Author: admin

March 11, 2020

* safe haven reversals continued on Tuesday… 

* Shale Producers are having problems… 

Good Day… And a Wonderful Wednesday to you! Well, I can say that it’s been real, and it’s been fun, being back in the saddle, but… it hasn’t been real fun! HAHAHAHAHA! Just kidding, I love what I do here, with this letter, and hope you love reading it as much as I love writing it! Of course there are “those days” when I wish I didn’t have to wake up when I do, but to do it, tells me that I’m still alive and kicking! I’ll get going on the letter now…. Supertramp greets me this morning with their song: Babaji Not exactly a top Billboard hit, but one of my fave Supertramp songs…

Tell me if you’ve heard this before…. The Bank of Japan (BOJ) is going to introduce yet another stimulus plan for their economy…. Heard it, read the book, bought the t-shirt, right? Well, like the song Respect says, take out TCP, if we take out the BOJ and insert the USA… Then we’ve got a story, right? But come on don’t tell me you think this would be the first stimulus plan for the U.S. economy…. What about the year, not so long ago, when tax payers got a check from the Gov’t? or not long after that one, how about “cash for clunkers?”, and those were aimed at individuals, the banks on the other hand received TARP money, and the really Big Casino Banks they took in so much cash from the Fed that they had to take it in the back door, under the cover of night,  so no one knew they were receiving it!

So… That’s where we are once again folks… talking about stimulus for the U.S. economy that’s been stuck at 2.1%

And….  This stimulus for the Casino Banks continues today…  Yes, that’s what all the fuss about the repo market is about…  Just the other day the Fed announced that they would increase the amount of money that’s would be available each day from $100 Billion to $150 Billion, a 50% increase folks… But there’s a problem Houston…  the Banks requested a total of $216 Billion!!!!    So there was $66 Billion that didn’t get a dispersed…  Oh the humanity!  What’s a Casino Bank to do when it doesn’t get their allocation of cocaine?  I say that because that’s what this repo market stuff has become… An addiction to the Casino Banks…  And it’s a very sad thing…  I mean not as sad as learning that a longtime former colleague, Mary Vance, had died, but sad for the markets, economy and this country… 

So, there was more unwinding of the safe havens that had been bought late last week… The euro lost a little ground, the same with francs and yen, bonds didn’t move, but Gold got Whacked by $30….  Like I asked yesterday, have the fears of the Coronavirus subsided? Because that’s what the trading from the first two days this week is saying…  I find this to be utterly ridiculous, colleges across the country are cancelling personal classes, Shoot Rudy, even the SEC told their employees to work from home…  But traders don’t see this apparently… That’s all I’m saying about that!

And like always when Gold gets whacked like that, I say, that there’s always a silver lining here, and that is that the cheaper price gives investors an excellent opportunity to buy it cheaper than it was! 

Did you hear last week when our friends at OPEC (NOT!) decided to cut production again, but this time Russia said “nyet”? Well, that probably stuck in Saudi Arabia’s craw, don’t you think? Because now there’s a price war in Oil going on… And that’s not “just what we need right now!” But it is what it is…. I saw a great display of this price war going on the other day, as I traveled on route 76 down here in Florida. One gas station had regular at $2.55, and another just down the street, had regular at $2.19, which is where I would think the price of gas should have been given the drop in the price of Oil… I know there are lots of costs and taxes that go into refining oil to gas, but just thought that this was a good example…

Speaking of Oil…. Recall how I’ve told you that above $50 for Oil the Shale producers would jump in with more rigs and so on, and below $50 they got back out? Well… yesterday I saw a blurb on Bloomberg where they mentioned that “the new reality for shale producers is that almost all wells dug now lose money”…  With the price of Oil around $33 I would suspect that the “almost” is really an “all”… 

The thing that scares the bejeebers out of me here with the Shale Producers having to deal with losses is that they have accumulated debt up to their collective eyeballs… And how will they pay the debt servicing when they are losing their shirts daily?  I would say to look for some bankruptcies to be announced in this sector soon…  

And you know the song, the hip bone is connected to the thigh bone, which is connected to the knee bone, etc.?    So, think about these Shale Producers folks… They don’t make the rigs that they use, they buy them, and all the equipment needed to frack Oil from shale rocks… So, guess who will be next in line at the bankruptcy court after the Shale Producers? The Rig makers and fracking equipment folks, that’s who!  And then their producers get stuck with stuff, and so on… 

And regarding all of this going on right now… Well respected Investment Analyst Kyle Bass said in a MarketWatch.com interview that “if you think this is bad, wait a month”….    I shudder to think but it will come and there’s nothing we can do to stop it…  I’m just saying…  

The U.S. Data Cupboard is still empty in my mind… We will see the color of the Feb. CPI (consumer inflation) that’s about as reliable as a Nigerian Prince email!  HAHAHAHA!  The Federal Budget for Feb. is also supposed to print, but no one really pays attention to it any longer, as in the end of the fiscal year it will total more than $1 Trillion… 

To recap… The reversal of safe havens continued on Tuesday, and Gold got Whacked by $30!  Seems to Chuck that this presents an excellent buying opportunity…  Chuck talks about the repo mess going on, stimulus that’s being talked about, and other things this morning… 

For What It’s Worth… It’s been some time since I used a letter by my longtime friend, Bill Bonner, and today seems like a good day to revisit what he’s talking about these days… This time he’s talking about the Fed’s misdoings, and other things and can be found here: https://www.bonnerandpartners.com/bill-bonner-diary/feds-to-pump-more-fake-money-into-inflated-financial-system/

Or, here’s your snippet: “In 16th-century England, a performer warmed up the crowd for a Shakespeare play by eating a live chicken – feathers and all.

Now before us is an even more appalling act. The feds are swallowing the entire economy.

This is the story we’ve been watching for two decades.

The Federal Reserve’s grifters swallowed the academic claptrap. They claimed they could manage the economy by falsifying interest rates… and “stimulate” it with fake money. And the public was ready to swallow anything, if there was free money involved.

Then, each time the economy or the markets tried to correct, the feds intervened with more “stimulus.”

This inevitably caused more wriggling and jiggling inside the economy… and then they had to swallow something even bigger to try to stop it.
Let’s look at the oil industry as an example…

We reported more than a year ago that the U.S. shale oil industry was a bubble created by the Fed’s ultra-low interest rates. Producers borrowed huge amounts of capital, fracked the hell out of vast areas of the U.S., and consistently lost money!

In effect, the U.S. oil industry was swallowed by the Fed’s fake-money/fake-interest-rates policies.

As long as they could borrow money cheaply enough… it didn’t seem to matter that they lost money. Like tech companies Tesla, Uber, Twitter, and Snapchat, the frackers were able to keep fracking.

Finally, last year, OilPrice.com reported that the industry might soon turn a profit:”

Chuck Again…. Oh there’s more to this snippet, so go to the web link above and click it to read the whole message, nobody and I mean nobody can weave a story together like Bill Bonner… 

Currencies today 3/11/20 American Style: A$.6526, kiwi .6326, C$ .7282, euro 1.1330, sterling 1.2918, Swiss $1.0697, European Style: rand 16.0688, krone 9.5816, SEK 9.4670, forint 295.66, zloty 3.8152,    koruna 22.7070, RUB 72.17, yen 104.70, sing 1.3892, HKD 7.7693, INR 73.78, China 6.9492, peso 20.97, BRL 4.6897, Dollar Index 96.11,   Oil $33.16,   10-year 0.71%, Silver $17.03, Platinum $882.10, Palladium $2,354.00, and Gold…. $1,667.16

That’s it for today…  As I look outside the wind appears to have finally slowed down, as the palm trees don’t look like their bending over this morning! That’s a good thing!  The ocean is much calmer, and not as angry…  Well, tomorrow I go to have the “apligrapf” applied to my wound, I have no idea what this will entail, so I will be there bright an early in the morning to make sure if it takes more time than expected, I can get out of there and get back here in time for the baseball game!  I have my priorities, right? HA!   So, that’s it for today, tomorrow and Friday…  Grand Funk Railroad takes us to the finish line today with their song: Mean Mistreater…  I hope you have a Wonderful Wednesday, Tub Thumpin’ Thursday and Fantastico Friday, and will please Be Good To Yourself!

Chuck Butler

 

March 10, 2020

* Traders reverse Friday’s trading on Monday… 

* Last week’s “emergency rate cut” to be followed up next week… 

Good day… And a Tom Terrific Tuesday to you! Another day in the markets, and another day on a roller coaster! That and other thoughts will be discussed this morning, but first…. I want to send out a BIG Happy Birthday note to my good friend, Rick Baur…  Happy Birthday, young man, may your day be grand!  I used to invite Rick into the office and we would share a veggie-pizza… You know back when I had an office that is! Justin Hayward and John Lodge (The Blue Jays) greet me this morning with their song: Who Are You Now… 

Well… Apparently, traders had second thoughts about marking down stocks, Oil, and dollars, and buying euros, yen, francs, and bonds, because at a point yesterday that trade pattern stopped on a dime, and began to get reversed…  So, the Coronavirus scare must be over, right?  I shake my head in disbelief that anyone would think that, much less traders who are supposed to be looking ahead… 

The Plunge Protection Team (PPT), must be in total physical exhaustion today from all the heavy lifting they dad to do yesterday… I commend them on a job well done, and now invite them to crawl back into the holes they came out of and leave the markets alone… Do go away mad…. just go away! 

So… I had a fellow send me a note yesterday, chastising me and questioning my intelligence regarding the Coronavirus…  As I said something like if the virus got too bad that pro and college games would be played in empty arenas and stadiums.  He alluded that I wasn’t taking the virus seriously… Really?  I definitely recall telling you all yesterday that this was serious, and that it called for serious people… But, then I used skim through things when reading them too! 

Alrighty then… So, the euro lost a full cent in trading yesterday, Oil gained a full dollar, and bonds gave back 30 Basis Points, and the Dollar Index gained 65 ticks…  So, from that you can see exactly what I was taking about above with the reversal that went on…  And this morning, it appears it will continue, as stock index futures are up, and Gold is down $17 in early trading… 

OK… There were a lot of things that went on last week and yesterday, and apparently we need to be ready for more things to go on today, but one thing that happened last week, seems to have been forgotten about, and that is the Fed’s “emergency” rate cut of 50 Basis Point (1/2%)…  This was an “out of meeting” rate cut folks, which should have sent shudders down the spines of everyone and their brothers!  

The Fed’s FOMC will meet again next week on St. Patrick’s Day and follow it up with a rate announcement on 3/18…  I’m going to go out on a big fat limb and say the Fed cuts another 50 Basis Points from their Fed Funds rate, next week, bringing their internal rate to 0.75%. Wait! What? isn’t that nearly back to ZIRP (zero interest rate policy)?  Why, yes it is young grasshopper, that was very astute of you to recognize that!  

While I do believe that we are already in a recession (basically in my mind we never left the recession of 11 years ago), the rest of the markets and economists don’t see that along with me, so for their benefit, I’ll say that when the next recession hits, where does that take interest rates? Oh My! The Fed has nowhere to go with rates, but to go negative…  I’m just saying….  We’re almost there now… I’m also just saying… 

I just looked up and watched the sun rise out of the ocean… What a beautiful sight… And before some smart alec fires off a note to me telling me the sun doesn’t rise out of the ocean…  I’m fully away of that, but from my viewpoint, it sure does look like that’s what’s happening! So there! The ocean here has been very angry for days now, as the wind has really whipped up the waters…  I think the wind is suppose to die down today, so maybe we can get back to normal around here! 

I deliberately took that tangent to get away from what I was thinking about talking about…  So, to our former media folks that gave me media training back in the day, you can be proud of your former student for his “deflection”… 

OK… So, we start today with Gold down $17….  This after the shiny metal had climbed above $1700 to $1,704 yesterday… But then the boys in the band arrived and took Gold down to $1,679, just up $6 on the day, when it was up over $25 bucks at one point in the day…  I simply find this kind of price action to be lawless… with a lack of regulation… and outright brazen, given the way the metals dealers are being brought to court these days… 

OK… I will admit that the stock market selloff has caused some margin calls to be made, and sometimes we see other things sold to meet those margin calls… Other things being liquid assets, like Gold, Silver and Bonds…   Because for Heaven’s Sake you can’t just dissolve the margin account and walk away can you?  

Longtime readers may recall me telling you that at one point in my life in the markets I was the Manager of the Margin Dept in a regional brokerage house…  And while we never saw price action like this, we did see some times when we had to be on the phones all day calling clients and telling them their margin account had a BIG Hole that needed to get filled in the next 24 hours…  

I’ve been telling you the size of the margin debt here in the U.S. for years now, and pointing out that when the stock market finally faltered that those margin accounts with all that debt would be in Big Trouble…  Well, that time is now… 

As I said yesterday, the U.S. Data Cupboard is basically bare this week, and that means that there is only the small business index to print today, which nobody pays attention to, except the small businesses!  There’s really nothing else to talk about or deal with today here, so we move along… 

To recap…  The markets traders began a reversal of their selling of stocks, dollars and Oil last week, and instead sold euros, yen, francs, Gold and bonds…  Chuck asks the question, did the Coronavirus go away? Because that’s what the trading yesterday suggested!  The PPT must be totally exhausted from all that heavy lifting yesterday… now go back to the hole you climbed out of! Please! 

For What It’s Worth…  Before the PPT go to work yesterday, there was gloom and doom in the markets, and it appeared that the stock jockeys had walked off a cliff, but like Wiley Coyote, they found a way to remain suspended in air until the next frame…  But while that was going on, people in the markets were scared of a liquidity crisis… And this is what that looked like: https://www.zerohedge.com/markets/there-no-liquidity-market-paralyzed-fraois-explodes

Or, here’s your snippet: “Over the weekend, we discussed the latest analysis by JPMorgan’s Nick Panigirtzoglou according to which in addition to the literal lock up in equity markets (where S&P futures were halted limit down for hours overnight), credit and funding markets were starting to show signs of extreme stress, not only as a result of the sudden plunge in energy credits but due to a violent return of what appears to be systemic issues within the inter-bank funding market.

As the JPM quant summarized, “we see initial signs of emerging credit and funding stress. If these shifts in credit and funding markets are sustained over the coming weeks and months, especially in the issuance space, credit channels might start amplifying the economic fallout from the COVID-19 crisis.”

To prove his point that the credit bubble was cracking, Panigirtzoglou highlighted the recent spike in the dollar fx basis, the latest burst of repo activity by the Fed, the spike in the SOFR rate and the SOFR-IOER spread, and last but perhaps most notably, the sudden blow out in the notorious FRA/OIS spread.

Commenting on the sudden liquidity air pockets, Bloomberg Chief Global Derivatives Strategist Tanvir Sandhu wrote that “liquidity holes and the unleashing of suppressed volatility has seen convexity options outperform given the acceleration in volatility gains as tail risks reprice. For example, VIX calls funded by SPX puts would work for those looking for long convexity exposure. Now, extracting vol premium should come into play while managing the further deterioration of risk.”

Yet while traders are looking at indications the financial collapse of 2008 may repeat, there is one novel wrinkle: the unprecedented proliferation of ETFs and passive investing. For Nomura’s Hodges, the problem is exacerbated by the proliferation of exchange-traded funds, something we discussed in “Market Crash Reveals The “Liquidity Problem” of Passive Investing”. The problem with passive investing is that while it propels market dutifully higher, when stocks crash, ETFs reverse, and a painful selling liquidation commences, one which takes a long time to stop, or as Bloomberg puts it, “when the market goes into free-fall, they are required to sell the underlying asset, prompting a frantic search for anyone who will buy it.”

In the end, Aberdeen Investment money manager Luke Hickmore put it best: “People are asking for bids — and then dealing when they see them. You can definitely sell for sure, you just might not like the price.”

He’s right, for now. A few more days of liquidation panic, and there won’t be a price at all: the market will simply be halted indefinitely, and nobody will know when (and if) they reopen, something we first discussed almost 6 years ago in “How The Market Is Like CYNK (Which Was Just Halted)”

Chuck Again…  Yes, when it actually does go down the drain, liquidity that is, the PPT won’t be able to stop it…  Got Gold? 

Currencies today 3/10/20 American Style: A$.6556, kiwi .6314, C$ .7324, euro 1.1351, sterling 1.3027, Swiss $1.0716, European Style: rand 15.8207, krone 9.4608, SEK 9.4617, forint 295.88, zloty 3.8037,    koruna 22.5216, RUB 73.87, yen 104.80, sing 1.3912, HKD 7.7697, INR 73.95, China 6.9422, peso 20.40, BRL 4.6808, Dollar Index 95.86,  Oil $33.88,   10-year 0.71%, Silver $17.12, Platinum $880.72, Palladium $2,462.64, and Gold… $1,662.80

That’s it for today…  No doctor appt., no baseball game, today, what am I to do? UGH!  Yesterday what the first day in two weeks that I got my feet up for the 3 hours a day that I’m supposed to get them up for…  Psst, don’t tell my doctor!  Daughter Dawn, and her family of Jerry, Delaney, and Everett, will arrive on Saturday down here for their Spring Break…  So, things will pick up again soon enough! I can’t wait to see my darling little d, and E!  Well, we sent all our “tax stuff” to our accountant last week… Now I sit here and worry about payments to the Gov’t! UGH!  Last year I received a return, that this year I have to report as income!  So, hopefully it all comes out as a net zero!  Now wouldn’t that be wonderful? YES!  Steely Dan takes us to the finish line today with their song: Kid Charlemagne…  I hope you have a Tom Terrific Tuesday, and will please Be Good To Yourself!

Chuck Butler

March 9, 2020

* Gold, bonds, and safe haven currencies rally… 

* The Fed St. Louis talks about negative interest rates…. 

Good Day… And a Marvelous Monday to you! Well…. I’m back! Back from a great week of spending time with good friends, going to baseball games, and going out to dinner! My beloved Cardinals, which began spring training with the same no-hitting ability, they had last year,  began to heat up as the weather did too… And there’s hope in Mudville! There’s also joy at the wound center, as I’m finally ready to have the soft cast removed for good (on Thursday this week) and have, what’s called an “Apligraph” applied… What all that means is there is finally major healing going on, and the pain has subsided greatly! YAHOO! But the greatest joy has been Gold’s best performing week since 2016, last week! WOW! The danger that appears to be spreading, is the Coronavirus… Keep safe and keep your hands washed! The band America greets me this morning with their song: Sandman…

So, the Coronavirus, is on everyone’s minds now, and on every news stations, tv and radio, and so on… There are even thoughts about major sports venues playing games without fans attending… I sure hope it doesn’t come to that, because if it does, it means the virus is out of control here in the U.S. Overseas travel is a no-go right now, and it seems to me that anyone coming home from overseas would be kept in quarantine until they can prove they’re not carrying the virus.

While gold had its best week since 2016, stocks did not… The roller coaster ride that is the stock market has really taken a deep dive with lots of selling…. The price of Oil didn’t have a good week either, as the price took a deep dive, and our friends at OPEC (NOT!) decided to make huge cuts in production, but even that announcement couldn’t help the price of Oil…

The Oil price drop has caused major collateral damage to the Petrol Currencies, led by the Russian ruble, who saw a muliti-figure drop last week to a 68 handle, and the Mexican peso fall to a 20 handle once again, and even the Canadian dollar/ loonie, which had seemed to be inoculated from this illness, gave up the 75-cent handle and trades this morning down two full cents from a week ago… And the Norwegian krone has weakened to a price that’s weaker than its kissin cousin, Swedish krona, which I really don’t every remember seeing in the past before now. 

The other big winner, besides Gold last week, was the euro… And in a very different trading pattern than what we normally see, when the euro rallies it takes all the other currencies along for the ride… But not this time… Stranger than fiction folks, but it’s what is happening… But there are a few currencies going along with the euro for a ride higher VS the dollar. The “safe haven” currencies of Swiss francs, Japanese yen, and euros have been bought like funnel cakes at a state fair… 

Everyone and their brother know the Fed cut rates ½ point or 50 Basis Points last week, as they pointed to the Coronavirus disrupting economic development around the world as their reason for the “emergency cut” Of course the POTUS didn’t think ½ point was enough, and once again pointed to countries with negative interest rates, as if they are doing well with them, while they are not!

While I was on vacation, I received an email from the Fed St. Louis, (they call it FRED) and it was an explanation of negative interest rates… My initial reaction to it was that they didn’t just “happen to write an article on negative rates” This has to be a planned action, as far as I’m concerned, and the Fed is greasing the tracks for negative rates right here in the good Old USA!

OH! and don’t look now but the 10-year Treasury’s yield has dropped to just 45 basis points!  This is crazy folks… and Serious, and serious times call for serious people, of which I’m usually not one, but I can be as a serious as a heart attack when I need to be… So, serious it’ll be… 

Remember a couple of weeks ago when I told you about how famous economist, David Rosenberg, had talked about (on Twitter) how bonds had outperformed stocks?  He had said, ” Bonds have more fun”…  Well, he was back on Twitter this past weekend talking about how bonds continue to outperform stocks…   Oh, and this just flashed across my screen… Stock index futures are trading at max down this morning, indicating a very nasty start of the day and week for stocks… 

I had a discussion with my wife last night about a person that had come from Italy back to St. Louis, and now she has the virus… I have some serious thoughts on this situation, that I’m not going to get into now, and the Butler patio is not open yet, but my deck down here is… so join me if you can and I’ll impart my opinions on this situation! 

So, getting back to the negative interest rates discussion…   I truly believe that negative interest rates will appear here in the U.S. during the next recession, that should be the recession of all recessions… I said that in an interview with Dennis Miller of: Milleronthemoney.com  for his weekly letter a couple of months ago… Why did I think that then?  Well, I’ve explained this all before folks… I see things that are coming for the markets… Sometimes I’m way ahead of the crowd or the event if you will, but eventually my calls are bang on…  And I truly believe that my call for negative interest rates here in the U.S. will also be bang on… 

Is there danger in negative interest rates? Ahhh grasshopper, I’m glad you asked, for the answer is a simple: Yes there are dangers in negative interest rates…  Think about that for a minute, if the savings you have in the bank account, which aren’t getting paid diddley-squat, begin to have charges on these balances, thus reducing your savings holdings, would you continue to keep your funds there?  

What would happen to banks if there were runs on deposits?  Armegeddon, that’s what!  And the Fed would begin with helicopter money and attempt to head off the depositors before they reach the bank, and then the whole shooting match, the big enchilada, the economy comes to screeching halt, and the financial system collapses, and new system has to be thought of…

Now, how’s that for being serious? Wouldn’t you rather have fun-loving, Chuck back?  

The U.S. Data Cupboard last week had us looking at a negative print for Factory Orders in January, and a Markit ISM (manufacturing index) print below 50 at 49.4, and finally a Jobs Jamboree where the BLS claims that 273,000 jobs were created in February…  Nevermind that 143,000 jobs were added out of thin air by the BLS after the surveys were received!  

There’s not much for us to see in the Data Cupboard this week, so the markets will be on their own, which doesn’t bode well for the dollar, Oil, the Petrol Currencies and stocks….

To recap… It was a wild trading week last week, as the Coronavirus has taken over the minds of traders, who have exited dollars, bought the safe haven currencies, led by the euro, and bonds, and have sold stocks, Oil and Petrol Currencies…  Oil saw its largest 1week drop since 1991…  The 10-year Treasury’s yield has dropped by a HUGE margin to just 45 basis points folks…  That alone should tell you just how serious this virus has become…

 For What It’s Worth….  Longtime readers of this letter will recall me going ballistic on Janet Yellen a few years ago, when I said she was greasing the tracks for the Fed to buy stocks… Well, here we are a few years later, and the Fed’s Rosengren believes that the Fed will have to buy stocks… That article can be found hehttps://www.zerohedge.com/markets/boston-feds-rosengren-says-fed-may-soon-have-buy-stocksre: 

Or, here’s your snippet: “Three weeks ago, former Fed Chair Janet Yellen incepted the idea that during the next crisis, the Fed should consider expanding the range of assets it would purchase, most notably buying stocks. Our comment to this was that “thanks to Janet Yellen, we now we know that before the current fiat regime of central banks finally ends and before stocks go limits up as the revolution starts, the Fed will order a POMO of, well, everything in one final, last ditch effort to keep social stability by creating the impression that stocks are stable and rising even as society implodes.”

Well, thanks to experiments conducted in a Chinese P-4 bio-lab, the next crisis appears to have arrived in the form of the coronavirus pandemic, and the idea of the Fed buying stocks is now on the agenda, case in point Boston President Eric Rosengren, who echoed Yellen, and said the Fed should be allowed to buy a broader range of assets – either by change of mandate or through a facility that allows it to buy stocks – if it lacks sufficient ammunition to fight off a recession with interest-rate cuts and bond purchases. In such a scenario, the U.S. Treasury should indemnify the Fed against losses, Rosengren said in the text of remarks scheduled for delivery Friday in New York.

“In a situation where both short-term interest rates and 10-year Treasury rates approach the zero lower bound, allowing the Federal Reserve to purchase a broader range of assets could be important.”

Excerpt: “In such a case, as Marvin highlighted in his 1999 article, we should allow the central bank to purchase a broader range of securities or assets. Such a policy, however, would require a change in the Federal Reserve Act. … Alternatively, the Federal Reserve could consider a facility that could buy a broader set of assets, provided the Treasury agreed to provide indemnification.”

Rosengren also warned the Fed would face greater challenge than in 2008 crisis when Fed’s benchmark rate was cut to nearly zero, because yields on longer-run Treasuries have fallen below 1%.

Chuck Again…  Ask the Japanese and Swiss just how great it is that their Central Banks own a majority percentage of their stock markets…. I’m just saying…

Currencies today 3/9/20 American Style: A$.6604, kiwi .6334, C$ .7341, euro 1.1415, sterling 1.3090, Swiss $1.0780, European Style: rand 15.9330, krone 9.5232, SEK 9.3730, forint 294.57, zloty 3.7828,    koruna 22.3650, RUB 68.77, yen 102.40, sing 1.3829, HKD 7.7690, INR 74.35, China 6.9310, peso 21.53, BRL 4.6249, Dollar Index 95.21, Oil $32.55,   10-year 0.45%, Silver $16.96, Platinum $875.54, Palladium $2, 425.45, and Gold… $1,.677.65

That’s it for today….  I’m heading north again this morning, so I’ve got to get this out the door and get on the road! Our Blues won a good game in Chicago last night VS the Blackhawks! Always a “good game” when the Blues beat the Blackhawks!  And the NCAA major conference championships will go on later this week, with “selection Sunday” scheduled for this coming Sunday, and then the brackets get printed and office production goes to the wayside… HA!    Thanks to good friends Kevin, Lisa, Gus, Diane, Duane and Rick for their visits down here these past couple of weeks… We love to have company! And with that, I’ve got to go, so The Searchers take us to the finish line today with their song: Love Potion #9… I hope you have a Marvelous Monday, and will be Good To Yourself!

Chuck Butler

 

February 26, 2020

* The price Manipulators weren’t finished selling Gold Short on Monday

* The dollar bugs continue to hold the conn over the currencies… 

 

Good Day… And a Wonderful Wednesday to you! The last Pfennig until March 9th… I know you all will not like the fact that I won’t be writing until then, so take the time to enjoy this last one until the 9th! I will miss you too… But hopefully I will be having so much fun that I forget that I miss you! A bad game for my beloved Cardinals yesterday, but the day was fabulous! And a grand time was had by all… After the game we went to a nearby place to have some dinner, and while my stomach wasn’t participating, I went next door and got my head shaved at a cool barber shop that I’ll be sure to return to in a week to ten days when I’m ready for a re-shave! Two sets of friends that used to be neighbors of ours are here to go to games with us… Great company, great memories, great times! Loggins and Messina greet me this morning with their song: Your Momma Don’t Dance… And you Daddy don’t rock and roll! When my darling daughter Dawn was a young girl, she would get confused by the words, and so I told her to sing it the way she knew the words should be… And she would sing; My momma does dance and my daddy does Rock and Roll!

Poor Gold… The price manipulators just can’t bear to see us Gold bugs celebrate, now can they? Gold sufferered though a day where the price manipulators had the conn, and brought Gold’s price back down to $1,635… This after seeing gold reach $1,691 the previous day… So, there’s been no cure for the Coronavirus, no vaccine that can be administered, and so the same fears of spreading are still on the minds of traders, but… the price manipulators can’t have Gold taking off to higher ground without a fight…

In fact, the CDC just issued a note that talked about a “pending outbreak of the Coronavirus in the U.S.”  And then right after they issued that statement, it was reported that a U.S. soldier had been tested positive for the virus… Uh-oh…    So, on that news, Gold has recovered some of its loss yesterday, and is up $12.85 in the early trading…. 

Remember, and I’ll go though this once again for those that are new to class…. The U.S. Gov’t has been fighting a rise in the price of Gold since the early 70’s … I’ve seen communiques released by Wikileaks that have the words of Henry Kissinger, Paul Volcker, and others talking about how they couldn’t allow Gold’s price to rise, which would bring it forefront to the minds of investors around the world, who thought about substituting dollars for Gold… Palladium can climb to the moon, and the price manipulators don’t care… But give Gold a day or two of rally, and the price manipulators are allover Gold like a cheap suit!

OK, I had better stop there… before I hear a knock on my door, and two square jawed young men with sunglasses on, are asking me to go with them! But I figure as long as the folks over at Wall Street On Parade, continue to expose the truths about what the U.S. Gov’t is doing through the banks, etc, then I should be OK… But if they get shut down, by the Government, then I guess I will be worried at that time!

The Dollar Bugs are finding it difficult to keep the euro down, while there are finding it easiy to remain well bid VS the other currencies… The Dollar Index has risen to above 99… this is the highest it’s been in a long time folks…  Just goes to show-ya that dollar bugs are stranger than fiction… But what do I always tell you when it appears that something has gone about as far as it will go?  That to remember that a star shines brightest right before it burns out…  I’m just saying.. 

In the Eurozone this morning, the European Central Bank President, Christine Lagarde will speak. This will be her first run at continuing the legacy of Mario Draghi, who at any opportunity would throw the euro under a bus… I’m wishin’ and hopin’ and thinkin’ and prayin’ that Lagarde goes in a different direction, and begins to take ownership of the euro, which as the President of the Central Bank she should do automatically! 

The euro has slowly moved higher VS the dollar this week, and I would not like to see it get trashed because Lagarde throws it under a bus… 

Tonight in New Zealand, they will print their latest Trade data… Remember New Zealand is an island country so their Trade data should be a Deficit, but… this time this report will be affected by the Coronavirus in China… I’ll keep an eye (because that’s all I have!) on this data to see if the virus has started to filter into the economic reports.  This will be a good thing to go on down there, to take their minds off the way their respective currencies (A$’s and kiwi) are being treated these days… 

You know I totally forgot to gloat yesterday… What on earth am I talking about now?  Well, some time ago I told you that the U.S. 10-year Treasury’s yield would go lower than the previous low of 1.38% from several years ago, and yesterday it did just that!  I know, I know, I hear you saying that this only proves that even a blind squirrel can find an acorn…  But hey! At least I made a call that come to fruition, didn’t I?  And because of that I’m gloating this morning! 

In other things, the price of Oil has slide back below $50 in the past 24 hours, and that has simply piled on, without a 15-year penalty, the dollar’s strength on the Petrol Currencies, led by the Russian ruble… UGH! 

The U.S. Data Cupboard just has some new housing sales data for us today. Not real economic data… We won’t see any of that until tomorrow when the January Durable and Capital Goods Orders print…  I’ve really become jaded toward the U.S. Data Cupboard, and its data prints… For they don’t see to be taken into the value of the dollar, the way they once were…  

To recap… Gold hot whacked badly by over $24 yesterday, and it was all the paper short Gold trades doing the trick…  But a CDC statement yesterday has Gold trying to recover its losses yesterday in the early morning trading today.  The euro continues to inch higher VS the dollar, while the other currencies are getting taken to the woodshed on a daily basis. The Dollar Index has gone over the 99 handle, Treasuries have breached their previous low of 1.38%, and the price of Oil has slid back below $50…

For What It’s Worth…  Like I said above the bad and weak data prints don’t seem to be worthy of weakening the dollar these days, and here’s another example of that statement, as subprime credit delinquencies are rising and it’s as if no one cares… this article can be found here:  https://wolfstreet.com/2020/02/22/subprime-credit-card-delinquencies-spike-to-record-high-past-financial-crisis-peak-as-other-consumers-relish-the-good-times-why/

Or, here’s your snippet: “The rate of credit card balances that are 30 days or more delinquent at the 4,500 or so commercial banks that are smaller than the top 100 banks spiked to 7.05% in the fourth quarter, the highest delinquency rate in the data going back to the 1980s (red line).

But at the largest 100 banks, the credit-card delinquency rate was 2.48%, which kept the overall credit-card delinquency rate at all commercial banks at 2.7% (blue line), though it was the highest since 2012, according to the Federal Reserve. What’s going on here, with this bifurcation of the delinquency rates and what does that tell us about consumers?

Clearly, those consumers that have obtained credit cards at the smaller banks are in a heap of trouble and are falling behind at a historically high rate. But consumers that got their credit cards at the big banks – lured by 2% cash-back offers and other benefits that are being heavily promoted to consumers with top credit scores – do not feel the pain.

A similarly disturbing trend is going on with auto loans. Seriously delinquent auto loans jumped to 4.94% of total auto loans and leases outstanding. This is higher than the delinquency rate in Q3 2010 amid the worst unemployment crisis since the Great Depression. On closer inspection, there was that bifurcation again; prime-rated loans had historically low delinquency rates; but a shocking 23% of all subprime loans were 90+ days delinquent.

During the Financial Crisis, delinquencies on credit cards and auto loans were soaring because over 10 million people had lost their jobs and they couldn’t make their payments.”

Chuck again… and to think that supposedly we’re in “good times” economics wise, right, I mean that’s what we just keep hearing, but then we have all these problems, what gives? 

Currencies today 2/26/20  American Style: A$ .6591, kiwi .6298, C$ .7521, euro 1.0876, sterling 1.2936, Swiss $1.0250, European Style: rand 15.2602, krone 9.3808, SEK 9.7372, forint 312.20, zloty 3.9603,    koruna 23.2495, RUB 65.21, yen 110.55, sing 1.3974, HKD 7.7917, INR 71.62, China 7.0335, peso 19.13, BRL 4.3866, Dollar Index 99.12,   Oil $49.47,   10-year 1.37%, Silver $18.09, Platinum $928.82, Palladium $2,729.00 and Gold…. $1.647.84

That’s it for today and until March 9….   I’m really excited to have my spring training buddie showing up on Friday…  They will probably be ready for some warmer weather, it’s snowing in St. Louis this morning!  It was 85 and hot at times here yesterday, I even had to go underneath the stands for a short time to get out of the sun…   Maybe the next time we talk, I will have good news regarding my leg wound, as it appears to finally be on the mend…  Friday would have been my sister Barbara’s birthday. We lost her way too early to ALS a couple of years ago…  Many years ago, Barbara and I were very tight, but then she got married, and had kids, and life went on… OK… Blues beat the Blackhawks last night 6-5, that must have been a wild and wooly game like the one’s in the past!  Both my college basketball teams will play tonight at the same time… Mizzou will play at Vanderbilt, and St. Joes will visit out St. Louis U. Billikens…  Jefferson Starship takes us to the finish line today with their song: Count On Me…   I hope you have a Wonderful Wednesday, and please Be Good To Yourself, while I’m gone! 

Chuck Butler

February 25, 2020 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

February 24, 2020

* Gold soars on Friday and this morning!

* Dollar is still well bid VS most currencies… 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

February 19, 2020

* dollar bugs continue to slice and dice the currencies… 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

 

February 18, 2020

* dollar bugs continue to put pressure on the currencies

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

February 17, 2020

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

* Gold reaches a record high VS the euro! 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

February 12, 2020

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

* Gold is struggling to maintain its level this week… 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck