t warm up as much as the bright sunshine would have you believe… But it was  “warmer” than normal this time of year, which is good because the cold is coming back this week… But no snow is forecast for Christmas. UGH! You know, I never missed a day of work because of weather, snow, ice, whatever. Even back in the day, long ago, when I used to take a bus downtown from 20 miles out! But I do have to say that now that I don’t HAVE to go anywhere when is snows, I like that much better! I sat down at the piano yesterday for the first time in ages, and I mean AGES!  The piano is need of a tuning, but I was still able to figure out the notes for a song I’ve been hearing a lot of lately… And after about 10-15 minutes, I walked away from the piano…  I still haven’t picked up my guitar in a couple of months! UGH!  Alex closed on his home on Thursday, and moved in on Friday… I went to his new place to see if there was something I could do to help, but they had it all under control!  So, Congrats Alex! The Searchers take us to the finish line today with their song: Love Potion No. 9…  That song always makes me happy to hear it…  I hope you have a Marvelous Monday, and please with all that’s going on, Be Good To Yourself!

Chuck Butler

 

December 17, 2020

* Currencies, led by the euro, on pushing higher

* The U.S. names Switzerland a currency manipulator? 

Good Day… And a Tub Thumpin’ Thursday to you!  What a day yesterday… Congress is closer to a stimulus deal, The dollar weakened, Gold & Silver had good days, and Chuck received a Christmas Card from a longtime friend, Michael Checkin! I was pleasantly surprised upon opening the card to see who it was from…  I also got one from Tim and Nicole Smith, with their baby boy!  It’s that time of year again when we reconnect with long lost friends… I reconnected with one yesterday, and what a treat it was catching up! Melvin and the Blue Notes greet me this morning with their song: If You Don’t Know Me By Now…  (I’m sure any younger readers would recall Simply red doing that song, but the original was my Melvin and the Blue Notes)! \

Well, I took all the suspense out of reading the Pfennig this morning by telling you upfront what I was going to talk about, but in case you didn’t catch it… The dollar continued to weaken yesterday… I lot of the movement didn’t come until later in the day, after the Cartel’s, I mean the Fed’s press conference, where Chairman Jerome Powell, told an audience that the Cartel, I mean the Fed will continue with Quantitative Easing/ QE4…. That sent the dollar down, and the currencies up…

The euro, which had given back a little bit of its gains in the early trading, recovered the lost ground, and even went higher closing the day t 1.2192… I say closing the day, but, in reality, you all know that the Asian markets start the day, hand it over to the European Markets, who then hand it over to the U.S. markets, and then back to Asia… That all happens except on Fridays… When the U.S. market closes on Friday afternoon, it doesn’t open again until Sunday night in Asia…   

Gold & Sliver also took the cue from the falling dollar and rallied going into their close, with Gold gaining 11.30 to close at $1,866.10, and Silver outperforming Gold again on a percentage basis, gained 86-cents, a major move for Silver, and closed at $25.41…   The dollar weakness is because, what currency traders hear when they read that a stimulus agreement is near… They hear “more currency printing, thus debasing the current supply of dollars”…  Never mind that it might be needed by the masses, they deal with reality for the dollar…

It was surprising yesterday that Bonds didn’t budge after the November Retail Sales number printed… Boy was I glad that a deep sixed the BHI this month and went with what I’ve been telling you was going to happen to Nov. prints… Nov. Retail Sales were negative -1.1%… Which was far worse than the so-called experts had forecast (-.4%) …  And this print sure does bode unkindly to the Christmas Shopping Season, and that shopping season does get started in November! 

Retail Sales for 2020, are forecast to be down 10.5%, which is equal to $4.894 Trillion, and hadn’t been this low since 2016…  Of course the lockdowns are negatively affecting Retail Sales, but… only to a degree, for as the Amazon Prime driver that comes to my house every day with a package or two or three, knows, most shopping is being done online…

You know I miss shopping for presents… At least when I did that, I had the present in my bag and didn’t have to wonder when it was going to be delivered! I’m still waiting on two deliveries that I was told when I bought them that they would be here in time…  

OK, so the overnight markets all hell has broken loose! The dollar is on the chopping block! The Dollar Index has fallen to 89.86, the euro is pushing higher in the 1.22 handle, Gold is up $14, and the rest of the currencies are following the lead of the euro… Apparently, the Asian markets participants didn’t like the Cartel, I mean Fed’s song and dance yesterday!  But this move has the markings of what I’m going to be talking about with regards to the weak dollar trend, in a minute… 

The price of Oil rallied in the last 24 hours and is trading with a $48 handle this morning… See that? The Vaccine get approved, and shipped out, and medical people are getting shot up, and Oil begins to perk up… Just like I said it would, but if you want to see the price of Oil go back to $45 or lower, then you’ll have to call your congressman and tell him no stimulus please!  Yeah, like that’s going to happen!

