Author: admin

July 13, 2020

*Currencies end the week on a strong note… 

* And Start the week on an even stronger note! 

Good Day… And a Marvelous Monday to you! What an absolute beauty of a day yesterday, here where I spend my summers and falls… The humidity dropped like a rock, and so did the temperature, and there was a nice pleasant breeze blowing all day! I was in heaven sitting outside…  Well, I hosted another driveway happy hour on Friday, and even Chris Gaffney stopped by to say hi!  I like these driveway happy hours better than the Zoom ones we did when it was still cold outside… Those seemed to be cold inside too!  We honor distancing standards, everyone brings their lawn chair, and a small cooler, and we always have a ton to talk about… We all seem to be on the same wavelength with our thoughts too! And so far no one has asked me a question about the economy, stocks, or Gold. I guess, by now, they all know better! HA!

The talk around town sure has shifted from a “stocks will rally forever”, to a “stocks won’t rally the rest of this year!”  Longtime readers know that I don’t spend much time talking about stocks, not because I don’t understand them, I held three licenses in the stock business…. But because for years, I was associated with a bank, and because I held those licenses I was unable to talk about specific stocks, so I thought it was sufficient to just say, stuff like the stocks are up are down… Everyone can get news on stocks… I prefer to bring you news that you can’t get that easily, that will have something to do with investments.

The Currencies late last week inched higher going into the weekend, with the euro rising back above 1.13, and all others falling in line behind the euro.  Gold didn’t end the week as strong as it started the week… A brief pause for the cause, which the cause would be all the procrastinating buyers of Gold that have finally gotten the message…  International yields are negative, and here in the U.S. when you factor in inflation they too, are negative…   Gold doesn’t pay a yield, but you do have to pay to have it stored, unless you have safe in your house! But with yields negative and you having to pay the Gov from which your bond was issued from, to hold the bond, those storage fees make holding Gold an even draw….  And remember those stocks we talked about above and how they’re rallying? Well, as I told you last week, since 1999 the Dow has lost 66% VS Gold… 

So, all you stock jockeys out there, why don’t you tell your clients that one? I know why… Because your bosses won’t let you! And because your brokerage outfit doesn’t have Gold offerings! And that’s why I keep telling you dear reader to call Tim Smith at 1-800-926-4922 and listen to what he has to offer you! Because as I read this weekend on Twitter, that “one day you’re going to wake up and find that Gold has gapped up $200 and then the next day it does the same thing, and at that point, you can call a Gold dealer, but he won’t have any Gold to sell you, and you’ll have missed out …. 

And don’t look now, but Silver is on a run to higher ground… finally!  I know I’ve quoted this info previously, but here I go again… in the last bull market for Gold & Silver, it was Silver that outperformed Gold, on a percentage move basis, 7 of the 10 years…  I’ve got more info on what Silver is doing in the FWIW section today, so don’t leave home without reading that! 

Ok, I’ve talked about this state representative from West Virginia, before, but in case you missed class that day let me introduce you to someone who’s on your side with regards to Gold & Silver… Surreptitious intervention in the gold market by the U.S. government is the target of legislation introduced in the House of Representatives by Rep. Alex X. Mooney, R-West Virginia.

Mr. Mooney has introduced a bill HR 2559, Mooney also has introduced legislation to protect Americans against the Federal Reserve’s steady devaluation of the dollar — legislation to forbid federal taxation on the sale of gold, silver, platinum, and palladium coins.

In a letter to colleagues seeking support for his Monetary Metals Tax Removal Act, H.R. 1089, Mooney writes: “The Internal Revenue Service does not let taxpayers deduct the staggering capital losses they suffer when holding Federal Reserve Notes over time, so it is unfair to assess a capital gains tax when citizens hold gold and silver to protect them from the Fed’s policy of currency devaluation.”

Chuck again…  Man, I sure wish that guy was from my state, so I could be proud of my state representative!

I don’t want to be the bearer of bad news, but come on, you’ve go to admit that things just aren’t as rosy as they used to be, and even though, as a country we would tightened out belts, and worked through a bad stretch, without the Fed’s money printing and checks from the Gov’t. We didn’t need the Gov’t interference this time, we didn’t need it previously, and we won’t ever need it… As President Reagan said, “the scariest words you’ll hear, is: I’m from the Government and I’m here to help”…

I don’t see how the financial system that we all know and has been in place since 1971, is going to be able to withstand this siege on it by the Feds and Treasury…  QE1, QE2, QE3, Operation Twist, zero interest rates, and now more QE, which has been going on since last September, and all the while the country’s debt continues to reach new record highs about every 6 months….  You will recall me telling you about a month or so ago, that one day all this debt in the world, will have to be written down, and off, and it’s then that the financial system that we know, will come crumbling down….  John Mellencamp has a song where he sings: “when the walls, come crumblin’, come crumbling down” It’ll be something like that!

And I say that just looking at history…. There are cycles for everything folks… Business, economies, financial systems, etc. And they especially cycle faster when you don’t take care of what’s in the cycle, and we haven’t taken good care of our economy or financial system for a long time now….

While we’re on this subject, do you wanna know what I believe was the beginning of the end for our economy and financial system?  Remember back in 1994, when then Fed Chairman Big Al Greenspan said that the stock market was brimming with “irrational Exuberance”?  But then did nothing to stop this “irrational exuberance”….  It was his job to administer Fed Margin rates…. And I wrote back in 1994, that I didn’t understand why he didn’t just increase the Fed Margin rate, to calm down the stock market?   Look, I’m so old that when I first started in a margin dept, the Fed Margin rate was 65%, but then was lowered to 50% in the early 70’s… The first test I took the questions centered around the 65% margin rate, not 50%…   

So, that’s when the Fed became fans of the stock market, thinking that as long as the stock market was going strong, the masses would think the economy was too….  And that was not true then, or now!

My friends always ask me, how do you know all this history?  I simply say, “Because I lived it!”

OK, enough of this, that and the other thing!  Let’s talk about something else….  Well, last Thursday, the Weekly Jobless Claims were printed for the previous week, and they showed that 1.31 Million filed for Unemployment benefits in last week’s holiday shortened week. So, given another day, and the total would have been 1.40 as expected.  

The continuing claims and total number of people receiving benefits is now nearly 33 Million…  That’s 23% of the workforce folks….   So, wouldn’t that be the Unemployment Rate? And not the bag of lies that BLS tries to give us each month, like last month when they said that the Unemployment Rate was 11%? 

I know the BLS is just doing their job and trying to make everyone think that things aren’t as bad as they really are….  The U.S. has seen over 1,200 bankruptcy filings in just the last two months, and the list keeps growing day after day, another big name corporation files for bankruptcy…  But don’t worry about those last two things I just pointed out, everything is going to be just peaches and cream…. NOT!

Well, it’s not all gloom and doom this morning…  I read this weekend that the Treasury Dept is looking into a new type of Treasury that’s Yield is equal to GDP… So if GDP rises so does your yield on this bond…  Now, if things are going as bad as I believe them to be going, then you would be paying the Gov’t 8% for the 8% drop in GDP in the 2^nd QTR, that’s yet to be printed by the way, so I’m just using my usual logic to come up with that figure…. But you’ve got to figure that GDP won’t be negative forever, and it will rise again to average 2.1% like it has for the last 10 years!    So, not exactly great news, but not gloom and doom news, with a little satire on the side…

In my daily skip to my Lou through Twitter yesterday, I came across this from David Rosenberg on his Twitter feed: “ I saw a promoter on bubblevision saying we’re definitely in a new bull market. Industrial conglomerates: -23%. Autos: -31%. Advertising: -34%. Consumer finance: -37%. Regional banks: -37%. Energy: -36%. Casinos/gaming: -43%. Hotels: -52%. Airlines: -55%. Sure thing.” – David Rosenberg

The U.S. Data Cupboard this week builds to a crescendo this week, starting out very lacking, and by Wednesday and Thursday will be producing real economic data, like Industrial production, Capacity Utilization, and Retail Sales… But remember with all data prints these days, they have been massaged and cooked to look like what the Gov’t wants us to believe they are… 

To recap… The currencies finished last week on an up note, and have continued to rally in the overnight markets last night VS the dollar. Gold didn’t finish the week as strong as it started the week, but it’s back on the rally tracks this morning, no worries, and Silver is kicking tail and taking names later…. Lots of other things in today’s letter, better make sure you go back and reread it! HA! 

For What it’s Worth….  Well, I mentioned Silver above, but this article really paints a better picture of what’s coming for Silver than I ever could…  I want to thank Ed Steer at www.edsteergoldsilver.com for highlighting this in his Saturday letter….  If you don’t subscribe to Ed’s letter, you should, there’s nobody that works as diligently as Ed does to bring you information about the precious metals! So, anyway…. Here’s the link to this article about Silver: https://www.silverinstitute.org/silver-investment-demand-10-percent-first-half-2020/

Or, here’s your snippet: “Silver’s role as a valued investment was broadly on display during the first half of 2020, as investors actively accumulated silver in the first six months of the year, leading to a 10 percent gain in investment demand. Paving the way was remarkably strong growth in silver-backed exchange-traded products (ETPs), which have posted successive all-time highs this year, together with solid silver coin and bar investment.

The silver price averaged US$16.65 through to the end of June. Having fallen sharply in mid-March, the silver price has since recovered strongly, rising by 56 percent to reach US$17.84 at end-June; it has since broken through the US$18 barrier. The gold:silver ratio – the quantity of silver ounces needed to buy an ounce of gold – fell since its multi-decade high of 127 in March, and at end-June stood at 97.8, which is still very high by historical standards, and may signal that silver is undervalued relative to gold.

Silver Investment

Retail and institutional inflows into silver ETPs have been impressive this year. As of June 30, global holdings reached a fresh all-time high of 925 million ounces (Moz), which is roughly 14 months of mine supply. The ETP growth in the first half 2020 of 196 Moz comfortably surpassed the highest annual inflow of 149 Moz set in 2009. North American listed funds accounted for some 90% of the ETP inflows since March.

Retail bullion coin sales jumped by an estimated 60 percent year-on-year. Silver bar and coin sales surged in response to a deteriorating economic outlook linked to the global COVID-19 pandemic, leading to some supply-chain disruptions. This saw dealer stocks for several silver investment products quickly depleted, resulting in extended delivery lead times and higher premiums.”

Chuck again….  Well, if you didn’t get the message above, in Chuck parlance… “Silver is on a run and going higher!”

Market Prices  7/13/20: American Style: A$.6975, kiwi .6676, C$ .7373, euro 1.1333, sterling 1.2600, Swiss $1.0614, European Style: rand 16.7365, krone 9.3986, SEK 9.1538, forint 312.01,   zloty 3.9478,    koruna 23.5023, RUB 70.69, yen 107.10, sing 1.3891, HKD 7.7505, INR 74.97, China 7.0003, peso 22.47, BRL 5.3217,   Dollar Index 96.50,  Oil $39.88,   10-year .64%, Silver $19.10, Platinum $840.00, Palladium $1,936.00, and Gold… $1,810.00

That’s it for today… I want to wish all my former colleagues good luck with their decisions due today…  Well, starting tomorrow night, we’ll finally get to see some baseball, albeit  intrasquad games, but at least it will like watching spring training on the back fields…  The return of Baseball in just 11 days away for Cardinals fans, and 10 days away for Baseball fans…  I can’t wait to see the young kids around the league, like Fernando Tatis Jr., Vlad Guerrero Jr., Pete Alonso, Tommy Edman, and more get to show that they are stars too…  Heartsfield takes us to the finish line today with their song: Racin’ The Sun…  And with that, I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler 

 

July 8, 2020

* Currencies didn’t rally or get sold later yesterday… 

* You do know that the Bill of Rights are not just recommendations? 

Good day… And a Wonderful Wednesday to you! We’re not even into the dog days of summer, and I can already feel the slowdown in energy each day… I had a nurse ask me last week how my energy level was, if I got out and did stuff… I told her, that 45 minutes per leg each day on the leg pumps, and 3 hours a day with my feet at hip level, and a cat nap, doesn’t leave me a lot of time to “get out and do stuff”… She laughed, and said, “ I guess you’re right”! I loved it! I was told I was right! Do you know how many times even here at home that I’m told I’m wrong? That made my day, along with the fact that I didn’t have to return to the wound center! Just a friendly Spiderman reminder that there will be no Pfennig tomorrow. I get to go see my oncologist… The Guess Who greet me this morning with their rock classic song: These Eyes…. Watched you bring my world to an end… Very appropriate wording, eh?

Well, the currencies didn’t rally during the day like they have been lately, and they didn’t get sold during the overnight session either, so the trend has come to an end…. I didn’t like the trend any way…. So, the dollar bugs fought back yesterday, and gained some ground for the dollar…. But that sure wasn’t what happened with Gold…. The dollar lost $10 to Gold, as it closed at $1,795… I don’t really consider myself a Gold Bug, but I do believe that if you do NOT own Gold at this point, you had better figure out a way to buy some, because from $1,800 I believe Gold will leap from to $2,000, in the blink of an eye…. I could be wrong, but if inflation is in our future,( more on that in a couple of minutes) with debt up to the country’s eyeballs and the economy in shambles, I just don’t see how Gold won’t move upward from here…

And in the early morning trading today, Gold has moved past $1,800, so strap yourself in, and keep your arms and legs inside at all times, this ride is going to go from zero to 60 in a flash…. Here we go! 

