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