The new weak dollar trend that I talked about last month beginning, is really becoming something that I’ve seen before… When just about every day that I arrived at my desk at the old EverBank World Markets, and turned on my Bloomberg, I would see that the euro had gained again…  We’re not exactly there just yet, but getting there… Remember when you were a kid and played a game where you hid something and other kids would have to find it, and you would say “getting hotter”, “your burning up”, when they were close to the object?  Or say, you’re “getting cold, then colder, then you’re ice cold” when moving away from the object?   Well, I do believe we’re getting warmer to those days when the dollar is sold daily..

Regarding Gold… The good folks at GATA sent me a note yesterday that started like this: “Gold and silver in the form of coins and bars are experiencing an enormous surge in demand at German precious metals dealers.”  Now I would put that down as good news for Gold & Silver…

Let me remind you that a weak dollar is a loss of buying power for dollar holders, which happens to be all of us! I’ve always viewed the loss of buying power like a tax, that you certainly didn’t vote to have charged to you! 

So, have you heard the news that Lola, aka Goldman Sachs, bought the Perth Mint’s Gold ETF business?  This all sounds very strange to me folks… Lola bought the ETF biz. And is having the physical Gold shipped to London… And Lola’s new Gold ETF won’tt have the convertibility that the Perth Mint had… The Perth Mint was only place you could convert your GOLD ETF into physical Gold, but that’s gone, and Goldman won’t allow that… . Makes you wonder why, doesn’t it?

I don’t know this to be a fact or anything, but I would think that Lola will lease out the Gold, and therefore couldn’t chance a run on convertibility of the ETF…  I would also think that the regulators would have a problem with that, but… As we’ve seen with metals regulators, they aren’t worth a hill of beans when it comes to regulating these Bullion dealers…

I’m sure no one at Lola reads this letter, so they won’t get mad at me for telling stories out of school on them… At least I would think  that to be the case!  And the other thing that the new Goldman Gold ETF won’t have and that is the ETF’s unique guarantee from the government of the State of Western Australia.  But them Lola supplies most people to Gov’t posts, so maybe they’ll work out a deal…

I was reading the 5 Minute Forecast on Tuesday, and read where the new guy at Agora, was touting Bitcoin, and talking about how it’s better than Gold…  Well, I decided to let that go, because that’s just his opinion, and opinions are like… you know the rest…   I went back to the 5 yesterday to see what readers had to say, about that claim, and poor Dave Gonigam, the editor of the 5, was inundated with replies telling his new colleague how wrong he was, and so on… So, it was then that I decided to cheer up Dave’s day, and I sent him the link to that YOUTUBE that I had put in the Pfennig a week or so ago… Missed it? Ok, here it is: bitcoin billionaire – YouTube

And wouldn’t you know it I received a note from a dear reader yesterday with news about a possible solar flare! I quickly went to the source, and the guy had concluded that there may be as much as a 12% chance of such an event occurring. But not saying when!  But did you know that the last Solar Flare to hit earth hit near Quebec and put out power there for days?   And there have been 7 Solar Flares hit Earth since first recorded in the 1800’s…  

Ok, back to regular programming…  The Big Piece of data today from the Data Cupboard is the Weekly Initial Jobless Claims, which last week showed that the week following Thanksgiving saw 818,000 claims flied…  Recall that there were two less day to fil the week of Thanksgiving, so there were in effect 2 extra days in last week’s report. So, one would think that this week’s report will be less than 818,000, butt… what happens if the number of claims is great than last week’s 818,000?  I would think that the dollar would get hit, and Gold & Silver would potentially have good days…

There are some other prints today, but none that get me all lathered up…  Including one of those regional manufacturing indexes, that I am boycotting, reporting on, since they don’t ever feed into the National ISM numbers… So, why report them? 

To recap… Congress is apparently close to a stimulus deal and that news sent the dollar to the wood shed for the day, the currencies, Gold, Silver and Oil all rallied on the day…  Chuck talks about previous weak dollar trends and how the dollar traded inside those trends, and how we’re not quite there yet… And then he discusses the Lola purchase of the Perth Mint’s Gold ETF Biz….  And he touches on Solar Flares, just for the fun of it… for his Bitcoin buddies!

