June 3, 2020
* Currencies inch higher VS the dollar…
* A$’s get the rug pulled out from under them….
Good Day… And a Wonderful Wednesday to you… As I sat there last night changing channels by the second, because I didn’t want to watch any more buildings afire, I thought… You know, this country has more good people that are nice, are fun to be with, and care about each other, than those that want to do harm to the country… Good, will eventually win out, I know it in my heart of hearts! June has brought us some very warm days to start the month, and after the cold wet spring we had, I’m all for very warm days! I can’t sit out in the sun as long as I could previously, but, I still get a good amount of Vitamin D each day…. The grandkids, all four of them, were here to swim yesterday. I guess with the local pools shutdown this summer, that I’ll be seeing those four rascals a lot! YAHOO! Journey, pre Steve Perry, as lead singer, greets me this morning with their rock classic: Of A Lifetime…. Now there’s a song that I’ll be that not too many people have on their iPods!
Another day…. Another day of the currencies pushing higher VS the dollar… I told you yesterday that the Aussie dollar (A$) and kiwi had both gained a full cent VS the dollar on Monday, and on Tuesday they repeated that Monday performance… The A$ was trading with a 69-cent handle yesterday… In April, the A$ was dropping daily, and reached a 63-cent handle, before turning things around… Once again, I’m happy for the A$ and kiwi to be rallying, but shoot Rudy, they have nothing to be rallying about! China is in a deep recession, and the rest of Asia is following China down the broken glass littered alley… So, be careful here, folks…. One of these days a trader is going to wake up and say, “Hey! How’d this happen?”
And that may have happened in the overnight markets, as it was reported that Australia’s record run of 9 years without a recession, look to be coming to an end, as the 1st QTR GDP was negative -.3%, and with the second QTR forecast to be even worse, that would make a technical recession, of two consecutive quarters of negative growth… And heaven forbid, but traders actually sold A$’s on this fundamental news! Sure, traders go ahead and pull out the fundamentals when they work for you, I see how you guys work!
I just find that a currency getting sold or bought on Fundamentals is a rate occurrence these days, as it’s all about trader sentiment…
There are only a handful of currencies these days, that pay interest on deposits… They include the Russian ruble… And as long as that’s the case, I’m going to hold on to my rubles, and keep rolling them over so that the interest that’s paid gets added to principal…. But after reading Peter Zeihan’s chapter on Russia’s future, in his book Dis United Nations, I’ll be watching them closely, that’s for sure!
Peter Zeihan believes that Russia along with Germany are in deep dookie going forward… And no I won’t give you a spoiler alert, as to what he sees these two doing in an attempt to revive their countries…
Gold & Silver don’t pay any interest, but, to me their retention of wealth is important to me… I guess I woke up the boys in the band yesterday, when I asked the question of whether or not they had turned in their instruments… And as gold neared the $1,750 level, the boys in the band made sure it didn’t reach that price, and knocked Gold back by $12 on the day, with Gold closing at $1,727… And Silver, which had outperformed Gold, on a percentage basis, recently, got whacked, and finished the day below the $18 handle, which if held for a bout 4 days…
And both metals are still on the selling blocks this morning, with Gold down $7 and Silver flailing away… What gives here? Oh, it’s just the same-0, same-0 with the price manipulators, folks, nothing new here, nothing to see, move along for these are not the droids we’re looking for…
My good friend, Dennis Miller, the Retirementor, sent me a chart of the deposit yields on CD’s and Treasuries at his brokerage company…. Man, you talk about depressing! You would have to go out 10 years with a CD to get 1.%… You would have to go out 30 years with a Treasury to get 1.45%, and you would have to go out 30 years to get 2.4% in Agency bonds, (Gnma’s and the sort)…. And there are still people out there that would rather lock up their money in Treasuries, that may or may not have defaulted by ½-way through to maturity, instead of buying Gold & Silver… I’m just saying… that doesn’t make sense to me…
You know if I could have all Pfennig readers in a room, and ask to see a show of hands of those that own Gold or Silver or both, I’m quite certain that 90% of the people in the room would raise their hands… I guess when I bang on people about buying Gold & Silver I’m preaching to the choir… But I figure if I give them enough fodder, they’ll feel confident to talk to their neighbors or friends, or family about the subject of Gold & Silver as a store of wealth…
Well the price of Oil shot higher yesterday and traded with a $37 handle, yesterday. And just as I suspected, the Shale producers are sniffing around once again, getting ready to go full throttle on fracking , once the price guarantees them a profit…. And our friends at OPEC (NOT!) were just talking about extending their production cuts… Hmmm… You know, as I said the other day, the Saudis are looking to put the Shale Producers out of business for good, as they, the Saudis, can deal with a cheaper Oil price, than a lot of their competitors… But somebody should have explained to them that less supply equals a higher price, and vice versa… And a higher price brings the shale producers back into the mix…. I’m just saying…
Nearly 40 Million people out of work in the U.S. in the last 8 weeks, and the stock jockeys keep keepin’ on… Nothing seems to bother them, no awful economic data will stop them, no people working will stop them, no corporations not making profits will stop them… What?, the stock you own is from a company that can’t keep their lights on, and it keeps going higher? What does that remind you of? Come on, it wasn’t that long ago… Yes… The Dot.com bust…. Remember all those dot.com companies that never turned a profit, but their stocks were soaring higher, until one day, someone with an ounce of gray matter, said, “you know there’s something that’s not right about this” And soon trillions of dollars were lost, a lot of those dot.com companies were never to be heard from again, and here we are 20 years later, and investors are falling into the same trap…
Well… The currencies just can’t stand prosperity…. While the euro is nearing 1.12 this morning, the rest are just wallowing in the mud. The Russian ruble is back to moving in the right direction. The Japanese yen, has finally moved past the 107 handle! It sure seemed that yen was going to remain in that 107 handle for-ever! Reminded me of when I first began trading foreign bonds, and writing the Pfennig… Everyday it seemed that the yen was trading with a 130 handle… And then one day, it wasn’t any longer!
The U.S. Data Cupboard today has the ADP Employment Report for May, and I think they’ll say that in the month of May the U.S. lost 10 Million jobs… As I’ve explained before, this ADP report is supposed to be the precursor to the BLS report that will print Friday morning. As it turns out the ADP report is probably more reliable than the BLS report… But then it’s another case of Apples and oranges… with the BLS cutting off mid month to mid month for their report, and the ADP using the actual numbers from the previous month… So, don’t get your hopes up that just because the ADP report shows less lost jobs in May, because the BSL will have something up their sleeves… right Bullwinkle?
U.S. car sales have fallen into a deep dark hole… But what did anyone expect, people were told to stay home, and that meant not going out to buy a new car! I know they have those new apps for your phone that allow you to buy a car and have it delivered to you… Well, when all cars are made infallible that might work, but for now, a buyer has to go out a “kick the tires”… So, car sales take a major hit in May, but at least they were better than April’s numbers!
I’m still getting 3 weeks to a gallon of gas with my car…. Besides June of 2007 after my cancer surgeries, I’ve haven’t had a period of time when I drove my car less…. I love to drive, that’s the problem… I remember the first time I drove my car, when I was 16… I had bought a 1964 Ford Falcon, that barely ran, but it was mine, and the first time I took it out, that feeling of freedom, with the wind blowing through my hair… I still get those feelings sometime when I drive… I have a funny story about that car if you have a minute to spare I’ll tell it to you…
The girl next door, Ann, needed to go to work one day, and me being the ever-helpful young man, decided to offer to drive her to work. So, we left, and I made the first right turn, hit a pot hole, and the gear shift, fell off and into my lap… She said, “Does that happen all the time?” Well, it never happened again after I got the duct tape out!
To recap… Well, the currencies inched higher yesterday, once again, but have backed off a bit this morning. Gold is still on the selling blocks after losing $12 yesterday, the shiny metal is down another $7 this morning. Chuck talks about rubles, euros and A$’s this morning, and then talks about how the current stock market reminds him of the dot.com market of 20 years ago…
Before I go to the Big Finish, I wanted to mention that my good friend, Dennis Miller, will be printing his interview with yours truly, tomorrow, for those of you who still don’t receive Dennis’ letter (for free!), you’ll still be able to see what I said, by clicking www.milleronthemoney.com
For What It’s Worth… When I find myself in times of trouble, I turn to longtime friend, and publishing guru, Bill Bonner, to show me the light, and that’s where I was yesterday… So, I pulled up his website to see what he had to say, and, well, he had a lot to say! So, if you want some Bonner this morning, click here: https://www.rogueeconomics.com/bill-bonner-diary/america-is-marked-by-health-emergency-economic-recession-social-unrest/
Or, here’s your snippet:” You’ll remember our dictum: “When the money goes, everything goes.”
Huh? You wonder. What’s this got to do with money? Isn’t this just about racism and police brutality? In short, we wish.
The monetary foundation of the U.S. (the Federal Reserve balance sheet) began the century at only $674 billion. That is where it had gotten since the Fed was set up in 1913. Now, it is $7.1 trillion, and it’s headed to $10 trillion by the end of the year.
And now, every crisis, every calamity, and every disaster, caused by the feds themselves, will be met with more money-printing… and more war. The war on terror… the Mortgage Finance Crisis of ’08-’09… the war on COVID-19 …
Each time, the feds go back to doing the only thing they know how to do… the only thing that increases their power and enriches their friends – running the printing press.
And each time, they make the situation worse.
The current round of riots and lawlessness, for example, are probably not just a reaction to another killing by the police… not just the work of a few subversive groups… and not caused by the Russians (as Susan Rice claims), nor by our “foreign adversaries” (whoever they are) as suggested by Donald Trump.
Instead, they are an inchoate reaction by millions of Americans to an inherently corrupt and unfair system.
“Racism” is something they understand. They were indoctrinated about it in school.
But “racism” may be just a rallying cry… a trigger… a focal point… for deeper bitterness and resentment.
Money represents time… and life. And when people can’t trust it, they lose faith in their institutions, in the system, and in each other.
The center cannot hold. The masses become more extreme in their opinions… some wanting to tear down the “capitalistic” system… others wanting to protect it at all cost.”
Chuck again… OK, you’ve got to… or as Otis Redding would say, you gotta, you gotta, check out the whole piece by Bill…. He ties it all together in a nice bow that makes sense!
Market Prices today 6/3/20: American Style: A$.6871, kiwi .6381, C$ .7380, euro 1.1197, sterling 1.2570, Swiss $1.0376, European Style: rand 17.0509, krone 9.5425, SEK 9.3411, forint 309.02, zloty 3.9393, koruna 23.7878, RUB 68.82, yen 108.58, sing 1.3984, HKD 7.7500, INR 75.17, China 7.1063, peso 21.65, BRL 5.2972, Dollar Index 97.59, Oil $36.02, 10-year .69%, Silver $17.90, Platinum $840.66, Palladium $1,950.11, and Gold… $1,720.11
That’s it for today… I’m so upset by the low road that both the MLB players and owners have taken in regards to a deal to play this year… I guess I should have known this would happen, given their history, but I thought in this time of a pandemic, and people needing an outlet so badly, that they would see this almost like a relief effort, but Nooooooo! This week will be the go/ no go decider, so hopefully they can get their acts together! Kansas takes us to the finish line today with their song: Carry On Wayward Son… Kansas was HUGE in the 70’s… But then Steve Walsh, went solo, and well the rest is history… And with that, I hope you have a Wonderful Wednesday and rest of the week…. Yes, no Pfennig tomorrow, as an early trip to the wound center is on the docket for me… But please, Be Good To Yourself!
Chuck Butler