Did you know that since 1999, the Dow is down 66% VS Gold? I read that yesterday, and about fell out of my chair! Well, I don’t see Gold stopped there either! So, either you need to buy your first ounces of Gold, or you need to buy more for your portfolio I would suggest that you get off your collective duffs and get to it!

In my daily perusal of Twitter, I came across a couple of Tweets that caught my attention, and should catch yours too, I believe…. First up is Danielle Di Martino Booth and her Twitter feed said, “Via DB’s Reid “This is only 10th time that YoY money supply growth has gone above 20% in the US. On all previous occasions nominal GDP soon moved comfortably into double digits, mostly through inflation” Are we, in theory & grounded in historic precedent, prepared for inflation?”

And then this from Sven Heinrich who had this to say on his Twitter feed: “Screw sanitized Fed minutes. Fed meetings should be on public live feed. The public has a right to know as this privately owned organization controls so much of their economic lives.”

And that ends today’s walk through Twitter….

I do want to touch on something that was in Danielle Di Martino’s Tweet…. That Money Supply is over 20%, and that the only times in the past that it has reached 20%, we had had soaring inflation…. Look, as opposed to the Paul Volcker years, when he crushed inflation, these Fed Heads want and need inflation badly… And the thing that gets me is that they actually think that they can stop inflation at 2%…. I’ll bet you a shiny quarter that they can’t…. I’m just saying…

You may ask, “why does the Fed need inflation?” Well, obviously you haven’t been in class in the past when I explained this, so here goes…. Inflation brings about higher GDP…. It also helps to pay off debts, which is what their main goal is all about…. There’s some research out there that counters the age old rhetoric of low inflation and low interest rates, spur consumer spending… Their research shows that when inflation is rising, consumers get out their check books and plastic cards and get to spending!

Another thing I want to talk about today is debt…. Yes, I’ve been the boy crying wolf about debt for over 20 years, but I think given what we have today, with no economic growth, that the chickens have come home to roost on that subject….

And then there’s also this…. Recall how I’ve blasted the Fed over and over again, ever since the Greenspan put, that the Fed doesn’t allow the economic cycle to run its normal course, and to have a recession where all the excesses get cleared out, bad corporations fails, and new corporations take their place for the next upward movement in GDP…. So, if there’s never a period where the economic cycle starts over, how can it ever get moving upward again? That’s my position on this, and you won’t change my mind! The Fed is at fault for just about everything that’s wrong with the economy, with some major boosts from Congress who continues to deficit spend as if it’s the cool thing to do…

Of course it took a pandemic and economic lockdown to finally have a recession, and now we will be able to eventually move forward and upward again, but then there’s always that debt thing dragging us down… You can’t win for losing in this environment folks… 

You know how people will give up their civil rights in a heart beat? Think back to the Patriot Act? And then the stay at home, economic lockdown… We all listened, (well mostly ) and may jobs were lost, many lives were lost during the lockdown, I believe in social distancing, I believe in wearing a mask in public, but I don’t believe the Gov’t should have told us to stay at home, not go to work, and closed down the businesses….

Speaking of losing their jobs…. On Tuesday this week, it was reported that there were 5.4 Million Job Openings…. Now that’s all fine and good, except…. That there are still 25 Million people looking for a job! See? The math doesn’t work, and just like I told you when the lockdown began, a lot of companies aren’t going to be coming back, and if they do, they won’t be at the employment levels they were previous to the pandemic. I read yesterday that the iconic clothier Brooks Brothers, who outfitted several presidents over the years, got themselves into deep debt, and have no way out, but to file bankruptcy…. Another one bites the dust….

And this just in, this morning, it’s being reported that the operating company that owns Ann Taylor, will file for bankruptcy…  Who’s next? 

The U.S. Data Cupboard continue to lack anything that would move markets, and today’s flavor of a 2nd tier report, will be Consumer Credit (read debt) for May… And it won’t be reported until this afternoon, so the morning trading is all open for Trader Sentiment to take it somewhere… 

Tomorrow’s Data Cupboard has the usual Tub Thumpin’ Thursday fare, and that’s the Weekly Initial Jobless Claims.  Did you know that there are still 1.50 -ish Million claims being filed weekly? Yes, the weeks were 6 Million claims were filed, but still… 1.5-ish Million?  That’s each and every week folks…. There’s no V for the recession / economy, and if anything we might see a W… 

And in the next downward move for the economy, and stocks, we’re going to see even larger money printing numbers…. With each downturn, the money printing numbers grow higher than the previous downturn…  I know the Fed thinks they are doing the right thing, here…. But, in my mind, I don’t see how the financial system can deal with more Trillions all at once… 

And here’s another thing that crossed my mind yesterday reading about Trillions of dollars being used for this, that and the other things…  Think back to 2007-08, and that financial meltdown, the Trillions number wasn’t used… Remember TARP? $750 Billion…  But this time we broke out the Trillions numbers, and what will be for the next downturn? 

Before we head to the Big Finish today: Well, The devil may have gone down to Georgia, but an angel went to heaven… I was so saddened to hear that one my all time favorite musicians, Charlie Daniels, had died…. Just as a tribute to him, I played the Saddle Tramp album last night, every song… R.I.P. Charlie Daniels…. You made my life richer… 

To recap… The currencies didn’t rally during the day, and they also didn’t get sold overnight, so it was a nothing day all around for the currencies. Gold on the other hand gained $10 on the day, and in the early trading this morning it has crossed over the $1,800 level…  Chuck thinks you had better keep your arms and legs in for this ride…  And Chuck goes on to talk about Civil Liberties… Did you know that the Bill of Rights is not just recommendations? I’m just saying…

For What It’s Worth…. Thanks to the good folks at GATA for sending me this link to this article, about a coming crisis at the COMEX…. It’s written by Alasdair Macleod, and it can be found here: https://www.goldmoney.com/research/goldmoney-insights/a-potential-crisis-in-comex-gold?gmrefcode=gata

Or, here’s your snippet: “We are all used to the bullion banks covering their shorts on Comex by waiting until the speculators are over-bullish and vulnerable to mark-downs that trigger their stops. Algorithmic traders go from long to short in a heartbeat as well, and they dump contracts into a falling market, speeding up the decline. We should say at this juncture that the Managed Money speculators are short-term, attracted by futures leverage, and their gold position is often part of a wider risk strategy deployed by hedge funds. They do not intend to stand for delivery. The wider investment world taking strategic portfolio decisions does not often get involved with gold, so the Comex gold contract has been a secular play.

In the non-speculative category, the bullion banks (Swaps) had 56% of the shorts and the Producer/Merchants 44%. Mark-to-market value of the Swaps net short position was $25bn. Of the speculative longs, the managed money category (hedge funds) held 69%, and at 296,106 long contracts it was almost a record. There was a high level of bullishness; easy pickings for the bullion banks, who by the following December drove the price down to $1120, reducing their net shorts to under 50,000 contracts.

It was a game that evolved out of Comex futures being used simply to offset long bullion positions at the LBMA. Over time, bullion bank traders increased their trading position limits, as opposed to their pure hedging activity, making easy money jobbing the other side of Managed Money trades.

Now look at the current situation, with the gold price at decade highs ($1775) and open interest at 561,628 (30 June).

Bullion banks are between a rock and a hard place. For years they’ve been playing the hedge funds as an angler hooks and plays a fish. That game has ceased and there is no easy way for them to get level. For the moment they are trying to put a lid on the price, but the cost has been rising open interest, and therefore rising mark-to-market positions.

The August active contract runs off the board at the end of this month and bullion banks are likely to be forced into large delivery volumes again. Furthermore, the exchange for delivery arbitrage facility between Comex and the LBMA is broken, allowing Comex premiums to London spot to go unchallenged.

It is increasingly possible the gold contract is evolving into deep crisis, and that force majeure might have to be declared if, as seems increasingly inevitable, a wider banking crisis ensues.”

Chuck again, yes, I know it’s a long one, but well worth it when you get to the end conclusion, that extrapolated, means the short sellers won’t be able to cover their shorts without HUGE losses… YIPPEE!!!!

Market Prices  for 7/8/20: American Style: A$ .6949, kiwi .6550, C$.7360, euro 1.1288, sterling 1.2557, Swiss $1.0626, European Style: rand 16.9871, krone 9.4631, SEK 9.2373, forint 314.89,  zloty 3.9641,   koruna 23.7005, RUB 71.63, yen 107.51, sing 1.3947, HKD 7.7498, INR 74.78, China 7.0154, peso 22.70, BRL 5.3563,  Dollar Index 96.90,  Oil $40.65,   10-year .65%, Silver $18.50, Platinum $840.99, Palladium $1,942.42, and Gold… $1,803.88

That’s it for today, and this week…  I realized something as I was writing this morning, regarding my energy levels… It’s been 3 months on the new chemo cocktail I take each night, the accumulation effects are beginning to work on me… So… I have that going for me! Aren’t I lucky? They used to joke on the trade desk that I was Mr. Lucky…  Well, my beloved Cardinals were back on the field to work out yesterday, after having their workout cancelled on Monday because of a delay in Test results…  This is the new norm? I sometimes think, why didn’t they just wait until next spring? But I would miss the game too much…  OK… onto the oncologist tomorrow, just an opportunity for the doc to get to see me! HA!  OK, here’s a treat for good friend Rick B., The group A-ha takes us to the finish line today with their song: Take Me On…    I hope you have a Wonderful Wednesday, and rest of the week, and please Be Good To Yourself!

Chuck Butler

 

 

July 7, 2020

* Currencies rally during the day, but lose ground overnight

* Gold gains $10 gives back $7… Same-0, same-0, for the shiny metal!

Good Day… And a Tom Terrific Tuesday to you! Well, I may be finished with the wound center on Thursdays but…. I still have my monthly visits to my oncologist, and those happen to fall on Thursday mornings too… So, going forward, (I hope) I’ll only be gone 1 Thursday every month… So, you’ve got that going for you! HA! OK, my beloved Cardinals were called off the field on Monday, because…. They hadn’t gotten the test results back yet… So, riddle me this Batman, Major League Baseball says it’s going to check players twice a day, for temperature, and every other day with a COVID test, but if they haven’t gotten the test results back from the previous test, how are they ever going to tell what’s up? Just a viewpoint from the cheap seats…. The band, Yes, greets me this morning with their song: Long Distance Runaround…. I’ve said this before, but it bears repeating, the recordings of the band, Yes, is what headphones were made for!

I guess there were more Traders getting back from the Hamptons yesterday, because there was little movement in the currencies. I checked them last night, and they were bang on what I had reported for their levels Monday morning! Gold on the other hand had a good day, gaining $10VS the dollar, or the dollar lost $10 to Gold, same thing, but somehow it gains more attention to people if you say the dollar lost $10 to Gold…. I have a dear reader who always reminds me of this, so I wanted to give kudos to Bernard….

As has been the trend of recent trading nights, the overnight markets saw some slippage in the currencies, so their lofty levels of yesterday have been shaved a bit…  And Gold has given back $7 of its $10 gain yesterday… 

See what happens when everyone is in their places with bright shiny faces?  When the boy in the band reassemble and the maestro, (JPMorgan) taps the baton on the podium, well then it’s time to start manipulating the markets…  Why? Well, you simply can’t have free flowing markets, for these investors don’t know what they’re doing, they have to leave it up to us Big Boys, for we all know what the markets need… 

I’m so jaded by the Big Casino Banks, folks… They are my arch enemy, although I’m sure that one day, my bank account will be held by one of them.  Yes, I’m afraid that the smaller regional banks are going to be bought out by the Big Casino Banks, especially after hearing and reading that they received the bulk of the stimulus bailout money, instead of the smaller regional banks…  Was that done on purpose?  

Well, my conspiracy blood is tingling again… And I’m sure that there was some pre-disposition of the money meetings that went on to decide who got what… I’m just saying…  

The price of Oil lost 26-cents yesterday closing at $40.37… There’s BIG news on the Shale Producers in the FWIW section today, you won’t want to miss that! The BIG news is also BAD news, and I don’t want to spoil the entrée, so I’ll leave it at that!

And… I’m getting out of the business of giving people writings from G. Edward Griffin…  (author of the Creature From Jekyll Island) He’s simply trying to give people information that they haven’t heard, but sometimes he reports things that are questionable… So, I apologize for yesterday’s FWIW article, I know that, for me, you’ll all be saying, why does this COVID treatment cost so much in the future, but so be it….

I had one dear reader, say to me, Chuck why don’t you fact check things before you write about them?  Oh, brother! Look… I do this for free… I don’t have research teams, I don’t have the wherewithal, to invest in more computers to do research, it’s just little old me, here, hoping to spread some information to make better investment decisions… If that’s not good enough then, fine, I truly don’t have any idea why I wake up each morning early, that is, to write, for free, again I might add…  

I know that some of you are saying, Oh, come on Chuck, what else do you have to do?  Oh, don’t get me started on that!  And I do want to say that I feel real bad when something that I’ve put out there comes back to bite me, but I could just quit putting FWIW articles out there… But I won’t do that! 

