Author: admin

April 21, 2020

* Currencies ended the day flat VS the dollar on Monday

* Gold see another round of selling this morning… 

Good Day…. And a Tom Terrific Tuesday to you! Well I had my video meeting with my primary doc yesterday morning, and he told me that “You look good”…. I started to ask him what rose colored glasses he was looking through, but he’s always been an Optimistic and positive person in my life, and I like him for that! The first time I met him, I had been handed over to him, as my primary doc. Had retired or something like that. He walked into the exam room, and stopped and with this very surprised look, he was awed, he said, “you don’t look like someone that’s been through what your medical records say you’ve been through”… I told him that first visit, that Cancer may win in the end, but it will know that it has a hell-of-a-time doing it, because cancer hadn’t met Chuck Butler! He has told me through the years, that he uses my story to inspire his patients that are down about something…. He once told me he was going to put me on a poster, and I told him he would need a wide angled lens…. The Yardbirds greet me this morning with their song: For Your Love…. The 5 original Yardbirds were not household names, but through the years, guys like Eric Clapton, Jeff Beck and Jimmy Page, all were members of the band…

Front and Center this morning, the price of Oil fell into negative territory yesterday, closing down negative $16…. This simply means that a holder of an Oil contract would have to pay the contra-side $16 to take it off their hands…. This is crazy folks…. And certainly an entry into your journal, right? Because no one, and I mean no one has ever seen this before! You lived in a time when the price of Oil went negative…. And most likely you lived in a time when the price of Oil was greater than $100…. As I’ve been telling you for weeks now, the supply was too great, for the lack of demand from the COVID-19 virus economic shut down. But this? Even this negative price surprised me, or should I say “shocked me”? Is this the beginning of the end of the financial system? It sure looks it could most certainly be just that to me!

In other markets, Gold gained some of the lost ground on Friday, back yesterday, with a gain of $9…. But that’s a far cry from the $33 the price manipulators took Gold down by on Friday! But seeing the reversal gives me a good feeling…. That these engineered price takedowns can’t keep a good bull market asset down! The physical demand is still strong folks… I heard from my metals guru, Tim, who told me that people are paying the outlandishly high premiums for their Gold coins and bars! I find that to be crazy…. Like I’ve said before the cheapest and more affordable way to own physical Gold is in a non-allocated account…. Call Tim at 1-800-926-4922, and ask him to explain this method of buying physical Gold, without the premiums!

The currencies ran upward for about an hour or two yesterday, and then came back to where they started the day, to finish the day flat VS the dollar…. To me, in this time of “everybody has problems” no movement in currencies is what should be taking place each day…. That is unless you want to buy the currency from the country that has only $235 Billion in debt, pays interest on deposits, and has gone hog wild buying physical Gold these past few years…. The country is Russia, and the currency is rubles….

I read last week that officials from the U.S. and Europe were meeting to discuss the elimination of the economic sanctions on Russia, at least while this COVID-19 virus is causing major problems in economies all over the world…. If that were to happen, we would see Russia’s economy really have the potential to get stronger, even in the face of a negative price for Oil….

OK… I’ve mentioned the Reserve Bank of New Zealand (RBNZ) a couple of times recently as they continue to tell people their banks are strong, they also continue to make drastic changes in banking rules, to ease the ability to make a loan…. The newest change comes by way of a proposal that has 10 days to become real, with lots of feedback due during the waiting time. But the proposal is to drop, not lower, but drop the LVR (loan, valuation, ratio) Again the RBNZ states that they are doing this to allow banks to make easier loans to citizens in need of money…. As someone that spent a good portion of his career in banks, (First National Bank St. Louis, Mark Twain Bank, Mercantile Bank, EverBank) I cringe when I hear that this is going to be taken out…. Banks are going to end up being up to their eyeballs in debt that can’t be paid back, and then what’s going to happen? UGH!….

And don’t tell me kiwi traders didn’t notice this proposal…. Kiwi got a good body blow to the mid section yesterday….

OK… This Oil thing really has my attention this morning, as it did last night too…. I mentioned the negative Oil price to my wife, and then said, “I wonder when the gas stations are going to pay us to fill our tanks?” HA! While I doubt I ever see that day, I do believe that cheaper gas prices will come of this move in the price of Oil, and that gas price drop will go a long way toward helping families that need some help…. Not that they can go anywhere right now, but when they are able to, it won’t cost them an arm and leg to fill the gas tank!

Last night before I went to bed, I jotted down what Gold was doing overseas, and it wasn’t a good note…. Gold was down $6 last night overseas…. And this morning…. I see that the shiny metal is down $27… Again, I ask, why?  Has the all clear horn sounded and I had my Bose noise cancelling headphones on and didn’t hear it?  This economic shutdown here and everywhere else is going to cause major disruptions to the food chain, the everything chain, thus throwing the financial system under a bus…. And Gold gets sold by $27?  Say it ain’t so , Joe!  Oh well, I carry on despite this news…. 

When Gold was above $1,700 the folks at Kitco came out and put a target price of $1,900 on Gold that would be reached in 3 months time. That’s the problem with making a call…. Everything in these markets change daily, so you make a call, and then look pretty much like a numskull a day later….  But I don’t think the guys & girls at Kitco are too far off base here….  Which makes Gold a real nice buy at these levels today, eh? 

The U.S. Data Cupboard is still pretty barren, with only the March Existing Home Sales on the docket… Yesterday, we had another regional manufacturing index print negative, this time it was the Chicago print that came in at -4.19%…. There is no data on the docket for tomorrow, so the markets will have a go of it on their own, (not as if they’ve been paying attention to all these negative reports, right?)

To recap….  Well, Chuck has settled down from his Monday tirade against the Fed, and its accomplices…. And meanwhile, back at the ranch, the price of Oil went negative yesterday… That’s right negative, if I own an oil contract, you’ll have to pay me to take delivery…. Is that not the crazyest thing you’ve ever witnessed?  Make sure you get your journal out for that one, folks!  Gold recovered $9 on Monday after experiencing a $33 takedown on Friday. And in the overnight markets Gold is down another $27…. 

For What It’s Worth…. Well, didn’t I tell you that the initial $1,200 stimulus per tax payer, wouldn’t be enough? I mean once the floodgates on deficit spending opened, there was always this chance that someone would think of this…. And they did, wanting to send more money to the tax payers…. I have that article for you here: https://www.marketwatch.com/story/one-1200-stimulus-check-wont-cut-it-give-americans-2000-a-month-to-fire-up-the-economy-2020-04-20?mod=MW_section_top_stories

Or, here’s your snippet: “Ohio Rep. Ryan: Emergency Money for the People Act covers what the CARES Act missed. Since the coronavirus struck our shores, my focus has been on keeping Americans safe and ensuring working people don’t get left behind. Their struggles today are greater than ever. Too many have suffered job losses, shrinking income, isolation, and health issues — all while caring for children and other loved ones.
The one-time $1,200 stimulus check that many Americans are now receiving under the CARES Act was a good start, but it does not go far enough as this quarantine enters its second month. Rent is still due, credit card bills keep coming in, utilities still need to be paid, our phone plans haven’t gotten cheaper, we still need to buy groceries to feed our families. How far do politicians think one $1,200 check can stretch?

Every American age 16 and older who earns less $130,000 per year will receive this money.

That is why Representative Ro Khanna (D-CA) and I introduced the Emergency Money for the People Act, which will provide almost every American $2,000 per month until employment levels reach pre-coronavirus levels. Every American age 16 and older who earns less $130,000 per year will receive this money tax-free.”

Chuck again…. But Rep. Ryan, who’s going to pay for this? While the money will be tax-free as they say, it will eventually be paid in our taxes, folks…. Trust me on that one!

Currencies today 4/21/20 American Style: A$.6285, kiwi .5965, C$ .7027, euro 1.0835, sterling 1.2313, Swiss $1.0305, European Style: rand 18.9854, krone 10.6124, SEK 10.0970, forint 327.49, zloty 4.1795,    koruna 25.3560, RUB 74.62, yen 107.40, sing 1.4305, HKD 7.7499, INR 76.44, China 7.0727, peso 24.33, BRL 5.2673, Dollar Index 100.30,   Oil -$3.23,   10-year .56%, Silver $14.80, Platinum $734.58, Palladium $1,931.74, and Gold… $1,668.39

That’s it for today…. A little shorter today, thank goodness, my fat fingers were flying acrosss the keyboard yesterday morning, in an attempt to get everything that was on my mind in the letter! I watched Game 1 of the 2006 World Series last night… I was in a hotel bar in Panama watching the game on TV back in 2006… After the game that Anthony Reyes had Vs the Tigers that night, you would have thought his future was so bright he had to wear shades…. but the cruelty of baseball, found him a year or so later…. OK, I’ve been home almost a month now, this is getting to be a real pain. And it’s not that I get out all the time these days…. But the little I used to get out, I sure miss!   Creedence Clearwater Revival takes us to the finish line today with their song: I Put A Spell On You….  talk about holding on to a grudge a long time…. John Fogarty sure has against his mates in the CCR band…. Oh well that’s their business not mine….  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

April 20, 2020

* dollar bugs win back the conn, what gives? 

* Gold see another engineered takedown on Friday…. 

Good day… And a Marvelous Monday to you! Another week in the books on staying at home…. I did venture out to my scans and oncologist visit last week, but I practiced personal distancing, except with my oncologist, who had to examine me…. I’m telling you this now, so maybe you’ll listen to me later, but I still can’t believe Americans are abiding by the stay at home rule…. One has to think that sooner or later, they will spill out into the streets, and when they do, what will be on their minds? The news at night is all about COVID-19, so I’m not going any further on that right now…. I do want to point out that last week I made a bad judgement call on something, and 100’s of readers let me know about it. I had already made my mea culpa on the error, but still…. It was interesting to see so many readers let me know I had errored! Again, sorry, for that…. The great band Chicago, greets me this morning with their song: Feeling Stronger Every Day…. (from 1973!)

Well the data is awful, the news is awful, and the prospects for the future look awful, but the brazen boys in the band decided on an engineered takedown of both Gold & SILVER ON Friday, with Gold being brought down by $34, and Silver by 35-cents…. I have to tell you, that I really thought that these engineered takedowns were going to the curbside, but I guess I was wrong about that…. You would think that the regulators would be looking into this price drop, as suspicious, given all the things Gold has going for it right now…. But everyone’s mind is focused on the COVID-19 virus, and they’ve taken their eyes off the ball regarding regulation!

And don’t look now, but…. The price of Oil has dropped to an $11 handle! That’s right! I said $11!!!!  Lack of demand (like I told you ) and too much supply that hasn’t seen the effects of the production cuts yet, have Oil traders scrambling this morning to find a bid for the Black Gold, Texas Tea….  Don’t rush out to fill up your car, because it will take a day or two before the gas stations get the wink and nod from the refineries to drop the price of petrol…. 

And…. If the metals were getting sold on Friday, guess what else was getting sold? Well, since this is an economics / currencies/ metals letter, you probably already know that the currencies got sold on Friday too…. I’ll go through the data prints from Wednesday last week, and they were just down-right awful, and you’ll be just like me, scratching my head wondering how that can be? But like a conversation I heard this weekend between Grant Williams and Peter Atwater on the Hummmminars… Fundamentals are no longer used to figure price discovery…. It’s all about sentiment… And so using that thought, we must then think that traders think that everything bad in the U.S. is not going to last very long, and so they are just pushing it aside, like you would a bad poker hand!

This is where I could really make today’s letter very, very long, with all my reasons for a short lived recession not having a snowball’s chance in hell of happening, so I’ll just stick to a couple of thoughts….  I’m going on record now that we won’t be filling stadiums, music festivals, movie houses for another year or so….  Think about that for a minute folks, how important those things are to the economy, and will you go and trust that the person sitting next to you is not carrying the virus?  It’ll be a looooooonnnngggg time before all that becomes the norm again…. 

My good friend, Sharon, sent me a link to a YOUTUBE featuring a 1.5 hour interview with one of my fave economists, Danielle di Martino Booth…. I sat there listening to her, and I swear, she’s been reading the Pfennig! She talked about things I’ve said over and over again, about debt…. How the economy won’t come back the same, jobs will be lost, businesses will collapse, etc. Then she said something that I’ve alluded to but not outright said, so here it goes…. I told you all for the last couple of years that Corporate debt was too high, and leveraged…. So, when the Fed looked at these Corporations, they decided that them shutting down was not their fault, so they would get bailed out…. But basically what has happened here folks, is that these Corporations were in deep dookie with loads of debt, and the Fed didn’t allow them to fail, they simply kicked the debt can down the road, and allowed these bad corporations to continue to be in business! This really ticks me off folks…. Really ticks me off…. Did I tell you that this really ticks me off?

OK…. Quick Quiz…. True or False…. The Federal Reserve’s bylaws prohibit them from buying Corporate debt? OK… if you said True, then why on earth is the Fed buying Corporate debt? I’m besides myself right now thinking about this, illegal act…. The Mises org. said it best on Twitter this past weekend: “The Fed is, in effect, a lawless economic government unto itself. It is the lender of first resort, a kind of reverse pawnshop that pays top dollar for rapidly declining assets.”

I’m on a roll this morning folks, so don’t stop me…. Did you stop the Germans when they decided to bomb Pearl Harbor? HA! (from Animal House, folks, I know all too well the Germans didn’t bomb Pearl Harbor!)

Remember when I kept telling you last fall that the Fed Reserve wasn’t telling us the whole truth, and nothing but the truth about why these supposedly, “strong banks” needed to be lent money in the repo markets daily? I kept telling you that something was awry…. And then we found out that we wouldn’t get to know who was borrowing these funds daily, for years! And that news got my spider sense really tingling…. Who was it? Well…. After a few months of investigating, the folks at Wallstreetonparade.com found out that JPMorgan Chase, from September 30 of last year to September 30 of this year, the bank reduced its cash position that was predominantly held at Federal Reserve banks by $145 billion from $344.66 billion to $199.8 billion.

So… it was JPMorgan that withdrew the funds that other banks were using…. And now we have two questions 1. Still who are the banks that need the cash daily?, and 2. Why did JPM need to withdraw all that cash? In the FOIA (freedom of information act) Wall Street on Parade filed a petition for information, and received this… “It acknowledges that it has 233 documents that might shed light on why JPMorgan Chase was allowed to dramatically draw down its cash reserves at the Fed, but says it will not provide them to Wall Street On Parade.”

So much for the FOIA, eh? Oh… and in the Wallstreetonparade.com letter of last week, they pointed out that they obtained information that had JPMorgan Chase CEO Jamie Dimon and his CFO attending a meeting at the Eccles Building in Washington, D.C. with Fed Chairman Jerome Powell on February 19, 2020….

The reason I make a big deal out of all this folks, is look at the dates above…. JPM withdrew $145 Billion in September and the next thing we know is that the repo market has no liquidity, and the Fed has to step in to provide liquidity to the repo market…. And then JPM CEO Dimon is summoned to the Eccles Building on 2/19/20, long before the COVID-19 virus was becoming a problem here in the U.S. Which brings me back to my original thought back in September of last year…. Houston, we have a problem…. The Banks were having troubles long before the COVID-19 virus showed up, but not to worry…. They’ll all be bailed out by you and me folks….

And all you folks that follow the stocks… Have you looked at the stock performance of U.S. banks? Uh-oh…. I’m smelling something that’s cooking, and it’s sour….    

What has happened to the American Revolution spirit? There was once upon a time when Americans wouldn’t take this information and let it slide off their backs, like water off a duck’s back….

So, before I go any further here with this… JPM has filed for two “mixed shelf offerings” totaling $210 Billion…. A “mixed shelf offering” per Google is: The mixed shelf will include securities warrants, debt securities and purchase contracts. Under a shelf registration, a company may sell securities in one or more separate offerings with the size, price and terms to be determined at the time of sale.

Now, I wonder why the bank has to resort to something like this? Oh, and it just so happens that my fave (NOT!) bank Wells Fargo, filed for a mixed shelf offering of $66 Billion on Jan 29, 2020…. This after the CEO of Wells Fargo, announced that the bank had put aside $1.5 Billion for legal costs, in response to the scandals that Wells Fargo has been guilty of…

Don’t tell me that they will use these new found funds to purchase their respective stocks, to support them with the current rot on the vine in bank stocks?  Well, that’s what they’ve done with their excess cash and tax savings the past two years, so why would now be any different?  

And once again…. I’ll ask you this question….. Got Gold?

And still…. Fed Chairman Powell, continues to tell Americans that U.S. Banks are strong…. Yeah, I’ll believe that one when Pigs fly!

The U.S. Data Calendar for this week is pretty barren… There will be some housing reports, but those are behind in time, so they haven’t seen the rot on the vine from the COVID-19 yet…. And we’ll have to wait until mid-week to later to see anything really worth going through…. Last week was an awful week for U.S. Data…. First, Retail Sales for March were negative -8.7%, Industrial Production was negative – 5.4% in March, and Capacity Utilization fell out of bed in March seeing a drop from 77% to 72.7%…. Then the piece de’ resistance, of the week was the Weekly Jobless Claims, that added another 5.2 Million, bringing the total of Americans filing for unemployment in the past 4 weeks to 22 Million…. Oh, and that, along with the data prints we just talked about will be much worse in April…. I’m just saying….

On Thursday and Friday last week, we had Leading Indicators drop the most in one month than ever before going from -.2% to – 6.7%… But let me point something out, the forecasters were already negative before the COVID-19 virus… In addition last week, we saw two regional manufacturing Indexes print, The Empire (NY region) and Philly indexes both dropped out of the sky folks… Their numbers were so negative, it’s embarrassing to them to print them! But for those of you who twist my arm…. With both of these prints being for April, they are COVID-19 virus related, but for those of you who are keeping score at home, the Empire was negative -78.2% (from -2.1% in March) and the Philly was negative -56.6% (from -12.7% in March)….

I keep hearing people that should know better say that once the all-clear horn is sounded that the economy will get bank to normal in no time…. I disagree…. I believe being shutdown for so long, now, is going to keep some businesses from reopening, and some reopening but having a different business model… I also don’t believe that all jobs that were there when the shut down started will be recalled…. I’m not hoping for these things folks, but you need to hear someone else’s opinion on all of this….

And keep in the back of your minds, that in 2001 I called the drop in the dollar, when everyone and their brother was saying that the king dollar would go on forever…. And in 2003, I said it would be the Year of the Euro, and that was exactly what it was! In 2003, I talked about a housing bubble before anyone even knew there could be such a thing, and in 2007, I called for the successive rate cuts by the Fed before they made them, causing people at my bank to question my sanity…. Well, we all know how all that turned out, now don’t we?

To recap…. Gold got taken down by the boys in the band on Friday, and the currencies didn’t fare any better, and all because the U.S. Data was about as awful as it could be…. Trader sentiment has to be that they don’t see this lasting…. I think they have a Day of Reckoning coming…. Chuck goes all-in on the JPMorgan/ Chase sage with the repo market problems, and doesn’t hold back any punches for the bank that’s plead guilty to three criminal felony counts….. And then it takes some time to go through all the awful data prints….

And before I head to the Big Finish… I received a text yesterday from a friend in the business, that sounded like he was depressed, or ready to throw in the towel…. So, I wrote him back this….
What happened to all those people that claimed the dinar was going to be revalued upward?
What happened to all those people that claimed the Amero was real and our next currency?

I’m sure that cheered him up! 

For What It’s Worth…. Have you ever heard of a “dead cat bounce”? (no cats were hurt!) A couple of weeks ago, in a letter that my friend, Dennis Miller of www.milleronthemoney.com sent out he asked me to explain this…. So, you can either go to the website and read it, or suffer through it here…. Basically, a DCB (dead cat bounce) is when the markets rebound in the midst of a bear market…. Think about it like this… you drop a tennis ball off a high rise building, the ball will bounce really high once it hits the ground, but then, it falls again, and we repeat this until there is no more bounce…. I tell you all this because that’s the nature of today’s FWIW, which comes to us from the land down under…. And you can find it here: https://www.smh.com.au/business/markets/delusional-investors-are-underestimating-the-economic-shock-the-world-is-facing-20200416-p54kc3.html

Or, here’s your snippet: “Investors are repeating the mistake they made all through February and early March. They are again underestimating the immense economic shock of COVID-19.

Can there be any parallel in market history to the surreal clash of narratives we saw this week? Global bourses soared even as the International Monetary Fund painted a series of scenarios ranging from dire – the most violent slump since the Great Depression – to catastrophic, with all the potenti Yet Goldman Sachs tells us that COVID-19 is under control and the worst is over. “The number of new active cases looks to be peaking globally, projections of cumulative fatalities and peak healthcare usage are coming down,” it says.

From this breathtaking premise, Wall Street’s fashion leader argues that we should “look through” the Great Lockdown to sunlit uplands ahead, anticipating a further 8 per cent rise in the S&P 500 index by the end of the year.

We can disregard normal bear market rules. This time we will avoid the textbook sequence of events in recessions: a swift crash followed by a torrid buy-the-dip rebound, and then a slow downward grind over months as reality hits home, ending only in capitulation at far lower level. “
Authorities have spared us such a fate by rescuing everything immediately. “The Fed and Congress have precluded the prospect of a complete economic collapse,” it says.”

Chuck Again… I tell you think because I’m not short any stocks, or that I want the stock market to drop, but come on! This move has to be so obvious to everyone, but I see investors saying, “but this time will be different”…. I so dislike that phrase….

They say history repeats itself, or at least it’s very near to the scene of the crime…. And with that, I’ll move one…

Currencies today 4/20/20 American Style: A$.6358, kiwi .6050, C$ .7086, euro 1.0855, sterling 1.2444, Swiss $1.0323, European Style: rand 18.7625, krone 10.3776, SEK 10.0006, forint 326.54, zloty 4.1692,    koruna 25.1834, RUB 73.91, yen 107.80, sing 1.4231, HKD 7.7501, INR 75.96, China 7.0722, peso 24.11, BRL 5.2328, Dollar Index 99.96,   Oil $11.88,    10-year .63%, Silver $15.22, Platinum $783.70, Palladium $2,172.09 and Gold…. $1,686.31

That’s it for today…. When will it warm up again here? I’m sick and tired of this chilly weather, we’re almost to May, and we’ve had two warm days since I returned from Florida! A couple of years ago, we came home for Easter, and it was cold here, so we got right back on the plane and went back to Florida until mid-May! But we can’t do that this year… Well, I guess we could if we wanted to risk our health! Did another Zoom meeting with my happy hour friends on Friday afternoon, and I have another Zoom meeting with my primary doc this morning! Medicine in this day of personal distancing…. I went on a little too long this morning so I’ll end this here, and tell you that today, my good friend, Frank Trotter, celebrates his birthday! Happy Birthday Frank! You’re one year older than me again! HA! And for Frank’s Birthday, one of his fave artists, Jethro Tull takes us to the finish line with his song: Aqualung….. I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

April 15, 2020

* the dollar fights back in the overnight markets

* The boys in the band come back to work….  UGH! 

Good day… And a Wonderful Wednesday to you… This’ll be the last Pfennig this week, as I have been summoned by my oncologist to her office tomorrow, bright and early…. I told you Monday that I had scans last week, and in those scans they saw the tumor in mouth had grown (I could have told them that!), but no other signs of cancer in me, which is good…. 7 weeks ago, I stopped taking my old chemo because it had come to its end of usefulness in me. And, the fact that I need 4 weeks without it to rid it from my system. On the 5th week, the tumor in my mouth began to grow again… And on the 6th week, with it getting big in my mouth once again, I began my new chemo drugs…. Hopefully these drugs have the same luck the previous 4 did, when they immediately shrunk the tumor down to nothing…. So, anyway, my oncologist wants to see me, since it’s been 4 months since she last saw me…. My fave Pink Floyd song greets me this morning: Comfortably Numb….

OK… What began yesterday, as a thought that the dollar’s days as the kind of the hill were nearing an end, were prolonged, but not buffeted in yesterday’s trading…. The currencies gained a little VS the dollar on the day, not giving up its overnight gains one iota, and Gold also gained VS the dollar closing up $3 on the day, to close at $1,725…. A nice strong number, eh?

However, in the overnight markets, the dollar climbed back up on the hill, and began kicking sand in the faces of the currencies and Gold.  This was a reaction to the big gains in the stocks here in the U.S. yesterday…. As if, everything is fine and the all-clear horn has sounded…. NOT!  So, In my opinion, we’ll have to go through these rallies even though, in my mind we have entered a bear market for stocks….  Don’t just take my word on that, let’s listen to what economist, Ken Rogoff of Harvard, had to say about the economy. 

“The short-term collapse… now underway already seems likely to rival or exceed that of any recession in the last 150 years.” – Ken Rogoff taken from the Daily Reckoning.com  

OK. let me see if I understand what Ken Rogoff is saying here….  That the economy is “likely” to rival or exceed any recession in the last 150 years… that would include the Great Depression, right?  Oh my! Say it ain’t so, Joe!

And Bill Bonner reminds us all the time about the Dow-to-Gold ratio. It shows us how much the Dow is worth as priced in real money – gold.

The ratio hit a peak over 40 in 1999. Since then, it has come down.

It’s now at 14. But it still has a long way to go before it reaches its historic “rendezvous with destiny” below 5. That’s where the real bottom will come. – Bill Bonner  

A couple of years ago, I wrote an article for the Dow Theory Letters, and in it I showed the numbers for stock market performance during recessions, and the outcome was not good folks… Which tells me that whenever we get around to agreeing that the economy is in a recession, that the stock jockeys will wake up to smell the coffee….

The reason I’m spending some time this morning talking about stocks is that when we saw stocks drop like a rock from a cliff last month, the Fed panicked and cut rates down to near zero… So, what will the Fed do when stocks slip again?  Well, if you ask me, and I know you didn’t, but you’re going to hear from me anyway….  The Fed will resort to cutting interest rates below zero, into negative territory…. 

And I just don’t see that being a good thing for inflation, stocks, or the dollar….  I’m just saying… I talked about it yesterday, the possible end of the strong dollar trend…  This is the scenario in which that could all take place. 

In talking about an end of the strong dollar trend, whenever that may be, and could be now, I know a lot of people will say, but everyone has an economic problem, why buy their currency? Well, you see I don’t see this as a sell dollar / weak economy VS buy “x”/ strong economy…. I see this simply as traders exiting the dollar and throwing a dart at the board of currencies to see which one they buy…. Of course the euro will get a lot of love being the offset currency to the dollar, but I doubt we’ll see the euro go on runs like it did in 2003, & 2004, when it began its climb to 1.53 in 2008… But, it will slowly add to its current levels…. That’s all IF the dollar is indeed ready to give up the strong dollar trend it has been sailing on for 9 years!

In the past you could use fundamentals and they would tell you where to go when selling the dollar…. The Aussie and Kiwi currencies were the darlings of the last weak dollar trend, when they both reached 100% gains, doubling their prices…. Both of these currencies had much higher interest rates than the dollar, and they had China booking 10% plus annual GDP’s so the raw materials to China were almost on a conveyer belt! That’s obviously not the case any longer, in China and the Antipodeans…. 

Back in the day, the price of Oil was also bumping higher as the dollar dropped…. Remember $105 Oil? Well, when Oil’s price was rising, so were the currencies of Norway, Canada, Brazil, Russia, Great Britain, and Mexico…. And in Mexico, Brazil and Russia, you also had a nice yield coming your way too boot! And again, that obviously isn’t the case any longer, but….  You can still find positive yields in Russia, Brazil and Mexico….    Oh!…. and the price of Oil has slipped below $20 to $19.62 this morning…. I said a couple of weeks ago that I thought the price of Oil appeared to be heading to $15….  

I was wondering the other day, just when the boys in the band were doing to show up… I realize that they had all been sent home for “home sheltering”…. For they had not been seen in days…. And I sure hope they were practicing personal distancing when coming back to work, but come back they did yesterday, as Gold went on a tear early and climbed to $1,769, only to be brought back down by the boys in the band….

And the shiny metal is down $7.50 in the early trading today…. Now, on Monday that early trading selling didn’t upset Gold’s applecart, and at the end of the day, the applecart was full of apples!!  So, if the boys in the band want to continue to tune up their instruments, maybe Gold can turn this around today too!  If not, mark it down to an asset going back to fill in the gaps….  That’s how I’m looking at it right now…. 

The U.S. Data Cupboard gets back into the data prints business today, with key reports like  March Retail Sales, and Industrial Production along with Capacity Utilization. I don’t believe any of these are going to be good, strong prints, although, March was split in half regarding the shutting down of the economy, as it really didn’t begin in earnest until  after the Ides of March… 

Hey, recall yesterday’s FWIW with the run on the credit union for their cash? Well, apparently it’s beginning to happen all over, as I read a report of banks in the U.K. seeing runs on cash…. Seems individuals are getting the message that this recession if Global, and will not be a “V-Shaped recession”…. 

And before we head to the Big Finish today…. I’ve got to say this about what happened yesterday regarding the COVID-19 virus…. I was 100% in favor of halting the payments to the World Health Organization (WHO)…. There’s some very serious charges being thrown out there against the WHO, and George Soros, and Bill Gates…. I would think we would want to know all the facts before any more money is sent their way….

Suggested reading in case you want to find out more would be: Google: Robert F Kennedy, Jr.  Bill Gates….  I don’t think you’ll like what you read, but it has to be read to know where I was going with my last statement…. 

To recap….  The currencies and Gold continued their upward moves VS the dollar yesterday, but in the overnight markets, the dollar has fought back, and we begin today with Gold down $7.50, and the currencies having given back some of their recent gains. Chuck reminisces about his days writing for the Dow Theory Letters…  And then throws a grenade from left field, regarding the World Health Organization….

For What It’s Worth…. While I don’t believe that I could be accuse of “going to the well too often” I have been using the Wallstreetonparade.com site quite a bit lately…. It’s because Pam & Russ Martens do a bang up job of telling like it is, without pulling any punches…. And today’s article from them does just that, once again, as they talk about Banks / off balance sheet items/ liquidity/ repos and more, and can be found here: https://wallstreetonparade.com/2020/04/three-of-the-biggest-banks-on-wall-street-have-7-4-trillion-in-off-balance-sheet-exposures/

Or, here’s your snippet: “In the past few weeks everyone from Fed Chair Jerome Powell to U.S. Treasury Secretary Steve Mnuchin to former Fed Chair Janet Yellen to bank analyst Mike Mayo have appeared on TV to tell the American people that the big banks on Wall Street are well capitalized. To put it in Janet Yellen’s exact words on CNBC last Thursday, “we have a strong, well capitalized banking system.”

These folks have to keep repeating this mantra to the public because the public is increasingly getting curious as to why the New York Fed has had to pump a cumulative $9 trillion in cash to these Wall Street banks, since September 17 of last year, if they are so well capitalized. Can big banks actually be well capitalized and have no liquid money to make loans – the key function of a bank? As we have regularly noted, the Fed’s trillions of dollars in cash infusions to the banks began months before there was any coronavirus COVID-19 outbreak anywhere in the world.

The reality is that the U.S. banking system only looks well capitalized if federal regulators, banking analysts, and the mainstream business press put blinders on and don’t look at what’s hiding in off-balance sheet items at the banking behemoths on Wall Street — the same fatal mistake they all made in the years leading up to the 2008 collapse.

Why are off-balance sheet items such a huge red flag on Wall Street? We’ll let the researchers who wrote the autopsy on the 2008 financial collapse for the Financial Crisis Inquiry Commission explain. They wrote:
“For example, as of 2007, the five major investment banks — Bear Stearns, Goldman Sachs, Lehman Brothers, Merrill Lynch, and Morgan Stanley — were operating with extraordinarily thin capital. By one measure, their leverage ratios were as high as 40 to 1, meaning for every $40 in assets, there was only $1 in capital to cover losses. Less than a 3% drop in asset values could wipe out a firm. To make matters worse, much of their borrowing was short-term, in the overnight market—meaning the borrowing had to be renewed each and every day…And the leverage was often hidden—in derivatives positions, in off-balance-sheet entities, and through ‘window dressing’ of financial reports available to the investing public.”

That last sentence perfectly describes what is going on today – except that it’s worse today than it was in 2008.”

Chuck Again…. These folks at Wallstreetonparade.com are good, and they tell it like it is, Aaron Neville style…. And I totally appreciate that, for that’s my bag baby! 

Currencies today 4/15/20 American Style: A$.6337, kiwi .6020, C$ .7135, euro 1.0935, sterling 1.2510, Swiss $1.0375, European Style: rand 18.6605, krone 10.4755, SEK 9.9926, forint 321.00, zloty 4.1520,    koruna 24.6200, RUB 73.19, yen 107.38, sing 1.4222, HKD 7.7503, INR 75.88, China 7.0494, peso 23.86, BRL 5.1870, Dollar Index 99.37,   Oil $19.62,   10-year .68%, Silver $15.52, Platinum $780.65, Palladium $2,231.53, and Gold… $1,718.50

That’s it for today…. Not so wordy today, eh?   Well, Pfennig Tradition would have called for me starting the letter today with the song Tax Man by the Beatles, but…. Tax Day has been moved to July this year, so I’ll have to save that for when 2020’s Tax Day comes….  The heart doc’s office called me yesterday and apologized for failing to call on Monday, and set the Zoom meeting for this morning….  I bundled up in a hoodie and went outside to sit in the sun for a while yesterday…. The weather here has been so crappy lately, that even at 50 degrees the sun felt warm and good! Again, I’ll say that I’m amazed that Americans have all towed the line with this stay at home thing….  You  don’t think ….Nah, that couldn’t be behind this, Chuck!, Oh Shoot Rudy, I’m going to throw it out there to see if it sticks…. This has been good practice for civil obedience hasn’t it? And the National Guard didn’t even have to patrol the streets!   There! I said it!  Ok…. Steely Dan takes us to the finish line today with their song: Deacon Blues….  that’s one of those songs that you’ll have in your head all day now….  I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler 

 

 

April 14, 2020

* Gold has taken off for the stars…. 

* The Dollar Index drops from 102 to 99…. 

Good Day… And a Tom Terrific Tuesday to you! Well, my Zoom meeting with my heart doc. didn’t take place yesterday as planned… I guess no one showed up in his office to work! Sign of the times, I guess, they’ll call to reschedule at some point… I’ve been on my new chemo for 5 doses and I’m already wanting to sleep all the time…. UGH! I have a mea culpa today, some more thoughts on where all this is going, and more, so stay tuned! But first…. Alice In Chains greets me this morning with their “unplugged” version of their song: Down In A Hole….

Which is exactly where a lot of citizens of the U.S. are these days…. I got to thinking about those stimulus checks…. Like I told Dennis Miller’s (www.milleronthemoney.com) readers in an interview we recently did, “what are the citizen’s going to do with the money? Maybe pay some bills but that doesn’t really help the economy right now, they need to spend it, but who’s open?” Well, add to that my latest gloomy, put you in a bad mood, thought…. Citizens will get up to $1,200 each, so a household could see $2,400 (see that math I just did in my head? Amazing!), and that’s all well and good, but…. Think about the Corporations getting bailed out for their years of loading up on debt, and buying back their respective stocks, instead of putting the money into the corporation (CAPEX)…. And then the icing on my “gloomy, put you in a bad mood, thought” is the very idea that Wall Street Casino Banks are getting BILLIONS of dollars! That’s Billions with a Capital B!

Ok, how was that to start the day? Get your blood flowing, heart rate and pulse up, and now you’re ready to take on the world? I sure hope so, because mine is, just from thinking about that and typing it! Now, you’re wanting something good to read about, to balance this out, right?

Well, how about Gold turning the $7 downside in the early morning trading into a $18 gain on the day, which makes the total turnaround $25! Yes, Gold pushed past the short Gold paper trades yesterday, and traded through the $1,700 figure, to close the day at $1,717!!!!!! Onward and upward as my good friend, and new grandpa, Frank Trotter, would always tell me when I would enter his office in a foul mood, with something on my mind, only to leave forgetting what I had gone in there mad about! We called these Jedi Mind Tricks…. I could use some of those Jedi Mind Tricks right now with all this stuff going on….

Think about that for a minute before we go on…. Since March started, and came in like a lamb…. We had the Saudis and Russians bring their dispute on production cuts to a standstill, which caused a HUGE chunk of the Oil Price to slip away…. Then we had the beginnings of shut downs, Spring Training, then restaurants, bars, churches, the beach, and then pools, and any other place you can think where people gather, shut down…. Shoot, they even shut down tennis courts…. Now that’s a sport that practices social distancing, right? Didn’t matter, shut down! In the 70’s the band April Wine had a song where they would say… Shot…. down…. That’s what all this feels like… the economy is… Shot… Down!

The dollar was busy losing ground to Gold yesterday, and the currencies traded flat pretty much for the day, with the Aussie dollar (A$) getting in some body shots to the dollar bugs…. I was thinking about the A$’s move yesterday, and wondered what was behind this move, given that the Aussies have opened up their printing press too…. Well, again this goes back to the “look” that the U.S. has now and their pledge to shepherd the reserve currency of the world with care…. It’s not looking like they’re holding up their end of the bargain, for getting the ability to print at will, get commodities cheaper, have Oil priced in dollars, and so on….

In the overnight markets, the dollar was sold lower. It looks like a tag team wrestling match…. yesterday, it was Gold’s turn to blister the dollar, and then they tagged the currencies and overnight it was the currencies to blister the dollar…  This could very well turn out to yet another false dawn with regards to a sustained selling of the dollar, but, what if it isn’t? The Dollar Index which about 10 days ago was 102 and change, and this morning it’s barely hanging on to 99….  

I’ve been waiting for the strong dollar trend to end for good, for the last couple of years, and to wet my whistle, the currencies would go on these mini-rallies, VS the dollar, only to get everyone on board that the strong dollar trend was over, and then, poof! The rally was over, and the dollar bugs were back on top of the hill doing a dance to rub it in….  

I read this morning that our friends (NOT!) at OPEC plus, came to an agreement on production cuts for Oil, but does it really matter when there’s little to no demand right now worldwide? The Russians get it, they see there’s no demand, so why cut the production to hopefully raise the price when it doesn’t matter right now… They tried to make the Saudi’s see it their way, but that didn’t happen, and they finally gave in…  So the OPEC+ group of nations will cut oil production by 9.7 Million barrels a day…. The “plus” countries include: Russia, and Mexico, who by the way had been the last fly in the production cut plan’s ointment…. Mexico? Really? Oh well…. We carry on…

Speaking of Oil…. I was reading my weekly edition of Things That Make You Go Hmmmm…. From Grant Williams yesterday (it arrived Sunday night), www.ttmygm.com You have to pay for a subscription, but to me, it makes sense…. And in the group of letters he had in there was an article titled: CORONAVIRUS MAY KILL OUR FRACKING FEVER DREAM: BETHANY MCLEAN

Got your attention? Well, she goes into how the Shale Producing Companies were so badly in debt before the COVID-19 virus came along, and now they don’t have any production to help…. I read some things here that I always “felt were true” but now I know that they are! Our dream of being energy independent is floating out to see folks… Sort of like those Viking funerals where they set the boat on fire and send it out to sea… I’m just telling you these things to back up what I’ve told you about the how the Rig counts were falling, and the Shale Oil production was falling too, weren’t just me spouting off about something I had no business spouting off about!

Why does everything in this country have to have a Political slant to it? When the first stimulus bill, that was supposed to get money in the hands of people who had lost their jobs due to the economic shutdown of the economy, as the pandemic spread, we had Political fighting back and forth, name calling and finger pointing. The bill finally went through, but was packed with all kinds of Pork it’s crazy!  And now the thoughts that they didn’t do enough for the people with the first bill, they’ll have some political wrangling and wrestle with each other over it, before it comes out looking nothing like it was supposed to…. 

I’m going to harp on this thought over and over until the cows come home folks, but I just don’t see why Corporations get to be bailed out by taxpayers, after years of neglect to their own respective balance sheets…  Reminds me of the Aesop fable about the ant and the grasshopper…  the Ant is the taxpayer, saving and stretching their earnings, and the grasshopper is the Corporations, spending their earnings and then borrowing some more to buy back their stocks, and when the fit hits the shan, they come back with their tails between their respective legs, and beg for a bail out….  It’s downright shameful that 1. they do this, and 2. that we let them! 

I’ve said this for years, well since 2009, and I’ll say it again until they colonize Mars, and that is…. IF…. we had not meddled in the economy in 2008, with bailouts, but with support so that the financial system didn’t fail, that the years 2010, and 11 might have been pretty ugly, but, then all the excesses of the years that the Fed didn’t allow the economy to get rid of them, would be gone, and we would have been building an economy that was stronger, and without all the added debt…  

Then IF real smart people would have figured out that we needed to reintroduce the Glass Stegal Act and not allow the Large Brokerage Houses to buy Banks, and become Casino Banks, many would things be different today…. And the Covid-19 virus, shutdown wouldn’t look like it could damage the economy for years to come, like it does now….    I’m just saying…. 

As I told you yesterday, the U.S. Data Cupboard won’t have anything for us to really look to until tomorrow….  So, we can simply move along here for these aren’t the droids we’re looking for….. 

Well…. One of my first bosses in the banking business, Ed Bonawitz, sent me a note yesterday, with a link to the fact check organization that debunked the claim by David Stockman that the House gave themselves a $25 million raise in the stimulus bill…. So, now I’m at a loss as to whom I should believe, David Stockman, the former budget director for President Reagan, or the fact check folks? I guess the fact check folks don’t have a book to sell like Stockman does, so I’ll say sorry to the House folks for saying that they took a raise, but I won’t say I’m sorry for all the other things I said about them! 

To recap….  Gold took off for the stars yesterday, crossing the $1,700 figure on the way, then tagged the currencies in the overnight markets, where they took their turn blistering the dollar. The A$ is really moving higher these days, and that has Chuck scratching his bald head, but then when you think of what the U.S. has done to mar the dollar, he sees the light….  Remember the ant and the grasshopper?  Well, believe it or don’t, but Chuck weaves that fable into the letter this morning…. 

For What It’s Worth… I was going through my email box this past weekend, and noticed an email that I must have missed reading. It was from longtime reader Bob, who sends me stuff all the time, and this one was well worth the read, as it was about a run on a credit union in Baltimore a week ago, and it can be found here: https://www.zerohedge.com/markets/they-want-their-monies-out-baltimore-residents-storm-bank-amid-fears-social-unrest

Or, here’s your snippet: “The evolution of panic hoarding started with 3M N95 masks, then hand sanitizers, non-perishable foods, guns and ammo, and now cash?

A video surfaced on Instagram on Saturday, showing a possible bank run in Baltimore City at the MECU Credit Union, located at 2337 E Northern Pkwy.

The area is considered low/middle class working families (predominantly African American community). The video shows a large line of cars on Saturday afternoon and a line at the ATM. People weren’t cashing in their paychecks because many people were laid off, as we noted, more than 14 million people in the last several weeks have lost their jobs across the county, and what we could be looking at is the beginnings of a bank run.

As soon as the National Guard rolled into Baltimore City – many folks asked themselves – is this a revisit of the Freddy Gray unrest back in 2015,” said Teresa Davis, owner and operator of Teresa Davis Productions.

Davis said residents are going to the local banks because they fear banks are going to fail, and unrest could be nearing.
“They want their monies out,” Davis said, adding that some people in the community have been watching their 401ks crash, and others have been watching the news that a recession could be imminent.
Last month, the smart money in Mid-Town Manhattan and Hamptons were withdrawing as much cash as they could, with at least one bank running out of $100 bills.”

Chuck Again… Coming to a bank near you! As I said last week or sometime I don’t recall exactly when, “when the Fed cuts rates and they go negative, people will attempt to get their cash out of the bank rather than have it there for the bank to charge them for holding it…. This is just a precursor to what we will see soon…. Oh, and when that happens…. Pandora’s Box of digital currencies will be thrown at us…. More on that some other time….

Currencies today 4/14/20 American Style: A$.6405, kiwi .6095, C$ .7195, euro 1.0965, sterling 1.2565, Swiss $1.0395, European Style: rand 18.2478, krone 10.2878, SEK 9.5553, forint 319.45, zloty 4.1428,    koruna 24.4950, RUB 73.44, yen 107.30, sing 1.4155, HKD 7.7509, INR 75.67, China 7.0490, peso 23.55, BRL 5.1437, Dollar Index 99.07,   Oil $21.87,    10-year .75%, Silver $15.56, Platinum $775.76, Palladium $2,245.50, and Gold… $1,722.81

That’s it for today…. Lot’s of things to think about today, folks…. Things will never be the same, I’m afraid….  Your favorite restaurant? It might not come back… Your favorite Bar? It might not come back…  You don’t just shut down the biggest economy in the world, and then keep it shuttered too long, and expect it to come back to the way it was…. It just doesn’t happen like that… I’m just saying…  Game 7 of the 1982 World Series was on the TV last night…. I was at that game. One of my fave pictures on my wall at my writing desk is of me holding my son Andrew, at the World Series parade that took place the next day in 1982….  Great memories! OK…. it’s time to go, I’m late, I’m late! Cat Stevens takes to the finish line today with his song: Moonshadow….  I’m being followed by a moonshadow….   I hope you have a Tom Terrific Tuesday! And…. Please Be Good To Yourself! 

Chuck Butler

 

 

April 13, 2020

* Dollar gets sold on Friday, as currencies & Gold rally!

* 2006 revisited Saturday night! 

Good Day… And a Marvelous Monday to you… I originally came back from Florida because I had a scan scheduled for last week. But then they called and told me they had to cancel it… And then on Thursday last week, they called and said they had an opening for very early Friday morning, and I said I’m good with that… So, I went, with my mask that Kathy made…. I also received a call on Thursday from my heart doctor’s office. They wanted to set up a Zoom meeting with him for Monday, which is today, and will take place right after I send the letter out! My heart doctor is a Cubs fan, so I don’t hold it against him. HA! We always have a nice chat about baseball when I visit, I have to think that these Zoom meetings will be short and to the point, which is fine with me anyway! Canned Heat greets me this morning with their song (that was made famous because of the Woodstock album): Going To The Country….

OK, riddle me this Batman…. 16.7 Million people have filed for unemployment in the last 3 weeks, but stocks have their best week in a month of Sundays, last week… how can that be?  Ahhh, grasshopper, as I keep telling you, we are in an era of “opposites”….  

The dollar, and Gold traded the way they should have hearing the unemployment news… The dollar got sold most of the day on Friday, and Gold gained nearly $40, and touched $1.700 in the intraday trading…  With the dollar getting sold, the euro, and Aussie dollar (A$), led the currencies on their charge back up the hill that the dollar has been king of for so long now….   

As I said last week, the stuff the Fed, Treasury, and Gov’t are doing is simply a replay of 2008, but only this is 2008 on steroids…. And while the folks behind all this mess, keep saying, that “it’s only temporary”…  I’ve heard that one before, haven’t you? I guess what I’m trying to say here is that the Fed/ Treasury/ Gov’t’s definition of the word Temporary is different from mine…. 

I’ve been watching videos that one of my fave analysts, Grant Williams put together, and calls them Hmmmminars…. I told you about the one with Pipa Malmgren early last week, and to end the week he had the great analyst and chartist, Stephanie Pomboy on…. Ms. Pomboy didn’t hold any punches, and really said what was on her mind…. Sort of like Bill Gates did for a MarketWatch article when he said, “No one should think the government can wave a wand and all of sudden the economy is anything like it was before this happened.”

And that’s what I’ve been telling you over and over again, that this shutdown of the economy is going to change things drastically when it’s all started up again….

Ok, I thought of this late last week, when I saw this on Twitter: MNUCHIN SAYS NO TALKS RIGHT NOW ABOUT POTENTIAL TO HAVE FED BUY STOCKS….

My mind went immediately to an owner or GM telling everyone that “the manager’s job is safe”…. I bet there were no talks yet to buy stocks! NOT! Who are they trying to pull the wool over their eyes? Oh, that’s right… The sheeple…. The people that can’t see the forest from the trees, or can’t get out of the way of a moving bus, or… oh, stop it Chuck, not everyone has the economics background you have! Why would these sheeple see that the Fed has taken the playbook for 2008, and just replicated it, but only this time it’s on steroids? And that this is the precursor to the end of the debt cycle that began in 1971, when Nixon took us off the Gold standard? It’s all going to end up in tears, folks…. So, you can decide now if you want to go along with the rest of the sheeple that pretend they don’t know any better, or….. You can decide today that you need to own some Gold / Silver…. You know, JP Morgan said it all those years ago that, “Gold is Money, and nothing else”….

 

I know that there’s been a lot of things happening and new programs being introduced by the Gov’t / Fed/ Treasury, and I’ve tried to keep on top of them…. But one that I did miss last week, was the announcement of the Fed buying Corporate Dept…. I like that they think that just because, from their point of view, the Corporation was downgraded recently due to the COVID-19 Virus, that there’s nothing wrong with this debt….. Really?

Haven’t I been telling you for a couple of years now that Corporate Debt was leveraged to the max, and all coming due in 2020? Oh, and in a sign of the times… I learned last week that Corporate downgrades grew from around 10 in February to 1,044 in the last two months! But don’t let the fact that the economy is shut-down right now, blur your picture of Corporations that were in trouble….

Well, the Fed saw this and decided that “it just wasn’t fair” that the corporations had to go through this virus shutdown, and decided to set up a line of credit for them…. OK, here’s the problem as I see it… not only is this junk the Fed is buying, with newly created dollars, but that the size of the Corp. bonds is around $2.5 Trillion, and the Fed only allotted $750 Billion of this program…. Once again, unless the Fed goes back to up the ante, if you will, they will be doing the deciding on who lives and who dies… corporation wise….

Well, reading through my emails this past weekend, had me spending a lot of time on an article by David Stockman (you know the former budget director for Reagan) , he was good enough to go line by line the pork filled bailout that was passed a week or so ago… One of the first things he details is an allocation of $25,000,000 for additional salary for House of Representatives… Wait! What? The House of Representatives got a raise, and threw it in the COVID-19 bail out? Really? I find this to be so irresponsible, and self-centered, and just plain wrong! A raise? For what? Oh, I see, they get a raise for properly identifying a rising debt problem and choosing to deal with the debt problem by doubling down on the debt! Instead of a raise, they should all be fired, and sent home! But since that’s not going to happen, I guess you and I, you know the taxpayers, get to rejoice this expenditure, the best way we know…   And that brings me to a tale of the past… Dan Devine was a great football coach for the Missouri Tigers, and their hated rival was the Kansas Jayhawks, and their coach at the time was Pepper Rogers, who after a game gave Dane Devine the peace sign… When asked about it Devine replied, “I returned a one fingered peace sign to him”….  So we can rejoice the raise in the House with a Dan Devine special!

The U.S. Data Cupboard is once again as barren as the moon today, and won’t really have anything for us again until Wednesday, when March Retail Sales will print, along with Industrial Production and Capacity Utilization. In addition, on Wednesday, there will be other prints but none as important as those three…

So… the these aren’t part of the U.S. Data Cupboard, but… On Thursday last week 6.6 Million more people filed for unemployment, that totals, in just the last 3 weeks: 16.7 Million people filing for unemployment… When will these type numbers begin to show up in the Unemployment Numbers? Well, I believe we’ll see some of it in the April #’s that will be reported the first Friday in May.

In addition to that, I also want to make an amendment to my previous call of the Fed’s Balance Sheet being above $10 Trillion by year end…. Just last week, the Fed’s Balance sheet rose over $2 Trillion, so if we extrapolate that out to the year, we would be over $20 Trillion at year’s end…. And trust me on this one folks, the Fed Heads are just getting started with buying junk….

Oh… and this little ditty is pretty telling…. For the first time  the Fed now owns more Treasuries than foreigners own…. The U.S. has depended on the kindness of strangers for years to finance our deficit spending, but apparently, that’s not needed any longer, not from a result of reduced deficit spending, but as a result of the Fed now monetizing all debt of the U.S., and apparently can print as many dollars as the U.S. Treasury issues bonds to finance our debt….

I saw an article this weekend where the writer said that the Fed had gone the MMonTy….  Remember the talk about MMT (Modern Monetary Theory), which is print all the money you won’t, debts don’t matter…  I thought the writer had thought of a real funny line… 

For years, when people would ask me if debt is so bad, how come Japan is still in working order? Well, the answer is that the Japanese own most of their debt, making their debt “self financed”, and the U.S. always depended on the kindness of strangers, which makes the latter of the two the most risky, because your debt is held by people that could decide not to hold it any longer….

And before we go on any further there…. Japan in working order? Really? Well, if you think that being in a deflationary funk for over 2 decades is “working order” then Ok…. But to me Japan is a poster child for what happens when debts grow too big…. 

Well, since we are creating dollars to pay for debt, it’s still worse than the self financed scenario. Why? you may be asking…. Well, This is not a “good look” to the rest of the world, folks…. And the shepherd of the reserve currency of the world, needs to be taking better care of their balance sheet to deserve such a title…. I’m just saying…. .Got Gold?

Last week I gave you the “insurance talk with regards to Gold”…. And the other day I heard this line, which will relate to people crashing the gates to buy Gold when the time comes…. “You can’t buy fire insurance when you house is already on fire”….

OK, one more thing on the Debt and the Treasury issuance…. About 8-10 years ago, there was an idea floating around the Gov’t that the way to make running up the debt and having to issue tons of Treasuries, easier, was to….. Require all IRA’s, 401K’s, SEP’s whatever,  to have to buy Treasuries ONLY! This is how I believe the Gov’t could get around the fact that the Fed is owning more Treasuries than foreigners…. Instead of the Fed owning the Treasuries, U.S. taxpayers will own them whether they want them or not! (probably not, given the yield)

And while we’re on the yield…. When inflation beings to stir, the Fed will want to hike rates, but by doing so the bond servicing costs of ALL THOSE TREASURIES would go higher, and with yields low, the bond servicing costs still take up a very large piece of the tax revenues…. And that inability of the Fed to react to the rising inflation is only going to allow inflation to run wild…… Again, I’m just saying…. Got Gold?

And don’t think for one minute, that Gold hasn’t noticed what the Fed, Treasury, etal are doing…. Look, I know that other countries are in the same boat, but their fiscal reaction to their bout of COVID-19 has been miniscule compared to the steroid induced U.S. Version of this… And besides Gold has already booked all-time highs VS all those currencies in the last year, and now it’s the dollar’s turn to see an all-time high in Gold be booked against it! 

To recap…. 16.7 Million people have filed for unemployment the last 3 weeks, and that news sent the dollar down VS the currencies and Gold. the euro and A$’s were the main beneficiaries of dollar selling, along with Gold which gained nearly $40 on the day… Gold is giving back $7 in the early trading today….   The Fed is going to be buying Corp Bonds, are stocks next? You bet your sweet bippie they are! 

For What It’s Worth…. I had two different dear readers send me the link to this article that be found on wallstreetonparade.com…. If this one doesn’t make your blood boil and want to demand a recall of your representative and Senators to ask them how or why they game the store away, then you had better hook yourself up to a blood pressure machine and see if the heart’s ticking correctly! I’m serious here folks, this article has information in it that will make your skin crawl…. And it can be found here: https://wallstreetonparade.com/2020/04/the-new-york-fed-owned-by-multinational-banks-is-nationalizing-capital-markets/

Or, here’s your snippet:” This is exactly what happened during the last financial crisis: the New York Fed was put in charge of the bailout programs and then farmed them out to multinational banks like Goldman Sachs and JPMorgan Chase – who are among the largest shareowner owners of the New York Fed. In fact, JPMorgan Chase, while Dimon was sitting on the Board of the New York Fed, signed a highly lucrative contract to serve as custodian for the New York Fed’s purchases of agency mortgage-backed securities, which currently total $1.45 trillion. That contract has now been in effect for more than 11 years as the Fed promised to unwind that program, but never did, and is now doubling down on it.

During the more than 11 years that the New York Fed has allowed JPMorgan Chase to hold $1.45 trillion of Fed assets, it has pleaded guilty to three criminal felony charges and is currently under another criminal probe by the U.S. Department of Justice for turning its precious metals desk into a racketeering enterprise. One of JPMorgan Chase’s primary regulators is (wait for it) the New York Fed. One of the former bank examiners for the New York Fed, Carmen Segarra, was pressured by the “relationship managers” at the New York Fed to change her review of Goldman Sachs. The pressure was so intense that she went to the Spy Store, bought a tiny microphone, and taped the internal conversations. When she wouldn’t change her review, she was fired.

Let’s remember where all of these bad debts came from on which the U.S. taxpayer is now going to eat the losses. These multinational corporations and multinational banks issued debt in order to buy back trillions of dollars of their own shares to inflate their profits so that their CEOs and other top executives could claim great stock performance and get paid 200 to 400 times what their average workers were getting paid. According to the Economic Policy Institute, CEO compensation has grown 940 percent since 1978 while the typical worker’s compensation has risen by just 12 percent during that span of time. Jamie Dimon has become a billionaire as a result of stock options at his bank.

Today’s unprecedented nationalization of capital markets is the end result of the moral hazard Congress created by allowing the New York Fed, owned by multinational banks, to oversee the bulk of $29 trillion that the New York Fed created out of thin air during the last financial crisis and used to bail out its own shareholder banks and foreign global banks that were interconnected via derivative contracts that were blowing up.”

Chuck Again…. There was so much to talk about in this article, I had to decide what part to put in as your snippet… In this case I think it would better to click on the link above and read the article in its entirety….

Currencies today 4/13/20 American Style: A$.6335, kiwi .6065, C$ .7160, euro 1.0915, sterling 1.2478, Swiss $1.0335, European Style: rand 18.0740, krone 10.2573, SEK 9.9525, forint 323.77, zloty 4.1757,    koruna 24.6156, RUB 73.74, yen 108.03, sing 1.4155, HKD 7.7522, INR 75.69, China 7.0351, peso 23.45, BRL 5.1055, Dollar Index 99.56,   Oil $23.13,    10-year .72%, Silver $15.30, Platinum $746.54, Palladium $2,227.40, and Gold… $1,689.26

That’s it for today….  A pretty long one this morning… .That’s what happens when I have nothing else to do all weekend but read and write down notes about what to say today!  In 2006, I was traveling to Panama during Game 7 of the NLCS (Cards Vs Mets)… And didn’t know the outcome until arriving at my hotel! Saturday night I watched a replay of the game, that I had never seen all the way through! Pretty cool!  After that trip to Panama, I said, “I’m never going back there”… but ended up having to go 2 more times! UGH!   OK… Seals and Crofts takes us to the finish line today with their song: Diamond Girl….   I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

 

 

 

April 9, 2020

* Currencies are flat for the most part on Wednesday

* Gold was flat too, but is up $15 in the early trading this morning! 

Good Day… And a Tub Thumpin’ Thursday to you! Brother was it hot here yesterday…. A record temp of 91 was the high on the day… And then a cold front moved through last night, and we’ll be lucky to hit 60 today…. But boy did that 90 degrees feel good on my bones…. The problem was that you can only sit out for so long…. I was reading a book outside, and when it got tooI  hot, I went inside, sat down in my recliner, and fell asleep! When I awoke, Kathy has turned the A/C on, and I was freezing! I have to give kudos to my wife, she’s been busy making masks, for medical workers, or just people that feel better having them on while around other people…. That and we had the cover removed from our pool (the earliest in the year we’ve ever done that!) and it’ll take a few days for it to be clean to swim in… By then the temps will be back to chilly…. UGH!… Oh well, we’ll be ready when the warm weather turns hot! The Rolling Stones greet me this morning with their song: Bitch, one of my faves by them!

OK… Well, the currencies just drifted along for the most part yesterday…. There is one currency though that is defying the odds and rallying lately, and that is the Aussie dollar (A$)…. A couple of weeks ago the A$ was trading with a 59-cent handle and looking to get weaker, but then China printed that, questionable at best in my opinion, stronger than expected PMI, and suddenly, traders changed their sentiment toward A$’s…. This morning the A$ is well into the 62-cent handle… So bully for the A$!

The Russian ruble has turned around too…. But is still very cheap given their strong fundamentals… There aren’t too many currencies, right now, that I can say that about!

Gold was pretty much flat on the day…. Which seems strange, given all the unknowns out there…. But Every time I go to Twitter or YOUTUBE you don’t have to look for too long before finding an article or video by someone touting the prospects for Gold…. If everyone would stop talking about it and put up some cash to buy it, the Gold price would be better off!…. My dad used to say to me, “Chuck, money talks, and Bull sh*** walks”…. I truly believe that statement and have always thought about it when things like this arise….

And Gold which drifted at best yesterday, down a buck or two on the day is up $15 in the early morning trading…. so this could be a good day for the shiny metal, eh? 

OK…. I have no idea what’s going on here, but…. I keep getting questions in the PRB asking me the best way to buy physical Gold…. Really? Where have you been? Ok, so you missed class the other 12 times I wrote about this? This won’t be the last time, but…. It should be!

The best affordable, convenient way to buy and hold physical Gold or Silver, is in what’s called an “non-allocated account” or Pooled Gold/ Silver…. I suggest that you call Tim Smith @1-800-926-4922, tell him I told you to call, and he or any of his compadres will explain the product, how to open an account, what the costs are, etc. So, please write down that phone number in case you decide at a later date to buy some Gold / Silver!

And again…. I do this for you out of the goodness of my heart…. I’m not paid one wooden nickel for recommending this program or Tim…. So, where else do you get free newsletter with free recommendations? Only here, at the home of A Pfennig For Your Thoughts!

I had someone write me yesterday, ask me why I never talked about cryptocurrency…. Oh brother! Another person that missed class! Basically, cryptocurrency is not a “currency” it’s a device to control you, period! When your life savings can be stolen from your laptop where your cryptocurrency is stored, I don’t see that as something that we need…. Besides, all these cryptocurrencies, like Bitcoin, will not be around in the future, because I truly believe the Gov’t will be issuing their own digital currency in the future…. I first wrote about this in the Currency Capitalist, and then again in the Dow Theory Letters, and of course here…. My good friend Dennis Miller and collaborated on an article regarding this cashless society, that’s coming to a theater near you, soon! You won’t want to miss it, and in case you think you did, check out: www.milleronthemoney.com

I had a message come my way last night from a dear reader that wanted to know what would keep Mr. Trump from pulling an FDR and confiscating individual’s Gold? Well, besides people marching on Washington D.C. with pitchforks and shovels… I guess it could be done…. But the main difference between then and now, is that the U.S. needed the Gold to print more debt/ dollars…. These days the Fed just fires up the IMAC and voila, more dollars and debt are created!

The thing I think the countries of the world that hold their physical Gold here in the U.S. should be worried about is this….. What if, the price reset in Gold is made and the U.S. decides to confiscate all the foreign Gold and make it their own? Now, that’s something to worry about, if I’m Germany, and France, and whomever else has Gold stored here…. The U.S. could say that they were taking the Gold reserves over, and unless you want to go to war with us, you can’t do a thing about it!

Now there’s some food for though, eh? I’m sure there’s a lawyer out there that will give me 10 reasons why that can’t happen, and I’ll just respond…. “possession is 90% of the law”, neener, neener, neener….

And I’m sure there were lawyers back in the days of FDR that told him of the 10 reasons why he couldn’t confiscate people’s Gold…. Did that stop him? Would it stop Trump? Or whomever is the President at the time….

The Central Bank measures just keep coming folks…. Earlier this week the Reserve Bank of New Zealand  (RBNZ) introduced a new financial measure to buy bad loans…. Remember a week or so ago, when I told you that the RBNZ Gov. had said that the New Zealand economy was strong? Really, now…. But then your Central Bank the one you run, keeps coming out with new measures that wouldn’t be needed if the economy was really…. Strong! Hey, I was born in spring, just not this last spring! 

OK… I watch a video last night sent to me by a longtime reader, Linda, and asked me to give her my thoughts on it…. Basically it was a woman who used to be in the White House, (Catherine Fitts) talking about how this current virus is what she calls a “Plandemic” She talks about how at the end of 2019, all we were hearing about were the dollar destabilization crowd, talking about the ending of the dollar as the reserve currency, and then a month later,, everyone has forgotten about that, and instead have a “plandemic” to deal with…. Do you believe in coincidences? I don’t… but sometimes things can get very eerily close, right? Now, I’m not saying this is for real, what I’m saying is things are just too eerily close right now….

Then I watched a video interview with Doug Casey…. Now everyone knows Doug Casey, right? In San Diego a few years ago, I sat on a patio puffing on cigars with Doug, talking about the world…. Well, last night Doug went out of his way to say that he absolutely was shocked at the reaction of world leaders to this virus…. He, like me, questions the shutting down of the economy, and how the reaction to this is going to cause a great depression…. Now, for the most part, through the years, when Doug Casey talks, people listen…. I sure hope the Gov’t is listening to him now….

The U.S. Data Cupboard yesterday, finally printed the Feb. Consumer Credit (read debt), and it soared in Feb from $12Billion in January (you know the month when people get their credit card bills for their Christmas expenditures and pay them down) to $22 Billion in February! WOW!…. OK, just like all the other data from this time, it was before the COVID-19 virus hit our shores, and can you imagine how much this will shrink in March?

Someone asked me the other day about my call that we’re going to see soring inflation in the near future….. Well… basically I see the Fed printing dollars by the truck load, cutting rates to zero, and probably to negative soon enough, I see so many dollars chasing so few goods, since the economy has been shut down, And a Central Bank that not only needs but wants higher inflation in the worst way…. They need inflation to help with the debt, folks. It’s beyond unsustainable, in my opinion…

So, there you have it…. But what I failed to tell you is that first we’re going to see a short-lived bout of deflation, which will send the Fed Heads reeling and wanting to cut rates even more…. And that’s when the inflation spiral begins….

But will the Fed be in any position at that time to slow down the spiraling inflation? No! All they have is to shut off the money supply spigot, and hike rates…. And doing that at this time would be akin to throwing gas on a fire in hopes of putting it out!

This has been a week of dull, sometimes non-existent, economic data from the Data Cupboard, and today just doesn’t change that one iota! We will see the Producer Price Index (PPI)  (wholesale inflation) for March, which will be negative, I’m sure, and the Consumer Sentiment for the first week of this month, which won’t be good, you can bet your sweet bippie on that!  

And we end this dull week for data with the stupid CPI (consumer inflation) for March, tomorrow… What a “nothing” week for data! Oh, that’s right we had the Fed’s FOMC Meeting Minutes yesterday, and I have those for you in the FWIW section today!  Man, this guy that writes this letter just keeps giving people food for thought! HA!

To recap…. The currencies were pretty flat yesterday, with the A$ and rubles the only currencies with some real attention…  Gold was also flat to down a buck or two yesterday, but is up $15 this morning….  Chuck has really been fielding the questions in the PRB here in the Pfennig so everyone can read what his thoughts are…. And today we talk about Gold confiscation, who should be worrying, and spoiler alert, it’s not U.S. citizens!

And before I head to the Big Finish today…. I have this for you….Well…. I thought this line from a dear reader yesterday was very funny…. He said, “after this quarantine is over, ½ of the people will be excellent cooks, and the other ½ will have a drinking problem” HAHAHAHAHAHAHA….. Yes, I’ve noticed that I continue to have my 4 o’clock Happy Hour that started when I was down in Florida, and I would go out on the deck for some late afternoon sun, watch the ocean, and have a cold one…. I now go outside for late afternoon sun, watch the pool water, and have a cold one! Some things never change…. HA!  

For What It’s Worth….  Ok, I gave you a strong hint above as to what’s in today’s FWIW section…. It’s a recap of the Fed’s FOMC Meeting Minutes from my friends at MarketWatch…. and it can be found here: https://www.marketwatch.com/story/the-fed-staffs-worst-case-scenario-no-recovery-until-next-year-2020-04-08

Or, here’s your snippet: “The Federal Reserve staff’s worst-case scenario for the economy is no recovery until next year, according to minutes of the central bank’s two policy meetings in early March, released Wednesday.
The staff economists told officials that there were two plausible scenarios for the U.S. economy grappling with the coronavirus outbreak. In one scenario, the U.S. economy would start to recover in the second half of the year. The more adverse scenario was an economic recovery “much slower to take hold and not materially under way until next year.” Under both scenarios, inflation moves lower.

Facing this uncertainty, Fed officials responded by slashing interest rates to zero and launching open-ended purchases of Treasury and asset-backed securities. Supporters of the full percentage-point cut on March 15 called it “forceful.” It brought the Fed funds rate to a range of 0% to 0.25% because the Fed had already cut rates by a half-point on March 3.
In the March 15 meeting, a “few” officials wanted to cut rates only by a smaller half-point, the minutes show. Cleveland Fed President Loretta Mester eventually voted against the decision for the larger cut.

During the discussion of the cut, several officials said they were worried the public would think the central bank would be out of ammunition with its benchmark rate essentially at zero. But some officials told their colleagues the Fed had other tools — using forward guidance or the Fed’s balance sheet — to ease monetary policy further. There was also a concern that the action might foster investor expectations of negative policy rates.”

Chuck again…. Really? Well, I’m going to throw my hat into the ring that says the recover doesn’t come until next year, but I’m not buying the low inflation thing…. 

Currencies today 4/9/20 American Style: A$.6231, kiwi .6005, C$ .7125, euro 1.0861, sterling 1.2421, Swiss $1.0295, European Style: rand 18.0438, krone 10.2572, SEK 10.0705, forint 326.12, zloty 4.1852,   koruna 24.7468, RUB 75.36, yen 108.85, sing 1.4338, HKD 7.7528, INR 75.86, China 7.0605, peso 23.83, BRL 5.1935, Dollar Index 100.10,  Oil $27.31,   10-year .73%, Silver $15.19, Platinum $735.85, Palladium $2,184.48, and Gold… $1,660.99

That’s it for today and this week…. Tomorrow is Good Friday, and Sunday is Easter, for those of us who celebrate that….  The Greeks celebrate Easter a week later… This will be an Easter that will be like no other that came before this year… I’ll miss stealing some chocolate candy from the kids’ Easter baskets! Saturday marks two weeks since we came home, we self quarantined because of our drive back and the stay in the hotel in Paducah….  I’m still here! My new chemo gets delivered to me today….  This has been a real fight for me and the young lady in the prescriptions dept. of my oncologist’s office….  Part of the problem was that there was no one in office at the Pharmacy to make a call!  Well, anyway, I get to stop partying like it’s 1999 tomorrow, when I take the first dose…. UGH!  OK the Stealers Wheel takes us to the finish line today with their song: Stuck In The Middle With You…..  Clowns to the left of me, jokers to the right…. Here I am, stuck in the middle with you!   I hope you have a Tub Thumpin’ Thursday today, and a very blessed Easter on Sunday, should that be your bag…. Please Be Good To Yourself!

Chuck Butler

 

 

April 8, 2020

* Currencies don’t give back their gains on Tuesday… 

* Chuck does Gold 101….  Any questions? 

Good day…. And a Wonderful Wednesday to you! I read the news yesterday that MLB is considering opening the baseball season in Arizona before empty stadiums…. That’s not going to satisfy me! What on earth is MLB attempting to do here? Baseball will help heal the country ,when its safe for fans to attend games again, period, and not a moment before! I also read where in China they’re starting their baseball season without fans, but in one stadium they’ll have 500 robots dressed as fans to play for…. I just don’t get it…. Stupid! If you ask me! Well, did you see the super Pink Moon last night? The skies were clear here, so we saw it rise in the sky, not the same as being on the beach and watching it come out of the ocean a big orange ball, but it had to do…. And it did…. The late great Dan Fogelberg greets me this morning with his song: As The Raven Flies….

The currencies had a good day yesterday, adding onto their gains from the night before… I have to say that this is the first time I’ve seen a good trading day for the currencies following good overnight trading for the currencies, in what seems like a month of Sundays! I’ll tell you one thing, economists and analysts are split down the middle, with ½ of them saying the dollar is King, will remain King, no questions asked, and the other ½ of them saying that once the Oil contracts begin to take the dollar out of the picture, and trading countries us their own currencies, then the trap door springs on the dollar, and suddenly, everyone begins to fret about all the debt the U.S. accumulated….

So, go ahead and pick your side…. I’m of the opinion that we’re going to see a change in the financial system, and that dollars won’t play as big a part as they do now…. This has been going on for some time now folks…. You see, the Fed, was bailing out foreign entities, without Congress or the public knowing about it, back in 2008…. Well, the President has put a stop to that, and even with the Fed’s new Unlimited amount that they can buy, they had better make sure it’s only from U.S. Corporations/ banks…. This lack of dollars overseas has become a real problem… There’s a ton of dollar denominated debt coming due overseas, and they don’t have enough dollars to pay them off…. So, what will these foreign entities do? They will search for ways to go around dollars, so that this never happens again…. Uh-oh….. And that will be the beginning chip to be thrown on the poker table, that will lead to a big pot, that causes a collapse of our financial system…. I’m just saying…

So, go ahead and keep buying stocks, go ahead and keep getting further into debt, I’m just going to sit here grinning like the Cheshire Cat, with my Gold & Silver….

Gold started the day yesterday down $7 and tried to come back to even on the day, but was turned away by the roadblock that was price manipulators… I’m telling you this now, so you may listen to me later, but “it is NOT in the best interests of the U.S. to have Gold become more in want than dollars”…. I’ve had long arguments with my former big boss, and good friend, Frank Trotter about this, and even showed him the WikiLeaks memos from the state dept, with conversations confirming my thoughts, but he was a naysayer on all that, and we agreed to disagree, going forward…. But that doesn’t mean he didn’t think Gold had a place in one’s investment portfolio!

I know that you longtime readers are getting quite tired of hearing me say that the one thing the price manipulators do, is keep the price of Gold from soaring, and allowing procrastinators the ability to buy Gold before it gets away from them…. You know what? I think that’s the last time I’m going to write that…. I’m sick of having to talk like I appreciate what the price manipulators are doing! To hell with them and the horse they rode in on!

So, everyone that writes a book about the coming collapse of the dollar, has the same problem… they all can’t think of anything that can take the place of the dollar… Well, if Angela Merkel hadn’t sold the Eurozone’s soul to the devil and allowed millions of refugees, the Eurozone would be working toward having the euro do just that, replace the dollar… It’s already the second most traded currency in the world…. Its capital accounts are open and easily traded, a deep bond market, and so on, but right now, all the Gov’t’s efforts are tied down to dealing with refugees….

10 years ago, I thought that by now China’s Capital Markets would be open and easily traded, with tons of trading partners… I guess I underestimated just how much control the Communist Party would have on all that, and they’ve delayed China’s currency on a grand scale from happening…. It could still happen… But…. I doubt it now…. UGH! And I was so sure that they would be in position to take over the reserve currency of the world by now…. See, I guess all my “visions” don’t come true…. Although a lot of them eventually come true, but if you’re wrong on the timing you might has well have kept your mouth shut, because no one remembers…..

Gold…. I knew when I typed the words to yesterday’s title that I shouldn’t do that because it could led to the “old Chuck’s kiss o’death”….  But I went ahead and used “Gold Continues to March Higher”…   I’m sorry…. I really wanted to believe that I had no such powers…. HA!   

Speaking of Gold…  You know, that Gold has no liabilities, right? It has no counterparty risk? It’s not an investment, it’s a store of wealth, right? That it can’t go bankrupt, be bailed out, have taxpayers pay for its years of acting like the Three Stooges, right? Well, then as long as we have all that straight, then tell me that an ETF, that has all those bad things, is just as good as physical Gold?  I’m just saying… 

I keep telling people that this economic problem we’re in was going to pop anyway, it was leaking air, and the COVID-19 virus just move it up on the schedule…. Here’s a ditty to prove what I’m talking about… The Fed set up a lending facility for small business, and allocated $350 Billion…. The applications received totaled $1.7 Trillion!!!!!!! These businesses were up to their eyeballs in debt, and now they’re just using the virus as an excuse !

You know… this economic shutdown is just getting worse for everyone with every passing day…. Imagine all the perishable food that’s not being eaten because it can’t get picked, trucked, delivered and sold at a grocery store…. I imagine heads of lettuce, and so on just rotting in the fields… The food supply chain has been badly damaged, and broken, folks…. Time to dig a garden I suspect, except where I live, with a creek at my boundary line, I have so many wild animals, raccoons, deer, coyotes, foxes, just to name a few, that would eat up anything I planted before it ripened! UGH! Oh well, guess I’ll have to learn to live on meat and potatoes!  And  Meat lovers Pizza! HA! to get Federal aid…. 

And that inflation that I keep telling you is coming, will first be seen in food prices, because of the demand and lack of supply…. As I’ve told you for many years now, almost as long as it was for when my dad told me this…. But in reality there’s no such thing as a shortage of an item…. It’s merely an item that is need of a price adjustment…. And so it will be with the perishable foods that we purchase….  

The proof of that statement is in the pudding with Palladium folks… A couple of years ago, Palladium was trading less than Platinum…  And then it was discovered that there was a so-called shortage of Palladium, and what did the price of Palladium do? Well, we all know it skyrocketed! 

The U.S. Data Cupboard continues to be wanting…. Wanting more economic data, and it won’t get it today, as the only thing on the docket today is the Fed’s FOMC Meeting Minutes from their last meeting, which ended up being anticlimactic, given the Fed had cut rates twice out of meeting prior to that last meeting…  So, these minutes will probably be a bunch of back slapping and congrats for doing a bang up job….  I kid of course, they had better not be celebrating their latest moves! 

Well, it’s holy week, and last night was the first rise of the full moon for this month. It was called the Pink Moon, and was considered a Super Moon…. The timing of these events is important, the paschal full moon refers to the ecclesiastical full moon of the northern spring used in the determination of the date of Easter. The name “paschal” is derived from “Pascha”, a transliteration of the Aramaic word meaning Passover. – google

To recap….  The currencies had a good day yesterday, but saw some drifting and weakness overnight…. Gold saw $11 be taken from its price, by the price manipulators, and dollar bugs.  Chuck is very concerned about the food supply chain being badly damaged….   Inflation is coming…. I hear it sneaking around the corner…. Remember those old ghost stories we would tell around the campfire, closer he came, step by step, inch by inch, till finally, HE WAS ON YOU! 

For What It’s Worth….  I like it when I can find really BIG guys and gals that millions of people follow each day say stuff that sounds like me talking….  And so it was with Raoul Pal, and the folks at zerohedge.com reproduced his comments about the COVID-19 virus and the economy, and they can be found here: https://www.zerohedge.com/markets/whole-worlds-fked-raoul-pal-pulls-no-punches-latest-interview

Or, here’s your snippet: “The whole world’s in trouble” ( he used a different phrase not suitable for this family letter, so I changed it!) 

That is how Raoul Pal, the former hedge-fund manager who founded Real Vision, reacted when he first heard of the uncontrolled and rapid contagion of COVID-19 across the globe. Speaking from his home in the Cayman Islands on the latest “Lindzanity” podcast, the ex-Goldman, ex-GLG Partners trader said:

“The moment the spread hit Iran… and then Italy… that all happened over the span of three or four days… I was like: ‘time to panic before everybody else’…”

“It’s human behavior function. If the Chinese closed every single border and every city, everybody’s going to do it.”

“I said: ‘Listen, this is the biggest economic event of all of our lifetimes – and it’s coming'” he added. “And that was, in retrospect, the greatest call I’ve ever had.”

And now, with stock markets down 20-40% (depending on geography), bond yields collapsed, credit spreads still blown out, oil almost in the teens, and gold topping $1,700, Pal continues to think (even after Monday’s manic short-squeeze melt-up), that COVID-19 will cause “the largest insolvency event in all history.” And, as Business Insider notes, given his track record as of late, that’s not reassuring.

“I think the balance of probabilities are that this is a much longer event – in terms of economic impacts – than anybody is pricing in,” he said.

“I think it’s a huge societal change that’s coming from all of this.”

To Pal, it is the duration of the fallout from COVID-19 lock-downs that is the key factor here, and one he believes investors are not paying enough attention to (let alone pricing in). In his mind, those who are a projecting sharp V-shaped recovery in the third and forth quarter are incorrect in their assumptions..”

Chuck Again….  Tell them Mr. Pal! Because nobody listens to me! Traders that is….  

Currencies today 4/8/20 American Style: A$.6182, kiwi .5976, C$ .7144, euro 1.0875, sterling 1.2360, Swiss $1.0296, European Style: rand 18.1834, krone 10.2765, SEK 10.0609, forint 329.80, zloty 4.1625,    koruna 24.9787, RUB 75.56, yen 108.92, sing 1.4267, HKD 7.7520, INR 75.97, China 7.0582, peso 24.25, BRL 5.2520, Dollar Index 100.07,   Oil $24.46,   10-year .75%, Silver $15.05, Platinum $739.32, Palladium $2,191.36, and Gold… $1,645.53

That’s it for today…. I really got depressed for a bit yesterday, when it hit me that this coming Sunday is Easter, and it won’t be like any Easter in my lifetime…. No little Delaney in her Easter dress and bonnet, no grandsons dressed up…. Hopefully they still go through the motions of Easter at their homes so we can zoom them or facetime them…. But I guess great traditions can be brought to an end, when a pandemic hits, eh?  And I haven’t held my granddaughter, Evie, for 4 months!  Oh well, it is what it is….   Last night I watched the World Series Game 3, when Albert Pujols hit 3 home runs!  Only Babe Ruth, and Reggie Jackson, had done that previously….  Hey! MLB did a NCAA tournament style bracket to determine in the history of baseball who had the absolutely best season…. On one side of the bracket it was hitters, on the other side, pitchers….  And in the end facing each other in the finals it was Babe Ruth, VS Bob Gibson…. The fans vote Gibson the winner! His 1968 1.12 ERA season is and will always be one of the great memories I have listening to the games on the radio….  OK, I’ve gone on too long today… sorry…  Marvin Gaye & Tammy Terrel take us to the finish line today with their song: Your Precious Love….  I hope you have a Wonderful Wednesday, and well Be Good To Yourself!

Chuck Butler

 

April 7, 2020

* Currencies rally in the overnight markets… 

* Chuck answers some questions…. 

Good Day…. And a Tom Terrific Tuesday to you! It’s a good thing I start each day with a day of the week ditty, as I would for sure lose track of what day it is…. And don’t Laugh, I’m sure that now that most of you are working from home, you know if it weren’t for you signing in each day, that you would lose track of what day it is too! The clouds and gray finally gave way to sunshine yesterday, and I was able to get back outside! I sure do miss my baseball…. What’s a poor boy like me supposed to do without baseball? I began listening to Classic Rock’s Top 100 on my Sirius XM radio app yesterday… Most of the songs I have on my iPod already, but have heard some that I had forgotten about! Music is what I have now… I sit out in the backyard, and sing out loud with the songs, and there’s no one anywhere to complain! HA! The Beach Boys greet me this morning with their love song: Wouldn’t It Be Nice….

Yes, wouldn’t it be nice to put all this in our rear view mirror? But it’s still with us, and the worst is yet to come, although we, as Americans sure have done better with the stay at home rule than I would have thought we would do…. Look, we are “social people”, we get out among the people, make new friends, etc. I really thought by now, my fellow Americans would be saying “to hell with that!” But then again, we ARE Americans, and we rise to the occasion, when its placed in front of us…. You know, my publishers, Mary Anne and Pamela Aden, aka The Aden Sisters, have always been on me to come to Costa Rica… And right now I’m thinking that just might be where I go and never come back until there’s baseball again! Hello, Mary Anne…. This is Chuck, I was wondering if I could bring my whole family down to Costa Rica… Yes, there are 12 of us…. You have a hotel we could use? That would be great, we’ll be there by the end of the week… No wait! We have to get shots before we go, right? Oh, well, forget about that then, because there’s no way we can get them while this COVID-19 virus thing is ruling the day!

I’m sorry,,,, I started typing and the next thing I knew I was in Costa Rica! Silly me! OK…. Well, the euro couldn’t hold onto the 1.08 handle yesterday, as the dollar bugs continued to work their magic spell over the markets, that have them believing that this shut down in the economy will be short-lived, and therefore it’s time to buy stocks and dollars again….

But in the overnight market, there was some healing in the currencies, and as I look at them this morning, they’re all trading with better numbers this morning than yesterday morning…  I know, there’s really nothing out there in currency land that screams, “buy me, buy me”…  Unless of course you’re willing to take a flyer on the Russian ruble, which to me fundamentally seems to be the best, but with their main business, Oil, looking for production cuts to keep it from falling below $20, the ruble gets ignored….  I’m just saying, that maybe, it’s worth a section of your investment portfolio, where you have your “pet investments”… 

For full disclosure, I own rubles….  And I bought them for all the great fundamentals, and the fact that they pay a yield, which in this day of negative and zero yields, is a big thing in my book! 

I was scanning the stories on MarketWatch.com yesterday and came across this quote that I thought played nicely in the sand box with my thoughts that there’s another shoe to drop with stocks… Check this out… “When the markets start to see some of the data on unemployment rising and economic growth and corporate earnings contracting, there will be another level of panic in the market.’ — Scott Minerd

If you don’t know who Scott Minerd is, well he’s themanaging partner and chief investment officer of Guggenheim Partners, so maybe, just maybe he knows a thing about what’s going on, eh?

Gold found a way to push the dollar down by another $20 and in the early trading today the shiny metal is giving back some of those gains from yesterday, but it’s early…  There have been a lot of articles by very smart people in the past week that believe the days of engineered takedowns are ending, as the COMEX is like the Emperor without clothes right now having defaulted last week on a delivery of a 400 oz Gold Bar…. Basically it works like this, folks…. 400 oz Gold Bars are what is know as “good delivery” Gold…. So, large institutions, banks, Central Banks casino Banks (that is if they ever got their heads out of their …. And bought some Gold) when they take delivery of Gold that they purchased, it’s in the form of a “good delivery bar”…. Apparently, the COMEX had to deliver one last week, and couldn’t find it…. Wait! What? Yes, the COMEX in a desperate attempt to keep the paper Trading alive, introduced a new 400 oz Gold Paper Contract, but then found out they didn’t have any in stock in case someone needed delivery!

Not to worry, I’m sure that’s all been taken care of now, right? HA!

Come on Chuck, this is supposed to be the Holy Week, you’re supposed to be kind to your fellow man…. Well, I’m trying, it’s just that the morons keep stepping out in front of me! I’ll try to do better the rest of the week….

Well, what I really wanted to talk about is all the articles talking about an end of the paper contract’s ability to move the Gold & Silver Prices….. I want to know just who they know that told them this is going to be the case, because, if that’s the case, then Beep, Beep, Beep, Yes, that’s the sound of my truck backing up to the loading dock to take on as much Gold as I have money for! Hey…. I just thought of something…. If you could go into debt, and take the cash and buy Gold, and when the fit hits the shan, and the Gov’t forgives everyone’s debt, you would be left with Gold that you didn’t pay for! OK, I’ve got to get a day job, my mind is working overtime on this stuff these days, ! HA!

OK, after climbing to a $27 handle yesterday, on news that Trump and Putin are going to cut Oil production, by 10 Million barrels a day, the price of Oil slipped a buck downward, this time on news that a production meeting is going to take place in a few days, and there are now questions of the production cuts…. Oh my…. Why can’t you all get together and decide where Oil is going and then get out the way!

OK. I want to get to a couple of questions I received in the Pfennig Replies box, that seemed best to answer in the Pfennig so that everyone can read what I have to say…. Yesterday, I mentioned that there could be a new financial system soon…. This is where the debt that every country, sans Singapore and Russia, have accumulated, gets repriced, or even written off… This gives all the debtor nations an opportunity to reset the system, and when resetting the system, the main thing will be at what price do they reset Gold…. Is it $10,000 or $15,000? And that’s when all the countries in the world meet and show their hands, like in poker. Their hands? How much physical Gold do they have in reserves…. They’re will be some BIG surprises…. Like here in the U.S. when we find out that ½ our Gold has been leased out…. We still own it on paper, but possession is 90% of the law, right? The other BIG surprise will be just how much Gold China has accumulated…. I’m betting that their total is north of 15,000 Tonnes…. Which would put them at the head of the table, eh?

And then the other question was about why do I bash Gold ETF’s…. OK…. I’m sorry if I appear to be bashing Gold ETF’s…. To me, if you are simply attempting to track the price of Gold to trade it somewhere down the line, then go ahead and buy the ETF…. But…. At some point in the future, push comes to shove, and you need physical Gold…. Well, you won’t be able to get it out of the ETF…. And with everyone buying physical Gold, there will be none to buy, and then what are you going to do, with the dollars that, if Gold is that important that point, I can’t see the dollar being worth much,.

I say that with the thought that keeps creeping into my brain, and that is that there’s nothing in writing that says the dollar would be worth less if Gold was worth so much… It’s just the way it’s always been, Gold up, dollar down… but this last year has brought the idea that the dollar can remain strong in the face of a Gold rally….  Strange? yes it is, but it is what it is, and I don’t argue with things like that, I just take them as they come…. 

You buy auto insurance in hopes that you never need it, right? You buy health insurance in hopes you never need it, right? You buy home insurance and fire insurance in hopes you never need it, right? Well, there’s nothing different about buying physical Gold…. You buy it, store it, and hope you never need it…. Period!

Can you believe that my old stomping ground wouldn’t allow me to say that last paragraph? They really had a problem with me telling people to buy investment insurance, which would reduce their dollar holdings… I’m just saying…. OK, I’m past the time I agreed not to talk about them, so there! Whoa, there, Chuck… you had better tread lightly there…. 

There’s one more reoccurring question in the PRB… This one asks me why I don’t mention TIPS….  You know the inflation protection bonds that the Gov’t came out with about 20 years ago?  Well, if you can allocate enough money to TIPS then you’ve got inflation protection for that amount of money… See what I’m talking about? I consider TIPS to be a self-centered investment…. And then there’s also the fact that when I went to the bond screen this morning to check on how low yields were for TIPS… And guess what? The whole yield curve is negative!   No thank you ma’am I’ve had enough! 

Well, remember Michael Burry, of the Big Short movie? He saw the housing bubble (after I wrote about it in the White paper, the Year of the euro, 2003) and made bets against the housing sector, and came out looking like a genius…. Well, he’s back to bashing things, this time it’s the economic shutdown here in the U.S.   Apparently, like me, he’s concerned that we won’t be able to “kick start” the economy, just like that!  

As I told you yesterday, the U.S. Data Cupboard was a barren as the moon, and today it just has a couple of data prints that won’t really move the markets, but there is one that I follow… Consumer Credit (read debt) which is really old, as it’s the Feb. print, before the COVID-19 virus came to our shores, so this print will be interesting to see how much debt consumers took on in Feb. 

To recap… The dollar bugs ruled the day yesterday, but in the overnight markets the currencies, and I mean all of them, rallied to win back some lost ground…  Gold was up again with yesterday’s move bringing $20 more to Gold’s price…. The early markets this morning have Gold giving back about $6 of that gain yesterday, but… it’s still early….  Chuck answers some  questions, and wonders what the interest in TIPS is all about?

Before I head to the Big Finish today…. I took a ride last night in my car…. I hadn’t really driven my car in 4 months, and while I thought that it was getting driven while I was gone, the battery barely turned the motor over…. I went straight to the QT for gas (I had my disinfectant cloth with me so I could touch the gas handle…. I then set out for a ride on the highway, which was pretty much empty…. Oh, and the QT was eerily empty, I was the only car on the lot pumping gas! That place is usually busy at 3 in the morning! I love to drive in Missouri, it’s such a beautiful state, with its rolling hills, and scenic vistas…. I got back home around dark, and thought, I’m going to do that again tomorrow!

For What It’s Worth….  I was reading last night an article that explained that Gold futures to the next rollover data are much higher in price the spot Gold…. That’s got to be good right?  Well, here’s an article on zerohedge.com that gets into this for you, and it can be found here: https://www.zerohedge.com/commodities/gold-futures-extend-gains-8-year-highs-after-pelosis-trillion-dollar-promise

Or, here’s your snippet: “COVID-19 appears to have impacted the deep fiscally-conservative regions of the brains of politicians more than many suspected possible as left, right, and center seem to be coalescing around the fact that more spending is better, more helicopter money is even better-er, and more zeros in the national debt is better-est!

Tonight’s latest utterance/demands from Speaker Pelosi – that the next, fourth, round of virus-relief stimulus must be at least $1 trillion – appears to have confirmed one thing (as @hkuppy notes so pointedly): “Glad to see both parties supporting gold $10k…”

And sure enough, gold is soaring after hours following this headline…

Referring to his institutional market research at Global Macro Investor, we give the last word to Raoul Pal and his most recent thoughts (excerpted) on “A Dollar Standard Crisis” are…”Don’t forget – the $13tn short dollar positions (foreign dollar debt held mainly by foreign corporation and investment vehicles) is the largest position ever taken in the history of global financial markets.”
It can only mean a massive, uncontrolled dollar rally.

QE will not fix this. Swap lines will not fix this. A debt jubilee would fix this or multiple trillions of dollars in write-downs and defaults.

It is the dollar strength that brings to world to its nadir (just like the 1930s). It is the dollar system that is the really big problem.

The dollar has eaten all of its competitors and now it is going to eat itself.”

This eventually breaks the dollar after a super-spike as global central banks are forced to find alternatives.

The world’s elite have long wanted to replace the U.S. dollar with a single global super-currency, as The World Bank’s former chief economist said in 2014, it will create a more stable global financial system.

“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank.

“The solution to this is to replace the national currency with a global currency.”

Chuck Again…. Yes, I want to make something perfectly clear here…  All the deficit spending, all the Fed’s measures,  all of it, is only here to extend the bad loans that everyone has made, and to provide short-term liquidity….  I’m just saying… 

Currencies today 4/7/20 American Style: A$.6185, kiwi .5987, C$ .7136, euro 1.0880, sterling 1.2320, Swiss $1.0272, European Style: rand 18.3352, krone 10.2425, SEK 10.0225, forint 330.47, zloty 4.1751,   koruna 25.0016, RUB 76.44, yen 109.05, sing 1.4243, HKD 7.7520, INR 75.40, China 7.0905, peso 24.25, BRL 5.3048, Dollar Index 100.18,  Oil $26.91,   10-year .74%, Silver $15.21, Platinum $744.64, Palladium $2,209.90, and Gold… $1,655.10

That’s it for today…  Pretty wordy today…. Oh well, what else do you have to do today, besides read a long Pfennig! HA!  Fox Sports Midwest is showing the 2011 World Series games this week… I already know the outcomes of the games, but it’s great to just see some baseball being played! Even though it was 9 years ago!  There were some players in that game 1 last night that I had forgotten that they had played for the Cardinals! WOW!  The Great Al Stewart takes us to the finish line today with his song: On The Border….  I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler

 

 

April 6, 2020

* The dollar bugs grab the con once again from the currencies

* Gold rallies two consecutive days…. 

Good Day… And a Marvelous Monday to you! Well, besides the drive back to St. Louis, last week, I’ve been sheltered for 3 weeks… Ever since my kids left to go home, upon their conclusion of their spring break, I’ve pretty much stayed put… Neighbors, Paul and Lenore, were out on their deck on Friday, so pulled a chair into the yard, and we caught up, as I had not seen them for 3 months…  practicing social distancing! It was good to talk to someone else…. I have a group of friends that meet at my favorite watering hole every Friday afternoon, and so we all got together and had a “zoom” session. Hey! At least I got to see everyone again! This Zoom thing is pretty cool… That is until it won’t be any longer…. HA! Dell Shannon greets me this morning with his song: Runaway….

So, riddle me this Batman…. 701,000 are reported as jobs lost in March, and the stock jockeys rejoice? Wait! What? Yes, this is a blatant example of the “opposites” we are in for trading of assets these days, for sure! I’ll have more on the Jobs Jamboree in a minute or two…. But first!

More importantly, to me that is, the dollar bugs also rejoiced at the news of a job losses and sent the currencies to the woodshed… How in the world does that happen? What causes a dollar bug to think that this is all going to work out in their favor, when the last two weeks have seen over 10 Million apply for unemployment benefits? I think I know the answer to this, and it was very prevalent on the deck down in Florida, when the two gentlemen were discussing how they were buying into the market because the worst is behind us…. Really? I would offer this…. The worst is still ahead of us, folks… The next two weeks with this virus is going to be critical to understanding when we reach the peak of cases and deaths….

I understand that stock mark futures are up this morning because traders thought the weekend death toll numbers were better than expected…  Brother! Is that what this has come down to? I’m not even going there!

So, the Big Winner on Friday, and through the weekend, was the price of Oil… Looking very weak until Friday of last week, the price of Oil has rebounded upward to a $27 handle. The first move came after new that Trump and Putin had agreed to cut daily Oil production by 10 Million barrels… Well, that might be all well and good, for the Oil producers, but for the common man, trying to eke out whatever he can of his savings each week, the rise of price of gas at the pump isn’t going to be a big help….  

The only currency to come through the gauntlet put down the dollar bugs, on Friday, was the Russian ruble, who FINALLY saw some love from traders…. but do you see the connection?  Oil price rises, Russian ruble rallies….   But the ruble wasn’t able to drag the other Petrol Currencies along for the rally… The Mexican peso got trashed, the Norwegian Krone is too tied to the euro’s fortunes, which weren’t good on Friday, the Brazilian real just can’t stop stepping on its own toes, and the Canadian dollar did get a little love, but not much…. 

Well…. Gold has a decent day on Friday, closing up $11 on the day, and is up again this morning in the early trading by $20… Front and center on this discussion is to say thank you, thank you, thank you, in my best Gomer Pyle voice, to those of you who sent along emails alerting me that the actual end of the decade comes on 12/31/20…. So, Whew! I don’t have to eat any crow yet, on my call that the U.S. dollar would not be the reserve currency of the world by the end of the decade, that is… yet!

I was reading an email from the GATA folks this weekend and in it GoldMoney’s Alasdair Macleod was talking as if he had been in one of my presentations from 10 years ago…. He said that Basically, in his mind that China would end up selling a load of U.S. Treasuries, buying more physical Gold, and then backing their currency, the renminbi or yuan, with Gold, thus making it the most attractive currency in the world , and thus stealing the crown from the King Dollar…. These are all words that I used to say at just about every presentation I gave back in the day! So, it was nice to see that someone else believes what I do….

And I ask this question once again…. Got Gold?

OK…. I was able to listen to a talk with Pippa Malmgren and Grant Williams on Thursday last week… In case you don’t know Pippa Malmgren is a very well respected analyst/ economist that has worked in the White House, Wall Street, etc. And she was giving us a way to lessen the backlash of all this debt…. You see, for those of you who remember this, back in the late 80’s we had the Savings and Loan collapse, remember that one? The Gov’t created the RTC, which would buy the debts of the savings and loan, and then package them up in a 30 year Gov’t guaranteed bond. It was a novel way to deal with the Savings & Loan mess…. And Pippa thought that maybe the Gov’t could do something with all the debt they are taking in with all their new and improved plans…. I say, give it a shot, why not? Otherwise the Fed just sits there with over $10 Trillion of junk that’s probably going to have problems in the future…. I’m just saying… 

Well… My good friend, Dennis Miller of www.milleronthemoney.com sent me a note last Thursday night, that a longtime reader, Bernard, had already sent me, and in the article it talked about how, while the Gov’t is going to be sending U.S. citizens checks, that it might take months for a lot of those checks to be received…. Then on a different note I saw on Friday, it talked about what a “good thing the IRS was doing”…. In making the stimulus money available to be automatically deposited in one’s bank account…. Well, that might be all well and good, but, be careful of things the “Gov’t does for you”…. Because if you allow them to access your bank account they’ll be able to go both ways on that in the future…. And that leads me to an article that I’m writing with Dennis Miller on the end of cash…. So, we have that to look forward to now don’t we? 

Spoiler alert…. Chuck pulls out an old Dow Theory Letters article from 2016, that’s so bang on with what’s going on today, with interest rates…. 

OK, the Jobs Jamboree on Friday turned into a Job Fair… As 701,000 jobs were lost in March…. But is that really the true number? I mean the last two weeks of people filing for unemployment in the U.S. have totaled more the 10 Million…. So, where’s the discrepancy? Ahhh, you can’t shoot all the chickens in the hen at once, right? So, as I keep telling you, the April number is going to be a real doozy! But as long as we’re all prepared for it, it won’t surprise anyone…. So, go ahead and say, it for April the Unemployment Rate will rise to 6%,…. It hasn’t been that high since we were coming out of the depths of the Financial Crisis of 2007-08.

And here’s another thing I want to you to stop and think about…. What IF…. The turning of the Earth on its Axis thus bringing warmer weather to the northern hemisphere, doesn’t bring about an decline in the COVID-19 virus numbers? How long are we going to keep the economy shut down? And here’s where I differ with just about every economist out there…. I say there will be no “quick start” to the economy once its back on line… Yes, we’d all like to believe that will happen, but in my mind it won’t, for there will be too many roadblocks preventing it…. And the main one is that in my opinion, the financial system won’t be the same…. Go on chew on that one for a minute before I hit you with more…

OK, the U.S. Data Cupboard today is as barren as the moon today, but last week was a Bonanza of data that got missed because of the Jobs data….  But the Monthly Trade Deficit fell below $40 Billion for the first time that I can ever remember, I think…. Just goes to show you that when the U.S. consumer decides to stay home and not spend like there’s no tomorrow, that the Trade Deficit goes down…. 

In addition, the Feb. Factory Orders were flat, 0% growth, which was better than January’s negative -0.5% drop… But again the majority of this data was taken before the COVID-19 came to our shores, so again, March’s print, in April, will be very bad….  And the Unemployment Rate rose to 4.4% in March…. But like I said above, I’m looking for a 6% rate come next month…  Think about that for a moment over 10 MILLION people have filed for unemployment benefits in the last two weeks….  What happens if this trend isn’t “short-lived” like the markets participants are thinking? 

I just think that in this situation that we should be more like Jack Reacher, and “hope for the best, plan for the worst”….  That’s a saying that I use all the time now, thanks to Jack Reacher!  

To recap…. The Economy lost over 700,000 jobs in March, and the dollar bugs and stock jockeys thought that to be a good thing, and rallied their respective assets and that rally will continue today….  Oil jumped in price since last week, and this morning Oil has a $27 handle to trade with, which helped the Russian ruble become the only currency that saw some love on Friday….   Chuck poses the question for everyone to consider…. What IF this isn’t going to be short-lived, like traders are thinking it will be?  Chuck believes we should be “hoping for the best, and planning for the worst”…. 

For What It’s Worth…. Well first I saw this article sent to me from the GATA folks, and then in his Saturday letter, Ed Steer highlighted it too (edsteergoldsilver.com) And it originally came from the weirdest of places…. Bloomberg.com…. I say that because Bloomberg writers have ripped Gold Bugs up and down for years, and now it seems they’ve come over to the right side…. The Force! So, you can find the article here: https://www.bloomberg.com/news/articles/2020-04-03/gold-bugs-finally-see…

Or, here’s your snippet: “For years gold bugs were relegated to the fringes of financial markets. Often viewed by mainstream investors as tinfoil-hat conspiracists with basements full of beans and bottled water, their warnings sounded apocalyptic: a coming collapse in financial assets, widespread devaluation of paper money, and global disasters that erode civil liberties

Welcome to 2020.

As the coronavirus brings economies around the world to a standstill, gold is rivaling Treasuries and the dollar as the best-performing major asset this year. The metal proved its haven status with a 6% rally as almost $16 trillion was wiped off global stock markets and oil plunged.

There’s also been a scramble for physical metal as investors in exchange-traded funds build the biggest stockpile in history and dealers say they’re struggling to find gold to sell.

“We’ve been trying to warn people that something like this would happen,” said Jim Rickards, the author of several books that predicted a coming financial reset. Rickards, who spoke from a New England mountain compound, has long recommended holding gold as a precaution for wealth preservation.

“I’ve been saying it for years,” he said. “I’m not happy about being right.”
There are echoes of many of the typical gold bug predictions in today’s crisis. Besides the obvious economic and financial-market upheaval, social interaction has become taboo and in some places soldiers are telling people not to leave their homes.

Even the so-called paper market for gold is showing cracks and a squeeze last month on New York’s Comex, the largest gold futures exchange, added fuel to another of the prophecies: that when the crisis came, there wouldn’t be enough gold to go around.”

Chuck again…. Wow, can’t believe that Bloomberg has jumped on the Gold bandwagon! In normal times I would say that this is a signal for us to jump off for now…. But, with all that I’ve told you about this last week, I just can’t see this as the turning point, like when the cabbie says “I just bought some Gold”…. I’m just saying….

Currencies today 4/6/20 American Style: A$.6072, kiwi .5935, C$ .7072, euro 1.0803, sterling 1.2293, Swiss $1.0227, European Style: rand 18.8386, krone 10.5322, SEK 10.1590, forint 338.35, zloty 4.2237,    koruna 25.5380, RUB 76.49, yen 108.88, sing 1.4338, HKD 7.7517, INR 76.10, China 7.0881, peso 25.11, BRL 5.3465, Dollar Index $100.66,   Oil $27.45,   10-year .65%, Silver $14.62, Platinum $732.64, Palladium $2,158.58, and Gold… $1,641.65

That’s it for today…. Week 2 at home, but like I said, other than the drive home, I’ve been keeping to myself for weeks now….   I would like now to be serious, and ask you all to say a short prayer today for my good friend Dennis Miller, who after weeks of immunotherapy, will have a scan today to see if the treatments are working….   It was a cold, gray, rainy, weekend here, no outside time for me, and I’m already missing the sun!  So, how are you all doing be sequestered at home? I know that everyone isn’t being sequestered, and if you’re a doctor, nurse, any health related person, grocery store folks, and anyone else that’s out there going to work each day and subjected yourself to the virus… May God Bless you!   Well, I was treated with great 60’s songs to start the day and end it, as Dion & the Belmonts take us to the finish line today with their song: The Wanderer… I hope you have a Marvelous Monday, and will continue to Be Good To Yourself!

Chuck Butler

April 2, 2020

* Currencies drift again on Wednesday…. 

* Tomorrow is a Jobs Jamboree Friday! 

Good Day… And a Tub Thumpin’ Thursday to you! WOW! This is the first time I’ve written on a Tub Thumpin’ Thursday in a month of Sundays! Well, I guess I didn’t tick too many people off yesterday, as the responses in the Pfennig Replies box were more supportive than anything… Thanks to all who sent along well wishes for getting home safely…. I’ve always been someone that you could put behind the wheel of an auto and drive all day or all night… years ago, in a trip to the west coast, I got in the car in Rolla Mo. 100 miles from St. Louis, about 6 o’clock at night, and the next morning when everyone else woke up, I was pulling into Flagstaff Arizona…. So, the 17 hours from Juno Beach, Fla to Fenton, Mo, was no big deal! Jonathan Edwards greets me this morning with his rock classic song: Shanty…. We’re going to hang around the Shanty momma and put a good buzz on!

Another day, and another day of boring moves in the currencies.. I have to think that right now traders are trying to figure out which direction they want to go with the dollar…. They have the idea that it’s going to the dumpster on one hand, and on the other hand, they’re hoping that all this mess is going to be short-lived, and shorting the dollar outright, right now might not be a good thing… Of course they could ask me, and I would tell them that there’s no way that all these measures that are being put in place are going to be short-lived…. And shorting the dollar right now while it still is pretty strong (99 handle in the Dollar Index) would be the trade of the decade…. But then that’s just me, and see things before they actually happen…

The financial world that we knew before all this, will never be the same… I’m set in stone on that thought… To me, the Covid-19 virus has really just been the Black Swan event that has made the popping of the Fed’s credit bubble even worse…. The Covid-19 virus will abate at some point this summer, and then we’ll be left with the same problems in the markets that we had before, but only this time, inflation will be rising, the bond market rally will be a thing of the past, with yields rising to combat the inflation, and the Fed’s Balance Sheet will be north of $10 Trillion dollars! And again I need someone to tell me how all that doesn’t end up in tears….

OK… Well, after the one-day whacking that Gold had to deal with on Tuesday, the shiny metal attempted to gain some ground back yesterday…. Gold posted a near $17 gain for the day yesterday, to close at $1,593, and this morning there is more love coming Gold’s way, as it is up a buck or two early…  

You know… above I talked about how traders should sell the dollar and it would be the trade of the decade… the problem for these traders is what to buy after they’ve sold the dollar… You see, currencies trade in pairs, so you sell dollars and buy “x”….  And therein lies the problem…. there is no real alternative in the fiat currencies… I’ve told you since 2000 that the euro is the offset currency to the dollar, but the euro has negative interest rates, and a truck load of their own problems right now. So. to automatically go into euros wouldn’t be prudent….

Of course in a natural sell off of the dollar that’s exactly where a large part of the money would go, to the euro, that is…  But there is an alternative that  doesn’t pay interest, but at least you can hold it without being charged for doing so, like is done in the countries with negative interest rates….  By now, you’ve figured out that I’m talking about Gold…. 

You, see… if the financial system is exposed for the house of cards that it is during this Global economic shutdown, then the safe havens will be bought… Japanese yen, Swiss francs, euros, and Gold…  Notice I didn’t add Treasuries. Well, as I said above, the bond market rally is going to be over when this is all said and done, and yields will be rising to combat rising inflation….  So, there!  

Dear readers send me notes all the time, and say, “I know you don’t want to give investment advice, but I need to know where to go with my money”, and  So, this will be the one time that I put these things down in the Pfennig….  First of all you can’t sell all your dollars, because you need some for gas, groceries and giggles (not that we get to have many giggles these days!), so for a good part of your investment portfolio, you should allocate to cash, short term CD’s…. while you can still get some yield, as paltry as it may be….  Then the tried and true combo of: yen, francs, and euros with at least 20% of your allocation, and then Gold & Silver, with another 20% of your allocation, maybe even more in this day of craziness! 

That leaves us with a large portion of one’s investment portfolio that hasn’t had an allocation yet…. And this is where you have your pet investments….   I currently own some Treasuries, but they were purchased some time ago, so I’m still receiving yield on them…. But when they mature, they will be rolled into cash…..  

So…. there you go… I don’t like doing that, as you’re all adults, and can make decisions on your own….  But sometimes a nudge toward an idea is all we need…. So, there’s your nudge…. 

Yesterday, I really laid into the Central Banks, and their Central Planning… I just don’t know where they all made the turn to the dark side… But they have, and there’s no stopping them now until they blow everything up, and we have to start over….   In which case…. The countries that have enough Gold to build a new financial system are: Russia, China, Germany and the U.S. (maybe, we have no idea if there’s really enough Gold in Ft. Knox!) 

Quite a few years ago, when I was in my previous life, I created a Combo CD that was titled: The Prudent Central Bank Index CD…. It consisted of euros, sterling, A$’s and kiwi, and probably francs, but I don’t recall now…. But how silly does that title sound now? For all these central banks that the currencies represent, have gone to the dark side…. Shoot Rudy, even the Reserve Bank of New Zealand (RBNZ) just introduced a TLF…. Term Lending Facility to go along with their TAF Term Auction Facility…. Here’s the plan of the Central Banks folks…. Dazzle the citizens with acronyms, letters that don’t mean much, but disguise what’s really going on….

Oh, and according to Reserve Bank Governor Adrian Orr who said:.

“New Zealand’s financial system remains sound, with strong capital and liquidity buffers. We are confident that the financial system is well placed to respond to the impacts of coronavirus.”

Ok, call me jaded, but if your financial system is sound, as you say, why then change things and begin following the FED. BOE, BOJ, ECB and others? I’m just saying!

Alrighty back to normal programming….

In a very obvious case of being late to the party…. The IMF yesterday, announced that the Global Economy was in a recession…. Great! That’s like someone yelling that the bank was robbed, after the robbers are 10 miles away! Boy, these folks at the IMF are a real help aren’t they? Couldn’t they have been a little more proactive and warn us about this coming Global recession a long time ago, like say that guy that writes a letter titled: A Pfennig For Your Thoughts? 

OK, the U.S. Data Cupboard had the March ISM for us yesterday, and just like I thought it would do, it fell below 50 at 49.1…. But as I said yesterday, the first part of March was normal, it wasn’t until the 12th of March that everything started getting shutdown….  So, the April print will be a real disappointment for sure!  

With the change in location, for me, and all the craziness going on, I completely forgot that we were in a new month, which means the first Friday is a Jobs Jamboree Friday!  The ADP Employment Report for March printed yesterday and showed -27,000 jobs created in March…. I would have thought that to be a bigger number, but, as I keep telling myself, the April numbers of everything are going to be the problem…. 

We’ll also see Feb. Factory Orders today, which again is before the COVID-19 virus hit our shores…. So, it will be weak but not the kind of weakness that’s coming for this data set, that’s for sure! 

To Recap… The currencies drifted again on Wednesday, and really have no direction right now, as traders attempt to figure out if they want to sell dollars, or if all this craziness will be short-lived….  Chuck would help them along, but they won’t listen to him! Gold gained back $17 on Wednesday, after getting whacked by $44 on Tuesday.  Quick test…. What countries have enough Gold?  Come on, the answer is above! HA! 

For What It’s Worth….  I talked about Bill Gates’ Pandemic plan earlier this week, so when the folks at MarketWatch sent me a link to an article about what Bill Gates sees now, I knew it had to be a FWIW article…. And that’s what we have Bill Gates’ view on the Pandemic, and it can be found here: https://www.marketwatch.com/story/bill-gates-shutdown-everywhere-or-well-be-faced-with-a-recipe-for-disaster-2020-04-01?mod=MW_section_top_stories

Or, here’s your snippet: “That’s Microsoft MSFT, -3.55% founder Bill Gates urging the government to enforce a nationwide shutdown in an op-ed in the Washington Post on Tuesday.

“Despite urging from public health experts, some states and counties haven’t shut down completely,” he said. “In some states, beaches are still open; in others, restaurants still serve sit-down meals. This is a recipe for disaster. Because people can travel freely across state lines, so can the virus.”

He explained that until the numbers start to go down across the country — which he says could take at least 10 weeks — the shutdown should be in play everywhere. He also stepped up his call for more testing and was hopeful a vaccine will be developed in less than 18 months.
As it stands now, at least 30 states have stay-at-home orders in place with some 250 million Americans told to remain sheltered and maintain social-distancing measures.

Gates latest comments echo those made in a recent TED interview.
‘There really is no middle ground, and it’s very tough to say to people, “Hey, keep going to restaurants, go buy new houses, [and] ignore that pile of bodies over in the corner,’” he said, taking aim at politicians who seem to think GDP growth is all that counts.

The Gates Foundation ponied up $100 million to assist in the battle against the spread of coronavirus in February after committing to $10 million in January when the outbreak started.

President Trump warned Americans on Tuesday to brace for a “rough two-week period” as the White House released grim new projections for as many as 240,000 deaths even if current social distancing guidelines are maintained. “I want every American to be prepared for the hard days that lie ahead,” he said. “We’re going to go through a very tough two weeks.”

Chuck again…  10 more weeks of not going anywhere? Oh well, if that’s what it takes… But I don’t see most Americans abiding to that too well… We’re a country of people that are “social”, and on the go….  And if I, who’s pretty sedentary these days, am champing at the bit to get out and go, I can only imagine what the go-getters are doing!  It’ll be tough, but…. We’re Americans, we pull together when the going gets tough, and if we need to stay home for 10 more weeks, so be it!  We CAN DO THIS! 

Currencies today 4/2/20 American Style: A$.6093, kiwi .5955, C$ .7065, euro 1.0922, sterling 1.2445, Swiss $1.0348, European Style: rand 18.4635, krone 10.2965, SEK 10.0284, forint 331.95, zloty 4.1844,    koruna 25.2351, RUB 78.75, yen 107.31, sing 1.4318, HKD 7.7516, INR 75.95, China 7.0942, peso 24.30, BRL 5.2261, Dollar Index 99.56,  Oil $22.21,   10-year .60%, Silver $14.16, Platinum $723.50, Palladium $2,275.85, and Gold… $1,594.21

That’s it for today and tomorrow…. A dear reader sent me a funny yesterday… He said, “he washed his hands so much that the answers from his 8th grade test began to show!”   HAHAHAHA! So, that’s my new saying, “wash your hands until the answers from an 8th grade test show”!  I exchanged belated birthday greetings with my former publisher, Erika Nolan yesterday… I told her that life has no meaning without baseball…. Of course I was kidding, but that sure tells a lot about how I feel that there’s no baseball as the weather warms…. And yesterday, should have been home Opening Day here for my beloved Cardinals….  UGH!  Next week is the Holy Week…  I’ll need to be nicer than I have been in the Pfennig next week! The Allman Brothers take us to the finish line today with an instrumental song: In Memory Of Elizabeth Reed…   (I have a story to tell about that song, but I’ve gone on too long already today, so I’ll save it for another day) I hope you have a Tub Thumpin’ Thursday, and Please Be Good To Yourself!   

Chuck Butler