Oh, and before we head to the Big Finish… get ahold of this… The U.S. has named Switzerland a “currency manipulator”….  Now that may be true, but isn’t this a case of the pot calling the kettle black?   

For What It’s Worth…  Ok, since I had said yesterday that didn’t expect any market moving comments from Cartel, I mean Fed Chairman Powell, and then we went out to prove me wrong, I thought I would give you an article that explains what he said, and it came from our local paper! The St. Louis Post Dispatch… and it cvan be found here: Fed vows to buy bonds until it sees ‘substantial progress’ in economic recovery | Local Business | stltoday.com

Or, here’s your snippet: “The Federal Reserve on Wednesday promised to keep funneling cash into financial markets further into the future to fight the recession, even as policymakers’ outlook for next year improved following initial rollout of a coronavirus vaccine.

Repeating a pledge to keep its benchmark overnight interest rate near zero until an economic recovery is complete, the U.S. central bank said it would also now tie its program of monthly government bond purchases to that same goal.

“Together, these measures will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete,” Fed Chair Jerome Powell said in a news conference after the end of the central bank’s latest policy meeting.

The bond purchases would continue “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals,” the Fed’s rate-setting committee said in its unanimous policy statement.

It was the more incremental step of the options the Fed was weighing, taken as policymakers boosted their outlook for U.S. economic growth next year to 4.2% from 4% at the median, and lowered the expected year-end unemployment rate to 5% from 5.5%.

With the economic landscape in 2021 brightening, the Fed did not change the type or pace of assets being purchased, a step many analysts had expected as a way for it to provide more immediate help to the economy in the months that it will take for the impact of vaccines to be felt.”

Chuck again… 4.2% next year, when we haven’t even booked a 3% gain since 1985!!!!!!  What’s Powell been smoking? And no thank you I don’t want some!  I like that he said, “we’ll keep funneling cash into “financial markets” into the future…  He didn’t specify what asset classes he included in his term “financial markets”…  So… take that to mean, Treasuries, Corp and Mortgage bonds, and ETF’s, gotta keep that stock market going strong Jerome… But while you’re doing that Jerome, could you find in the Fed’s mission statement where it says you are the stock markets’ buyer of last resort?

Market Prices 12/17/20: American Style: A$ .7629, kiwi .7167, C$ .7871, euro 1.2246, sterling 1.3588, Swiss $1.1318, European Style: rand 14.6868, krone 8.5800, SEK 8.2760,  forint 290.01,  zloty 3.6250,   koruna 21.3757, RUB 73.38, yen 103.02, sing 1.3249, HKD 7.7525, INR 73.52, China 6.5325, peso 19.79, BRL 5.0921,  Dollar Index 89.86,  Oil $48.07,  10-year .92%, Silver $25.91, Platinum $1,058.00, Palladium $2,358.00, and Gold… $1,880.30

That’s it for today and tomorrow… I know it wasn’t a popular decision that I made last year about me not writing on Friday’s any longer, but it has been a God send to me! Like Manna from Heaven, as I roll over on Friday mornings and realize that I can go back to sleep!  So, my Missouri Tigers football team will end their season on Saturday in Starkville Miss. VS Miss. St.  It would be much nicer to end the year at 6-4, and not 5-5, although they were only forecast to win 2 this year!  The reports yesterday of the high school seniors who have signed to play at Mizzou, was very impressive…  I used to always complain about kids in the state that went to different schools other than their state school… I would have given my first born to be able to play football at Mizzou! But, the new coach Eli Drinkwitz, seems to have the message that young men want to hear! So, bully for Eli! Or Coach Drink!   I’ll be here to write Monday through Wednesday next week, and then my winter vacation begins… 12/21 though12/30, and back on 12/31… I might tweet something that comes up that’s important to know, but I doubt it….  Billy Joe Royal takes up to the finish line today with his song: I Knew You When…  “you were lonely…. A girl all alone without love”…  The Human League did a song similar to this one in the 80’s called: “don’t you want me baby”…    And with that, I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow! And please Be Good To Yourself!

Chuck Butler

 

December 16, 2020

* Currencies drift on Tuesday, but rally overnight

* Dollar weakness leads to rallies for Gold & Silver… 

Good day…  And a Manfred the Wonder Dog Wednesday to you! BRRR… it’s cold outside! I can’t wait to get down to S. Florida for the winter. I told Kathy last night that it appeared we could be spending a longer time in Florida this winter, as Major League Baseball is considering starting Spring Training games in April. They want all players, and team personnel to have been vaccinated before showing up to Florida or Arizona. And apparently they don’t think that can happen between now and the middle of February, when pitchers and catchers normally kick off spring training.  Our St. Louis University Billikens Basketball team played last night, and beat Indiana St. handily….  I’m thinking great things about both the basketball teams I follow, SLU and Mizzou, for this year. They both are upper-class laden teams, which I think is important.. (Not to Kentucky, but everyone else!)  The late Great Dan Fogelberg greets me this morning with his song: Lessons Learned…  “Lessons learned are like bridges burned, you only need to cross them but once”… 

Alright, alright, I was one day ahead of what’s going on in the U.S. Data Cupboard yesterday! What a dolt! So.. to straighten this all out…. YESTERDAY, Industrial Production printed for November, and saw a .4% gain, down from 1.1% in Rocktober… And Retail Sales won’t print until today!  UGH! I can’t believe I did that! No, wait… I can believe I did that, because, I’m a dolt! So, sorry for all that being wrong and off a day yesterday… I can’t promise I’ll never do that again, because, well… When you’re a dolt, you can’t ever be sure!

The currencies didn’t move much yesterday and they just sort of drifted all day long… The Dollar Index, which yesterday morning traded at 90.56, ended the day at 90.50… So… you can see right there that there was little movement in the currencies on Tuesday. Gold & Silver, however, were a different story! Gold rose $26.60 on Tuesday to close at $1,854.80, and Silver rose 63-cents to $24.55…  There was news yesterday that a new stimulus package was being discussed by the parties involved. And that means going deeper into debt, more currency printing, and… something that’s called collateral damage, in that, this would be the second stimulus, and that would start the clock on the 3^rd stimulus, because once you opened Pandora’s Box of giving people money, they’ll always want more, and more, and more… And when you cut them off and make them go cold Turkey on cash giveaways, they take to the streets…   I’m just saying…

I love it when long time fiend, and publishing guru, Bill Bonner talks about the currency printing as “fake money”…  Because that’s what it is!  It’s created not from hard earned wages, or wealth accumulation, it’s printed out of thin air…  It’s Fake Money”!

OK… in the overnight markets… it has been a different story, as the dollar has been getting sold like funnel cakes at a State Fair! The Dollar Index this morning has fallen to 90.22, the euro is within spittin’ distance of 1.22, and Gold is following up yesterday’s large upward move with a positive start to the day…   

One has to wonder what’s behind the last two day’s move in Silver, which has outperformed Gold on a percentage basis… Silver this morning is up 62-cents, which means it is up $1.25 in the last two days. Remember what I’ve told you previously, that in the last bull-commodity market that Silver outperformed Gold in 7 of those 10 years…  On a percentage basis, for we know that the current Gold’s price is much larger than Silver’s price… 

That little thing that Kitco has on their site that allows you to see the price action in the metals, tells me that most of Gold & Silver’s moves overnight have been courtesy of the weakness in the dollar…  So, as I’ve said before you can look at these increases two ways… You can say Gold gained VS the dollar, or you can say that the dollar lost VS Gold…   

I keep reading more and more articles about different countries announcing their plans for implementation of a digital currency… Singapore, was the latest to do so…  The U.S. has announced any such plans, yet, that is, but they did say that they were working on developing a digital currency… I would imagine that takes in far more obstacles than in Singapore…  Remember, I first told you montths ago about how the U.S. would introduce a digital currency, and you would wake up one Monday morning, turn on your computer, log in to your bank account, and find that it no longer reflected dollars held, replaced by digits…   This isn’t going to happen overnight, next week, next month or maybe even next year, it all, to me that is, depends on when the U.S. has to default on any of their debt, and the dollar begins to fall like a rock… 

It’s been a month of Sundays since we last saw the S. African rand below 15…  But that’s where we find it this morning, and to me this is just another sign that the new weak dollar trend is beginning… For when a currency like the rand begins to rally, you know that dollar selling is the cause of that rally…  I’m not touting the rand to own…  With all the corruption in that country, I’ve always said that “I wouldn’t touch rand with YOUR ten foot pole!”  