OK, back to the markets….  I read this morning, didn’t do a fact check, but I believe it to be true, that Russia has added to their FX reserves, which is interesting in this time of a pandemic, but shows to go ya, that the Russian Central Bank Gov. knows what she’s doing, and that’s fact Jack!   For the last 10 years, Russia has foregone buying FX for their reserves, and bought Gold instead… At first the other countries that weren’t seeing their currencies bought by Russia, made fun of Elvira Nabiullina for her insistence on buying Gold, but after the dollar went on a long term strong trend, and those currencies lost value, those same countries were touting the Russian Central Bank Gov. for her strategic move….

So, I wonder what she’s telling us now? That the dollar’s strong trend is nearing an end, and owning the foreign currencies again is in vogue?   Well, I don’t know the answer to that question, but should they continue to add to their FX reserves, one will have to be paying attention, right? 

The Best performance overnight goes to the Indian rupee!  Wow, it’s probably been a year of Sundays since I last said those words!  Every morning when I do my rundown of the currency prices, I get ready to jot down 75 for Rupees… But not this morning… It seems that some large inflows into the Central Bank, and the news that the Central Bank is no longer buying dollars,  got rupee traders all wound up and the currency ended up having the best performance of the night for the currencies! 

Again, is this another sign to us? India is no longer buying dollars…. The signs are beginning to add up, right? 

You know the bond boys continue to speak their position on the U.S. economy, as the 10-year Treasury trades around .70%, and has for some time now…  I was taught many years ago, to always pay attention to what the bond boys are saying about the economy, and while things have changed for many of the rules I learned in my years trading, bonds, and currencies, this one remains strong in my mind, as to how much it should be paid attention to… 

I told you yesterday that the economic data from last week, all beat expectations, but that it was coming from such lows. And later in the day I had this thought… That all the data prints were doing was showing that the deep plunge is over, for now, that is, not that we’re doing great! 

Keep in mind the news I have you yesterday, and no I didn’t fact check it, that bankruptcies in the U.S. during May skyrocketed to 722 from 562 in April…  Now April was the worst month ever, think about that one… 

The U.S. Data Cupboard this morning doesn’t really chalk up the real economic data prints, but they do have the current Job Openings in the U.S. not that this data does anything for the markets… But it prints nonetheless…  I told you yesterday that the Data Cupboard had little in the way of real economic data for us this week…  

To recap…  The currencies and metals had a good day going for it yesterday, but in the overnight markets we’ve seen some slippage, as if the dollar bugs just won’t give up the king of hill routine.  Chuck goes into the plan to buy out the smaller regional banks, by the Big Casino Banks, well in his mind anyway!  And Chuck thinks that if what he’s writing about isn’t good enough, then so be it! 

For What It’s Worth… Well, I mentioned this above today, but saved the real meat for the FWIW section today… This is about the pulse of the shale Oil business, and it doesn’t look good folks…. It all can be found here: https://srsroccoreport.com/chart-of-the-week-the-collapse-of-the-u-s-oil-drilling-rig-count-spells-big-trouble-ahead/

Or, here’s your snippet: “U.S. Energy Independence that lasted for less than one year, is over. With the collapse of the domestic oil drilling rig count, U.S. shale oil production will begin to fall off a cliff in the next 3-6 months. This should also destroy the notion of a “V-Shaped” economic recovery once and for all.

According to Shaleprofile.com, U.S. shale oil production peaked at 8.3 million barrels per day (mbd) in November 2019 and declined to 7.8 mbd by March this year. However, the oil rig count from November to March was about the same, 683 rigs. During these five months with the oil rig count about the same, shale oil production declined 500,000 barrels per day.

Unfortunately, since mid-March, the domestic oil rig count has collapsed from 683 to 185 today (Source: Baker Hughes). That is nearly a loss of 500 oil drilling rigs:

Again, with the U.S. oil drilling rig count down 73% in just the past four months, watch for a significant decline in shale oil production over the next few months. Even if the shale oil industry starts to add more drilling rigs, the damage is already done.

As I have stated several times, I believe the U.S. economy will be in serious trouble in the second half of the year, and especially during Q4 2020. But, it won’t end there. The economic situation will likely continue to weaken in 2021.

Investors better start considering protecting some of their wealth in physical Gold & Silver.”

Chuck Again…. Remember when I told you that the Saudis were attempting to run the Shale Producers out of business? I bet they’re all jumping with joy over in Saudi-land… But we’re not here, now I’ve never been a fan of fracking, but if it took fracking to get us independent of Middle East Oil, then that was a game changer to me… I know this guy that wrote this article sounded a lot like me, but it goes to show ya, that more and more people are waking up and smelling the coffee….

Market prices   7/7/20: American Style: A$ .6940, kiwi .6538, C$ .7370, euro 1.1291, sterling 1.2521, Swiss $1.0608, European Style: rand 17.0850, krone 9.4285, SEK 9.2637, forint 313.07, zloty 3.9550,   koruna 23.6272, RUB 71.58, yen 107.71, sing 1.3950, HKD 7.7498, INR 74.57, China 7.0284, peso 22.57, BRL 5.2992,  Dollar Index 96.88,   Oil $40.41,  10-year .68%, Silver $18.12, Platinum $829.95, Palladium $1,932.50, and Gold… $1,777.97

That’s it for today….   I almost didn’t answer the bell this morning… You see most mornings I wake up on my own before the alarm goes off, but this morning the alarm went off, much to my chagrin, and I dozed back off, thus the reason for the lateness of the letter this morning! If sports don’t come back soon, I do believe I’ll go batty! I’m searching for anything that is a competition, and on Saturday, there I was watching the National Cornhole Championships!  Now I know that things have sunk to new lows, when I’m getting into watching men throw bags, something we do in the back yard!  Oh well… got to get going this is running late…  REO Speedwagon takes us to the finish line today with their song: Riding The Storm Out…   with that, I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

July 6, 2020

* Currencies push the envelope VS the dollar… 

* JP Morgan thinks stocks will rally forever…. 

Good day… And a Marvelous Monday to you! WOW! What a great long weekend for yours truly! Starting on Thursday with my last visit to the wound center! Yes, I said my last (Hopefully I don’t ever have to go back!) visit to the wound center… After 15 months I’m finally 100% healed! , and now my challenge is to keep my legs from swelling up and putting strain on that new skin… I finally got in our pool on Saturday! First time since the summer of 2018! But I caused the water level of the pool to rise too high, and had to get out! HA! It may be against the county law to shoot off fireworks, but people around me didn’t care, and the loud bangs went late into the night on Saturday… Good for them! The great Johnny Rivers greets me this morning with his song: Summer Rain….

Well… while the U.S. grilled hot dogs, brats, and hamburgers the rest of the world was open for business on Friday, but most of the action for the week, was on Thursday, with skeleton crews only on board for Friday, for if the U.S. isn’t around, there’s no liquidity, and no reason to go out on a limb… So, on Thursday, we saw the currencies claw back at the dollar and end up with some nice gains for the day… The euro gained 2/3 of a cent, the Aussie dollar (A$) gained 3/4 of a cent, and so on… All those gains were held on Friday, with little to no change in the currencies’ levels.

And in a change of direction, the overnight markets last night didn’t buy dollars and sell the currencies! In fact, the currencies continued to move higher VS the dollar overnight. The euro is back above 1.13, for instance… 

Gold didn’t have such a good week, and ended the week up $3 from where it started the week, but in between there was some back and forth, that had Gold closing the week at $1,774.40. Friday’s Gold trading was a joke… with just 34,000 contracts traded on the day, and the price was down one thin dime on the day… So, we start today, with Gold up in the early trading today, by $5…  so we have that going for us, eh?

One of the things that keep me dazed and confused is this price difference between the current spot price of Gold $1,778, and futures contract to the nearest expiration date, of $1,787…. So, basically, if you want to buy Gold in the futures market, you’ll have to pay $1,787…. So why would anyone do that, when the spot price is $9 cheaper? But they do… and they have their reasons, and it’s those reasons that keep me dazed and confused!

Well… I received a call from Dennis Miller over the weekend, Dennis was putting together a letter, in which he talked about the zombie corporations… OK… I’ve mentioned this before, publishing guru, Bill Bonner talks about zombie corporations all the time, but I thought to myself, have I ever really explained what a Zombie Corporation is? A Zombie company is one unable to service its debt through current profits and is either paying interest only or rolling over its borrowing to stay in business.

The U.S. Government allows this to continue, because…. Well, so many Americans would be out of jobs if these Zombie Corporations were allowed to fail… But what if I told you that these Zombie Corporations are failing anyway? In May Bankruptcies soared to 722 just in May, and that beat April’s number of 562! I told you last week about the operator that owns Pizza Hut and Wendy’s  (NPC) filing for bankruptcy and while sitting in the waiting room at the wound center on Thursday, I heard that Cirque Du Soleil had filed bankruptcy with $1 Billion in debts…. What’s a Fed to do in a case like this?

And then in reading my fave letter, Grant Williams’ Things That Make You Go Hmmm… He found this from Forbes: (Forbes): The federal government may be worried about a lot of things, but officials don’t seem to have their eye on the retail ball. It appears that their primary concern (from a federal perspective), only relates to big labor or to big business. Anything in-between is apparently not ringing their bell. Republican talking points favor large corporations or payroll tax cuts. Democratic talking points extend to unemployment benefits and health care. Someone needs to realize, that if retail workers don’t have jobs because their companies are strapped for cash, then all the benefits they want to provide (in preparation for reopening) are meaningless…

And so ends my diatribe on Zombie Corporations… They existed before the pandemic, and with the pandemic they’ve become a major sticking point for the economy…

Speaking of the economy… I read this weekend that the IMF has stuck their toe into the economic forecasting waters… The IMF said that the global economy will shrink this year by 4.9%, which is worse than their previous forecast in April of a 3.2% decline.

The problem with this is that the U.S. has the largest Economy in the world, so that means that a large part of that decline will come from us…

Hey! Remember when the Congressional Budget Office (CBO) told us earlier this year that the deficit in the U.S. would be $1 Trillion for 2020? Well, they had to go back to the drawing board and add in some new deficit numbers, which now they say the U.S. deficit for 2020 will be $3.7 Trillion and $2.1 Trillion in 2021….

Of course that doesn’t count any new stimulus deficit numbers… And we all know they’re coming, because…. Well, it all goes back to the Zombie Corporations… The Fed seeing these soaring Corporate Bankruptcies will have to come ups with some new Alphabet lettered plan to bail out the small businesses too!

Well the news on the virus continues to amaze me… Texas has the virus counts mounting, and New York, the former epi-center of the virus, as the counts falling.. Florida is seeing their counts mount too…  But the thing I lie to point out is that the death tolls are falling… Which means…  I don’t know, nobody knows, but the deaths are falling and that’s a good thing! 

I really can’t believe this damn virus is still causing problems… And until there’s some kind of change in this spread, or a medicine that can attack the virus, I would think that the economy is on a ride on the slippery slope, and everything that goes along with this virus is on the upside of the slope. I had previously thought (wrong it turns out!) that once the sun warmed up it would bake the virus away… But that obviously hasn’t happened…  By the end of this week, it’s supposed to be 100 degrees, but I guess that doesn’t help… UGH!   

JP Morgan issued a report on stocks that was interesting… They opined that given the strength of the virus, and no cure-all around, that the Fed would have to continue to provide liquidity with their alphabet named stimulus programs and that all means that interest rates aren’t going higher, and in the end, they believe that all of this will be good for stocks going forward.  I would have to agree with them, to a point…  It’s all good until it isn’t…  

The U.S. Data Cupboard was busy in last week’s shortened work week, and all of the data was better than expected, but one must remember here that these data prints are comparing data to the previous month, which means they came from such large holes….  Take the Employment data… Yes, in the last two months we added back over 6 Million jobs, and that’s good, but in no way does it make up for the over 30 Million jobs that were lost… I’m just saying… 

This week’s Data Cupboard doesn’t have much for us in the way of real economic data, so it will be second and third tier prints all week, and I doubt the markets even take a peek at them.  So, the dollar is on its own this week, I have to wonder if that’s a good thing or bad thing… But it doesn’t matter what I think here, because Trader Sentiment will rule the roost once again… 

To recap…  The currencies ended the week on a high note, and continued to push the dollar bugs into a hole, in the overnight markets last night. Gold only gained $3 on the week, but is up over $5 in the early trading today, so maybe Gold can get back on the rally tracks more firmly this week.  Chuck explains Zombie Corporations, and why they are allowed to continue to take up space. And there’s lots of talk about how deep of a dive the economy will go…. The IMF, The World Bank, and Forbes all contribute this morning… 

For What It’s Worth… I sometimes listen to The Bridge on Sirius XM and they run a commercial for the station by playing an artist, and then saying that “The Bridge was built on songs like that”… Well, receiving news like I did last week reminded me of that slogan, and so therefore, “it’s articles like this that The FWIW was made for”…. This is about medicines to treat COVID-19, and how one is being warehoused, (because it’s cheap), and one is going to cost us an arm and a leg to have it administered… Guess which one is moving to the top? All that can be found here: https://needtoknow.news/2020/06/faucis-remdesivir-costs-9-per-dose-will-be-sold-at-3000-per-treatment/?utm_source=rss&utm_medium=rss&utm_campaign=faucis-remdesivir-costs-9-per-dose-will-be-sold-at-3000-per-treatment

Or, here’s your snippet: “The Association of American Physicians and Surgeons filed a lawsuit against Department of Health and Human Services and the FDA for “irrational interference” by the FDA with timely access to hydroxychloroquine (HCQ), which has shown great success in treating Covid-19. HCQ is being sidelined despite having been approved for malaria in 1955, it is reported to be 91% effective in treating COVID-19, and it is inexpensive, costing only $1 per treatment to manufacture. All but four states have imposed restrictions on outpatient use of this drug. Major pharmaceutical companies (Novartis, Bayer, Teva, and others) donated nearly 50-million doses of HCQ to the Strategic National Stockpile, but most of it still sits in warehouses because state governments are preventing its use.

Dr. Fauci has been promoting remdesivir, which has only shown modest results with COVID-19 patients, despite taxpayer funding $70-million to Gilead pharmaceutical, the CDC, and the National Institutes of Health to develop it as a treatment for Ebola, which flopped due to severe side effects and almost zero curative effect. Patients must be hospitalized in order to receive remdesivir. Bloomberg reported that the cost to manufacture remdesivir is $9 per treatment, but Gilead said it will cost over $3,000 for a six-vial treatment. Gilead spent over $5-million in lobbying Congress in 2019.”

Chuck again… I’m beside myself over reading this article! I’ve always been aware of Big Pharma, and their stranglehold on people that are sick, needing medication, and knowing that there are natural remedies out there that are for free, but doctors cannot prescribe them… And, I fully understand that it takes years of research, to develop a drug, and then even longer to get it approcved by the FDA, and that Big Pharma have to recover their costs… But come on! And now this… $9 to produce the drug, cost to the patient: $3,000… I shake my head in utter disgust….

Market prices  7/6/20: American Style: A$ .6966, kiwi .6540, C$ .7381, euro 1.1310, sterling 1.2505, Swiss $1.0630, European Style: rand 17.0495, krone 9.4017, SEK 9.2765, forint 311.89,  zloty 3.9511,   koruna 23.6083, RUB 71.39, yen 107.53, sing 1.3915, HKD 7.7498, INR 75.33, China 7.0608, peso 22.26, BRL 5.3112,  Dollar Index 96.76,  Oil $40.62,  10-year .69%, Silver $18.23, Platinum $823.97, Palladium $1,921.20, and Gold… $1,777.24

That’s it for today…  There was something else I wanted to talk about this morning, and I didn’t jot it down so I would remember it, and well, I forgot it… I know it’s something good, but… Oh well, it will come to me  at some point today! Well, did you have a Incredible Independence Day Holiday? Ours was low key, but I had fun any way! There was a lot of yummy food around, and so I ate it! Well, Summer Camp started last week for Baseball Players… I’m not sure they’ll get to play games this year with this virus spreading again…  I sure hope so, I could use some baseball games right now! I really truly want to see Jack Flaherty pitch again! Still can’t remember what I wanted to talk about, so I’ll end this with  the Allman Brothers singing their song: One Way Out….  And with that, I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

July 1, 2020

* Currencies rally in daylight, get sold overnight

* Gold trades to $1,804 before the boys in the band show up… 

Good Day… And a Wonderful Wednesday to you!  and welcome to July…  Pfennig tradition calls for this…  There I was on a July morning, looking for love, with the strength of a new day dawning, and a beautiful sun…  Those lyrics come curtesy of Uriah Heap, the band, not the Dickens character! Another day of rain and clouds yesterday, and this morning, but by noon, it’s all supposed to leave us and bring us back our sunshine and blue skies! But it IS that time of year, when the days heat up, and bring about a Thunderstorm, and then leave us with hot and humid days… So… We carry on! I slept through most of yesterday, as the daylight hours without a nap finally caught up with me!  Jonathan Edwards greets me this morning with his classic song: Shanty… Now all you old time rockers will have that song in your heads all day today… not that that’s a bad thing!

 We sat around last night and talked about face masks, who’s wearing them, and who isn’t, should we continue to wear them when out, and all sorts of things virus related. The conversation started when I informed Kathy that she had to self quarantine for two weeks… That blew over like a led balloon!

OK… Well, the BIG NEWS yesterday, was that Gold reached $1,800 for the first time since 2011… Then in news not covered, the price manipulators brought Gold back to $1,780 to end the day… But it won’t be long now before Gold moves past $1,800 and to infinity and beyond! Slowly, but surely, the sheeple will get the memo that says the economy isn’t coming back any time soon, and that Gold is going to outperform every asset class…. Silver didn’t see the late selling that Gold did, and was able to move above $18 and remain there for the day, closing at $18.24… It was last summer that we saw Silver begin to really move higher, and the thought then was that first we would see $20 and the $25, in Silver… But then the rug was pulled out from under Silver, and it’s taken nearly a year for it begin to look like it’s going to move higher again.

Back to Gold for a second…  I loved the way Ed Steer explained the price manipulation, in his letter this morning that can be found here: www.edsteergoldsilver.com, here’s how he explained it, “. A serious rally began at that point – and it really began to soar at the 10 a.m. EDT afternoon gold fix in London. ‘Da boyz’ were forced to step in a few minutes before the London close, as the market was about to go ‘no ask’. About fifteen minutes later it began to get sold quietly and unevenly lower.”

So Gold was allowed to hold onto $7.5o of its gain on Taco Tuesday, to close at $1,780…   

The dead men walking, the currencies, found a way to push the dollar bugs aside, and rally on the day, with the euro reclaiming the 1.12 handle, and all other currencies falling in behind the single unit. One day rally, next day sell, the next day rally, the next day sell… I told you all that this is how the last weak dollar trend began in 2002… But seriously, here, do traders really take this long to make up their minds on which way the dollar is going to go?

For the record, there’s still more money printing to be done by the Fed, folks… There’s still more debt to be added to the current debt of 26+ Trillion, as more stimulus checks seem to be on the way… I know that some of you were with me back in the mid 90’s, but this is what this reminds me of… Japan… By 1995, Japan’s stock market had gone to hell in a hand basket, and the economy was suffering big time, and Japan’s answer to it all was stimulus…. And then zero interest rates, And then quantitative easing, and then share buybacks, to the point that the Japanese Gov’t is the stock markets largest holder of stocks now… And what has it gotten them? Well, they’re still around, they haven’t collapsed, but… they’ve had deflationary economies year after year, with no growth… Now ask yourself this… “does this sound a lot like what we’re going through here?” Man, if in two decades, we’re still wallowing around in the mud of no growth…. Maybe someone will say, hey! Remember that guy, Chuck Butler who used to sing the Violent Fems song: I’m turning Japanese, yes, I really think so… I wonder what he would say now?

If, in fact we are beginning a new weak dollar trend, that’s going to be bad news for a lot of countries, because their respective currencies will be going up in value VS the dollar, whether they need them to or don’t! Take Japan, during the last weak dollar trend, we saw yen go below 100… (it’s a European priced currency, so that means as the price goes down, the more value it returns when buying dollars) that was the last thing they needed at that time, and it will be the last thing they need at this time, but being a secondary offset currency to the dollar, with the euro being the main offset currency to the dollar, yen is going to rally… The Bank of Japan (BOJ) will first attempt to jawbone (threaten the markets with intervention) , and when that doesn’t have any lasting power, they will turn to intervention, but the trend is not going to be their friend!

And that resistance to stronger currencies by the countries that own them has been illustrated both overnight markets this week, with last night seeing the currencies being brought back down after a day of rallying… I really dislike this back and forth stuff, I would much rather see a trend put in place and have them either move higher or lower consistently… 

Ok, a quick perusal through Twitter yesterday found this little ditty… First the Tweet, then my take, ok?
“The #BISInnovationHub is pleased to announce a strategic partnership with
@federalreserve
@NewYorkFed
to further the development of fintech initiatives for the global financial system” – from Twitter 6/30/20

OK… for those of you not following along in class previously… Remember when I told you that all the crypto currencies didn’t mean a thing in the long run, because once the Gov’t came out with their version of a C.C. it was all over for the other guys… Well, now you have to the two most powerful Central Banks in the world,  (the Fed & BIS) joining together to come up with their own C.C…. Go ahead and laugh you Bicoiners… The last laugh will be on you!  You see the steps that I laid out for you on how this current financial system will all come to and end, come together, and you start to think… “Hey, maybe Chuck was onto something”… 

In another Tweet that made me smile… here’s Lyn Alden regarding Gold on her Twitter feed.” Pretty much every currency in the world has devalued by at least 10% relative to gold since Ray Dalio infamously said “cash is trash” at Davos in January of this year.” Lyn Alden’s Tweet 6/30/20

I had said at the time of his comment, that Gold had set new high records against nearly all currencies in the past year, and in 2020, it was time for Gold to set its new record high VS the dollar… Well, in inflation terms… Gold was there yesterday briefly, as I explained above…

 

The U.S. Data Cupboard yesterday was interesting even though it didn’t really have market moving data… The Case/ Shiller Home Price Index for April moved higher… Hmmm…. And the Chicago PMI (manufacturing index) moved higher in June from 32 in May to 36 in June… Not exactly what everything thought it would be (higher)… There’s no sign of a V-shaped recovery there… And in the stupid Consumer Confidence data it not only moved higher in June, it soared! CC was forecast to rise to 90… it came in at 98! So, everyone is confident that things are going to work out just rosy, eh?

Well, I suggest they don’t tell the folks a shale pioneer, Chesapeake Oil, for they filed bankruptcy the other day, and don’t tell Shell Oil, who is inching toward a write down of $22 Billion in debt… Hmmm… And what’s this that 87% of the people polled on who they would vote for, said they were not happy with the direction of the country… But don’t worry about it Consumer Confidence is flying higher!

And this news just came across my screen this morning… The operator of Pizza Hut and Wendys is going to file for bankruptcy…   Come on Fed, why didn’t you buy their debt to help them out? What? you don’t like a frosty, or a meat lovers pizza? 

The U.S. Data Cupboard will be busy today, as the data reports are plentiful today. Leading off today is the ADP Employment Report for June… Not to be confused with the stupid BLS report of lies, I mean of jobs that will print tomorrow. Batting second will be the June ISM (manufacturing index), which for the previous two months was below the 50 line in the sand…  then up third will be Construction spending for May, and then batting clean up will be the Fed’s Meeting Minutes from their last meeting, and finally, Vehicle Sales for June will print…  

All of the June prints seem to be suggesting that the opening of the economy has made a difference, wrapped a tourniquet around the bleeding if you will, but do not suggest that the economy has recovered… but come to think of it the economy wasn’t much to talk about before the pandemic, so the bar isn’t exactly raised to a level out of reach!  I’m just saying… 

To recap… Gold rose to $1,804 yesterday, a record high in inflation terms, but just about when Gold was ready to go “no ask” the price manipulators arrived and took Gold back to $1,780…  The currencies rallied nicely VS the dollar yesterday during the day, but once again they were sold in the overnight markets… Chuck explains why…    Silver is back above $18…. Hmmm….  And the Fed and BIS are joining forces folks to design a crypto currency… and the steps to an end of our financial system have begun… 

For What It’s Worth… Well, you knew that eventually that the grim reaper for home owners was going to show up. The home owners received a reprieve when the Covid-19 virus came about, and prohibiting foreclosures for non payment of loans until July 25th…. Well, today is July 1st… And no one on Capital Hill seems to be talking about an extension… That’s what this article is about, and it can be found here: https://thehill.com/policy/finance/505139-millions-fear-eviction-without-more-aid-from-congress

Or, here’s your snippet: “ Millions of tenants are at risk of receiving eviction notices in late July as protections from a major coronavirus stimulus program are set to expire.

The coronavirus relief bill, signed as the CARES Act in late March, included a moratorium on evictions for tenants in units with federally backed mortgages or other assistance who were unable to pay rent.

But with no agreement in Congress on an extension of the moratorium, families hit hard by the coronavirus pandemic may soon have to make new living arrangements.

“There are now only 25 days left before the federal eviction ban expires on July 25,” said the Financial Services Committee, on Monday.

“When it does, many families who have been unable to pay their rent because of the COVID-19 pandemic will face eviction and the devastating consequences that evictions have on families, particularly children,” she added.

The federal moratorium only applies to housing being paid off through federally backed mortgages or insurance, so it only applies to about a fifth of renters.

But because many of the government programs are aimed at keeping costs down for low-earners, those renters also tend to be among the most vulnerable.”

Chuck again… I see an 11th hour agreement to extend this coming on July 24th… But until then there will be lots of nervous people wondering if they will get an eviction notice or not….

Market prices  7/1/20: American Style: A$ .6885, kiwi .6448, C$ .7360,  euro 1.1200, sterling 1.2389, Swiss $1.0550, European Style: rand 17.2605, krone 9.6047,  SEK 9.3575,  forint 316.35,  zloty 3.9787,   koruna 23.8040, RUB 70.73, yen 107.48, sing 1.3955, HKD 7.7503, INR 75.32, China 7.0682, peso 22.97,  BRL 5.4296,  Dollar Index 97.54,  Oil $39.84,  10-year .68%, Silver $18.21, Platinum $813.50, Palladium $1,925.13, and Gold $1,781.26

That’s it for today and this week… I hope everyone has a safe and fun Independence Day Holiday weekend! I have no plans, like most people, who are adhering to the guidelines…  I know that I’m a “high risk” person, given my health situation, so I take zero chances!  Well, the 2nd QTR is finally over! I think that was the longest quarter on record!  So, long, and don’t let the door hit you  in the rear, as you leave, 2nd QTR! I’m really ready for some sunshine, and blue skies, I have to admit I don’t know how the folks in the Northwest deal with rain all the time… but I guess if that’s what you’re born into, you know of no other weather! But still… I would be fitted for a white suit if I had to live there!  OK… The good reverend Al Green takes us to the finish line today with his song: Love And Happiness… I love the music in this song!  Ok, with that, I hope you have a Wonderful Wednesday, and Incredible Independence Day Weekend! Please Be Good To Yourself! 

Chuck Butler

June 30, 2020

* After a nothing day, dollars get bought overnight

* The Fed releases the names of Corporate bonds they bought… 

Good Day… and a Tom Terrific Tuesday to you! After days of marvelous weather here, we had a yucky day here with rain and clouds all day, but as I always say, we have to experience a little rain to thoroughly enjoy sunny days! Kathy’s vacation away from me, ends today… Sorry dear, all good things must come to an end! HA! Everything seems to be escalating these days, and everything is political too… I saw a scary video yesterday, as protesters began to walk down a street that the St. Louis Mayor lives on, they were met with two home owners with guns… That’s just the first step, folks, the next will be blood shed, and then the national Guard will have to be called in, and it will be like a civil war… I’m hoping that it all just goes away, quietly, before someone gets hurt badly… Since when does a national emergency (the Covid-19 virus) become so political? Now, longtime readers know that I don’t talk politics here, I’m just pointing out that everything is now political…. And while I won’t talk politics here, they are a welcome subject on the Butler Patio… The Kinks greet me this morning with their song Sunny Afternoon… The taxman’s taken all my dough, and left me in this stately home, and I’ll I’ve got is this sunny afternoon…

Well, as far as the market go…. It was another of those “nothing days” for the currencies and metals, the euro gave back a small amount, and the Aussie dollar (A$) is trading in the same clothes has yesterday morning. Gold didn’t budge on the day… Well that’s not exactly true, Gold did move up and back down, but ended the day at $1,771, the same price as it began the day, and was reported here in the Pfennig.

However, in the overnight markets someone decided that dollars needed to be bought, and the nothing day, turned into a dollar rout in the overnight markets…  The Dollar Index rose from 97.17 to 97.79, and the currencies look very weak this morning… Why dollars? I guess we would have to ask the currency trader in Asia what he was thinking to get this dollar buying started…  Because there’s nothing that has changed from yesterday, fundamentally that is…  And Gold is down $4 in the early trading this morning… What the hell is going on here? 

Stocks saw some buying (the PPT maybe?) and finished the day in the green…I just don’t see how this is going to last for stocks, but I guess the getting’ is good, while the getting’ is good!

It’s a good thing stocks are liquid…. And that’s all I have to say about that! The Fed released an initial listing of the Corporations from which the Fed bought bonds… In essence bailing them out for years of non-increasing production, no expansion, and Capital expenditures, but instead bought back their own company’s shares, so they could get a bigger bonus… But I digress here… the names that were listed were your usual run of Big Name Corporates. It just drives me up a wall and causes the neighbors to call 911 because I’m out there yelling at the top of my lungs, about the Fed buying Corporate bonds…. So, these Big Name Corporates, are probably getting a double dip of Fed help… The Fed is probably buying their ETF’s too… Oh, to be a Corporate Captain… They have the life of Reilly, They misappropriate their profits for years, go leveraged to the hilt, and when times get tough, The Fed comes along and saves their arsess… I’m just so fed up with the Fed… I can hardly speak of them without spitting while I talk!

The Fed would say, “Well, these Corporations were not at fault, they didn’t know there was going to be a pandemic that shut down the economy” And I would respond… “Well, what happened to saving for a rainy day? Wasn’t the pandemic the good example of needing to save for a rainy day?”

I bet moms and pops all over this great country are reintroducing themselves to the idea of “saving for a rainy day”…. Much like they did after the financial meltdown in 2007 & 08… But that didn’t last long, because, we as Americans love to work hard, and spend our cash! No, Chuck, wait a minute there, do you really think Americans love to work hard? Or do they love to hardly work? Ahhh grasshopper, that’s a good question… But either way, we still love to spend our cash! Oh, yes we do… So how much longer will the “save for a rainy day” scenario last this time?

When will they ever learn? When, will, they, ev-er, learn?

Last week I told you about the collapse of the company Wirecard, and this morning I hear that German regulators are going to make changes in reporting hierarchy to prevent this from happening again…  I guess they used the U.S.’s “Make no effort to clean things up approach” as their base for how not to do something…. 

In my daily perusal of Twitter, I found fave economist, David Rosenberg talking about the forecasts for this Thursday’s Jobs Jamboree. This is what he has to say on Twitter: “So let’s get this straight. The consensus that told us May payrolls would be -7.5m, with a range of -800k to -12m (headline +2.5m) expects +3m this Thursday (range +500k to +9m). And nobody has a minus sign for June. This tells me we’re set up for a big downside surprise!” – David Rosenberg

And this one was from someone I hadn’t heard of before, but… he caught my attention! I found this and thought it made so much sense that I just had to include it in today’s letter…

“Sven Henrich
@NorthmanTrader

Markets are not forward looking, they follow liquidity.

Too much artificial liquidity creates asset bubbles.
Asset bubbles eventually burst & hurt the economy & middle class.

Central banks drive artificial liquidity & asset bubbles.

They are not the savior but the danger.” Sven Henrich on Twitter 6/29/20

And that ends today’s run through Twitter….

I see this guy holds the Fed in as high of esteem that I do…  which is the bottom of the barrel esteem! 

Well for every analyst that finally sees the light that Gold & Silver’s respective prices are manipulated, there’s another one that thinks otherwise… I took this from the GATA note they sent me yesterday, “In an essay posted today at FX Empire, “Gold Market Manipulation and the Federal Reserve,” financial planner Kelsey Williams both admits and dismisses complaints of manipulation of the gold market.”

I just shake my head in disbelief after years of proving that the manipulation occurs that there are people that don’t believe what they’re being shown…  I’m from Missouri, so I have to be shown, and I was! 

The U.S. Data Cupboard today is still lacking real economic data, but today’s fare will be suffice… First up is the Case/ Shiller Home Price Index for April… That should be a real doozy! And then we’ll see the color of the Chicago PMI (manufacturing index) for June. So we’ll be able to check the pulse of manufacturing in the Chicago region… And then finally, the stupid Consumer Confidence report for June…  Get this, the forecasters are calling for a jump higher in the index…  Crazy, I know… but then that’s this stupid report, it’s always just about stocks.. 

There will be 3 Fed heads speaking today, and these are the Big 3… John Williams of the NY Fed is up first, then Lael Brainard bats second, and then in the all important 3rd spot in the order, Fed Chairman Powell, will be joined by the Sec. of the Treasury, Mnuchin, to testify on Capital Hill…  Oh, oh, oh! Choose me! Choose me! I want to be there to question these knuckleheads!  Oh, please let me be the guy that asks the questions! 

To recap… The currencies and metals traded in their same clothes all day yesterday, but in the overnight markets they got slammed! And Gold is down $4 in the early trading today… So, overnight someone thought it to be the thing to do, buy dollars, and the rest is in the books…  The Fed released the names of the Corporations that saw the Fed buy their debt/ Corp. Bonds… Chuck wishes he was the Captain of a Corporation, for they have the life of Reilly…  

For What It’s Worth…  Well, things in China and Hong Kong continue to be bad, as far as the U.S. is concerned, and that has brought about changes to the relationship between the U.S. and Hong Kong… This article was sent to me last night, and then I saw it in Ed Steer’s letter this morning, and I knew then that it was FWIW worthy!  This article talks about that relationship and it can be found here: https://www.zerohedge.com/geopolitical/wilbur-ross-says-us-revokes-hong-kongs-special-status

Or, here’s your snippet: “

While it was just a formality at this point, after the U.S. revealed several weeks ago that it would strip Hong Kong of its special trade now that China’s is set to impose its new security law as soon as tomorrow, moments ago U.S. Commerce Secretary Wilbur Ross, issued a statement advising China that Hong Kong’s special status is officially revoked.

“With the Chinese Communist Party’s imposition of new security measures on Hong Kong, the risk that sensitive U.S. technology will be diverted to the People’s Liberation Army or Ministry of State Security has increased, all while undermining the territory’s autonomy. Those are risks the U.S. refuses to accept and have resulted in the revocation of Hong Kong’s special status.”

As a result, the Commerce Department said that “regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended.” Ross also said that “further actions to eliminate differential treatment are also being evaluated” and urged Beijing to “immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world.”

Needless to say, and have said it many times in the past, China will not be happy, but so far both sides have shown a willingness to contain themselves to merely jawboning and verbal fireworks instead of escalating and jeopardizing the fragile economic truce between the two nations. That, however, may change in the coming months as the November elections approach.”

Chuck again…  Do you get the feeling that this whole shootin’ match with China is going to turn ugly? I do… And that’s all I have to say about that! For now that is! HA! 

Market Prices 6/30/20: American Style: A$ .6848, kiwi .6404, C$ .7307, euro 1.1196, sterling 1.2070, Swiss $ 1.0510, European Style: rand 17.3582, krone 9.7425, SEK 9.3725, forint 318.39,  zloty 3.9796,   koruna 23.8790, RUB 69.98, yen 107.75, sing 1.3973, HKD 7.7501, INR 76.32, China 7.0771, peso 23.16, BRL 5.4530, Dollar Index 97.74,    Oil $39.12,   10-year .62%, Silver $17.82, Platinum $812.94, Palladium $1,908.99, and Gold… $1,767.80

That’s it for today…  A little shorter today, there’s just not much going on overseas, other than the Germans making changes to prevent another Wirecard event….  So, a little shorter, today… I know most of you won’t mind… HA!  Well, it’s the last day of June! Where did the month go?  It’s seems to me that it was just last week I was singing June is busting out all over! Tomorrow’s Pfennig tradition on July 1st is a real treat, so be sure to come back for that!  So, do you have plans for this weekend, and the 4th of July? People around where I live sure have been having fun shooting off fireworks in their backyards… But those are nothing, compared to the Big Bangs of real fireworks shows…  I’ve told you this before, but there are so many new readers since I’ve last told it, so here goes… My dad, was a veteran of WWII, and a real patriot… He felt it was his right to shoot fireworks on the 4th of July, and every year, we would have out own fireworks display in the alley behind out house.  Sometimes the police would show up, and just sit there in their cars watching!  Ok, I’ve gone on too long this morning with this ending! Midnight Oil takes us to the finish line today with their song: Beds Are Burning…   I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

 

June 29, 2020

* Currencies find a way to gain VS the dollar on Friday… 

* Have the words of Stephen Roach sunk in to currency traders? 

Good Day… And a Marvelous Monday to you! Well, for all of you longtime readers, this will throw you for a bit… Youngest son, Alex, celebrated his 25th birthday yesterday… I know some of you can recall when he was born, and some of you can recall when he used to help me write the pfennig, but now after all these years, he holds a doctorate degree from St. Louis University in Physical Therapy… All the folks in our family have agreed that we don’t have to call him Dr. Butler… And he’s OK with that! But can you believe it? 25 years ago, I was 40, and thinking I’ll never be alive to see this kid graduate from High School, much less College, and now here we are… I’m still alive, and so darn proud of him! I hope your day was grand, Bud… Peaches and Herb greet me this morning with their song: Reunited… (what a great song!)

OK… where to start, where to start… Let’ see… should we talk about all the vandalism going on in our country? Or should we talk about Gold? Or should we talk about the U.S. economy? Well, guess what? I’m going to talk about them all, and… more… so grab a cup of coffee, and let’s go!

It’s totally crazy, what’s going on in the U.S. these days… People have gone off the deep end, folks, trust me on that, for there’s a petition going around to change the name of the city of St. Louis… These same folks want to tear down the King Louis statue that sits outside of the Art Museum… What? Have they no better things to do? I’m so fed up with all this removing of our history, that I’m going to stop here, before I go the whole 9 yards, with my feelings on all this!

OK, the markets… Well, Gold found a way to add $6 to its total on Friday, and close at $1,771… But… and you knew I would have something additional to say here, right?  Gold had climbed as high at $1,786 at one point on Friday, only to see most of that gain wiped out by the price manipulators… But, a again, is a gain, right, and we shouldn’t look a gift horse in the mouth, now should we? Gold is in a bull market folks, and no amount of price manipulation is going to stop it from moving higher now…

Last week you may recall me telling you about Stephen Roach, and his call that the dollar is going to sink very low, and wondered if he still had the ear of the markets…  Well, I see just about every news agency that covers financials have picked up that article and ran it, with Stephen Roach saying the dollar is going to fall… I find it interesting that this call by Roach has gotten so much air play… 

And the dead men walking currencies found a way to gain VS the dollar on Friday… You see, as each day goes by, more and more cases of the Covid-19 virus are being reported by the states… ( which makes sense to me since there’s more reporting, right? ) and when those number of cases get reported, it’s all doom and gloom, and the stocks and the dollar just can’t put up a fight… Two of the last 3 days of last week saw stocks get hammered… Is that a trend?

Well, I know that some of you took my hints a couple of years ago, and signed up for the Aden research Dow Theory Letters, and if you did, you may recall me writing an article for the Dow Theory Letters (DTL) about historical stock performance during a recession… The history doesn’t lie, even though folks today might want to change it to better suit them, and historically speaking, when we’ve had a recession in this country, stocks do NOT perform well… And last I checked, let me check again, yes, nothing’s changed, we are in a recession…

And now that we’ve got that out the way… The currencies found a way to gain, once again, VS the dollar on Friday of last week, The euro which has seen some fluctuations recently, is now back above the 1.12 handle, and looking to go higher, I might add!  Talk about fluctuations, if you look up the word in the dictionary, you’ll see a picture of an Oil barrel! HA!  

The price of Oil just can’t settle down, up, down , sideways it’s been everywhere in recent weeks, and these gyrations just don’t help the Petrol Currencies find some terra firma…  The Russian ruble continues to illustrate exactly what I’m talking about here… The ruble follows the price of Oil step for step…  And that reminds me of a conference I attended about 5 years ago, in Westin Florida, and sat on a panel with guys like James Rickards, and Grant Williams! And David Galland was the moderator, and asked the panel what they thought of the Russian ruble… And there was nothing but crickets, until I spoke up and said, “Well, to me, the ruble is a play on Oil, if you believe the price of Oil is going higher, then you would want to own rubles, and vice versa..” 

While most of that statement is true, there have been other developments in Russia since then, like the economic sanctions placed on them by the U.S. and European Union, and their accumulation of physical Gold, and ability to still grow their economy even with the economic sanctions… Their Central Bank head, is the best in the field of Central Bankers, and Russia is in good hands with her at the helm…  

In India late last week, they saw the ratings agency, S&P, downgrade 4 of their shadow banks credit ratings…  India has been hit by the Covid-19 pandemic worst than most countries, which makes sense given their population, and the ratings agencies are making their living going through the financial companies of India, that’s for sure!  But the rupee just continues to hold somewhat steady in the face of all these problems… I don’t know how much longer the rupee can hold on because, like the U.S. dollar, the fears and unknowns are just too great. 

The U.S. Treasuries have sure seen some back and forth in the yield of the 10-year bond…  But on Friday, after a week of watching economic data in the U.S. show promise, but still miss big time, the bond boys decided that the recession is in bloom, and the yield on the 10-year fell from .72% last week to start this week at .64%…  In percentages that doesn’t seem like a big move, right?  Well, for bonds it is… trust me on that one… I used to trade bonds… 

I was talking on the phone with good friend, Dennis Miller, of www.milleronthemoney.com, a week or so ago, and I mentioned that I still hadn’t gotten over the drop in the 10-year’s yield at the end of March. Remember? overnight it went from 1.80% on 12/30, to .59% on March 23…  I was shocked to report that level, almost as shocked as I was to report when the price of Oil went negative! 

The U.S. Data Cupboard doesn’t have much for us to start the week, but ends the week with the lies and cooked books of the BLS and their jobs report for June…  This will get printed on Thursday this week, because Friday is a holiday, because the Independence Day, July 4, is on a Saturday this year.  It’ll be interesting to see the revision to last month’s bloated report of job creation for May… Recall that the BLS admitted out loud that they had a “glitch” and over reported jobs…  

In my book the BLS should report each month that they over reported jobs…  But they won’t, and they’ll attempt to report the revision under darkness so that the markets don’t notice them… But, I’ll find them, you can bet your sweet bippie on that! 

Did you hear the latest goof-up by the U.S. Treasury Dept.?  Ok, so a month or so ago, the Treasury sent out the so-called “stimulus checks”, and now we find out that they sent out checks to dead people… To the tune of $1.4 Million… And now they want their money back… If you go to their website you’ll find detailed instructions on how to send the money back!  I shake my head in disbelief this morning over that news… What a, wait! You can’t say what you really wanted to call it, Chuck, so just move along…. 

To recap… The currencies found a way to gain VS the dollar bugs on Friday last week, and Chuck wonders if the words of Stephen Roach have finally sunk in on currency traders?  Gold moved up $6 on Friday, and is flat as a pancake in the early trading this morning. Chuck talks about the Russian rubles, and Indian rupees this morning, just for grins… 

For What It’s Worth…  Ok, longtime readers know how much I like the writings and thoughts of publishing guru, Bill Bonner… I read his stuff nearly every day. On Friday last week, Dennis Miller, called me and said he was sending me an article that I would like… It happened to be Bill Bonner and his thoughts on the four steps to what he calls, “Ka-Boom!” So, I thought that would be a good article for the FWIW today, and so here it is, Bill Bonner and his 4 steps to “Ka-Boom!” and it can be found here:https://www.rogueeconomics.com/bill-bonner-diary/the-four-steps-to-an-unstable-and-corrupt-america/ 

Or, here’s your snippet: “But in America, we have a long way to go…
First, the Federal Reserve needs to step up its money-printing. This is almost guaranteed. Because if they back off now, the stock market will fall again.

Second, the feds need to “stimulate” the Main Street economy, too. They’ve already made a big effort – including the above-mentioned $1,200 checks and a $4 trillion deficit.

But they are just getting started. There will be no V-shaped, rocket-ship recovery. This will cause the feds to spend more.

Third, the dollar must fall. Eventually, this, too, is almost a sure thing. But it can take time.

Fourth, consumer prices need to rise. This will happen slowly, at first. Then, Americans will see prices rising and realize that their dollars are not as valuable as they thought they were.

Suddenly, dollars will begin to change hands more quickly. The “velocity of money” will shoot up, as people will no longer be willing to hold dollars in their bank accounts. Then, prices will rise much more rapidly.
Ka-Boom!

Meanwhile, the masses must get restless… sensing that something is very wrong, but not knowing what it is. Rabble rousers on one side will point at “greedy capitalists,” “racists,” and “fascists.”

On the other, they will want to call in the troops to restore “law and order”… even if it means giving up on the Bill of Rights.

At that point, the center no longer exists. Morons on the Left. Imbeciles on the Right. And nothing left in the middle.

The feds will print more and more money… just to try to keep the lid on. But it will go Ka-Boom! anyway.”

Chuck again…  You tell ’em Billy boy!  A very good article once again by Bill Bonner who puts things in perspective like no one else can, in my book anyway! 

Market prices 6/29/20: American Style: A$ .6875, kiwi .6435, C$ .7325, euro 1.1280, sterling 1.2317, Swiss $1.0575, European Style: rand 17.2075, krone 9.6768, SEK 9.2930, forint 315.77,   zloty 3.9590,    koruna 23.8166, RUB 69.67, yen 107.25, sing 1.3923, HKD 7.7500, INR 75.22, China 7.0759, peso 22.99, BRL 5.4811, Dollar Index 97.17,   Oil $38.77,   10-year .64%, Silver $17.87, Platinum $813.12, Palladium $1,903.74, and Gold.. $1,771.42

That’s it for today…  Ok, let me get this out of the way… with the Independence Holiday being observed on Friday this week, that means everything get crammed into 4 days, and that spilled over to the scheduling of my weekly visit to the wound center on Thursday. They had to cram me in the very early morning slot, so that means no Pfennig on Thursday…  You get 5 days off from having me whine and complain about things! HA! We had a nice family birthday celebration for Alex yesterday, and it was a dual celebration, because it was my darling daughter Dawn’s 16th wedding anniversary…  We all had some great memories of 9-year old Alex at the wedding reception…  All the guests sang happy birthday to him, and for a 9-year old, that was pretty special!  Ok… need to get going! The Allman Brothers take us to the finish line today, with their song: Southbound…   I hope you have a Marvelous Monday… And Please Be Good To Yourself! 

Chuck Butler

June 25, 2020

* Only dollars & Treasuries survive yesterday… 

* Fears of Pandemic 2.0 roils the markets… 

Good Day… And a Tub Thumpin’ Thursday to you! Another beautiful day here yesterday… Our house is usually pretty chilly, especially in the basement, where I spend most of my time. And I usually have to put on a jacket, or hoodie to watch TV, or sit at my writing desk… Last night I thought, Hey! I’m going to go outside to watch TV for it’s gotta be warmer outside! But by the time the sun set, I was in search for my pullover jacket… A beautiful evening, just not as warm as I thought it would be. The lightening bugs are out! I love watching the lightening bugs in the summer time… I made “pig-cluckers” for dinner last night… A “pig-clucker” is a bacon wrapped boneless chicken thigh… but the hit of the night was the cut up strawberries I had prepared for dessert! Oh! And the Arkansas tomatoes are in season, and boy was all that yummy! Cat Stevens greets me this morning with his song: If You Want To Sing Out… There were a few years during the early 70’s when Cat Stevens put out hit record after hit record… And this was one of those hit records!

No beating around the bush this morning, folks… Everything got sold yesterday… Stocks, metals, energy, and the only things to survive the melee were the dollar and Treasuries… Can you say, hello to the Plunge Protection Team (PPT)? I knew you could! The euro lost nearly a full cent on the day, and Gold gave back $8 on the day to close at $1,761… I told you we could still see the price manipulators make a run at Gold’s price, but that isn’t going to stop Gold now, in the past, or in the future! Once a Bull market begins in Gold, ain’t no stoppin’ it now! I saw a chart yesterday that showed the previous bull markets for Gold, and even though Gold has outperformed most asset classes this last year, it’s nowhere near the heights it will see as the bull market trend plays out…

In the overnight markets, the euro got sold even lower and now trades with a 1.11 handle this morning. Gold is basically flat in the morning trading, but the selling of the dollar has ended with a thud once again, what the heck is going on here? The beginning of the last 2 weeks saw the dollar get treated like a rental, and then recover to end the week…   

I’ll tell you something here that you should keep in mind… In my years of trading first bonds, then currencies, and writing about them, I’ve seen a few trends begin and end, and each new trend began with starts and fits. In other words, the asset, like the currencies, would begin to take off, only to see its progress halted for a day or two, but that wouldn’t stop the rally, and soon it would pick up again, and then lather, rinse and repeat… Until one day, and you’re suddenly down the road a bit, and realize that the trend is in place! 

There was an “Oops did I say that out loud?” event with the U.S.’s Trade guy, Peter Navarro, not to be confused with the lead guitar player Dave Navarro of Jane’s Addiction (the band). Peter Navarro told Fox News in an interview that the China Trade Deal was “over”…  

That news sent the stock jockeys running for the cover, but then the comment was quickly changed and everyone was told it was just a wording faux pas, and that everything is still in tact with China…  And the stock jockeys were told to come out now, it’s safe… 

I don’t believe that people make wording faux pas when speaking in an interview, for they have been sent the questions ahead of time, and they can then prepare the answers to be given.  I personally think the trade deal with China is “over”…  Remember, that China added wording to the pact the day before the signing that allowed them to skip out of the deal in the event of a pandemic…  

Knowing that bit of information has had me yelling and screaming about China’s little bit of trickery… Why did they need that wording in the pact? Did they know about the Pandemic but weren’t telling anyone?  You bet your sweet bippie they did…  I’m just saying… 

The fears of a return of the virus has got the markets really shaken, not stirred. So, one has to wonder what’s next for the markets, right? I feel as though, if in fact there is a 2.0 of the pandemic, then I’m certain that that’s where we’ll see the Fed go negative with rates… But before we see 2.0 of the pandemic, Baseball is back! YAHOO! And this year it will be a sprint to the finish line with an only 60 game schedule on the docket…. I can’t wait for the first game, July 23…

I really don’t see the U.S. shutting down the economy again, if the 2.0 pandemic does hit…. I think we as a country have learned out to deal with this virus…. I went to fill up my car with gas, still getting 3 weeks to a gallon, and had my hand sanitizer in the car to clean my hands after touching the gas pump…. I wore my StL Cardinals mask to the grocery store, and so on…. I was sent on a wild goose chase by doctors yesterday, and that’s all I’ll say about that!

Speaking of the economy, Yesterday, I told you that the IMF was going to print their latest outlook for the Global economy, and that they would be full of gloom and doom… They did not disappoint me! Here’s what the IMF had to say. I took this from Marketwatch’s website: www.marketwatch.com : “The International Monetary Fund again cut its global economic forecast for 2020 on Wednesday, saying that the coronavirus pandemic has caused an unprecedented decline in global activity.

The IMF sees a global economic contraction of 4.9%, almost two percentage points lower than three months ago.

If realized, that would be the worst downturn since the Great Depression of the 1930s, far worse than the financial crisis of 2008-2010. In January, before COVID-19 had spread, the IMF had projected 3.3% global economic growth this year.

“We are definitely not out of the woods. We have not escaped the great lockdown,” said Gita Gopinath, the IMF’s chief economist, at a press briefing.

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated and the recovery is projected to be more gradual than previously forecast,” the IMF said.”
Worse than the Great Depression the IMF says! I told you they wouldn’t try to make you feel good with sunshine, lollipops and rainbows, like the U.S. economists do… “ – MarketWatch

Chuck again…. I thought for sure yesterday, I would receive some emails about by scenario of how data prints get printed…. But none, thank goodness…

Today’s U.S. Data Cupboard will the usual Tub Thumpin’ Thursday fare, of Weekly Jobless Claims,  Durable and Capital Goods Orders will also print today… Then we’ll receive the final revision of the GDP from Q1… You may recall that the last revision of -5.0%…. That’s negative 5.0% in case you missed that…. They say the whole quarter’s GDP was negative 5%, when only 2 weeks of the final month of the quarter (March) saw the economy shut down…

So, obviously the first two months of the quarter were hurtin’ for certain, but we kept getting told by the Fed Heads that the economy was “robust”… I would really love for someone on the finance committee to ask Fed Head Chairman, Jerome Powell, what he meant by “robust”, when it’s quite obvious that the economy wasn’t robust! I’m getting a little wound up right now, so I had better take a chill pill and talk about something else…

Ok, I don’t know how this is going to end up being any better at chilling me down, but earlier this week I talked about how stupid it was that all these statues are being taken down… I said then that It’s our history, to learn from mistakes…. I then sent a video of George Will talking about the same idiotic notions going on these days, to my friend Rick S. and he sent me this back….

“History isn’t there for you to like or dislike. It is there for you to learn, and if you dislike it all the better because then you will be less likely to repeat it. It is not yours to erase. It belongs to all of us.”

Ok, I did get through that without getting my dander up…

To recap… Everything but dollars and Treasuries, got sold on Wednesday…. The PPT must have been out doing whatever they could help the dollar which has looked like it was ready to take a ride on the slippery slope…. I know, the PPT usually steps in to save stocks, but with the Fed doing the heavy lifting there, the PPT probably chose to focus on the dollar. Gold got taken off its highs of $1,776, and the euro lost nearly 1 full cent… Oh, well, the Price Manipulators have to have their day in the sun too, right? NOT, I wish they would go to jail, do not collect $200, and stay there!

For What It’s Worth…  Well, did you hear the news that Canada’s rating was dropped from AAA? Yes, the ratings agency decided that their debt levels were too high.. Hmmm….   OK, so here’s the article that explains what the ratings agency was seeing, and if can be found here: https://www.zerohedge.com/markets/canada-loses-its-aaa-rating

Or, here’s your snippet: “Fitch Ratings has downgraded Canada’s Long-Term Foreign Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ (outlook stable) citing the deterioration of Canada’s public finances resulting from the pandemic.

“The nation is expected to run a bigger general govt deficit this year and emerge from recession with “much higher public debt ratios”

“The higher deficit is largely driven by public spending to counteract a sharp fall in output as parts of the economy were shuttered to contain the spread of the coronavirus”   

The rating downgrade reflects the deterioration of Canada’s public finances in 2020 resulting from the coronavirus pandemic. Canada will run a much expanded general government deficit in 2020 and emerge from recession with much higher public debt ratios. The higher deficit is largely driven by public spending to counteract a sharp fall in output as parts of the economy were shuttered to contain the spread of the coronavirus. Although this will support recovery, the economy’s investment and growth prospects face challenges.

Fitch expects the coronavirus response to raise Canada’s consolidated gross general government debt to 115.1% of GDP in 2020, up from 88.3% of GDP in 2019.

Pandemic lock-down measures and depressed global oil demand will cause a severe recession of the Canadian economy with 7.1% GDP contraction in 2020.

Canada’s net external debt/GDP, 44.9%, is elevated and its current account deficit/GDP, 2.0%, is wide relative to the current ‘AA’ medians, a 18.6% net creditor position and a 2.3% surplus, respectively for 2019.

Canadian household indebtedness remains elevated, above 175% of disposable income since 2016, with debt service averaging 14.7% of disposable income in 1Q20.”

Chuck again…  OK, This is how I think this all unfolded… The ratings agency, in this case, Fitch, has watched the countries around the world ramp up their debt, and wanted to hit someone, and that someone was Canada, because, Fitch felt that Canada wouldn’t fight back…  If they had downgraded the U.S. for its debt, they would never hear the end of it from the Government… And probably end up going out of business… for some strange reason… wink, wink… 

Market prices 6/25/20: American Style: A$.6857, kiwi $.6407, C$ .7330, euro 1.1195, sterling 1.2418, Swiss $1.0525, European Style: rand 17.4520, krone 9.7172, SEK 9.3627, forint 316.60,  zloty 3.9901,   koruna 23.9796, RUB 69.09, yen 107.35, sing 1.3831, HKD 7.7502, INR 75.37, China 7.0711, peso 22.93, BRL 5.2215, Dollar Index 97.49,   Oil $37.44,  10-year .67%, Silver $17.54, Platinum $805.98, Palladium $1,870.81, and Gold… $1,760.24

That’s it for today…  And of course this week…  It’s been a very strange week for me and the markets for sure! When we come back on Monday we’ll be finishing up June, and headed for July, and next Friday will the holiday since the 4th is on a Saturday this year…  So, a nice 3-day weekend is on the docket for next week…  I head to the wound center again this morning after sending the letter out. I’m really growing tired of this weekly visit… But it’s all my own fault, and I realize that…  So I carry on.. I sure wish we could start 2020 all over again, knowing what we know today… And that brings us to the great Reverend Al Green, who takes us to the finish line today with his song: Let’s Stay Together…  I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and will continue to Be Good To Yourself!

Chuck Butler

 

June 24, 2020

* Gold pushes through $1,750 and is not looking back! 

* Currencies benefit from dollar selling… 

Good day… And a Wonderful Wednesday to you! What a day, yesterday, what a day! One of the most beautiful days I can recall in June… No major problems at the Butler house to deal with yesterday, so my normal routine was not in trouble like it was on Saturday, Sunday and Monday! I’m a “routine” kind of person, and to upset the applecart which is my daily routine, tends to send me spiraling into a funk… But the funk was taken care of yesterday, by the routine being back in place, and the beautiful day! Today is supposed to be a lot like yesterday, so I have that going for me, eh? The breakout for Gold is happening, the currencies gather steam again, and other things about the economy that you’ll probably not hear anywhere else! But before that, the band, Yes, greets me this morning with their song: Rythm of Love… (and yes, they spelled rhythm like that!)

OK, so all my whining and complaining yesterday about the baseball players and owners being knuckleheads was quieted when a report came out that the MLB Commissioner per the agreement from March 26th, has implemented a start to the season which will be July 26th, with players reporting for “summer camp” by July 1st… So, another of Chuck’s routines, watching his beloved Cardinals play baseball will be returning, and not soon enough as far as I’m concerned!

Well… The breakout to higher prices for Gold has begun in earnest, folks… Yes, there could still be an uprising by the price manipulators, but for the most part, the bull-market has dug its heels in and it looks like there’s nothing holding Gold back now…. Gold rose $16 yesterday to close at $1,770… So the parameters I put on whether or not $1,750 was going to be launching pad, was that Gold had to first cross it, and then hold that level… check, check! So, we’re off to find the Wizard the Wonderful Wizard of Oz… What were Dorothy, toto, and her friends told to do? Follow the yellow brick road…. Follow the yellow brick road…

late last week’s drubbing of the currencies by the dollar bugs, appears to be small number now in the review mirrors of the currencies. The currencies, led by the euro was back over 1.13 handle last night, and the Aussie dollar (A$) was climbing toward 70-cents, at .6951. However, in the overnight markets the A$ was brought back to .6915…  

With the price of Oil pushing higher, the Russian ruble has gotten back on the rally tracks… I just wish the ruble was strong enough to pull all the Petrol Currencies, like the Norwegian krone along for the ride! 

I wonder just how much weight, the words of economist, Stephen Roach, has had to do with this rebound in the currencies? Recall, I told you late last week, that Roach, now of Yale University, told an audience that the dollar is getting ready to fall to great lengths, price wise. There was a time 20 years ago, when Stephen Roach said something, people, and traders stopped to listen… I still get excited to see a quote by him… So, maybe, just maybe, ‘cause we just never know, he’s still listened to by traders?

Yesterday, I was a little tough with the beaver…. Oh, come one, Chuck you were just giving the RBNZ, “the business”, Ok Eddie Haskel… I’ll take your word on that… The Reserve Bank of New Zealand (RBNZ) didn’t cut rates as I suspected they would last night, and instead they did something that I would call very prudent! They said that no further monetary policy changes would be made until they saw the total effect of what they have already done, first…. Yay for the RBNZ! Hip, hip, horary! It’s been awhile since I last heard a Central Bank talk with prudency…

I don’t know if you’ve been watching the Swiss franc lately, but a stealth-like move has been going on and this morning the franc is within’ spittin’ distance of $1.06…. I know someone who has been watching the franc’s upward movement, and that is the Swiss National Bank (SNB)… Yesterday, the SNB issued a report reminding traders that monetary intervention is still a tool in their tool belts…. This, rallying currencies,  is going to really cause some problems for all the currencies that rally VS the dollar, as the dollar get sold… All the countries of the world, except maybe Russia, can’t be having their respective currencies on the rally tracks too long, they don’t have inflation right now to fight, and they need all the help they can get with exports… So, they don’t need stronger currencies right now… But unless they want to throw good money after bad money and intervene, they’ll have no choice…. It’s all the dollar’s fault!

The U.S. Treasury Secretary John Connelly had this to say in 1971 (remember when the dollar was losing so much ground after being taken off the Gold standard) “The dollar is our currency, but it’s your problem”

Getting back to the Swiss franc… Remember when the SNB placed a floor on the franc VS the euro and then couldn’t defend it and eventually had to scrub the whole idea? Dolts… certifiable dolts! They tried to tie down the franc, and all that did was present a dare or challenge to traders, who went immediately for the SNB’s throat! All that happened not that long ago folks….

OK… onto other things… Well, remember earlier this month when I said that I wouldn’t trust another economic print, no matter who was printing it? Well, my leeriness with these economic prints is that of Government intervention…. In other words, a guy shows up at the research division’s door wearing a trench coat, shades, and a Sam Spade hat, and says “Vito needs you to goose the numbers this monrh, so they don’t look so bad, got it?” Now, I don’t know if that really happens, but I have my suspicions… speaking of suspicion, that’s a great song from long ago, by Terry Stafford, and it sounds so much like Elvis singing! Just thought you probably should know it’s not Elvis singing, but Terry Stafford…

So, with my suspicions on the data prints, the Markit version of PMI (manufacturing index) for the first part of June printed yesterday, and they claim there was a HUGE recovery from May’s really low number of 39.8, to a 49.6!!!! Really? So, when did Vito visit you at your offices, Markit? And New Home Sales in May skyrocketed higher! So, while the country is on lockdown, and people are supposed to be staying at home, they were able to go out and buy new homes? Really? Come on….

Today’s Data Cupboard has the IMF’s World Economic Outlook for us… The IMF are not easily influenced by the Vito’s of the world so look for this report to be pretty gloom and doom, which is should be given what we know has happened around the world!

I know that I do those Data Cupboard roundups just for my own entertainment, because nobody pays attention to them any longer, unless something sticks out like a sore thumb!

The price of Oil moved past $40 yesterday, I will admit that when I do go to the doctor or hospital for something, there are more cars out on the road these days, than before, so maybe the demand is growing once again… I saw two different car companies’ commercials yesterday that both told people to get back out on the road, for an old time road trip! The problem that I see with traveling by car right now, is that you have to get out and fill up with gas, and go to the bathroom, and you’ll be touching all kinds of things that who know’s who, has touched them already… Then you’ll have to go to a motel…. What are their cleaning practices? When was the last time the room was sanitized? Questions that will need to be asked and satisfied, before staying….

Planes? I think that’s probably pretty safe right now, those folks are becoming what we used to call in S. St. Louis, “a scrubby Dutchman” There were people who used to get on their hands and knees and scrub the sidewalks with soap and water! That’s when people took pride in their surroundings…

Now? Cleaning the sidewalks? That’s what rain is for!…. I’m just saying…

In my daily run through Twitter to see who’s saying what (economists, I don’t get into all that other cr.. )  Danielle Di Martino Booth leads off today with her report on GNC… “GNC filed for bankruptcy protection with the aim of selling itself and closing stores after its latest effort to manage its debt load unraveled amid the coronavirus pandemic.

Yet another retailer that has been encouraged to make its footprint too big bites the dust.” from her Twitter feed…

Next up is David Rosenberg… “I don’t think it is well understood or appreciated that we have a looming crisis in commercial real estate, and the banks are not immune. See “Brookfield Skips Mortgage Payments” in today’s National Post for a wake-up call.” – from his Twitter feed… 

Just two examples of many that are out there, of how badly the economy is, no matter how stupid strong the stocks are…. 

To recap…. Gold finally crossed the $1,750 level that Chuck’s been talking about for months, and now it’s time to follow the yellow brick road! The currencies are seeing gains visa-vi the dollar getting sold,. Chuck wonders if the words of Stephen Roach, got traders thinking about selling dollars? The RBNZ left rates unchanged and wants to wait to see what the previous moves have done in the economy before making another cut… Chuck applauded them, for it’s been a year of Sundays since he last heard a Central Bank talk with prudency…

For What It’s Worth….  Ok, since I talked about this earlier, regarding the bankruptcies and economic gloom and doom, this article that Ed Steer highlighted today seems to be right up that alley, as it’s about rising bankruptcies, and if can be found here: https://www.zerohedge.com/markets/default-wave-arrives-weekly-bankruptcy-filings-soar-financial-crisis-levels

Or, here’s your snippet: “One month ago, when looking at the recent flurry of chapter 11 filings and a striking correlation between the unemployment rate and loan delinquencies, we said that a “biblical” wave of bankruptcies is about to flood the US economy.

 It appears that the wave has now arrived, because according to Bloomberg data, no less than 13 US companies sought bankruptcy protection last week, matching the peak of the global financial crisis. The filings, led by the perennially weak consumer and energy sectors, were the most for any week since May 2009.  

And while energy has been the second-biggest contributor to this year’s bankruptcy surge, there is much more coming here. Chesapeake is preparing for a filing while California Resources got an extension until June 30 to make interest payments originally due May 29. Seadrill is also considering bankruptcy.

A Deloitte analysis has found that almost a third of U.S. shale producers are technically insolvent with crude at $35 a barrel. And while WTI has been trading slightly higher, this does little to prevent 15 years of debt-fueled production growth catching up with many shale producers, Deloitte said in a study. Adding to the pain is the spring redetermination season which resulted in most high-yield borrowers seeing their reserve-based loans. Borrowing bases, which are determined by the collateral value of oil and gas reserves, were cut by an average of 23%, which means that most energy companies now have roughly 25% less access to liquidity.”

Chuck Again…  the most backruptcies filed in one month in 11 years…  Remember 2009?  It was the first year of Quantitative Easing, which fueled the return of the stock market… 

Market Prices 6/24/20: American Style: A$.6915, kiwi .6435, C$ .7372, euro 1.1307, sterling 1.2520, Swiss $1.0588, European Style: rand 17.3134, krone 9.5455, SEK 9.3030, forint 310.64,   zloty 3.9347,    koruna 23.6182, RUB 68.85, yen 106.55, sing 1.3884, HKD 7.7498, INR 75.30, China 7.0637, peso 22.51, BRL 5.2056, Dollar Index 96.73,  Oil $38.64,   10-year .72%, Silver $17.89, Platiun $826.13, Palladium $1,928.28, and Gold… $1,776.21

That’s it for today…  So, how are you doing with the pandemic? I read this morning that the number of cases are soaring again, but…. the number of deaths are falling, does that mean that it’s more like the flu?  Things around the Butler house are getting back to normal, with the kids, and grandkids coming over, soon friends will be here too, and then we can have a big blowout party to celebrate the end of the virus, and the start of the baseball season! Yesterday was the birthday of a former colleague, Neil George, who when I sent him a birthday note yesterday, said, “Maybe next year I’ll make the Pfennig”…  Well, no need to wait until next year!  I have a treat for us today, as Billy Squier takes us to the finish line with his song: Lonely Is The Night…  And with that, I get on to my routine! I hope you have a wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

June 23, 2020

* Currencies rebound on Monday! 

* Chuck explains that the stock market is NOT the economy… 

Good Day… And a Tom Terrific Tuesday to you! Last night they replayed Game 1 of the 1968 World Series, in which Bob Gibson set the World Series record for strikeouts in a game, at 17… I recalled watching the game somewhat in school, on a TV that they rolled into the room. The game was in black and white, which still puzzles me, because color TV was around then… Some classic baseball names were in that game: Gibson, McCarver, Maris, Cepeda, Brock, and flood for the Cardinals , and McClain, Lolich, Cash and Kaline for the tigers. 1968 was the year of the pitcher, and the year that Gibson set the all-time record low for ERA at 1.12…. That record still stands strong today. Baseball lowered the mound after 1968, and in 1969, baseball introduced the divisions with a league championship series to determine who would play in the World Series. Before then to win a pennant meant a whole lot, because you had to beat out 14 other teams in a 6 month marathon… Most youngsters only know the current set up with wild card teams and an extra round of playoffs. Paul Revere and the Raiders greet me this morning with their song: Kicks…. Kicks just keep getting harder to find, you know those kicks aren’t bringing you piece of mind….

Well, with no baseball or little hope of baseball this year, I felt compelled to carry on about 1968 in the intro this morning… And the song to greet us was very appropriate, too! So, let’s get down to work, eh?

The Currencies had a decent day VS the dollar yesterday, as they found a way to move higher VS the dollar in small doses. The euro climbed along with the Aussie dollar (AS) and all others fell in behind these two leaders, one from Europe, and one from Pan Asia… Gold pushed past $1,750 yesterday and closed the day at $1,754…. Ok, now, Gold needs to be able to hold the figure and not play this game of back and forth, for if it does hold on , then I foresee a major upward move in Gold from here… And with everyone talking about a reboot of the virus, Gold has no reason to be looking around for a bid…

For the record, Gold was $11 higher yesterday, and the price manipulators tried like hell to get the price back below $1,750, but they failed and Gold closed at $1,754…  The early morning trading in Gold has the shiny metal up another $5, so my spider sense is tingling again folks… I think the train is leaving the station, if you get my drift… time to get on board, or be left standing on the station platform, with your hat in your hands… 

I told you yesterday that Lola had changed their forecast for Gold upward, to $2,000 in the next 12 months… And what Lola wants, Lola gets! I had to explain that to a younger reader one day, because he had no idea that the Lola I talk about is from the movie Damn Yankees… played by Bebe Neuwirth, very well, I might add…. And not the Lola from the Copa Cabana song by Barry Manilow…

You know… most people, like me included, that own Gold don’t really check its price every day, or really care if it moves up or down…. I only get upset with the price manipulators taking chunks out of the price of Gold, because that’s not natural movements on fundamentals… If the fundamentals called for Gold to get sold, then so be it, but the fundamentals have been in Gold’s favor for some time now, folks… I’m just saying…

Well, it appears that another one is going to bite the dust… I’m talking about Central Banks that have resorted to going negative with rates…. The Central Bank I’m talking about this time is the Reserve Bank of New Zealand (RBNZ)… They really have no more rate to cut. In New Zealand they refer to their internal rate as the Official Cash Rate (OCR) which currently stands at 25 Basis Points, or 1/4 %… There have been rumbling from the RBNZ that they will need to go negative soon… And wouldn’t you know it, the RBNZ will meet tomorrow (tonight for us)…. They may go negative and then they may just go to zero first, before going negative… The New Zealand dollar/ kiwi has been hanging on the coattails of its kissin’ cousin across the Tasman, A$, but with a gloomy outlook from the RBNZ, I would suspect that kiwi would get hit…

Speaking of going negative… I’m still a believer that the U.S. Fed will have to resort to going negative with deposit rates probably before the year is out…. Think about that for a minute… Even with or without a reboot of the virus, the U.S. economy is going nowhere, and even Fed St. Louis President, Bullard, admitted that there was a deflation problem brewing… I had a dear sweet friend call me last week and ask me this question, “if I have three bank accounts, and all banks go negative with rates, thus charging me for holding my money in that bank, wouldn’t it be better for me to combine the three bank accounts into one, and only get 1 charge instead of 3? I said, of course that makes sense, but be careful of the FDIC limits….

Speaking of James Bullard, he must really be in demand as he is on the docket to speak 3 more times this week, starting today… Unless he’s going to give a different speech, I don’t see the need for 4 speaking engagements in the span of a week… But it is what it is….

The U.S. Data Cupboard today has the Markit version of PMI, their flash version of how June is doing so far… This will be interesting to see if the reopening has influenced manufacturing any…. Yesterday, the Chicago regional manufacturing pulse showed a revival of sorts in that area, but nothing to write home about…

I received an email from longtime reader Bob, who forwarded me an article that is really scary, in that it shows that Government Revenues that were used for spending so far this year have dropped from the usual 80-something percent, to just 51% this year… Jackson Brown said it best when he sang, “Someone’s gonna have to explain it to me,” You see… for the last 10 years, we have averaged 80-ish% of spending being covered by tax revenues… But this year, after a corporate tax cut last year, the revenues are only covering 51% of the spending… That drops the U.S. on the economic health meter….

If you cut taxes, but don’t cut spending, you’re asking for Big Trouble, and that’s what we have here and now folks… Congress failed to cut their deficit spending, and now with all the white knights being passed out to help with the pandemic, it’s really gotten out of hand… And don’t forget what I told you a few weeks ago, that put shivers down my spine, that for the first time on record in a 12-month period, money creation exceeded Tax Revenues…. If that doesn’t spell trouble for the dollar, and the U.S. economy, I’ll eat my hat! No wait! I don’t want to eat my hat… But I’ll be thinking about it!

I have another thought this morning that’s not going to make a lot of people happy… But here it is…  The bull-market rally in the stock market does NOT mean the economy is doing well! Come-on! We’ve been through this before, the stock market is NOT the economy!  I’m still waiting for the bear trap door to spring, and I still believe it will come when the earnings season hits and everyone does the V-8 head slap and realizes that they were wrong about all these corporations that the stocks come from….  There! I said it!

So, in my humble opinion, if you are hell bent and whiskey bound to play with the stocks, please make certain that your stop-losses are in place, and that at the first sign of trouble, you will get out of Dodge, you will not pass Go, or collect your $200!

And then before I head to the Big Finish today…  Have you heard of the company, Wirecard?  Well, in the tradition of the S&L meltdown of the 80’s, Enron in 2001, and Madoff in 2008, we have Wirecard in 2020… This company had auditors arrive and not be able to account for or find $2.1 Billion that the Company’s books said was there… Now the folks at this company admitted that the $2.1 Billion was never really there!  Could this be the snowflake that causes the avalanche? 

To recap…  The currencies rebounded on Monday from late last week’s drubbing by the dollar bugs, and are stronger in the overnight markets too…  Gold made its move above $1,750, and closed at $1,754, after the price manipulators knocked $11 off Gold’s high for the day. Gold is up $5 in the early trading today, so is the train pulling away from the station? Chuck thinks so…  Chuck also points out that the stock market is NOT the economy, and that the economy is going nowhere, and that the bear trap door will be sprung on the stocks… 

For What It’s Worth…  OK, yesterday I told the bad news of all those home owners that weren’t making their payments, and then this crossed my screen, an article on Zerohedge.com that details the failure to make home loan payments for far in June… And it can be found here: https://www.zerohedge.com/personal-finance/30-americans-didnt-make-their-housing-payment-june

Or, here’s your snippet: “A stunning 30% of Americans didn’t make their housing payment for June – a figure that is likely going to ripple through the housing industry in coming months. According to a new survey by Apartment List, the rate is similar to May and shows that even though other industries are rebounding, the situation has not yet improved meaningfully in housing.

These figures stood at 24% in April and 31% in May, before falling slightly to 30% in June. One third of the 30% in June made a partial payment, while two thirds made no payment at all.   

Despite the trend of missing payments at the beginning of the month, households have been able to play catch-up later in the month and “narrow the gap” by making payments in the middle of the month. This was the case in May, where the missed payment rate “dropped from 31 percent at the beginning of the month to 11 percent at the end.”

We’ll see how long people can play catch up.

Meanwhile, as the survey notes, delayed payments in one month are a strong indicator for coming months. 83% of those who paid on time in May did so in June. Meanwhile, only 30% of those who were late in May have made their payment in full for June.

This means the data for the beginning of July is likely to be just as ugly as June.

Recall, just days ago we wrote that Americans had already skipped payments on more than 100 million loans while, at the same time, job losses continue to accelerate.

To put this in perspective, let me once again remind my readers that prior to this year the all-time record for a single week was just 695,000. So even though more than 44 million Americans had already filed initial claims for unemployment benefits before this latest report, there were still enough new people losing jobs to more than double that old record from 1982.

That is just astounding. We were told that the economy would be regaining huge amounts of jobs by now, but instead job losses remain at a catastrophic level that is unlike anything that we have ever seen before in all of U.S. history.”

Chuck Again… OK, I pasted the whole article in for the snippet, because this is important stuff folks… The economy is NOT recovering as quickly as we were all told it would do… But you never heard that B.S. from me! 

Market Prices  6/23/20: American Style: A$.6930, kiwi $.6487, C$.7392, euro 1.1288, sterling 1.2447, Swiss $1.0575, European Style: rand 17.2851, krone 9.5085, SEK 9.3015,   forint 309.26,   zloty 3.9280,   koruna 23.5667, RUB 69.31, yen 107.07, sing 1.3919, HKD 7.7498, INR 75.33, China 7.0699, peso 22.57, BRL 5.2467, Dollar Index 96.85,  Oil $37.23,   10-year .72%, Silver $17.82, Platinum $813.00, Palladium $1,858.00, and Gold… $1,759.10

That’s it for today… I have no idea what happened to yesterday! I sent the letter out, and then the next thing I recall is that I woke up from a nap, and it was time to think about dinner!  WOW!  Crazy , eh?  I think that all the activity of the weekend finally caught up with me!  Last night I was singing, rain, rain, go away… And it did! The sun is coming up and the sky is blue! YAHOO! I had been having wifi problems, and yesterday, with the help of Grace, we worked it all out, and everything is back to where it was before… Double YAHOO!  In today’s world, a wonky wifi is not a good thing to have! OK… time to get my feet up, so Carlos Santana takes us to the finish line today with his band’s song: Europa    this is an instrumental song, no words, and it’s one of Carlos Santana’s best guitar work… With that, I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler