Is The Stimulus On Or Off?

Rocktober 12, 2020

* Currencies & metals rally on Friday… 

* With Friday being an up day, today must be a down day, eh? 

Good day… And a Marvelous Monday to you! What a weekend! First, my beloved Missouri Tigers beat LSU on Saturday! And then on Sunday, it was my darling granddaughter, Evie’s, first birthday… I told you about 10 days ago how she was finally taking her first steps, well, now she’s a real pro at walking and even rounded the corner inside out house at running speed!  She is growing up, already… UGH!  But it wouldn’t be right if I didn’t give a great Big Shout Out to Evie! Happy Birthday, Evie! May you have many more!  On Thursday I visited my oncologist, and she told me to keep doing what I’m doing… When I told her that means nothing… She laughed and said, Ok, keep doing nothing!   The wound center on Friday was different, and the doctor there wanted to know what I had done to have 3 spots on my legs open up…  After examination, she told me I had lymphedema in my legs…  I went home and looked up what caused lymphedema… And it’s a reaction to cancer treatments…  And I thought… I’m damned if I do take chemo, and I’m damned if I don’t take chemo!  Not a happy day for me, but, then Saturday came, and it was all seashells and balloons!  On Friday, I felt like I was being treated like the title of this song that greets me this morning… It’s the Allman Brothers and their song: Whipping Post… Because sometimes, I feel like, sometimes I feel, like I’ve been tied to the whipping post!  

Well, after a down day on Thursday, it was time for an up day in the currencies and metals on Friday… Gold rose $36, to close at $1,930.60, and Silver followed with an increase of $1.28 (which if you’ve been paying attention in class is a HUGE move in Silver)… , to close at $25.22 And the euro which started the week at 1.18, but then saw its value shrink to less than 1.18, finished the week at 1.1820…

So, let’s see, if Friday was an up day… today must be a down day, and it sure looks as if the overnight and early morning trading markets is going to keep that stupid trend going, as Gold has given back $5 in early trading and Silver is basically flat, while the euro lost the 1.18 figure again in overnight trading…   This back and forth stuff is really getting old with me folks.. As I’ve said before… Come on Traders, pick a lane! 

So what got Gold & Silver all lathered up on Friday? Well, remember when I told you that last week the President has Tweeted that there would be no stimulus until after the election, and that had taken the wind out of Gold and Silver’s sails? Well, before you could say, “what the hell is going on here?” The President changed his mind and said that he was ready to sign whatever stimulus bill had been negotiated…  And hearing those words, Gold started moving higher, and by the end of the week it was trading higher than it had the week before…  If the U.S. is going to go willy nilly on adding more debt, to the tune of over $2 Trillion dollars in one fell swoop… Then dollar traders arent’ going to stand around and look like idiots… They sold dollars so fast the dollar bugs didn’t have time to get back behind the wall boards they cam out of…

I needed some sanity on Saturday as heard that the stimulus is back on the table… And so I pulled up Bill Bonner’s  Rogue economist email to see what Bill had to say… And this is from his letter that can be found at www.rogueeconomics.com… Here’s Bill… “But on the horizon is the biggest crash of all. Like a freight train loaded with debt… the U.S. is about to get slammed by $237 trillion worth of “unfunded liabilities.”

The boomer elite did not merely look out for itself in the past and the present… It promised itself pension and medical benefits, literally, from now until Kingdom Come.

There are 76 million boomers. None is eager to get to the grave. But every one of them hopes to get there before his Social Security/Obamacare benefits run out.

Many believe it’s a sure thing… They think there is a “trust fund” with money tucked away to pay for their care. But there is no “trust fund,” no savings, no pot of money anywhere.

Here’s what former Federal Reserve chairman Alan Greenspan had to say about it:

The term Social Security “Trust Fund” is nonsense… It is a mandatory outlay and there is a 0% chance that outlay will not get made. When the fund runs out, there is no chance anything will change. The U.S. has committed to pensions it cannot pay…

Greenspan is right. There is another head-on collision coming, much more serious than the Democrat-Republican game of chicken. There is zero chance that the payments won’t be made.

But there is also zero chance that the funds will be there to make them.”

Chuck again… you know I used to say, back when I was around 50, that “I didn’t expect to receive anything from Social Security…  And then I turned 65, and started receiving payments on the money I had contributed to S. S. for nearly 40 years… And thought, OK, I guess I was wrong… But was I? Well, I did actually receive something from S.S., but for how much  longer? 

Well, today used to be a holiday, for me… But I guess since they took down the Christopher Columbus statue here in St. Louis, I would think that I would be stirring up a hornet’s nest to say I was taking the day off for Columbus day…   I used to joke about how this was the day we celebrated his discovery of the West Indies…  But as time has gone on, I feel he got a raw deal… Was he not, at the time the greatest explorer of that time?  And that’s all I have to say about that!

The U.S. Data Cupboard is empty today in celebration of Columbus Day…  Late last week, we saw that the Weekly Initial Jobless Claims continued to be a very higher number… In fact it beat the estimates of 825, 000 and instead came in at 840,000, which means that for every week since March the Weekly Initial Jobless Claims have been above 800,000…   The Continuing Claims fell the prior week, but that could simply mean that the the time had passed on the claims, and they were dropped from the list… There are still 25.5 million workers collecting some form of benefits, more than half of whom fall under special benefits set up during the pandemic.

I’m got a great piece from John Mauldin, who quotes my fave economist, David Rosenberg, about all this , so I won’t spoil your appetite here… Just make sure you stay tuned in for the FWIW section today…

We won’t see much in terms of economic data prints this week, until we get to Friday when Retail Sales, Industrial Production and Capacity Utilization for Sept will print… Thursday will have the usual fare of the Weekly Initial Jobless Claims, and other than that there’s really not much…For instance, tomorrow will have the stupid CPI (consumer inflation) for last month, which is only expected to print at a gain of .2%… Bollocks!  I love that word! I got it from reading my Cormoran Strike novels, which take place in London…  I don’t think I have to explain the meaning of the word to you… So, we’ll just move along here…

To recap… Friday was an “up day” after Thursday’s “down day”… And Gold gained $36 on the day, and silver added $1.28 to its value… The euro climbed back above the 1.18 handle, and even stocks had a good day! The talk that there could, after all has been said and done, be a stimulus package…  I wouldn’t hold my breath that that would/ could happen before the election… But Traders seem to think it’s a done deal. And so the strength of the rallied on Friday…

For What It’s Worth…  Ok… I didn’t now this before I read this article, but longtime friend, John Mauldin is now contributing to Forbes, which is where this article can be found, and it’s about how David Rosenberg believes that we are in a depression…  and it can be found here: https://www.forbes.com/sites/johnmauldin/2020/10/09/rosenberg-we-are-in-a-depression/#24536c1115bf

Or, here’s your snippet; “Disney is laying off 28,000 workers. American Airlines and United Airlines plan to cut 31,000 workers. Last week’s disappointing unemployment report shows that we have a long way to go. Perhaps a lot longer than we think.

I’m going to quote at length from my friend David Rosenberg, who I believe is absolutely spot on:

“You tally up these sectors and before the crisis, they supported 32 million jobs, or about a third of the private sector workforce, and it looks to me as though half of them are not going back to their old jobs.

“And I’m not sure many people understand that amusement parks, airlines, hoteliers and restaurants cannot stay in business at 50% capacity (or even 75% in the case of restaurants).

“… As it stands, the U.S. Chamber of Commerce said that 25% of small businesses have already shut down. Another survey by Ipsos concluded that two-thirds are still nervous about leaving their homes; 59% say they intend to remain locked down on their own until signs emerge that the virus is ‘fully contained.’ A YouGov/CBS poll concludes that 85% of American households say they wouldn’t get on an airplane even if they could. That’s why the industry needs a bailout!

“A Washington Post/University of Maryland poll shows that only 56% of consumers across the nation intend to shop at the supermarket, which I suppose is a continuous bullish data point for delivery services but that’s about it. Just 33% say they are comfortable entering a retail store. And a mere 22% say they are willing to dine in a sit-in restaurant.

“All these polls say basically the same thing – it will not be ‘business as usual,’ as the bulls will try and convince you, and the best we can hope for is a partial recovery. I mean, at best. What we had on our hands was a vertical down economic decline with job losses an order of magnitude higher than anything we have witnessed since the Great Depression. So, even as the stock market is telling you it has it all figured out, I can assure you that what we face at this very moment is a very uncertain economic future. And unfortunately, most of the longer-term risks are to the downside.

“We are in a depression – not a recession, but a depression. And I think the dynamics of a depression are different than they are in a recession because depressions invoke a secular change in behavior. Classic business cycle recessions are forgotten about within a year after they end – the scars from this one will take years to heal.”

Know this: That which can’t go on, won’t. We can’t keep piling on debt at this rate forever, and we can’t repay what we have.”

Chuck Again… You tell ‘em Dave!  I love the way he pulls no punches when he talks, and he’s always spot on with this forecasts, and thoughts… I’ve told you all before how John Mauldin and I are friends from a long time ago, but I’ve never met David Rosenberg at a conference or other places, and I guess my chances at doing that are slim and none, and Slim left town! 

Market Prices  10/12/20: American Style: A$ .7212, kiwi .6647, C$ .7616, euro 1.1797, sterling 1.3033, Swiss $1.0984, European Style: rand 16.5316, krone 9.1475, SEK 8.8079,  forint 302.30,  zloty 3.7959,   koruna 23.0181, RUB 76.72, yen 105.42, sing 1.3568, HKD 7.7498, INR 73.21, China 6.0927, peso 21.26,  BRL 5.5306,  Dollar Index 93.21,  Oil $40.11,  10-year .78%, Silver $25.24, Platinum 888.00, Palladium $2,512.00, and Gold… $1,926.30

That’s it for today… What a great victory for my beloved Tigers on Saturday! The first time they’ve beaten a ranked team since 2018!  At the end the LSU team had driven to the 1 yard line with time running out, and I said, “I’ve seen my Tigers lose so many games through the years on the last play of a game, I don’t think I can watch this…” But the defense held, and the only thing missing was a rush of fans to the field, to take down the goalposts… What a rush that used to be to walk through the town after the game and see students with cut up pieces of goalposts holding them up high so everyone could see them!  So… Little Evie is walking now, I love watching her get around… She’s a fast learner too, as she was shown a couple of times how to negotiate the sunken living room that we have, and soon she was coming and going over the step down as if it was second nature!  My “other girl” Delaney Grace was here too…  My girls are so damn cute!  Triumph takes us to the finish line today with their song: Fight The Good Fight… Which is what I always try to accomplish here… And with that, I hope you have a Marvelous Monday, and please continue to Be Good To Yourself!

Chuck Butler