September 9, 2020
* dollar buying continued on Tuesday…
* What’s causing the disruption of completing the Nord Stream 2?
Good Day…. And a Wonderful Wednesday to you! Well, a day/night doubleheader didn’t go without a win, like the last doubleheader did here against the last place Pirates… My beloved Cardinals settled for a split and now get a day off, before they play another doubleheader VS the Tigers… The Cardinals, because of their quarantine after a virus outbreak, will have to play 23 games in 18 days to finish the virus shortened season. Hopefully they don’t collapse before the season ends, and they can hang on to their current playoff spot…. Chilliwack greets me this morning with their song: Fly At Night (In the morning we land) Let’s see a show of hands of people that know or have heard music by Chilliwack! HA! Just kidding….
Well, I told you yesterday morning that it appeared to be one of those days when just about every asset class gets smacked! Stocks, currencies, and Oil, with Treasuries ekeing out a gain, and the metals coming back and making a positive day of what was negative in the early morning trading.
Remember the song Ooh, La, la, by faces? Poor Old Grandad,…. Poor Old Oil, it can’t seem to find any demand…. And the price of Oil just keeps dropping… People just don’t drive like they used to… So many people are still working from home, and probably most of them will keep working from home from now on… School Buses aren’t in use, per se, like they used to be, Summer driving by families just wasn’t there… Can you see a family with kids going across the country to see the Grand Canyon, and when they stop for gas, and everyone piles out of the car, they’re given Clorox wipes to use in the gas station if they touch something? Dad has one on his hand to pump the gas, and then they get their hands cleaned with GermX when they get back in the car…. Oooh, where do I sign up for a trip like that?
So, Gold was able to come all the way back from being down $9 in the early trading to show a gain of $2.50 for the day and close at $1,932.00… Silver gained back a few cents but still ended up in the red for the day by 18-cents to close at $26.72…. For now, it appears, that $1,920 is a resistance level on the down side for Gold, for when it slipped below that figure yesterday morning, the drive to bring Gold back began…. I’m just saying…
In the overnight markets, there was some additional slippage in the currencies and the stock futures are up this morning, so the rot on the tech stocks might take a breather today… Gold is up $1.60 early this morning, and even the price of Oil is showing green this morning… But it’s not a bright green if you know what I mean…
Well, the CBO (Congressional Budget Office) the guys that count the beans, said yesterday that through the 11th month of the fiscal year (August) the Federal Deficit was $3 Trillion, with another month to go…. For those of you new to class, the U.S. budget year is September to September…. That number of $3 Trillion is $1.9 Trillion more than the same period last year, and more than double the largest yearlong deficit on record, according to the CBO, who then went on to give excuses for the size of the deficit was due mainly to the costs associated with the COVID-19 virus spending…. Well, that may be some of the deficit but not all of it…. Before April began our Budget Deficit was already $743 Billion for 6 months of the budget year…. That would have been annualized to 1.486 Trillion… Still an unsightly number if you ask me! But that information was not supplied by the CBO, they simply wanted to place all the blame on the virus spending…. Which I also saw yesterday a blurb about more virus spending soon to be up for a vote… They might want to wait until Rocktober when the new budget starts…
And this news was sent to me from the good folks at GATA, who got it from Bloomberg.com, and here you go… “A $750 billion industry still struggling to bounce back from the last crisis is cracking under the Federal Reserves lower-for-longer mantra on U.S. interest rates.
Prime money-market funds — a long-time favorite for anyone seeking a cash-like investment with a little extra yield — are facing an existential challenge, just four years after a regulatory overhaul to restore confidence in the wake of the global financial crisis. Assets in these vehicles dropped 20% in just six weeks this year, spurring talk of new reforms. But some of the industry’s leaders are opting for another solution: Shutting them down.”
Chuck again… Shutting them down? Oh, wouldn’t that be convenient for the stock jockeys, because where are these people going to go with that bundle of funds to get some return on their cash? The stock market that’s where, thus adding the risk of the bubble popping at any time now… Get everybody in and then turn around and have to get everybody out, makes for 2 commissions… I’m just saying…
And the GATA folks also sent me this… “U.S. banks are increasingly worried about being repaid on loans secured against commercial property, as offices, malls, and hotels continue to stand empty.
The darkening outlook of banks is laid bare by disclosures on so-called criticised loans, which are flashing warning signals about a borrowers ability to pay.
Among the 10 banks with the largest increases, criticised loans rose by 62 percent in aggregate in the second quarter, but criticised commercial real estate loans rose by 144 percent, to $26 billion, according to an analysis by the Financial Times.
The banks with the largest total increases include JPMorgan Chase, Bank of America, and Wells Fargo.”
Chuck again… I keep saying that all this rent that’s going unpaid is going to hurt.. And the Commercial bldgs.. have a real problem and it goes back to what I was talking about earlier with workers not going into an office, and families not going on summer trips, have left hotels empty, and most commerce these days is done online… No need to go to a brick and mortar store…
One of these days Alice! All this debt is going to collapse the financial system…. I’m just saying…
I had reader send me a note that said that “If I didn’t have anything to say about improving the pandemic, that I should not say anything.” I guess that was in response to me talking about how the economy should have never been locked down…. Oh, well, I thought I was offering an alternative to the decisions made in April…
This drop in the price of Oil has dealt a bad hand of cards to the Petrol Currencies, as the Russian ruble, Norwegian krone, and others can testify… The drop in the price of Oil isn’t the only thing bugging the ruble… I was reading something in the 5 Minute Forecast yesterday about how the Nord Stream 2 pipeline, which was about 200 miles from the completion of the pipeline that would bring natural gas to Germany from Russia is getting the brakes put on the construction of the pipeline…
Seems the West is having problems with the fact that an opposition leader in Russia apparently was poisoned… And all the blame for this poisoning of this fellow (he is still alive) is being thrown in the lap of Russian leader, Putin, and that doesn’t sit well with the folks in the West…. So, now Germany is having second thoughts about getting into bed with Putin…
Well the U.S. going back to the previous administration has been against this construction of the Nord Stream 2 pipeline… Seems we don’t like anyone messing with our hold on liquified gas shipments to Germany…. Were they that much against it that they would do some espionage stuff in Russia to make it look bad for Putin, and thus put the kyboshes on the pipeline? One insider in Russia had this to say… “if Putin had wanted the man killed, he would be dead”…. Just something to think about, that could be made into a movie, eh? And longtime readers know of my love for conspiracy theories!
In yesterday’s Data Cupboard, the July print of Consumer Credit (read debt) was on display, and it showed that Consumers racked up their debt loads by $12 Billion, a 3.6% increase over the June print of $11 Billion… After seeing a great fall in Consumer debt in April, the last three months have seen that fall reversed…. The interesting part of the report though was the drop in revolving debt (credit cards)… Seems folks are out buying new cars, and racking up student tuitions….
So, the “great American switch to savers” that everyone talked about in March and April, has fallen flat on its face…
I told you yesterday that this week’s Data Cupboard was lacking real economic data, for the most part…. And today’s Cupboard is a poster child for that thought…. The only piece of data today is Job Openings…. 5.9 Million was the print last month… Corporations are saying that they can’t find qualified workers…. Come one! Give me a Break here! There are 29 Million people, not counting the Gig workers, that are continuing to draw Unemployment checks, and these Corporations can’t find qualified workers out of 29 Million?
To me that’s just an excuse for not hiring, so they can keep the Gov’t off their collective backs, and they can keep receiving help from that same Gov’t… But for how much longer? I read a blurb on Bloomberg this morning that Bond guru, Jeffry Gundlach says, “the high yield bond defaults may double”… Yikes!
To recap…. More dollar buying on Tuesday, as brought the currencies almost back to where the started 10 days ago, with their rallies…. Gold was able to bounce back to show a small gain on the day, although Silver couldn’t do the same. The price of Oil continued to get pushed down, on a lack of demand that Chuck illustrates for us…. And the CBO says our Federal Budget Deficit is $3 Trillion with a month to go!
For What It’s Worth…. Well there sure seems to be more than just yours truly talking about a change in the currency regime (the end of the dollar’s reserve currency status). I would say welcome to my bandwagon, come on climb aboard, there’s plenty of room for us to remain 6 feet apart! Any way, this is an article about that currency regime change Idea, and if can be found here: https://www.rt.com/business/499957-replace-us-dollar-jim-rogers/
Or, here’s your snippet: “The dollar is on the brink of losing its status as the world’s main reserve currency, prominent U.S. investor Jim Rogers told RT, following reports of China’s plans to drop a huge chunk of its American debt holdings.
With a national debt of over $26.5 trillion, “the U.S. is now the largest debtor nation in the history of the world, and it’s getting higher and higher every day,” Rogers said, adding that it’s going to take a toll on the country’s currency.
“Traditionally, the U.S. dollar has been the soundest currency in the world. But tradition changes,” he pointed out, referencing the fate of the British pound and Dutch guilder, which, in previous centuries, were considered the most reliable currencies.
“I’m an American, so I don’t really like saying it, but I’m afraid the U.S. dollar is coming to its century or so of dominance, and something else will replace it.”
The dollar may still show strength next year, after the current turmoil in America caused by the Black Lives Matter protests and the election is over, “but that will probably be its last shot,” Rogers said.”
Chuck again… It was probably in 2010, or 2011, when I used to give presentations around the country, Canada, and Panama that were titled: The Coming Currency Regime Change…. I saw the debt piling up then, and just knew in my heart of hearts that this would come crashing down on the dollar at some point in the future….
Market Prices 9/9/20: American Style: A$ .7244, kiwi .6656, C$ .7565, euro 1.1776, sterling 1.2932, Swiss $1.0905, European Style: rand 16.7239, krone 9.0985, SEK 8.7987, forint 303.60, zloty 3.7775, koruna 22.5256, RUB 76.11, yen 106.17, sing 1.3684, HKD 7.7502, INR 73.48, China 6.8393, peso 21.67, BRL 5.3281, Dollar Index 93.57, Oil $37.48, 10-year .68%, Silver $26.69, Platinum $916.00, Palladium $2,305.00, and Gold… $1,933.60
That’s it for today and this week…. My monthly visit to my oncologist is bright and early tomorrow morning… As I’ve said for many years, I like make any doctor or scans appointments as early in the day as I can to avoid back ups…. Can you imagine how long next Monday’s Pfennig will be with all this time in between now and then to gather ideas and articles? Better come ready to read with a full cup of coffee! I’ve been very happy that my good friend, Duane, has been around the past two weeks, to come down and watch the baseball games with me. Watching baseball is much more enjoyable to me, if I have someone to watch it with…. Billy Squier takes us to the finish line today with his song: Lonely Is The Night…. We used to play Billy’s Don’t Say No, CD on the trade desk all the time! Ok, with that, I hope you have a Wonderful Wednesday, and will Be Good To Yourself!
Chuck Butler