The price of Oil rose about 50-cents yesterday, as the news of another stimulus got Oil traders feeling giddy about the return of demand for their product.  The Petrol Currencies have been noticing this rise from $45 a week ago, and have been adding to their gains VS the dollar…  The Russian ruble, Norwegian krone, Brazilian real, Canadian dollar/ loonie, and even the Mexican peso, and British pound sterling, have all been rising VS the dollar in recent weeks… but especially in the last 10 days…

Remember a month or so ago, when I wrote about how a dear reader sent me a note and asked me what was up with the Russian Ruble, that the price of Oil had been rising but the ruble wasn’t?  And I provided a quote from the finance Minister, who said, “ the Ruble is weak right now, but it will come back”… How did he know?  The ruble which on 11/2/2020 (just 6 weeks ago), was 80.57, and this morning it is 73.      …..  Another sign that that a weak dollar trend is in place… 

I had a dear reader send me a note a couple days ago, and ask me how the C$ had gone from 74-cents to 78-cents that day? I went back and found that the C$ had been moving steady Eddie, and very stealthily upward for about two weeks, and had been trading with a 78-cent handle for about 5 days… But you can imagine some readers that don’t read the letter very often and tune in every now and then going to the currency roundup and seeing currency prices that they haven’t seen in years. And the last time they saw the currencies at these levels, they were coming down… Now they’re going upward!

Of course, it’s the opposite for Gold & Silver, these two have seen engineered takedown after engineered takedown to bring Gold from $2,000 down to where it’s trading this morning.  Those every now and then readers would be wondering what the hell happened to Gold? Shouldn’t it be on the rally tracks along with the currencies VS the dollar?  Well, sometimes yes, but this time no… You see, what’s going on with Gold is two things…  1. It’s currently a “risk off” scenario in the markets, and 2. The darn price manipulators, who take shots at Gold whenever there’s a day when there’s weakness and they pile on to make the day worse…

But… Gold is still the best performing asset class since 2000….  I’m just saying…

Today is a Cartel, I mean a Fed Meeting…  Investors are looking for the Fed Heads to signal even more accommodating fiscal policies….  Any MORE? How could they be even more accommodating than they are now?  Well, I guess they could go negative with rates, but I’m hoping that they take their cue from Sweden, who went negative a couple of years ago, and then decided that it wasn’t worth it, and the Swedes went back to ZIRP (zero interest rate policy)…  

Cartel, I mean Fed, Chairman Jerome Powell, will hold a press conference after the meeting, but don’t expect anything earth moving from him… He’s just managing to keep the apple cart upright right now…

To recap…  The currencies drifted all day yesterday, but Gold & Silver had great days! Gold rose $26 on the day, but in the overnight markets the dollar is getting sold like funnel cakes at a State Fair, as more discussions of another stimulus package is back on the negotiating table, even with the rollout of the virus vaccine…   more “fake Money” to be sent out…  You see, Deficits DO MATTTER! For if we as a country had cut deficit spending years ago, we might be dealing from a position of surplus or strength….  But NOOOOOOO instead we just keep adding to the National Debt, which when I checked the Debt Clock this morning it was $27.4 Trillion in the red…    UGH!  

For What It’s Worth…  Well.. I searched yesterday for a FWIW worthy article that I could use today, and then I came across this article on the Reuters site, and it’s about how small U.S. Corporations see 2021 working out for them, and it can be found here: Majority of small U.S. businesses see worst coronavirus impact still ahead -poll | Reuters

Or, here’s your snippet: “Most small business owners in the United States believe the worst of the coronavirus pandemic is still ahead of them, with half saying their operations would permanently close within a year unless the business environment improves, the U.S. Chamber of Commerce said on Tuesday.

A new U.S. Chamber-MetLife poll of small businesses taken from Oct. 30-Nov. 10 showed that 74% of the owners said they need further government assistance to weather the pandemic. That percentage rises to 81% for minority-owned businesses.

The quarterly poll found that the 62% of small business owners fear that the worst is still to come with COVID-19’s economic impact. Only 40% said they believe their small businesses can operate indefinitely during the current business environment.

“We must ensure small businesses across the country receive the assistance they need from the federal government,” said Neil Bradley, the Chamber’s chief policy officer. “Not passing the bipartisan compromise for temporary and targeted relief risks the permanent loss of tens of thousands of small businesses, financial hardship for millions of Americans, and unnecessary delays in combating the pandemic.”

Bradley said the quarterly survey found that 14% of small businesses are currently planning to cut staff, up from 9% in July and September. Staff reduction plans are back up to the 13% level that the survey saw in April during the pandemic’s first peak, he said.”

Chuck again…  You know, I’ve tried my best to keep ordering food to be delivered throughout these lockdowns, but that’s just restaurants, what about the other businesses? This has been tough for them to say the least, and we need to take the extra step to buy things from them, instead of just going to Amazon… I’m just saying… 

Market Prices 12/16/20: American Style: A$ .7566, kiwi .7099, C$ .7844, euro 1.2189, sterling 1.3520, Swiss $1.1308, European Style: rand 14.8560, krone 8.6764, SEK 8.3458,  forint 291.45,  zloty 3.6325,   koruna 21.4684, RUB 73.54, yen 103.41, sing 1.3295, HKD 7.7518, INR 73.54, China 6.5440, peso 19.89,  BRL 5.1048,  Dollar Index 90.22,  Oil $47.61,  10-year .92%, Silver $25.17, Platinum $1,048.00, Palladium $2,376.00, and Gold… $1,860.60

That’s It for today…  I’m going to have to get my laptop checked out… Every time I hit the “t” key it gives me two t’s….  And I since I type so fast, (that’s a joke!)  I’m two or three words past the typo, and have to go back and correct it… What a pain! Well, I must have partied too much this past week, for I gained back 4lbs! UGH! Now I’ll have to work diligently to lose those 4lbs and more before Christmas! I won’t be able to resist all the goodies that are around at Christmas… I’ll try, but I’m a sucker for those goodies! And then I’ll get back on the wagon when I head to S. Florida…  My blood sugars are continuing to go downward, and I think in about a month, they should be back to normal…  Someone asked me how I was doing the other day, and I replied, “not too badly for someone who has taken chemo for 13.5 years!”  Yes, that’s how long this saga has gone on… And I thank the Good Lord all the time for allowing me to be around to watch my older kids become parents, my youngest get his doctorate degree, and grandkids… I have great friends that I love sharing time with… And it also has allowed me to be married for 44 years to my beautiful bride, that I’m not supposed to talk about here! (please don’t tell her I did so!)  OK… Van Morrison takes us to the finish line today with his song: Into The Mystic…  I love Van Morrison’s music through the years…  I hope you have a Manfred the Wonder Dog Wednesday, and Please Be Good To Yourself!

Chuck Butler

December 15, 2020 

* IP in the U.S. drops like a rock! 

* Gold gets sold on Monday, rallies back today! 

Good Day… And a Tom Terrific Tuesday to you… I was looking at the calendar yesterday trying to figure out when I will be taking my annual winter vacation. I believe I’ll start it on Dec. 22^nd, and return on Dec. 31^st..  I know, I know, I’m retired, there’s no such thing as “vaction” any longer… But, by now, you should have figured out that I’m BIG on Tradition… And I’ve always taken a winter vacation at Christmas, so I’ll keep calling it that for as long as I continue to write.  People are getting their virus vaccines already… I said yesterday, that I thought that the drug companies rushed the drug through testing. But I had read, and should have believed it, that the drug companies had already done the bulk of the leg work on this new drug, since Corona viruses have been around for some time now…  Oh, and then there’s this… in the Swine Flu of 1976, more people died from the vaccine than the flu, according to Twitter…  Hmm…..  I’m back to the Smooth Jazz Christmas station this morning, and this morning I’m listening to: Getting Ready, by David Benoit (it’s from a Charlie Brown movie!)

OK… we’ve already talked about two very important topics… my winter vacation, and how I’m not lining up for the vaccine, just now…  If my oncologist tells me that they have run tons of testing on people with cancer, and it’s OK, then I’ll offer an arm…  But only then!

The dollar rallied back a bit yesterday, as the currencies had reached some levels they hadn’t seen in years, and I’m sure it triggered some profit taking…  The Dollar Index, which yesterday morning was 90.50, ended the day at 90.70…. It was a day for the dollar, folks… Gold ended up losing $12.30 and Silver lost 8-cents on the day.  The price of Oil gave up the $47 handle, and the Aussie dollar (A$) gave back about ½-cent…  So… the dollar bugs have inched out from the wall board, and tested the markets, and they couldn’t have gotten this urge to test the markets, from the Data Cupboard…  Industrial Production saw a huge drop in November, as I said it would, so it wasn’t data that gave the dollar bugs any reason to test the markets…  

But maybe the dollar bugs were kicking their heels together and celebrating the electoral college’s announcement that they had confirmed a victory for Joe Biden…  Funny, thing, I don’t hear anyone  crying about the electoral college this year….   And that’s all I have to say about that!

The price action in Gold was something… Every time Gold began to rise it would be hit with a ton of short sells, and bring the price back down. Gold actually climbed to $1,841 (up $14) before finally giving in to the “sellers”, to close at $1,827.20…  

In the overnight markets… The dollar bugs have been ushered back behind their wall boards and we’re back to pushing the dollar down, with the currencies, metals and Oil…  Gold is up $18.80 this morning, and Silver is up 50-cents…  And the Dollar Index, which yesterday morning was 90.70, has weakened to 90.56 this morning…  So, forget about yesterday, that’s was water under the bridge… Today is going to be a good day for the asset classes that are anti-dollars! 

I had a dear reader ask me to say something about the Swiss franc… So here goes… The franc has gotten in line behind the euro, to take liberties against the dollar… Safe havens are out these days, and so that label on currencies like euros, francs and yen, aren’t involved with their respective rises VS the dollar…  As long as this is a real bonafide weak dollar trend that’s beginning, I believe we’ll continue to see the franc perform nicely… 

Oh, and one more thing regarding the currencies… I read yesterday that the investment flows into China are soaring once again, and that’s the reason the Chinese renminbi is seeing its price get pushed higher on a regular basis by the PBOC…  Something to think about! 

Well… what have we here?  This was taken from the folks at www.wallstreetonparade.com  And I’ll let them go first before I comment. Take it away Pam & Russ Martens! “Using the New York Fed’s own annual reports to obtain the data, we can report that the New York Fed’s Trading Desk has grown from $576 billion in holdings of domestic securities as of December 31, 2008 (at the peak of the last financial crisis) to $6.59 trillion as of December 9, 2020. And according to the New York Fed’s most recent financial statement, its Trading Desk’s domestic securities holdings have spiked by $15.9 billion in just the past week.”

Chuck again… So, let me see if I’ve got this right… The NY Fed, is supposed to be the regulatory arm of the Fed, but now they’ve got a trading desk, that trades with the Casino Banks the NY Fed is supposed to regulating?  Tell me that’s not true, Chuck! Please tell me that’s not true Chuck!  Well, I hate to spoil your ham and eggs, but it is true, and I believe that this is all going to end up in tears…  This arrangement can’t possibly work out to everyone’s satisfaction… Either the NY Fed goes all in on their trading desk, which it appears they have already, and forgets about regulation… Or.. .they bulk up their regulation and forget about trading…  Guess which one you think is going to be head and shoulders above the other one? 

Let me take you back to 2007/ 08….  The NY fed was supposed to regulating the Casino Banks back then too… And look what happened…   These Casino Banks need a new sheriff in town, one that kicks some rear and takes names later! I really don’t know why our elected representatives allow this stuff to go on. Either they are aware but feel they are helpless to do anything, or… they don’t understand what’s going on… Wanna bet, it’s the latter of the two?  

OK… I was going through Twitter yesterday and came across this post by Sven Heinrich. Check this out!

“M1 money supply has increased yet another $210B in the week between Nov 23 and Nov 30 on top of the $500B the week prior, that’s over $700B in 2 weeks.

M1 Money supply of the United States has increased by 64.5% since the beginning of 2020.”

Chuck again… Are you kidding me? And where’s all that money going? Not to me! Not one red cent! So, who does it go to? Well, if you would have guessed: Zombie Corps  you would have one piece of the puzzle… I you would have guessed: The Casino Banks, you would have another piece of the puzzle, and the list would go on.. But you see other than the first stimulus checks that were sent months ago, and then were used to buy stocks by a good number of recipients, There’s been little for the regular people, like you and me, the middle class, to scrape from the barrel…

The cartel, I mean the Fed is trying their darndest to get inflation rising, folks… They have over 400 number crunchers and they can’t figure out how to get inflation rising… The Money Supply used to be a given for a rising inflation… But no longer, because the bulk of the money doesn’t get spent the way it used to causing the velocity of money to rise, which IS the cause of inflation…  memo to the 400 number crunchers at the cartel, I mean the Fed…. “find a way to get money in the hands of spenders, and require them to spend it and not put it in their Robinhood account, to buy stocks.”

There’s got to be something of significance that you can talk about this morning Chuck that doesn’t involve you taking cheap shots at the Gov’t, the Treasury, or the Fed…    Wait! What? You want me to be nice to these people that have ruined the Goose that laid the golden eggs?  Give me a Break!

OK.. The U.S. Data Cupboard this morning will have Retail Sales for November, and I explained my dilemma to you yesterday, in that I just t don’t see how this data could be good, but the BHI tells me otherwise…  So, I’m going to go against my own BHI, because I’m thinking that it’s just my wife’s spending and not the norm…. We shall see… in just a few minutes…

Yesterday’s Data Cupboard offering had Industrial production which went from 1.1% in Rocktober, to just .2% in Nov.   Capacity Utilization surprised on the upside and improved to 73% from 72.8% previously… This data set CAPU is really weak considering where it used to be… This data hit an all-time high in 1973 of 89… and last touched an 80 number in 2008… 

And do you know why this has gone the way it has through the years? I do, I do, I do, call on me Mr. Kotter!  CEO’s of big businesses started making BIG BUCKS, and to ensure they continued receiving the BIG BUCKS , they began to take profits that used to go toward buying new equipment, buying new desks, or expanding their footprint, to buying their company stock…  And until we ever get back to the way it used to be, if ever that is, our economy will never be what it was…  

Of course the amount of debt is also responsible for the weakness in our economy, and this was before there was a plandemic!  We as a country had only averaged 2.1% GDP for the last 10 years…. So, there you go…   No CAPEX (Capital spending) and too much debt…  And now stupid Govs. Of states that lockdown their economies! 

To recap…  It appeared to be a profit taking day in the currencies, as the dollar bugs inched out of the Wall boards to test the markets…  Gold never found a bid all day, and ended up down $12.30… Oil lost its hold on the $47 handle, and nothing, absolutely nothing, say it again, rallied on Monday, but dollars…  The Data Cupboard wasn’t kind to the markets, and probably won’t be today either!

For What It’s Worth… well… we haven’t heard from James Rickards in some time, so I thought it would be good to hear from him again. In this article he blasts MMT… You know the “Magic Money Tree” or as Jimmy Rogers calls it “More Money Tree”… Whatever it is that we call it, it spells disaster for our economy going forward. This article can be found here: Good News and Bad News – The Daily Reckoning

Or, here’s your snippet: “MMT has three basic tenets. The first is to treat the Treasury and the Fed as a single entity with a single balance sheet. Legally the two institutions are completely separate, but MMT insists that government can operate as if it were. This means merging Treasury and Fed operations into a single engine for spending, borrowing and printing.

The second idea is that citizens must accept dollars (whether they like it or not) because you need dollars to pay taxes, and if you don’t pay taxes, you’ll go to jail. In effect, the dollar is supported by the barrel of a gun, to paraphrase Mao Zedong.

The third idea is that there is no practical limit to how much debt the U.S. can issue. The U.S. debt-to-GDP ratio today is about 130% (up from 106% last year). But, MMT cheerleaders point to Japan’s ratio, which is over 250%, as proof that the U.S. can borrow a lot more.

These ideas are all badly flawed. Japan is not a good test case because the Japanese buy their own debt (the U.S. relies on foreign investors), and the Japanese economy has barely grown for 30 years (try that in the U.S.).

You can operationally merge the Fed and Treasury, but once it becomes apparent to markets that you are monetizing all the new debt, confidence will erode, rates will climb and this pyramid scheme will collapse.”

Chuck again…  Longtime readers already know about how Japan finances their debt, as I’ve written about that for years now… Many times!  And like Rickards says, “do we want to be like Japan?”  I hardly think so, folks… 

Market Prices 12/15/20: American Style: A$ .7536, kiwi .7072, C$ .7847, euro 1.2160, sterling 1.3392, Swiss $1.1289, European Style: rand 14.9650, krone 8.7286, SEK 8.3778,  forint 292.59,  zloty 3.6578,  koruna 21.6744, RUB 73.29, yen 103.90, sing 1.3337, HKD 7.7521, INR 73.48, China 6.5438, peso 20.16, BRL 5.0784,  Dollar Index 90.56,  Oil $47.19,  10-year .90%, Silver $24.42, Platinum $1,028.00, Palladium $2,373.00, and Gold… $1,847.00

That’s it for today… Today is the day that my dad would always bring home the Christmas tree… I have a younger sister, Terri, and today is her birthday, and as a young girl she thought that the Christmas tree was her birthday present!  So.. Happy Birthday Terri!   There are only 4 Butler siblings left of the original 7…  Rachel brought me a picture for my wall board of pictures, of me holding Evie when she was just hours old…  I proudly pinned it up the next day! Man did I suffer some sticker shock when I went to check the price of those Tregar pellet smokers… I was going to buy one for a house warming gift for Alex, but decided to get him a gift card to put toward one when HE can afford to buy one!  I forget what I paid for my Big Green Egg smoker, but that was for me! HA! And I was working back then and had cash flowing in… not just out!  Well, Christmas is only 10 days away, have you gotten everything for everyone you wanted? I have… neener, neener, neener! HA!  I used to take a day during my Christmas vacation and go shopping alone…  but that was back when getting around wasn’t a chore for me, now I do it all online… just like the deep state wants me to!   Come to think of it I had better get to thinking about this year’s Christmas letter that a traditionally send out on Christmas Eve… Beegie Adair is playing on her piano, Rudolph the Red Nosed Reindeer as we head to the finish line today… I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler