April 6, 2020
* The dollar bugs grab the con once again from the currencies
* Gold rallies two consecutive days….
Good Day… And a Marvelous Monday to you! Well, besides the drive back to St. Louis, last week, I’ve been sheltered for 3 weeks… Ever since my kids left to go home, upon their conclusion of their spring break, I’ve pretty much stayed put… Neighbors, Paul and Lenore, were out on their deck on Friday, so pulled a chair into the yard, and we caught up, as I had not seen them for 3 months… practicing social distancing! It was good to talk to someone else…. I have a group of friends that meet at my favorite watering hole every Friday afternoon, and so we all got together and had a “zoom” session. Hey! At least I got to see everyone again! This Zoom thing is pretty cool… That is until it won’t be any longer…. HA! Dell Shannon greets me this morning with his song: Runaway….
So, riddle me this Batman…. 701,000 are reported as jobs lost in March, and the stock jockeys rejoice? Wait! What? Yes, this is a blatant example of the “opposites” we are in for trading of assets these days, for sure! I’ll have more on the Jobs Jamboree in a minute or two…. But first!
More importantly, to me that is, the dollar bugs also rejoiced at the news of a job losses and sent the currencies to the woodshed… How in the world does that happen? What causes a dollar bug to think that this is all going to work out in their favor, when the last two weeks have seen over 10 Million apply for unemployment benefits? I think I know the answer to this, and it was very prevalent on the deck down in Florida, when the two gentlemen were discussing how they were buying into the market because the worst is behind us…. Really? I would offer this…. The worst is still ahead of us, folks… The next two weeks with this virus is going to be critical to understanding when we reach the peak of cases and deaths….
I understand that stock mark futures are up this morning because traders thought the weekend death toll numbers were better than expected… Brother! Is that what this has come down to? I’m not even going there!
So, the Big Winner on Friday, and through the weekend, was the price of Oil… Looking very weak until Friday of last week, the price of Oil has rebounded upward to a $27 handle. The first move came after new that Trump and Putin had agreed to cut daily Oil production by 10 Million barrels… Well, that might be all well and good, for the Oil producers, but for the common man, trying to eke out whatever he can of his savings each week, the rise of price of gas at the pump isn’t going to be a big help….
The only currency to come through the gauntlet put down the dollar bugs, on Friday, was the Russian ruble, who FINALLY saw some love from traders…. but do you see the connection? Oil price rises, Russian ruble rallies…. But the ruble wasn’t able to drag the other Petrol Currencies along for the rally… The Mexican peso got trashed, the Norwegian Krone is too tied to the euro’s fortunes, which weren’t good on Friday, the Brazilian real just can’t stop stepping on its own toes, and the Canadian dollar did get a little love, but not much….
Well…. Gold has a decent day on Friday, closing up $11 on the day, and is up again this morning in the early trading by $20… Front and center on this discussion is to say thank you, thank you, thank you, in my best Gomer Pyle voice, to those of you who sent along emails alerting me that the actual end of the decade comes on 12/31/20…. So, Whew! I don’t have to eat any crow yet, on my call that the U.S. dollar would not be the reserve currency of the world by the end of the decade, that is… yet!
I was reading an email from the GATA folks this weekend and in it GoldMoney’s Alasdair Macleod was talking as if he had been in one of my presentations from 10 years ago…. He said that Basically, in his mind that China would end up selling a load of U.S. Treasuries, buying more physical Gold, and then backing their currency, the renminbi or yuan, with Gold, thus making it the most attractive currency in the world , and thus stealing the crown from the King Dollar…. These are all words that I used to say at just about every presentation I gave back in the day! So, it was nice to see that someone else believes what I do….
And I ask this question once again…. Got Gold?
OK…. I was able to listen to a talk with Pippa Malmgren and Grant Williams on Thursday last week… In case you don’t know Pippa Malmgren is a very well respected analyst/ economist that has worked in the White House, Wall Street, etc. And she was giving us a way to lessen the backlash of all this debt…. You see, for those of you who remember this, back in the late 80’s we had the Savings and Loan collapse, remember that one? The Gov’t created the RTC, which would buy the debts of the savings and loan, and then package them up in a 30 year Gov’t guaranteed bond. It was a novel way to deal with the Savings & Loan mess…. And Pippa thought that maybe the Gov’t could do something with all the debt they are taking in with all their new and improved plans…. I say, give it a shot, why not? Otherwise the Fed just sits there with over $10 Trillion of junk that’s probably going to have problems in the future…. I’m just saying…
Well… My good friend, Dennis Miller of www.milleronthemoney.com sent me a note last Thursday night, that a longtime reader, Bernard, had already sent me, and in the article it talked about how, while the Gov’t is going to be sending U.S. citizens checks, that it might take months for a lot of those checks to be received…. Then on a different note I saw on Friday, it talked about what a “good thing the IRS was doing”…. In making the stimulus money available to be automatically deposited in one’s bank account…. Well, that might be all well and good, but, be careful of things the “Gov’t does for you”…. Because if you allow them to access your bank account they’ll be able to go both ways on that in the future…. And that leads me to an article that I’m writing with Dennis Miller on the end of cash…. So, we have that to look forward to now don’t we?
Spoiler alert…. Chuck pulls out an old Dow Theory Letters article from 2016, that’s so bang on with what’s going on today, with interest rates….
OK, the Jobs Jamboree on Friday turned into a Job Fair… As 701,000 jobs were lost in March…. But is that really the true number? I mean the last two weeks of people filing for unemployment in the U.S. have totaled more the 10 Million…. So, where’s the discrepancy? Ahhh, you can’t shoot all the chickens in the hen at once, right? So, as I keep telling you, the April number is going to be a real doozy! But as long as we’re all prepared for it, it won’t surprise anyone…. So, go ahead and say, it for April the Unemployment Rate will rise to 6%,…. It hasn’t been that high since we were coming out of the depths of the Financial Crisis of 2007-08.
And here’s another thing I want to you to stop and think about…. What IF…. The turning of the Earth on its Axis thus bringing warmer weather to the northern hemisphere, doesn’t bring about an decline in the COVID-19 virus numbers? How long are we going to keep the economy shut down? And here’s where I differ with just about every economist out there…. I say there will be no “quick start” to the economy once its back on line… Yes, we’d all like to believe that will happen, but in my mind it won’t, for there will be too many roadblocks preventing it…. And the main one is that in my opinion, the financial system won’t be the same…. Go on chew on that one for a minute before I hit you with more…
OK, the U.S. Data Cupboard today is as barren as the moon today, but last week was a Bonanza of data that got missed because of the Jobs data…. But the Monthly Trade Deficit fell below $40 Billion for the first time that I can ever remember, I think…. Just goes to show you that when the U.S. consumer decides to stay home and not spend like there’s no tomorrow, that the Trade Deficit goes down….
In addition, the Feb. Factory Orders were flat, 0% growth, which was better than January’s negative -0.5% drop… But again the majority of this data was taken before the COVID-19 came to our shores, so again, March’s print, in April, will be very bad…. And the Unemployment Rate rose to 4.4% in March…. But like I said above, I’m looking for a 6% rate come next month… Think about that for a moment over 10 MILLION people have filed for unemployment benefits in the last two weeks…. What happens if this trend isn’t “short-lived” like the markets participants are thinking?
I just think that in this situation that we should be more like Jack Reacher, and “hope for the best, plan for the worst”…. That’s a saying that I use all the time now, thanks to Jack Reacher!
To recap…. The Economy lost over 700,000 jobs in March, and the dollar bugs and stock jockeys thought that to be a good thing, and rallied their respective assets and that rally will continue today…. Oil jumped in price since last week, and this morning Oil has a $27 handle to trade with, which helped the Russian ruble become the only currency that saw some love on Friday…. Chuck poses the question for everyone to consider…. What IF this isn’t going to be short-lived, like traders are thinking it will be? Chuck believes we should be “hoping for the best, and planning for the worst”….
For What It’s Worth…. Well first I saw this article sent to me from the GATA folks, and then in his Saturday letter, Ed Steer highlighted it too (edsteergoldsilver.com) And it originally came from the weirdest of places…. Bloomberg.com…. I say that because Bloomberg writers have ripped Gold Bugs up and down for years, and now it seems they’ve come over to the right side…. The Force! So, you can find the article here: https://www.bloomberg.com/news/articles/2020-04-03/gold-bugs-finally-see…
Or, here’s your snippet: “For years gold bugs were relegated to the fringes of financial markets. Often viewed by mainstream investors as tinfoil-hat conspiracists with basements full of beans and bottled water, their warnings sounded apocalyptic: a coming collapse in financial assets, widespread devaluation of paper money, and global disasters that erode civil liberties
Welcome to 2020.
As the coronavirus brings economies around the world to a standstill, gold is rivaling Treasuries and the dollar as the best-performing major asset this year. The metal proved its haven status with a 6% rally as almost $16 trillion was wiped off global stock markets and oil plunged.
There’s also been a scramble for physical metal as investors in exchange-traded funds build the biggest stockpile in history and dealers say they’re struggling to find gold to sell.
“We’ve been trying to warn people that something like this would happen,” said Jim Rickards, the author of several books that predicted a coming financial reset. Rickards, who spoke from a New England mountain compound, has long recommended holding gold as a precaution for wealth preservation.
“I’ve been saying it for years,” he said. “I’m not happy about being right.”
There are echoes of many of the typical gold bug predictions in today’s crisis. Besides the obvious economic and financial-market upheaval, social interaction has become taboo and in some places soldiers are telling people not to leave their homes.
Even the so-called paper market for gold is showing cracks and a squeeze last month on New York’s Comex, the largest gold futures exchange, added fuel to another of the prophecies: that when the crisis came, there wouldn’t be enough gold to go around.”
Chuck again…. Wow, can’t believe that Bloomberg has jumped on the Gold bandwagon! In normal times I would say that this is a signal for us to jump off for now…. But, with all that I’ve told you about this last week, I just can’t see this as the turning point, like when the cabbie says “I just bought some Gold”…. I’m just saying….
Currencies today 4/6/20 American Style: A$.6072, kiwi .5935, C$ .7072, euro 1.0803, sterling 1.2293, Swiss $1.0227, European Style: rand 18.8386, krone 10.5322, SEK 10.1590, forint 338.35, zloty 4.2237, koruna 25.5380, RUB 76.49, yen 108.88, sing 1.4338, HKD 7.7517, INR 76.10, China 7.0881, peso 25.11, BRL 5.3465, Dollar Index $100.66, Oil $27.45, 10-year .65%, Silver $14.62, Platinum $732.64, Palladium $2,158.58, and Gold… $1,641.65
That’s it for today…. Week 2 at home, but like I said, other than the drive home, I’ve been keeping to myself for weeks now…. I would like now to be serious, and ask you all to say a short prayer today for my good friend Dennis Miller, who after weeks of immunotherapy, will have a scan today to see if the treatments are working…. It was a cold, gray, rainy, weekend here, no outside time for me, and I’m already missing the sun! So, how are you all doing be sequestered at home? I know that everyone isn’t being sequestered, and if you’re a doctor, nurse, any health related person, grocery store folks, and anyone else that’s out there going to work each day and subjected yourself to the virus… May God Bless you! Well, I was treated with great 60’s songs to start the day and end it, as Dion & the Belmonts take us to the finish line today with their song: The Wanderer… I hope you have a Marvelous Monday, and will continue to Be Good To Yourself!