Author: admin

February 10, 2020

* Currencies give back their gains after jobs report… 

* Jerome Powell to testify to Congress twice this week! 

Good Day… And a Marvelous Monday to you! A nice warm weekend down here in the south, but with lots of wind, making it difficult to be at the beach… I know, I know, these are not 3rd World problems! Our Blues lost again Saturday night after leading 2-0… UGH! They’ve gotten into a real rut, and need to pull themselves out of it soon! My beloved Missouri Tigers beat Arkansas in basketball on Saturday, while the St. Louis Univ. Billikens lost to Dayton… We celebrated the Super Moon rising up over the ocean last night with some condo friends… A fun time was had by all! I have to go north again this morning (every Monday and Thursday for the next month), so this should be shorter than usual… But I can’t promise!

Well, I didn’t hear a knock on my door, or receive any threatening emails or calls from the Gov’t to stop my attack on JPMorgan… But just to be sure, I don’t, I’ll not talk about them today, instead I’m going to take a shot at the Fed… The Fed’s repo market operations saw the bidding on the money the Fed was offering over subscribed , twice last week… And not by a buck or two either… I’m talking Billions of dollars that the banks said they needed… On Tuesday, the Fed offered $30 Billion and the banks wanted $59 Billion and change, and the same thing happened on Thursday… This is getting way out of hand folks… Something’s got to give, and to me I would think it’s the dollar, but then I’m just a country bumpkin, and not some Ivy league, slick backed hair, hot shot economist… Besides, I don’t have any hair!

The Fed Chairman, Jerome Powell, is going to speak to speak to the Senate Banking Committee on Feb. 12 (Wednesday) this week to answer a list of questions the committee sent to him regarding the repo operations… I’ll betcha one shiny quarter right here, right now, that no one on the banking committee demands to know who is receiving all this cash…. So… he’ll go there, and dance around with his answers, that he’s now had a few days to rehearse!

Well, all these shenanigans with the Fed and the Casino Banks, hasn’t hurt the dollar yet… And on Friday last week, the dollar rallied and took back the lost ground from the previous day. On Wednesday when I last talked to you, the euro was 1.1023, and the A$ was .6759… And by the close on Friday the euro was back to 1.0965, and the A$ .6690… Friday was the Jobs Jamboree blow the expectations out of the water, and added 225,000 jobs according to the BLS… wink, wink… The Jan. Unemployment Rate rose to 3.6% from 3.5% in December.

That news sent the dollar bugs dancing in the streets… A little later in the morning on Friday, Consumer Credit (read debt) for December printed, and showed an increase to $22 Billion from $12 Billion in Nov. Now that used to be the kind of news that would have rocked the dollar to the core, but not any longer… We’ve all become Comfortably Numb, with debt figures, now haven’t we? Well, maybe not you and me, but traders sure have… You know, when I began my career, in the brokerage business I used to talk to the bond traders all the time… Those guys had the intestinal fortitude to say when things didn’t look right, and would show you with trades to reflect their feelings… Not any longer… Every market is manipulated… What you don’t think the stock market is manipulated? Oh, Please! What do you think the Fed’s Repo system is doing? What do you think the Fed’s rate cuts are doing? And tax cuts are doing? They all have their hands in the cookie jar of stock manipulation, folks…

Gold, on Friday gained a whopping $3 and some change… But this was after gaining $9 on Thursday, so at least some of the ground Gold lost last week when it got it’s price engineered downward. I wonder how many people got their dander’s up over the article I gave you to read on Wednesday last week from Pam and Russ Martens of Woll Street On Parade? I know I did! OK, seriously, who uses the term “gets one’s dander up” any longer? I guess an old fogey like me, that’s who! HA!

The U.S. Data Cupboard is lacking data prints for the most part this week, and we won’t see real economic data until Friday, when January Retail Sales and Industrial Production and Capacity Utilization print… In the old days, the dollar would get punished for weeks of no real data like this, but in today’s world of opposites… Well… you know…

To Recap… The dollar rallied strongly on Friday after it was announced that the U.S. created 225,000 jobs in January… Smoke and mirrors folks… I’m just saying… The currencies gave up most of the ground they had gained last week, on Friday. Gold, however, gained $3 and change, that could be added to Thursday’s gain of $9… Chuck is surprised that he’s not received a letter from the Gov’t telling him to back off JP Morgan… So, he went for the Fed’s rapidly reducing credibility today!

Before we head to the Big Finish today…  WOW! Talk about putting a smile on my face! Saturday morning, my former colleague at Mark Twain Bank, Neil George, sent me a note giving me congrats on being picked up by Barrons… Barrons? WOW! Apparently they like what I said last week about the U.S. not making the grade with shepherding the reserve currency of the world… For those of you who missed class that day, and want to see what Barron’s printed, that was originally in my Pfennig, here you go: “By having the reserve currency of the world, the U.S. is supposed to be above all others at shepherding their economies and balance sheet to keep the currency strong…

“The report card on the U.S.’s efforts to shepherd their economy and balance sheet to keep the reserve currency strong, is not a good one, folks… The U.S. current debt stands at more than $23 Trillion, and the Unfunded Liabilities are $127 Trillion… Add those together… that’s how well the U.S. has done folks… If I were the teacher they would get a hard F! But that’s not all the debt we have in this country… Corporate debt is $15.5 Trillion, or 74% of GDP…. State and local debt is $1.6 Trillion, and Consumer debt is $13.86 Trillion… This is really bad folks… so go ahead and think the dollar is going to remain strong forever… One of these days, all this debt is going to come back and bite the dollar in the rear.”

Neil tells me it was in Wednesday’s Barron’s in the market section, page 11…   I was unaware that Barron’s read the Pfennig! WOW!

For What It’s Worth…  There are so many articles about the  repos, the debt, the presidential campaign, and so on today… So, I reached into my bag of tricks and came out with this little ditty…  I told you above that the Consumer Credit (read debt) had catapulted to $22 Billion in December, right? Well, this article tells the story about how the number got so high, and it can be found here: https://www.zerohedge.com/economics/how-americans-paid-record-holiday-spending-credit-card-debt-exploded-december

Or, here’s your snippet: “Well, we were right again: the answer was revealed on Friday afternoon when the Fed reported the consumer credit change for the last month of 2019, and of the decade… and it was a doozy.
With analysts expecting a $15BN increase in consumer credit, the actual print was a whopping $22.1 billion, bringing total consumer credit outstanding to a new monthly all time high of $4.2 trillion.

However it was the composition of this number that sparked raised eyebrows across Wall Street, because while consumers added a rather subdued $9.4bn in non-revolving credit, i.e., auto and student loans, it was the $12.63 billion surge in revolving credit that explained not only November’s modest drop in credit card debt, but the record holiday spending in 2019, which – as we now know – was to a record extent thanks to credit card debt. In fact, as the chart below shows, it was the biggest one month increase in credit card debt since 1998! 

And so, for yet another month, Americans sank ever deeper in debt just so their obsession with purchasing things they don’t need nor cad afford – obviously – can be satisfied. Although in a world in which central banks and politicians now openly encourage excessive spending and living beyond one’s means, who can blame Americans for doing just as all monetary and fiscal officials demand of them…”

Chuck again… Same-o, Same-o, as far as I’m concerned, no one ever learns a lesson, and repeats the same mistakes over and over again, thinking that “this time it will be different”…  

Currencies today 2/10/20 American Style: A$ .6691, kiwi .6405, C$ .7521, euro 1.1050, sterling 1.2918, Swiss $1.0226, European Style: rand 15.0180, krone 9.2376, SEK 9.6548, forint 306.29, zloty 3.8929,   koruna 22.8417, RUB 63.78, yen 109.80, sing 1.3887, HKD 7.7653, INR 71.27, China 7.0000, peso 18.74, BRL 4.3186, Dollar Index 98.63, Oil $50.31, 10-year 1.57%,  Silver $17.79, Platinum $974.30, Palladium $2,368.26, and Gold… $1,571.89

That’s it for today…  In the famous words of Mike, moon man, Shannon, “it’s a beautiful full moon tonight, I hope it’s a full moon where you are”…  I hope you got a chance to see the Super Moon/ Snow Moon last night, it’ll be in the sky again tonight…  Cardinals Pitchers and Catchers report on Wednesday this week, full camp on Friday, and the first spring training game will be next Saturday, the 22nd…  It’s like the 22nd of December for me!  It’s so close I can almost taste it!    Let’s get those Blues back on a roll! The Eagles takes us to the finish line today with their early song: Ol’ 55…  “Well my time went so quickly, I went lickety splitly, out to my Ol’ 55” I hope you have a Marvelous Monday and please Be Good To Yourself!

Chuck Butler

 

February 5, 2020

* currencies, bonds, & Gold all get sold on Tuesday… 

* A Vaccine for the Coronavirus is in the works… 

Good Day… And Wonderful Wednesday to you! I have to apologize to one and all for my whining yesterday about how I felt… I shouldn’t have gone into detail, and should have said instead, that “it was a tough night for yours truly” OK… now that’s out of the way, and in case you’re wondering I got the wink an nod to go off the chemo for a week… So, by about the time I start to feel human again, it’ll be time to go back on… I’m still of the belief though that this chemo medicine has run its course with me… I’ve been taking chemo for nearly 13 years and this is the 5 different chemo drug that’s I’ve taken… And I’ve been on this one for 2 years… This is when I contact MD Anderson for their advice as to what is the newest renal cell carcinoma drug available… I think that this morning’s song is telling me something… It’s the great, godfather of soul, James Brown and his song: Get On The Goodfoot…

Oh, and this is the last letter this week folks… I have to be at the wound center very early tomorrow… So no Pfennig tomorrow… sorry… 

Well, the currencies can’t stand prosperity… every time in recent months that they appear to be ready to roll VS the dollar, that probes to be a false dawn… They may still build on their gains last week, but it will have to come after giving back some gained ground, like they did yesterday… I say the “currencies” as a general statement, there was a currency or two that gained yesterday. The Aussie dollar (A$) is one of them, and the other is the Russian ruble.

A longtime reader asked me last week what was the # currency VS the dollar last year, and I responded that I believed the Malaysian ringgit was the number one, but it was a very illiquid currency that was difficult to own… And then yesterday, I learned that the Russian ruble was the number one currency of the top 20 currencies in the world, for 2019… The ruble’s return, currency only, was 12.46%… If you owned it the entire year you can add another 4.5% for interest… So, it’s total return was over 17%!!!!

And it should be the best perfoming currency for years to come, until they get back to the level it traded VS the dollar, (35) before the conflict with Ukraine a few years ago, when the currency plummeted…

You know the more I read the more I learn that more and more countries are weaning themselves from their dependency on the U.S. dollar… Russia and China are the leaders of this move, but until the U.S. experiences a failed auction of Treasuries… This movement will take years to come around, but the trend is in, folks… And can you blame these other countries? By having the reserve currency of the world, the U.S. is supposed to be above all others at shepherding their economies and balance sheet to keep the currency strong…

The report card on the U.S.’s efforts to shepherd their economy and blance sheet to keep the reserve currency strong, is not a good one, folks… The U.S. current debt stands at more than $23 Trillion, and the Unfunded Liabilities are $127 Trillion… Add those together… that’s how well the U.S. has done folks… If I were the teacher they would get a hard F! But that’s not all the debt we have in this country… Corporate debt is $15.5 Trillion, or 74% of GDP…. State and local debt is $1.6 Trillion, and Consumer debt is $13.86 Trillion… This is really bad folks… so go ahead and think the dollar is going to remain strong forever… One of these days, all this debt is going to come back and bite the dollar in the rear…

The early morning selling of Gold yesterday, carried through to the rest of the day, with the shiny metal losing $23 on the day, to close at $1,553…. OUCH! Now that’s going to leave a mark! But… as I always say, these brief sell offs in Gold give the procrastinators or the Johnny come lately to investing, the opportunity to buy at much cheaper prices than was we saw late last week!

For if you believe that Gold will remain at these levels forever, you’ll end up being wrong… Remember a few years ago, when Gold dropped to $1,100 and change, and a very well know investment analyst, said that Gold would go to $700? Well, instead of dropping further at that time, it began to rebound, and then late last year it took a big step to the $1,500 level… You know, I wonder where that , well known investment analyst, has gone? I haven’t heard from him in a few years now….

OK… enough of that! Did you hear that a cruise ship off the coast of Japan, has been ordered to remain there and not dock, because there have been some confirmed cases of the Coronavirus on the ship? Talk about the virus beginning to spead? Basically every person on that ship could have been exposed to the virus… I would thing that news like that would boost the price of Gold, euros, francs, yen, and bonds… But in this day of opposites, Gold, euros, francs, yen and bonds all suffered from selling… Go figure, eh? 

And speaking of the Coronavirus, a British scientist believes he has developed a vaccine to combat the coronavirus. By the time it gets through all the hoops and goes to manufacturing, it will be too late to help with the outbreak this time, but… At least the next time, there will be an answer, apparently, that is… 

I don’t think the news of a vaccine to combat the Coronavirus, had anything to due with the boys in the band taking down Gold yesterday, but I’m sure there’s an excuse list out there that the boys in the band are reciting from that has the vaccine as one of the reasons they took Gold down, I mean they really whacked Gold…  

The U.S. Data Cupboard yesterday had December Factory Orders, and I said yesterday that given the recovery in the ISM data, that I would expect that Factory Orders also recovered from their negative print in November…  And recover it did, apparently that is, for I’m unaware of fidgeting in this number, but given that all other numbers have some fidgeting, one would think that this one did too…  The December print was 1.8%, that wasn’t enough to bring Factory Orders out of the red y-t-d for 2019…  So, the poor readings will continue, with the December print a brief escape… That’s how I see it anyway!

Today’s Data Cupboard has the ADP Employment Report for January, and the precursor to Friday’s Jobs Jamboree, is expected to show 175,000, which is in line with December’s print… I would think that the January temp help for December was all gone, and that the January jobs number will be lower…   

To recap…  The currencies, for the most part, suffered through a day of dollar buying on our Tom Terrific Tuesday. Gold got whacked, royally, and that whacking is going to leave a mark!  The A$ and rubles were the only rallying currencies…  All the real data for December, ISM, Durables, Factory Orders, etc. all showed improvement, but couldn’t bring the annual numbers out of the doldrums… 

For What It’s Worth… Well the improvement in the data for December wasn’t enough to pull each respective data print out of the doldrums, and… it wasn’t enough to keep Macy’s from cutting jobs and shuttering stores… The article about this was found on zerohedge.com and can be found here: https://www.zerohedge.com/markets/macys-cut-2000-jobs-and-shutter-125-stores-amid-significant-structural-change 

Or, here’s your snippet: “Macy’s announced Tuesday that it had adopted a three-year plan designed to stabilize profits and continue company growth. The new plan calls for a radical $1.5 billion cost-cutting program that will axe upwards of 2,000 jobs and shutter 125 stores across the US.

The retailer, which operates 680 stores under the Macy’s and Bloomingdale’s brands, said the closure represents an 18% reduction in its brick and mortar footprint. The layoffs of about 2,000 corporate jobs will account for 9% of its workforce. There’s also a plan to close several offices. 

Macy’s said the cost savings would generate about $600 million in 2020 and $1.5 billion annually by 2022.

“We are taking the organization through significant structural change to lower costs, bring teams closer together, and reduce duplicative work. This will be a tough week for our team as we say goodbye to great colleagues and good friends. The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile, and better fit to compete in today’s retail environment,” Macy’s CEO Jeff Gennette said in a statement.
Gennette said the company’s “least productive” stores would be cut first. There are already 30 stores in the process of closing, he added.

Under the consolidation program, Macy’s NYC will become the company’s sole corporate headquarters. Offices in San Francisco, Cincinnati, and Lorain, Ohio, will be closed within the next three years.”

Chuck again…  Just another of the brick and mortar companies that are seeing less and less of foot traffic in their stores… But it’s not just the stores folks… We’ve seen Oil companies file for bankruptcy, and on and on… 

Currencies today 2/5/20 American Style: A$ .6759, kiwi .6485, C$ .7529, euro 1.1025, sterling 1.3054, Swiss $1.0295, European Style: rand 14.7168, krone 9.1920, SEK 9.5767, forint 304.65, zloty 3.8583,   koruna 22.7357, RUB 63.26, yen 109.58, sing 1.3800, HKD 7.7629, INR 71.09, China 6.9981, peso 18.61, BRL 4.2452, Dollar Index 98.05, Oil $50.74,  10-year 1.63%, Silver $17.61, Platinum $977.06, Palladium $2,488.80 (this metal is up $56 this morning!) and Gold… $1,553.71

That’s it for today… A Big Snow storm and cold front was moving through St. Louis later this morning. So Kathy changed her flight that was supposed to leave around 4pm to one that left at 5.50am and got out of Dodge before the deluge! (no telling her I talked about her!)  I traded emails with Ty Keough last night, he sounded upbeat… And doing better! The power of prayer reveals itself once again!  The Cardinals are moving their equipment south which means sprint training is nearing… we are now just 8 days away from pitchers and catchers reporting… YAHOO! The KC Chiefs will hold their parade today… It will be bitter cold in KC, but I doubt those long suffering fans will feel it!  The Kinks take us to the finish line today with their song: Sunny Afternoon…   I love this line: Now I’m sitting here, sipping on my ice cold beer, lazing on a Sunny Afternoon! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

February 4, 2020 

* Currencies for the most part drifted yesterday… 

* Chuck explains Gold Swaps/ leases…  

Good Day… And a Tom Terrific Tuesday to you! Another Chamber of Commerce Day here yesterday… I wasn’t feeling 100%, or even 75%, but I struggled to get outside, and the sun sure felt good and warm. Just how I like it! I believe that the chemo that I take daily, has gone bad on me… I’m continually fighting stomach problems, while the tumor in my mouth remains unchanged in size… I went to dinner last night with my good friend, “Martini Gus” and I had to have ½ of a “petit ribeye” wrapped to take home, because I almost became violently ill, but drank a lot of ice water, and got through it… My appetite is going to the wayside, I can’t put anything that has carbonation or spice in my mouth. So, I sent off a note to my oncologist last night asking her if I can go off the chemo for a week or so to get my system straight… Knowing how much she loves me, (HA!) I’m sure she’ll give me the wink and nod… Three Dog Night greets me this morning with their song: Mamma told me not to come…

Well, I didn’t do much after my trip north yesterday, and neither did the currencies as there was no follow up to the overnight selling of currencies and buying of dollars… the euro is trading in the same clothes as yesterday, and the poor Petrol Currencies can’t seem to find a bid these days, especially with the price of Oil slip sliding away… This morning Oil is trading with a $50… One more day of selling of the black Gold, Texas Tea, and we’ll be below $50 and the shale folks will be closing down their rigs, as this seems to be the level that sends them home, as I’m sure the cost of getting the shale Oil our of the rocks is much more expensive than traditional ways. If I’m wrong about that, just chalk it up to me not knowing that much about the oil sector…

The key Petrol Currency is the Russian ruble… And I found this on the Russia Today site yesterday…. “There’s a lot going for the Russian economy as 2020 kicks into its second month. Russia’s government reshuffle is seen as removing austerity constraints and speeding up the financing of Putin’s ambitious national development programs. In his speech to the National Assembly, Putin signaled the end of austerity on social spending, Russia being the only country in the developed world, which is now seriously increasing social spending (among other things, increasing pensions double the rate of inflation and initiating massive child support programs) while everyone else is cutting.”

That’s all fine and dandy, but the ruble is a Petrol Currency, and as long as the price of Oil stays down, so too will the ruble, even if, the Russian economy turns the corner and starts running on all eight!

The biggest mover overnight was….  drumroll please…. The Chinese renminbi, and the move was not a good one!  The Peoples Bank of China (PBOC) must be feeling the markets’ fears about the Coronavirus spreading even wider, because they took a huge chunk out of the renminbi in one fell swoop! The renminbi is trading back to 7 and change this morning, and now that the Trade negotiations are no longer a black cloud over China, and the U.S. has dropped the “currency manipulator” tag from China, the renminbi gets chopped!  Typical Chinese reaction, if you ask me… 

The other Big mover yesterday and again this morning is Gold…  The shiny metal lost $12 yesterday, and is down another $7 this morning…  One day a safe haven the next day not so much, eh?  The high price for Gold yesterday was $1,598… But it closed at $1,576…  As I said yesterday, either the exchange stabilization fund (ESF) or the Plunge Protection Team (PPT) was working overtime to make certain that the dollar remains strong… 

Speaking of Gold… I read last night that Russia is probably going to be named the #1 producer of Gold for last year, taking the title away from China. Whether Russia gets the title or not, the point is that both Russia and China do NOT sell the Gold they produce, so therefore the numbers that are used to denote the total Gold each respective country has in reserves is undercooked by a large margin… 

Which in my opinion, has the makings of a very difficult scene for the non-Russia & China countries when the current financial system collapses from the weight of debt and derivatives, and each country comes to the table to reorganize the new financial system, and shows their hand at how much Gold they have…  That’s when it will occur to everyone that the old adage of: He who has the Gold, Makes the rules…  will hit them like a V-8 forehead slap!  I’m just saying…

There’s this thing called Gold swaps…  or leases…  The banks that hold Gold see it as a non-interest bearing possession, and so they look for a way to swap it for cash, that they can lend out at huge mark-ups. The problem with that is that the outfit that bought the Gold in the swap, no longer owns it they sold it in pieces to a thousand different customers…  So the bank, let’s say the Fed Reserve, has an IOU for Gold in their vault, which I don’t think is going to carry much weight at the reorganization table… 

Which is why I don’t understand why congress won’t pass the “audit the Fed” bill…   No wait, I do understand, what I don’t understand is why Congress doesn’t have the intestinal fortitude to pass the bill…

Well, I was wrong (mark that down!) about the December ISM (manufacturing index) as it did recover back above the 50 mark, after two previous months of below 50 prints…  I don’t know if this data is fidgeted, but it sure seems a bit strange to me that after last month’s print was even deeper below 50, that the trend was in, and it would continue to drop, but then out of left field comes a rebound! Just like that!  Go figure, eh?

Today’s Data Cupboard has the December Factory Orders, which in November were negative, but given the recovery in the ISM, one would have to think that this data too, will recover…   

We will end the week with the Jobs Jamboree for January… I just don’t see this being a good report folks… But then I really don’t care about the numbers any longer… They are cooked, massaged, recooked, and massaged again until the BLS gets the number they want…   The FWIW section article I had for you yesterday proves what I’ve been saying for years now that it doesn’t matter how many jobs were created, what matters is whether or not they were high paying jobs, and not min. wage jobs, which from the article seems to be saying has been happening… 

To recap… The currencies drifted on Monday, but the biggest mover overnight was the Chinese renminbi, which lost a large chunk of value in one fell swoop. The fear of the Coronavirus spreading even wider caused the mark down, along with some other items that Chuck discusses above. Gold also was a big mover yesterday losing $12 and is down another $7 this morning… Safe Haven one day, and not so much the next day, eh? Chuck feels is the work of either the ESF or PPT…

For What It’s Worth… I’ve been pretty reliant on news from Pam & Russ Martens who pen the great website: www.wallstreetonparade.com I’ve learned so much from them, and today’s letter from them sure hits home on something that I’ve alluded to in the recent past, regarding the Fed… So, you can find their article here: https://wallstreetonparade.com/2020/02/fed-chair-powell-has-gone-rogue-on-repo-loans-and-the-volcker-rule/

Or, here’s your snippet: “ The Chairman of the Federal Reserve, Jerome (Jay) Powell, regularly states at his press conferences that the Federal Reserve is there to serve the interests of the American people. But his actions regularly undermine the credibility of that statement in a manner not all that dissimilar to Alan Greenspan, whose Fed chairmanship oversaw the gutting of Wall Street banking regulations and ended just before the greatest Wall Street collapse since the Great Depression.

Powell goes out of his way to present himself at his press conferences as the quintessential public servant whose only mission is to perform the mandate set out by the elected representatives in Congress while his actions strongly suggest he is a wily rogue agent for Wall Street’s cartel of bank trading houses.

Congress set out its mandate for the Federal Reserve and its fellow regulators to follow when it comes to monitoring and disciplining Wall Street banks in the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted on July 21, 2010. The legislation was meant to rein in the greed, corruption and illegal trading activities of Wall Street banks that had led to the financial crash and Great Recession — where 8.7 million Americans lost their jobs and 10 million American homes were lost to foreclosure from 2006 to 2014.

One of the key provisions of Dodd-Frank instructed the Federal Reserve that it would be on a short leash going forward in terms of secret, multi-trillion dollar bailouts of Wall Street’s trading houses. Without the approval or even awareness of Congress, the Federal Reserve, predominantly through the Federal Reserve Bank of New York, had showered $29 trillion in cumulative loans to bail out Wall Street’s trading houses from the end of 2007 through the middle of 2010. The Federal Reserve fought a court battle for years to keep that information secret from the American people. That was on Federal Reserve Chairman Ben Bernanke’s watch. But this is what has happened on Chairman Powell’s watch.”

Chuck again…. A great article about how crazy the Fed and Fed NY have gotten, and how they are disobeying the rules that congress set for them… I just shake my heard in disbelief, and disgust…

Currencies today 2/4/20 American Style: A$.6718, kiwi .6461, C$ .7532, euro 1.1050, sterling 1.3277, Swiss $1.0322, European Style: rand 14.7090, krone 9.2405, SEK 9.6240, forint 304.62, zloty 3.8715,    koruna 22.7640, RUB 63.77, yen 109.05, sing 1.3708, HKD 7.7659, INR 71.20, China 7.0086, peso 18.71, BRL 4.2639, Dollar Index 97.89, Oil $50.76,   10-year 1.57%, Silver $17.73, Platinum $978.03, Palladium $2,399.60, and Gold… $1,569.62

That’s it for today… A beautiful sunrise this morning right outside my sliding door…  Being here, I get  to watch the sunrise over the ocean, and the moonrise over the ocean, sometimes the vision is amazing! I simply love it! Looks like another good day outside, so I’ll head out there as soon as I finish my crossword puzzles I do each morning after writing the Pfennig, except days I have to head to a doctor appt…   Not much else going on to write about, except I would like everyone to say a prayer for my good friend Dennis Miller, who received some devastating cancer news this week… And while you’re at it, say a prayer for my friend, Ty Keough, who’s in ICU right now…   And get this… The song that takes us to the finish line today is the Doobie Brothers singing: Jesus is Alright…  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

February 3, 2020

* Currencies, Gold, and bonds all rally on Friday… 

* Chiefs win the Super Bowl! 

Good Day… And a Marvelous Monday to you… Congrats to the Kansas City Chiefs as they won the Super Bowl last night! NFL Champions! I was rooting for K.C. all the way… Hey! They’re a Missouri Team! On the Eastern border of the state, we don’t claim them for baseball, but for football they’re all ours! (since the Rams left town that is!) I’m heading north to Port St. Lucie again this morning, so this should be shorter than usual, but… stranger things have happened! And yesterday was Ground Hog Day, and Phil didn’t see his shadow, which means an early spring… Ground Hog Day is also one of my fave movies… The Cure greets me this morning with their song: Lovesong…

The Currencies, Gold, and bonds rallied on Friday… Stocks and Oil did NOT! The Coronavirus is really on the minds of everyone these days, and especially traders who are seeing the worlds 2nd largest economy come to a screeching halt… The dollar just got thrown in front of a buss for good measure, as Gold, bonds and euros were the picks on Friday… You know, I don’t know for sure, but this Coronavirus could be the snowflake/ more like an avalanche that causes the strong dollar trend to end… I guess we’ll know for sure when March comes around… But wouldn’t it be great to buy some currencies like the euro, rubles, francs, and krone, on a hunch that they go upward from here? Besides even if they don’t, now, they will eventually, and you will have gotten them on the ground floor…

The 10-year Treasury’s yield had fallen to 1.51% folks… The bond boys are telling us something bad is going to happen in the U.S. economy, that interest rates will be coming down, and other bad things are about to happen… Remember when I told you that I truly believed that the 10-year’s yield would revisit its previous low of 1.38% from about 5 years ago? Well, it certainly appears to be heading in the right direction, doesn’t it? Of course!

I say “had fallen to 1.51%” because that’s where it was a the close on Friday. But in the overnight markets the currencies, Gold and bonds have given up some of their gains from Friday… UGH!  The euro has lost about 1/4-cent, Gold is down nearly $11, and the 10-year’s yield is 1.54%, still a deep drop from where it began, but… not a linear move for sure!

And with Oil still slip sliding away, the Petrol Currencies, led by the Russian ruble, are still getting smacked around… The only Petrol Currency to be showing some life these days is the Canadian dollar/ loonie…   

I used to quote Grant Williams all the time, when I subscribed to his newsletter, which in my opinion is the best newsletter money can buy. So now to get his bits of wisdom, I have to rely on Twitter… And that’s where I found this quote from Grant Williams on his Twitter feed… “historians will look back at this post-crisis period as a relatively brief interlude of false prosperity bookmarked by crises caused by obvious policy errors that appealed to cheap political passions, weak intellects, low morality and corrupt motives.”- Grant William on Twitter

I think he sums up this past 12 years pretty accurately, don’t you? 3 completed rounds of bond buying known as Qualitative Easing, one round of Twist and Shout, leaving interest rates at zero much too long, and now dragging their feet to cut them in the face of a recession, and another round of “not QE”… These all add up to a real mess folks…

But don’t let it bring you down, it’s only castles burning…. (Neil Young) But it is very appropriate here, I think…

So, Great Britain finally left the European Union…. It happened on Friday, and now after all the euphoria settles down, Great Britain is left with no trade agreements with their two largest trading partners… The U.S. and the Eurozone… Those trade agreements are going to be real problems to complete, and will take up a lot of the lawmakers time in the U.K. I don’t see pound sterling as a viable currency to own in the near future… Now, once these trade agreements are finished, then we might look to pound sterling…

One would think that the U.K. would have these agreements all drawn up ahead of time, but… from what I read, it’s a start from zero thing…

Let’s see… what else can I talk about this morning? That you’re wondering why I picked the euro and franks as currencies to look to buying? I know, I know, they both have negative deposit rates, and I’ve been down on these two for that for some time now… But, if the weak dollar trend ends, the offset currency to the dollar is the euro… And if things get scarier with the Coronavirus then the safe haven trades will get even more attention, and the Swiss franc has always, and I mean always been the safe harbor for currency traders in times like this could end up being… So there!

My view from the cheap seats, tells me that the Exchange Rate Stabilization (ESF) and Plunge Protection Team (PPT) were working overtime in the overnight markets to bring the dollar back, and Gold down… It’s all about keeping the dollar front and center in people’s minds all over the world, folks… But one of these days, there’s going to be some many dollars in circulation that it will be lights out on the ESF and PPT… I’m just saying… 

The U.S. Data Cupboard today will have the December ISM (manufacturing index), which has been below the 50 break even level for the last two months or prints… I don’t see the ISM recovering up and beyond the 50 level, and three consecutive months below 50, would seriously point to recession… So look out for that!

The Data Cupboard on Friday last week had the Personal Income and Spending for December, and guess what? Personal Spending was below not only expectations, but… the previous month’s print of 0.4% growth, only growing 0.3%, which in any other month would be OK, but for December? I would think that December’s Spending would have been better than November’s… I’m just saying…

To Recap… The U.K. finally left the European Union, but now the difficult part starts… The currencies, Gold and bonds all rallied on Friday, while stocks and Oil did NOT! Grant Williams joins us for this morning’s discussion with his view on the post recession, and he’s not enamored with it, that’s for sure! The Chiefs won the Super Bowl, and Phil the Groundhog didn’t see his shadow, so an early spring is on the way!

For What It’s Worth…. OK… I’ve told you all about how the jobs data is worthless because we don’t know what kind of paying jobs are getting created… It does our economy that needs to grow, no good for min. wage jobs to be created… This article tells the story of what kind of jobs have been added during this record low unemployment period, and it can be found here: https://www.theguardian.com/commentisfree/2018/jul/29/us-economy-workers-paycheck-robert-reich

Or, here’s your snippet: “But the official rate hides more troubling realities: legions of college grads overqualified for their jobs, a growing number of contract workers with no job security, and an army of part-time workers desperate for full-time jobs. Almost 80% of Americans say they live from paycheck to paycheck, many not knowing how big their next one will be.

Blanketing all of this are stagnant wages and vanishing job benefits. The typical American worker now earns around $44,500 a year, not much more than what the typical worker earned in 40 years ago, adjusted for inflation. Although the US economy continues to grow, most of the gains have been going to a relatively few top executives of large companies, financiers, and inventors and owners of digital devices.

America doesn’t have a jobs crisis…. It does have a “good jobs crisis”!
When Republicans delivered their $1.5tn tax cut last December they predicted a big wage boost for American workers. Forget it. Wages actually dropped in the second quarter of this year.”

Chuck again… Yes, that’s another thing I told you about when the tax cut went through, I told you that it wasn’t for me and you, but for corporations and they wouldn’t use it the way they should , choosing to use their new found cash to buy back their company’s stock…. Oh, well… One of these days…

Currencies today 2/3/20 American Style: A$.6999, kiwi .6466, C$ .75553, euro 1.1063, sterling 1.3052, Swiss $1.0367, European Style: rand 14.8705, krone 9.2664, SEK 9.6516, forint 305.22, zloty 3.8837,    koruna 22.7676, RUB 63.95, yen 108.52, sing 1.3471, HKD 7.7663, INR 71.41, China 6.9334, peso 18.80, BRL 4.2805, Dollar Index 97.71, Oil $51.77,   10-year 1.54%, Silver $17.78, Platinum $955.18, Palladium $2,274.48, and Gold… $1,578.33

That’s it for today…  There was even a Ground Hog Day movie theme to a Super Bowl commercial last night… I laughed at a couple of the commercials, but for the most part, I was not moved… I sure hope my darling granddaughter, Delaney Grace, wasn’t watching the halftime show… I’m just saying…   It was warmer in St. Louis yesterday than it was here in S. Florida! But that won’t last, so I hope all my family and friends enjoyed it! I can see steam coming off the ocean as the sun rises this morning… the air temperature is still below normal but will rise to 72 today, so no worries, for me!  The Stone Temple Pilots takes us to the finish line today with their song: Interstate Love Song…   I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

January 30, 2020

* Currencies attempt to climb up on the rally tracks!

* FOMC  and BOE leave rates unchanged… 

Good day… and a Tub Thumpin’ Thursday to you! Did you miss me yesterday? HA! Well, I’m just conditioning you for the week of March 2 thru March 6, when I will be out of the writing business and having a good time with my Spring Training buddies on my annual spring vacation. I know, I know, it gets earlier every year, but I think I’ll draw the line in the sand here…. I had a better day yesterday after my wound center visit, but I was still in pain, just much more manageable… I told the doctor that I would not allow them to put the pasty medicine on my wound again! I put my foot down, and it worked! Billy Joel greets me this morning with his song: Stranger…

Man did it storm here last night! The Thunder echoed through our building, and sounded like it was a tank moving in downstairs! That’s one thing about Florida that I’ve figured out… When it rains…. IT RAINS! But yesterday was sunny and 80… little wind… a day that people come to Florida for in the winter up north.

Not that you clicked on the letter today to read a weather report! The Currencies haven’t moved one way or the other for the past couple of days, although the bias remains to buy dollars, and that hangs over the currencies like the Sword of Damocles… And it remains this morning, as the currencies are still searching for a rainbow… a white knight… a lifesaver thrown to them… This latest run of dollar strength, in the face of weakening economic data, and low interest rates, reminds me of a star right before it burns out… It burns the brightest…

The Coronavirus remains a real problem in China… The U.S. stopped all flights to China, after stopping them from entering the country last week. Well, Unless all the other countries stop the flights from China, who’s to say that someone in China couldn’t say fly to Switzerland and then to the U.S. a couple of days later? This virus is shutting down the world’s number 1 or 2 depending on what data you use, Largest GDP nation… So, let’s take the conservative path and say China is # 2… That means they buy tons of commodities, and gas from Russia, and so on, that’s going to get the brakes applied to them soon…

And those safe haven buys are back, as Gold gained some yesterday and is up about $4 in the early trading today to trade at $1,580…  The Coronavirus has the stock jockey running for exits in fear what it’s going to do here in the U.S. and bonds/ Treasuries on firmly on the rally tracks… The 10-year’s yield has dropped to 1.56%…  The price of Oil slid again after an abundant oil supply number in the U.S. printed…  And Gold… well, it’s on the rally tracks too, but it’s not sitting on them firmly, as the price manipulators are still around, and working… I’m just saying… 

Gold, which at the end of last week and the start of this week looked like it was heading to $1,600… just has not been able to add to those gains, which took it as high as $1,584, and has slid back to the $1,576… Not a large spread, but… when one looks like it will go to the stars but can’t get out of the earth’s atmosphere, there’s something going on… And to me it’s simply either the ESF (exchange stabilization fund) or the PPT (plunge protection team) that’s doing whatever they can do to keep Gold out of the headlines, and TV news, so that it doesn’t get mom and pop America, wanting to buy Gold… It’s that simple folks… Yes, Gold gained 19% last year, but that was after a few years of not being able to mount a meaningful charge… It was due… I’m just saying…

In reading Ed Steer’s letter yesterday, he highlighted that Palladium had been taken down by the price manipulators of whom he calls “da boyz” I gave you the wrong website address for Ed’s daily letter last week, so let’s try this again… www.edsteergoldsilver.com I had been wondering when that would happen given Palladium’s huge run up in price that was unencumbered one iota…

Sanctions? What sanctions?  The Russians reported yesterday that their economic growth had hit a 6-year high…  and despite the slippage of the Oil price, the ruble had a decent day of rallying VS the dollar…  I simply find this news to be amazing… What shepherding of the Russian economy the Central Bank has done!  

The Bank of England (BOE) met this morning, and have already announced their intentions to keep rates unchanged… Outgoing BOE Gov. Mark Carney, will leave without fulfilling his goal of raising rates, just like he left the Bank of Canada…  But don’t worry about old Mark, he’ll find a cushy job soon, and then write memoirs about his time as a Central Bank Gov. and people will buy them! UGH! 

The antipodean currencies of A$’s and kiwi can’t seem to find a bid these days, as their very big trading partner, China, is seeing its economy go to hell in a hand basket, which means that the two island nations’ exports to China will suffer.

One currency that baffles me on how it is able to rally is the Hong Kong dollar (HKD), aka the honker…   Talk about a trading partner of China! And then add in all the protests that take away from economic development, and Hong Kong has the ingredients to slow its economy, but the currency keeps ratcheting higher…  go figure…

The U.S. Data Cupboard will have a revision to the 4th QTR GDP, which originally printed at 2.1%, but I’m as sure as I can be about this one, it will be revised downward… I’m thinking 1.8% probably is where it will fall to.

Tuesday, the Data Cupboard had the December prints of Durable and Capital Goods Orders, and while Durable Good Orders were up in the positive territory there is something you’ll find if you look under the hood at the 3.1% gain… Don’t want to get your hands dirty? Ok… I’ll tell you, if you take out the military spending, Durable Goods Orders would have been negative 2.5% !!!!!    Capital Good Orders were negative 0-.9% , so both of these are in the negative as far as I’m concerned! 

Tomorrow’s data will have the Personal Income and Spending for December… The ECI (Employment Cost Index) which will probably remain at the same level as November’s .7%… this is where you would find wage increases folks, which would drive inflation higher… 

To recap… the currencies tried to climb up on the rally tracks but were thrown back down by the dollar bugs… A return to the safe havens was on the table on Wednesday, as Gold, & bonds rallied nicely, while stocks got trashed for the day…  The Coronavirus is the reason for the fears growing all over the globe that the virus will spread…   The BOE left rates unchanged this morning, and we’ll see the color of the 4th QTR GDP revision later this morning… 

For What It’s Worth…  I totally skipped talking about the FOMC meeting yesterday because I knew I had this in my back pocket… It’s Zerohedge.com’ s view on what the FOMC announced yesterday, and it can be found here: https://www.zerohedge.com/markets/fed-extends-temporary-repo-operations-january-least-april-hikes-ioer

Or, here’s your snippet: “While the Fed’s January statement was a snoozer, with the only difference from the December statement being the downgrade in the pace of household spending rising at a “moderate” vs “strong” pace, there were far more notable changes in the latest monetary policy implementation note, which – as many expected – saw the rate which the Fed is paying on excess reserves (IOER) hiked by 5bps to 1.6% , or “10 basis points above the bottom of the target range for the federal funds rate” which currently is at 1.50%.

The other notable change from the December meeting is that the Fed is now extending its duration of its repo operations, which in December were supposed to conclude in January 2020, to “at least” April 2020.

And while there was no comment or change to the Fed’s QE4, it was this extension to the deadline of repo that boosted stocks in kneejerk reaction, as it means the Fed continues to believe the crisis situation that emerged after the September repo crisis will continue through at least April, even though repo rates have long ago stabilized.

The Committee also directs the Desk to continue conducting term and overnight repurchase agreement operations at least through April 2020 to ensure that the supply of reserves remains ample even during periods of sharp increases in non-reserve liabilities, and to mitigate the risk of money market pressures that could adversely affect policy implementation.”

Chuck again…  Yes, it looks like the meaning of “temporary” is being abused again… The Fed has greased the tracks to do more repos and bong buying through April… That would mean that over 6 months of “temporary” had been done…   I get so riled up about these repos that I can’t see straight, so … 

Currencies today 1/30/20 American Style: A$.6727, kiwi .6505, C$ .7565, euro 1.1025, sterling 1.3069, Swiss $1.0369, European Style: rand 14.6789, krone 9.2193, SEK 9.6424, forint 306.62, zloty 3.8856,   koruna 22.8791, RUB 62.47, yen 109.87, sing 1.3525, HKD 7.7679, INR 71.62, China 6.9357, peso 18.75, BRL 4.2032, Dollar Index 97.92, Oil $52.16, 10-year 1.56%, Silver $17.76, Platinum $975.49, Palladium $2,280.17, and Gold… $1,580.49

That’s it for today…  Well, when we next talk it will be February, the Ground Hog will have had its day, as will the Super Bowl!   And next Monday will point out that there a two weeks until pitchers and catchers report! YAHOO!   That sure was sad news from Sunday about the 9 passengers on the helicopter that crashed, that included Kobe Bryant… I just want to say that this brings about something that I feel everyone should embrace… To make sure you don’t leave unsaid words until it’s too late… If you love someone, tell them… If they are your best friend, tell them, and so on…  And with that… Toad The Wet Sprocket takes us to the finish line with their song: Walk On The Water…   I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday! And please! Be Good To Yourself!

Chuck Butler

 

January 28, 2020 

* Currencies can’t find a bid these days… 

* Gold gives back yesterday’s gain… 

Good Day… And a Tom Terrific Tuesday to you! Well, my trip to the wound center left me in near tears again… They tell me it’s healing, but… why then does it hurt so much when they dress it? I go back tomorrow, as they want to see me quickly and not wait until the usual Thursday date. So, no Pfennig tomorrow… But I promise I’ll be back on Thursday, God willing! I learned last night that 100 people have been tested for the coronavirus and only 5 have tested positive, so… so far, no mass spreading here like in China. That doesn’t mean we should let our guard down… I could kick myself, because I didn’t practice safety the other day. I shook the hand of a friend I hadn’t seen in a year, and then he told me he had a bad cold! UGHH! You see, when you’re on Chemo, your immune system is at risk, and need to stay away from sick people, because if I come down with a cold, it’ll be a doozy! I used to tell the folks on the trade desk to stay home if they were coming down with something… I guess the next few days will tell if I contracted a cold… UGH! The Band titled Lighthouse greets me this morning with their rock classic song: One Fine Morning…

Yesterday morning, I meant to tell you just how beautiful the sunrise on the ocean was… And then it slipped my mind and I went onward… UGH!

OK, so the currencies lost more ground to the dollar yesterday, not as much as late last week, but some lost ground nonetheless. And Gold, which was up over $12 in the early trading couldn’t hold or add to that gain, and ended up gaining $9…. But add that to Friday’s gain of over $9 and you had a pretty good move the last two days… There wasn’t any news from the Eurozone or down under, or Japan or even Russia to change the direction on the currencies, so they suffered through another day of dollar bugs dancing in the street.

In the early trading in Gold, it seems the markets believe there is no threat of a spread of the virus and have knocked $8 off the price of Gold…  And the price of Oil has wrapped a tourniquet around the bleeding in the price, and fought back about $1 in the past 24 hours.  That move allowed the Russian ruble to put up a roadblock on the selling, but with all the weakness in the euro, the Norwegian krone can’t find a bid right now. 

You know something that’s really eating at me these days? Well, it goes like this… One side of the Government has tied up the country for over a month, and in the end, they will have wasted our time and tax dollars… But that’s not really what gets me these days, it’s more the traders not paying attention to the goings on with the Fed NY, and all their cash injections into the Wall Street Casino Banks… Now I get that maybe U.S. traders don’t want to rock the boar, but foreign traders? They should be slicing the dollar up like it’s a piece of salami each and every night! And it leads me to believe that this whole incestuous thing going on has gotten out of hand, and that everyone is in this together…

On a side bar…. Back in the day at EverBank, we had weathered the storm of 2007-08, and didn’t need to take any Gov’t bailout money… But then the TARP money came around, and the management team at EverBank received a call from the Gov’t, who said, “How much TARP money should we send your way?” Basically, they made the bank take some TARP money! That way, the bank couldn’t go out and say, “ we never took a dime”, and then we would be thrown in with all the other banks that either did or didn’t need the money…

Now, I’m not saying all that to make my former employer look good… I’m saying it because, who knows who’s receiving all this money the Fed has pumped into the casino banks since the repo market tried to correct itself on Sept. 17 of last year… the Fed NY has hid the names behind a curtain and will refuse to pull the curtain back… So, if you’re in Minnesota, it could be your bank that’s in need of cash, or if you’re in Nevada, it could be your bank and so on all across this country…. But…. Traders aren’t dealing with it correctly… 1. Bond yields should be diving, they dropped a little, but no diving taking palce… 2. Gold should be soaring, it had gone up $18 in the past two days trading, but that’s small potatoes compared to moves it should be making… 3. Stocks should be getting blasted, the price/ earning numbers are horrible, the economy is slowing, and Corp profits will be at risk…

Who knows I may end up on some gov’t list of known problem children, for spouting off like I do, but shoot Rudy, I’m just getting started! 

Is the Exchange Stabilization Fund, or the Plunge Protection Team working overtime these days, keeping American investors eyes diverted from the real problems so they keep buying and spending?  I do believe that to be the case folks…  We are a country of spenders, it’s what we do! The bad part of that is that we tend to go overboard, and spend what we don’t have…  Governments, corporations and individuals should take my good friend Duane’s thoughts to heart, as he has been known to shout out, “I’ve got money I haven’t spent yet”!  

The U.S. Data Cupboard finally has some real economic data to print today, and soon this morning, the color of the December Durable and Capital Goods Orders will print… As I said yesterday, the November prints of these two pieces of data was pretty weak, and while I expect today’s print to have recovered a bit, it will remain weak…  I say that because that’s the trend that’s in place with economic data folks…  

You know how they say that in a bull market you could throw a dart at a wall of investments and it doesn’t matter which investment the dart lands on it will rally?  I take that thought over to the economic data and say that when the country is in a recession/ depression, you can say that any piece of data will be weak, and be right!  

To recap… The currencies just can’t find a bid or a safe harbor these days, as the dollar bugs continue to dance in the streets. Gold gave back some of its early gain yesterday to end up $9 instead of over $12 it had gained early…  However, Gold is down $8 this morning, so the fear of contagion of the virus from China seems to have waned…  I think that’ll end up being the wrong decision, but then that’s just me! 

For What It’s Worth…  This is something that I’ve been saying for some time now… That the manipulations and bad ethics of U.S. corporate America will never end as long as the heads of the corporations are hauled into jail… The fines are one thing, but when they don’t compare to the amount of money the Corp made unethically, or unlawfully, the Corporations will just say the fine was the “cost of doing business”..  this article today talks about the CEO from Wells Fargo, and how his fines didn’t mean squat to his bottom line, and it can be found here: https://www.blacklistednews.com/article/76076/wells-fargos-exceo-will-pay-175m-in-fines-and-never-work-in-banking-again-but-he-is-still-very-very.html

Or, here’s your snippet: “When John Stumpf (previously) was CEO of Wells Fargo, he oversaw a string of scandals including literally millions of acts of bank fraud, and still managed to walk out of the business with millions in bonuses and no criminal prosecutions.

He remains a multi-multi-multi-millionaire, but will have to surrender $17.5m in fines for his role in the scandals and is barred for life from working in banking. Many of his accomplices from Wells Fargo’s C-suite are facing their own fines and restrictions on future involvement in the industry.”

Chuck again…  Yeah, until they haul these guys into jail along with the monetary fines, this stuff will continue…  

Currencies today 1/28/20 American Style: A$.6755, kiwi .6535, C$ .7581, euro 1.1006, sterling 1.3191, Swiss $1.2089, European Style: rand 14.6252, krone 9.1490, SEK 9.6280, forint 306.26, zloty 3.8840, koruna   22.9303, RUB 62.59, yen 109.08, sing 1.3580, HKD 7.7758, INR 71.20, China 6.9337, peso 18.82, BRL 4.1932, Dollar Index 98.07, Oil $53.43, 10-year 1.62%, Silver $17.90, Platinum $984.03, Palladium $2,294.89, and Gold… $1,573.77

That’s it for today…  I know, I know, later than usual, but late is better than never! HA!  I didn’t sleep well with the pain in my leg waking me up off and on. I usually wake up on my own before the alarm goes off, but not today! So… here we are…  Our Blues started the second half of the season with a loss in Vancouver last night. UGH! The second half of the season last year is when the Blues got on a roll all the way to the Stanley Cup!  It’s so difficult to win the Stanley Cup, and so to think the Blues could win two in a row, is wishful thinking… but they can try! Pitchers and catchers report in two weeks! YAHOO!  Spring Training games start even earlier this year, with the first game on Feb. 22nd!  Darn baseball leaders think that starting earlier allows them to end before Halloween!  Not shorten the season or the playoffs, just start in February! UGH!  OK… I’ve got to get this out the door… no Pfennig tomorrow… and the Beatles take us to the finish line today with their song: Getting Better…    I hope you have a Tom Terrific Tuesday and will Be Good To Yourself!

Chuck Butler

January 27, 2020

* Currencies have an awful day on Friday… 

* Gold is kicking tail and taking names later! 

Good Day… And a Marvelous Monday to you! As I left you last week, I said I didn’t know if I would get a letter out today, as I have an early appt. at the wound center this morning. But… I was able to get a lot of my thoughts down last night, and so, only the overnight markets are left for me to peruse and write about today… We had some real Chamber of Commerce weather here this past weekend, after the cool, rainy, dreary 3 days of winter passed. So I have that going for me! Billy Paul greets me this morning with his song: Me And Mrs. Jones… Well, she’ll go her way, and I’ll go mine, tomorrow we meet the same place the same time….

OK, time is of the essence! The currencies lost ground VS the dollar on Friday, as the week of no-to-little data in the U.S. ended up helping the dollar… Gold and Silver, however rallied with Gold gaining over $9 on Friday, and Silver gaining 33-cents… A good day for the two of them! When I last wrote to you, the European Central Bank (ECB) was meeting and just as I suspected, the ECB did little to give the markets of Europe the Idea that things are getting better, as they left their negative deposit rate unchanged… I wonder all the time just what the German Bundesbank thinks of these negative deposit rates, but then their Chancellor (Schmidt) back in the day was the one that jammed the ECB down the potential member countries, so if the Bundesbank has a problem with the ECB, they can thank their former Chancellor!

And the news of a continued negative deposit rates for the Eurozone, sent the euro-bulls home with their tails between their legs once again… With the Big Dog, euro, left to sit idly on the porch, the other little dogs had to remain there too… But for how much longer will all this dollar strength run? The strong dollar trend is in it’s 9th year… 10 years has been the longest of any of the previous trends, so like the U.S. economy which is gasping for air after spending so long in expansion, albeit soft expansion, but expansion, nonetheless.

In the overnight markets, Gold is kicking tail and taking names later… The shiny metal is up over $12 this morning…  I read this morning that the Coronavirus spreading has got traders full of fear, and therefore the safehavens are in play, like Gold…  

The price of Oil on the other hand is slip sliding away…  Oil trades with a $52 handle this morning folks…  And here the fear of the virus spreading is hurting the Oil price, as traders fear the demand for Oil will diminish, as people are made to stay home. I remember the last time that we had a deadly virus spreading a few years ago… I was traveling quite a bit for EverBank, and speaking here there and in between, and I would see people walking through airports wearing surgical masks…  

Sidebar here… I read yesterday that the CDC says that they don’t believe wearing a surgical mask prevents you from getting the virus…  FYI… 

Two other thoughts on the currencies this morning… 1. the big drop in the price of Oil has really taken its toll on the Petrol Currencies, led by the Russian ruble…  and 2. When you get down to the currency roundup and see the Chinese renminbi with a 6.93 price, you may be thinking that the renminbi has sure taken a slide down the slippery slope in recent weeks since the Phase one Trade Pact was signed… And now with the shutdown of the country due to the virus, this could very bad for the Chinese economy, folks… I’m just saying… 

I just finished reading a short book titled: Riggef, by Stuart Englent… Here’s a snippet from his book : “First Gold was coerced from American citizens and taken out of circulation. Second Silver was removed from the nation’s coinage. Next, the international link between the dollar and Gold was severed. Once that was accomplished, market were rigged to suppress precious metals, and convince the world that the U.S. dollar was a s good as Gold and Silver. The truth is, it’s not. If the dollar were as good as Gold & Silver, their prices couldn’t have to be rigged.”

If you’ve ver wondered about how or why the U.S. Gov’t manipulates the currencies and metals markets, this book will spell it out for you… I got mine at Amazon,.

And for you who still don’t believe that all markets are now manipulated, you especially, should read this book for all the documentation that’s in the book!

The U.S. Data Cupboard is still lacking today with only new home sales on the docket, but tomorrow we’ll see Durable and Capital Goods Orders… Recall that November’s Durables were negative -2.1%… I’m thinking that December’s number will remain negative, but improve a bit… On Jan 17 last week, Industrial Production for December also printed negative at -0.3%… The economic data, albeit rigged to make things look better than they actually are, continues to be weak, and weaker by the print, sooner or later, given the debt, the wars, the welfare, and the rise of Central Bank buying of Gold, the loos in confidence to the dollar will abate… You can mark my words on that one… And then no amount of currency manipulation will save the dollar from entering a weak trend….

To recap… This was a short one today, as Chuck has an early appt and it takes him 55 minutes to get there! The currencies had a bad day on Friday, but Gold gained more than $9 and Silver 33-cents on the day… And both are up in the overnight markets trading this morning. The Data Cupboard is still lacking today, and the ECB didn’t surprise anyone last week by keeping their deposit rates negative…

For What It’s Worth…  OK… my good friend, and the Retirementor, Dennis Miller wrote an excellent piece for his weekly letter last week, titled: Will The Next Bank Bailout Bankrupt America?   Those of you who have signed up for Dennis’ free letter already have read this, but there are many of you who have not, so here it is : https://milleronthemoney.com/will-the-next-bank-bailout-bankrupt-america/

Or, here’s your snippet: “Can bank bailouts bankrupt America? Why would congress let it happen?

In a recent Daily Pfennig, friend Chuck Butler tells about educating his grandsons about the worst president there has ever been:

“…. I couldn’t let that one slip … I explained to them that Woodrow Wilson was the all-time worst president, … culminating with, he ushered in the Federal Reserve….”

Minnesota Congressman Charles A. Lindbergh, (father of the famous aviator) warned:

“The financial system … has been turned over to the Federal Reserve Board. That board administers the finance system by authority of … a purely profiteering group.”

Chuck again… Yes, the FWIW snippet is shorter than usual today, time is of the essence, if you need more, simply click on the link above and read it all at Dennis’ web site! 

Currencies today 1/27/20 American Style: A$.6771, kiwi .6562, C$ .7584, euro 1.1025, sterling 1.3187, Swiss $1.0318, European Style: rand 14.5446, krone 9.0985, SEK 9.5977, forint 305.57, zloty 3.8735,    koruna 22.9003, RUB 62.05, yen 108.85, sing 1.3566, HKD 7.7769, INR 71.28, China 6.9334, peso 18.94, BRL 4.1800, Dollar Index 97.84, Oil $52.25, 10-year 1.62%, Silver $18.30, Platinum $989.36, Palladium $2,378.46, and Gold… $1,584.06

That’s it for today… Man I spent a day and night in hell on Thursday… The wound center tried a new treatment, and told me it might sting a little… OMG! I was in near tears most of the day and night, and finally got to sleep around 2:30 am! So, if they come near me with that brown paste this morning, I’m going to hit the ceiling! Oh, and on Wednesday I have to go back, even earlier than this morning, so…. No Pfennig On Wednesday, but I’ll be back on Thursday… I’m so glad that January is almost over… that means there’s only 20 more days until Cardinals pitchers and catchers report to Spring Training! The Super Bowl will be this weekend on Sunday… I read the other day that a petition is going around NYC to change Super Bowl Sunday to Super Bowl Saturday…. Why on earth would we do that? If it’s too difficult to get up on Monday morning, then pass around a petition to make Monday following Super Bowl Sunday a holiday! Seems easier than the other way! But then that’s just me… The Ides of March take us to the finish line today with their song: Vehicle…. I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

Jan 23, 2020 

* Currencies and metals have little movement on Wednesday

* Ray Dalio, Paul Tudor Jones, and Jan Nieuwenhuijs  talk to us today! 

Good Day… And a Tub Thumpin’ Thursday to you! I’m headed north 50 minutes from here after I get this out the door, to the wound center. My Billikens played an awful game last night at Davidson, a team they should have beaten by 10. Old Man Winter is now gone from down here… 3 days at we’re back to sun and near 80 today… I received an email from a dear reader yesterday… He told me that I had “knocked the ball out of the park” with yesterday’s letter… Now that made me feel good! But now I have pressure to do it again! And much like baseball players, I’ll be doing good to get it to that level 3 out of 10 times, but shoot Rudy, that’ll still make me eligible for the Hall of Fame! The Amazing Rhythm Aces greet me this morning with their song from the 70’s: Third Rate Romance….

The damage that was done to the currencies, metals and Oil on Tuesday, didn’t return for an encore on Wednesday, so in the end the day the currencies & metals wallowed around in the mud all day… The price of Oil lost more ground and this morning is trading with a $55 handle… I wonder where all those folks that were calling for 2020 to be the year of Oil have gone? Probably to the same place I go to whenever I call something wrong…. I’ll give you a hint… Hello bartender… I kid of course…

Come on Chuck, it’s only January give the guys a break here!  OK, you’re right… I guess I’m just upset with the way the price of Oil has beaten down the Petrol Currencies… Two weeks ago, the Russian ruble was ready to trade below 60, and now it’s getting ready to trade above 62! The Norwegian krone was making its way through the 8 handle and now it looks like it might trade back to a 9 handle, and even the Canadian dollar/ loonie, which had resisted all the downward movements previously, with the price of Oil, finally gave up and dropped below 76-cents… 

So, while I’m writing today, the European Central Bank (ECB) is meeting to discuss rates. I told you my opinion of ECB President Lagarde yesterday, so I won’t get into again today. Let’s just say I’m not expecting anything…. Overnight, the Aussie employment numbers came through, and Australia’s December Employment Change beat the 15,000 forecast with an increase of 28,900! Unemployment Rate slipped below 5.2% expected and prior to 5.1%. And this surprised move in employment brought about a ½-cent rise in the Aussie dollar (A$) overnight…

Gold had an OK day, and as opposed to ATT&T’s commercials, OK is OK when one day it gets sold and the next day it gets bought… Gold posted a 70-cents gain on Wednesday… And in Davos, Switzerland, Ray Dalio had this to say about Gold… “You have to have balance … and I think you have to have a certain amount of gold in your portfolio,” Dalio said, adding that gold will be a top asset to own in the years ahead as central banks will fail to normalize in the next downturn, which could’ve already started.” Ray Dalio at zerohedge.com

Longtime readers have heard me carry on about owning physical Gold VS paper Gold before, so I’ll just touch on it right now and then bring you the opinion of a well known Gold researcher on the subject… I’ve always contended that if things come to a grinding halt try getting your Gold out of a paper trade… And now with no further ado… here’s Jan Nieuwenhuijs who used to go by Koos Jensen on owning physical Gold VS an ETF…

“Sure, it offers exposure to the spot gold price. But when things go haywire, GLD exposes you to many counterparties, which would be BNY Mellon Asset Servicing (Trustee), which is a division of The Bank of New York Mellon, HSBC (Custodian), potential sub-custodians (The Bank of England, ICBC Standard Bank, JPMorgan, Scotiabank, and UBS), NYSE Arca, and the Authorized Participants. Owning GLD is like owning a gold derivative with as much counterparty risk as possible.”

Chuck again… That was Jan Nieuwenhuijs from Voima Gold and his whole article can be found here: https://www.voimagold.com/insight/gld-a-crash-course

OK… enough today on Gold, eh? The reason I keep harping on it is because from all reports I read, Gold is still not a part of a very large percentage of investment portfolios… Why is that? What else do I have to say or show you to convince you that the next downturn in the economy is going to take to hell in a handbasket, and you’ll need a diversified portfolio that includes Gold or Silver or any precious metal…

I had a dear reader send me a note and ask me to say a few words about rhodium… I did… And for those of you keeping score at home, I basically said that rhodium had outperformed the other metals, but… And this is a BIG BUT! When I was on the trading desk I inquired to many dealers about buying rhodium… And they all said nyet! So basically, if you can find someone to sell it to you, then go ahead and own some, but I doubt you’ll find someone, that is unless things have changed since I left the trading desk 3 years ago… I guess I should have checked with my old trading desk, metals guru, Tim Smith, before I wrote this…  Oh well… if I’m wrong, I’m sure I’ll receive 1,000 emails telling me that I was wrong… 

OK…  looking around the globe today, I already mentioned the ECB meeting going on right now. In addition to that the Eurozone Consumer Confidence for the current month will print… Smart that they took the poll before the ECB meeting, eh?  In New Zealand, they’ll print their latest CPI (consumer inflation)  which should be OK…  Kiwi has been playing follow the leader (A$) for a very long time now. There’s a spread between the two currencies, and currency traders are very careful to make certain that the spread is not altered. 

Here in the U.S. the Data Cupboard continues to be in need of real economic data to print, and there just isn’t any on the docket. Today we will see the Leading Indicators Index, as of December… You may recall that the November report here was 0%…  The markets don’t really pay much attention to this, one of the two forward looking economic prints, with the other being Capacity Utilization…  I wonder if the bond boys make a big deal out of Leading Indicators, as they, the bond boys, used to be all about looking out to the future…  I’m just saying… 

To recap… The dollar bugs crawled back behind their wall boards yesterday, and left the currencies and metals to wallow in the mud all day with little movement. The price of Oil however, lost a lot of ground again and is down again this morning and is trading with a $55 handle… The Petrol Currencies are getting pushed down because of this free-fall for the price of Oil.  No real economic data today, and overseas the ECB is meeting while Chuck types… 

For What It’s Worth…. Paul Tudor Jones checks in for the FWIW section today, with his quote about this time period reminding him of early 1999… Those of us old enough to recall that time, the dot.com’s were flying high, one day, and the next they weren’t, and then all the corporate scandals came about and so on… I found this on zerohedge.com and you can too by clicking here: https://www.zerohedge.com/markets/reminds-me-1999-paul-tudor-jones-warns-craziest-policy-mix-history

Or, here’s your snippet:” Billionaire investor Paul Tudor Jones sat down with CNBC’s Squawk Box at the conference and warned: “We are in the craziest monetary fiscal mix in history. It’s so explosive. It defines imagination.”

“We are in the craziest monetary fiscal mix in history. It’s so explosive. It defines imagination,” says Paul Tudor Jones. “It reminds me of early 1999.” 

Jones went onto say, “it reminds me a lot of the early ’99. Early ’99 we had 1.6% PCE, 2.3% CPI. We have the exact same metrics today. The difference is fed funds rate 4.75% today 1.62%, and back then we had budget surplus and we’ve got a 5% budget deficit … Crazy times.”

“Crazy times” indeed – if Tudor Jones is right, the market is in the final blow-off stage as ‘Not QE’ propels markets to new highs. It will only be when the Federal Reserve winds down its unprecedented monetary accommodations that will trigger a top in the market (just as it did in 1999 after supplying liquidity to tamp down Y2K anxieties).

As we’ve discussed before, the deviation of the stock market from corporate profitability is the widest since 1999 – it seems that Jones’ warning should grab the attention of bulls as the economy continues to stagnate.

And in Jones’ view – this will end very badly.”

Chuck Again… I also saw this on Ed Steer’s goldandsilver.com letter so, as I always say, if Ed thinks the article is worthy, then I have no reason to quarrel with him! And besides this guy talks like I do! I mean all the while I was reading the note, I was thinking, “did I write this already?”  Of course I did, but….  it always helps when someone else tells your kids what to do, right? 

Currencies today 1/23/20 American Style: A$.6868, kiwi .6593, C$ .7598, euro 1.1090, sterling 1.3125, Swiss $1.0323, European Style: rand 14.3658, krone 8.9827, SEK 9.5043, forint 303.87, zloty 3.8281,    koruna 22.6050, RUB 61.88, yen 109.58, sing 1.3492, HKD 7.7722, INR 71.20, China 6.9034, peso 18.72, BRL 4.1973, Dollar Index 97.49, Oil $55.87, 10-year 1.75%, Silver $17.68, Platinum $1,005.52, Palladium $2,473.77, and Gold… $1,554.14

That’s it for today…  Somehow I get the feeling that this one was as good as yesterday’s letter… Oh, well,  carry on, Chuck…  Come on Coach Ford, I would think that free throw shooting practice would be the only thing on the Billikens’ agenda each day! They would have beaten highly ranked Dayton last Friday night if they had hit 75% of their free throws!  And my beloved Missouri Tigers haven’t had a real bonafide “big man” since Arthur Johnson and that was many years ago now… their lack of a big man shows up consistently in their games…  I understand there’s  big man coming next year… OK, so I have to wait till next year?  UGH!   The NHL All-Star Game is in St. Louis, which is going to go through 2 days of rain, sleet and snow, which should make getting around very interesting for the fans who want to see the game…  Mathew Sweet takes us to the finish line today with his song: Girlfriend….    I hope you have a Tub Thumpin’ Thursday and will Be Good To Yourself! 

Chuck Butler

 

January 22, 2020

* Dollar bugs tear off the scab once again… 

* Retail Sales revisions tell a different story… 

Good day… And a Wonderful Wednesday to you! Old man winter came this way on Monday night, and will exit tomorrow… In the meantime I spent most of yesterday outside in the sun, soaking up vitamin D, and reading… I know I’ve said this before, but I love to be outside! Congratulations to Derek Jeter, and Larry Walker who will join Ted Simmons in Cooperstown this summer. Ted Simmons spent most of his career as a Cardinal and is already a Cardinals Hall of Famer, and Larry Walker spent his last two years in baseball with the Cardinals… You know, back when the Cardinals’ GM had the intestinal fortitude to make a mid-year trade to better the club… I’m just saying… The Black Crowes greet me this morning with their version of the original Otis Redding song: Hard To Handle…

Well, it was back to the markets buying dollars again yesterday, after the overnight markets had stopped the bleeding from last week, the scab was torn off the currencies again yesterday and they began to bleed once again… This continued dollar strength is really building to a crescendo, and from there… Well, it won’t be a good time for the dollar, but then every trend has to end sometime, to be replaced with a different trend… It’s been that way since Nixon removed the dollar from Gold backing in August of 1971, and it’ll continue to be that way until we have a new financial system… I’ll talk about that more in a minute…

The dollar bugs had a good day as just about everything other than stocks and Treasuries got sold…  The price of Oil fell below $58, and that added to the weakness of the Petrol Currencies, while Gold, Silver, Platinum and Palladium all saw selling…  It was “one of those days” folks, where you just turn the TV off, the radio off, and plug in our earphones and listen to music, because nothing you did could change the direction, and we all know that this is fake money chasing stocks… And that’s all I’m going to say about that, today… 

But first, Gold had an other bad day yesterday, while the runaway train that Palladium was riding on, left the tracks for the day… We’ll have to see where this one day of selling takes us, but it was as wild a day of selling as the buying had recently been in Palladium. Good Old Gold remains in the forefront of important people’s minds as their safety component of their investment portfolio… Shoot Rudy, one of my fave economists, David Rosenberg, thinks that Gold is a “no brainer” for one’s investment portfolio…

And one of the reasons I believe we’re headed for trouble in the economy is the fact that there are so many low-wage earners in the country… Now that’s not a shot at the earners, it’s a shot at the wages they are earning… The Brookings Institution’s Metropolitan Policy Program found 44% of U.S. workers between the ages of 18 and 64 are in jobs that pay median annual wages of $18,000.

Are you going to argue with the Brookings Institute? I didn’t think so… I love when I can pull things like this and show them to you, to prove what I’ve been telling you is true….

Another thing I’ve been telling you is that the Oil producers here in the U.S. are having difficulties, and the proof in the pudding of that thought was shown to us yesterday, when a Houston Oil Production Company, McDermott Oil, filed for bankruptcy… It is what it is, folks, but I’m afraid we’re doing to see more of this, from all sectors in the coming weeks and months, as they’ve built up too much debt… 

I’ve been doing a lot of thinking recently, given all the time I have on my hands down here with little to no distractions, and one of the things I keep reading about is how the next recession will be the “mother of all recessions” and some even believe that it will cause a collapse of the financial system that we know of, which would mean a reset… With Gold being the central figure in this reset… I just keep going back and forth with myself on whether this “reset” would be a good thing to experience or not… For a collapse of the financial system would mean chaos in the streets, folks… it could get very ugly, but… once calm has been restored, and the parameters of the “reset” begin to leak out, I don’t think Gold Bugs would be too upset with the price reset that’s being bandied about for Gold…

Speaking of a return to a Gold Standard… President Trump has just nominated Dr. Judy Shelton to fill a vacancy on the Fed Board of Governors. Shelton is a longstanding Fed critic and an advocate for using Gold as a reference point in setting monetary policy. Did you get that last point? An advocate for using Gold as a reference point in setting monetary policy… That’s central bank parlance for: A new Gold Standard!

OK, let’s not let that idea go to our heads… She will be only one vote on a board that’s not too keen to change their ways… But having her there will give the Gold Standard idea the opportunity to be beaten into their brains! I’m just saying…

The economic  data abroad continue to trickle in with none of it being of much importance… Today will yield nothing, absolutely nothing, say it again! But tomorrow,  in Australia, their employment data will print, and in the Eurozone, the European Central Bank (ECB) will meet to discuss rates… Yeah, like they are going to hike rates, right?  New ECB President Christine Lagarde isn’t ready to take the fight to the rest of the ECB members, and besides I really don’t think she has it in her to do so either, so rates in the Eurozone, which were thought to be ready to come out of negative territory a few months ago, will remain in the red…  UGH!  

Today’s U.S. Data Cupboard is pretty barren with only the Chicago region manufacturing index, and the Existing Home Sales data for December on the docket…  I said yesterday that I don’t like weeks like this when the data is void of showing us anything meaningful…  

Longtime Pfennig readers will recall how I’ve gone through the “revisions” of economic data before. I’ve talked about how the powers that be don’t care if the first report is correct or not, it will tell the story they want told, and by the time the revisions to that report are made… Too much time has passed, and everyone is focused on what’s coming, not what has happened, and therefore the revision doesn’t carry the weight that it should. And so it was with Retail Sales last week… The headline number from December was strong and everyone hooted and hollered about how it showed the economy was nowhere near a recession. But oh, for those revisions… The Rocktober and November prints were downgraded in the revisions to where the growth in retail sales for those months were negative! That’s right I said negative! But that revelation just skipped on past the markets folks… And by the time they get around to revising the December strong print, no one will notice that either, except me and a few others that look around corners and under hoods!

To Recap…  the dollar bugs won the day yesterday, as currencies, and metals all lost ground to the almighty dollar.  The overseas markets have been void of any real economic data, lately, so everything is hinged on what the dollar bugs do…  That lack of data ends tomorrow for the non-dollar countries….   Chuck talks about a reset, an Oil company bankruptcy, and other things tomorrow, make sure you go back and reread it  if you scanned it first! 

For what it’s worth… I’ve been writing about the annual winter boondoggle at Davos, Switzerland for years now… Usually there are a couple of good quotes that come from the boondoggle, but in recent years, it’s been more of a back slapping meeting as key financial figures congratulate each other over their conquests… So, when I saw this quote from the head of Guggenheim investments it hit a nerve that someone would speak out against the back slapping going on… So, here’s the link to that article, that I hope you enjoy: https://www.bloombergquint.com/onweb/guggenheim-says-central-bank-driven-ponzi-scheme-must-collapse

Or, here’s your snippet: “Scott Minerd has a message for his fellows at Davos who are applauding rallying markets: Things aren’t as good as they seem. The Guggenheim Partners investment chief likened the inflation of asset prices caused by the loose money policies of central banks to a “Ponzi scheme” that eventually must collapse.

Minerd cited rising defaults despite a rally in riskier assets, and reiterated a warning that BBB-rated bonds risk further downgrades. He said that type of debt is at a greater risk of deterioration than it was in 2007.

Anne Walsh, Guggenheim’s fixed-income chief, said in an interview that 15% of the U.S. economy is already in recession. She said the Federal Reserve’s efforts to pump liquidity into markets has created “zombie companies” that may see an outflow of capital as the utility of that money continues to diminish, she said.

The longer that this market runs, the harder the fall will be when it ends, she said.”

Chuck again… you may recall me calling what the Fed is doing a Ponzi scheme last week, right? And now this guy is associating what the Fed is doing as a Ponzi Scheme too… You think? Nah, that couldn’t be, oh, but maybe just maybe cause you never know, right? OK… I’ll take the bait on that, and say that maybe he’s a Pfennig Reader!

Currencies today 1/22/20 American Style: A$.6845, kiwi .6595, C$ .7655, euro 1.1082, sterling 1.3063, Swiss $1.0295, European Style: rand 14.4513, krone 8.9761, SEK 9.5116, forint 302.62, zloty 3.8218,    koruna 22.6806, RUB 61.75, yen 109.96, sing 1.3492, HKD 7.7711, INR 70.07, China 6.8967, peso 18.75, BRL 4.1949, Dollar Index 97.57, Oil $57.99, 10-year 1.77%, Silver $17.80, Platinum $1.004.21, Palladium $2,406.02, and Gold… $1,556.11

That’s it for today…  I don’t know what’s happened to my likes, but there was a time when I could turn on any two teams playing college basketball, and it would hold my attention. Not any longer, if it’s not my Tigers or Billikens playing, I have no interest…  And in the winter, that pretty much is all that’s on cable sports. That, and hockey, which I’m also tied to my Blues, and no other games…  So, that means I read a lot at night which could be a good thing or bad thing with regards to what I say the next day, if you get my drift….  Old man winter has stirred up the ocean, and waves outside are larger than I remember them being… It was 42 degrees outside when I woke up this morning… It’ll get up to the mid 60’s with lots of sun so no biggie, for me!  The Moody Blues take us to the finish line today with their song: Story In Your Eyes…    I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

 

January 21, 2020

* Currencies rebound from selling last week

* Gold continues to have good days and bad days… 

Good day… And a Tom Terrific Tuesday to you! Seems like it’s been eons since I last wrote to you dear reader, but it’s really only since last Thursday! Since then, the two teams that will play in the Super Bowl were determined (K.C. and S.F.), and all I can say about that is Go Chiefs! Hey! They’re a Missouri Team… And wouldn’t it be cool if they won the Super Bowl 50 years after last winning it, after the Blues won their first Stanley Cup 50 years after last playing in the final? Our Blues have shut down for the All-Star Week, and they have 4 members that will be on the All-Star Team! My son, Andrew and I attended the skills competition, the last time the All-Star Game was in St. Louis… It was at the old Arena then.. Our former neighbor, Jill, worked for the Blues, and got us primo tickets for the skills competition… Earth Wind and Fire greets me this morning with their song: After The Love Has Gone… “After the love has gone, How could you lead me on? “

Well… After signing off on Thursday morning and heading to the wound center, the currencies began to give back their gains they had worked so diligently to achieve earlier in the week. And by Friday’s close, the euro was back to trading with a 1.10 handle, the Aussie dollar (A$) was back below 69-cents, and the rest fell in behind, the Big Dog and the Proxy for Global Growth…

The overnight markets last night were much kinder to the currencies, as the dollar got sold and the currencies tried to recover…  The euro is back above 1.11 and so on in the overnight markets, so back and forth we go, where we stop nobody knows! 

Palladium is on a runway train folks… Every day I look at the price and say to myself, ” This is amazing!” There’s no stopping it right now, so either jump on board or get out of the way, would be my suggestion…  Gold on the other hand continues to have good days and bad days, with the bad days outnumbering the good days right now.  Yesterday, Gold gained $3 as the New York price manipulators weren’t at their desks or showing up at the COMEX with arms full of short Gold paper trades…  but in this morning’s trading Gold has given back that $3 gain…  Back and forth… 

I mentioned Global Growth above, and so Speaking of Global Growth, the IMF lowered their outlook for Economic Growth in 2020 this past week, claiming that they see major slowdowns around the world. And since the U.S. economy is the growth engine of the world, the IMF must then see that the U.S. economy is going to slow down… Basically, in my mind, I don’t see how the economy could slow down from its already snail’s pace, but there’s always a lower number, folks… And that’s what I see for the U.S. economy, once the Fed gets told to cease and desist their propping up the economy with debt monetization…

Oh, by the way, the Fed Heads still will not call what they are doing Quantitative Easing (QE) But they are doing their “not QE” by the hundreds of Billions each week… And now there’s a rumor going round, someone is underground, no wait! There’s a rumor going around that the Fed is not bailing out the Repo system, that instead they’re bailing out the Hedge Funds… OK, if that’s the case then they should send down more SWAT members than you can shake a stick at and arrest the Fed Heads for lying to the public! Their “not QE” going toward private companies’ coffers? To keep them afloat? OK… I must remind you that these are rumors, not fact… So before I blow a gasket, I’ll move on from here… 

And I found another thing these past 4 days… that answers the question I had about whom was buying the Treasuries that we need to sell to finance the debt. The Treasuries that were being printed and sent out as fast as the ink could dry on them, because the debt was exploding higher and higher! I pulled this from Russ & Pam Martens at their www.wallstreetonparade.com web site, regarding the excess Treasuries and where they were going….. “The New York Fed not only crowded out other counterparties but they also crowded out other forms of repo collateral according to OFR data. The repo collateral at Money Market Funds went from 33 percent U.S. Treasuries on January 31, 2011 to 63 percent on August 31, 2019 according to OFR data, making obligations of Wall Street and foreign banks less and less desirable.”

Chuck again… yes, the Fed is knocking at your door, you answer it, and they sound just like a NY Mafia man, saying, “ You need some treasuries” and you decline saying I don’t need any such thing, and they step inside the door, and in a deep accented voice, say, “you need some treasuries”…

OK, before I really get into trouble… I also read an additional report on wall street on parade.com and came away with these thoughts…

The Jobs Jamboree a week ago or so, was very interesting in that it never, and I mean never really counts true employment… There are so many tricks to the trade, and if you ever have time simply go to the BLS website and read about what the BLS considers to be “employed”… It’s crazy folks, simply crazy, as crazy as the guy who took a pig on a plane and said it was his emotional support animal! Now stay with me here for a minute… I’ve told you all that for the past decade we’ve averaged about 2.1% (some say 1.8%), GDP… Right? Well, how does a weak GDP like that garner an all-time low in unemployment? The two don’t match folks… I have to tell you that you have to have strong GDP to garner such unemployment numbers, and we don’t have that, haven’t had it, and probably won’t ever have it again!

And a dear reader reminded me last week of something that I’ve forgotten about, that I shouldn’t have, so shame on me! But a few years ago, the Gov’t moved the goal posts for computing GDP, and added stupid things that don’t really add to GDP, but they added them anyway, and it was supposed to have meant an additional 3% to GDP…  So think about this before we go on… If GDP has only been around 2% for the last decade, that means that without the hedonic adjustments, we would be in negative territory for GDP, right?  I’m just saying…    OK, back to the GDP and unemployment discussion.. 

Pam and Russ Martens of www.wallstreetonparade.com wrote about this recently, and went so far as to quote Big Ben Bernanke describing Okun’s Law, which I’m going to give you now from their letter: “Okun noted that, because of ongoing increases in the size of the labor force and in the level of productivity, real GDP growth close to the rate of growth of its potential is normally required just to hold the unemployment rate steady. To reduce the unemployment rate, therefore, the economy must grow at a pace above its potential. More specifically, according to currently accepted versions of Okun’s law, to achieve a 1 percentage point decline in the unemployment rate in the course of a year, real GDP must grow approximately 2 percentage points faster than the rate of growth of potential GDP over that period. So, for illustration, if the potential rate of GDP growth is 2 percent, Okun’s law says that GDP must grow at about a 4 percent rate for one year to achieve a 1 percentage point reduction in the rate of unemployment.”

If apples were counted as apples, oranges counted as oranges, we would have true totals of each, right? So, it points to the need to have a real accounting of unemployment, doesn’t it? I mean we can’t have these two things (slow GDP and low unemployment) out there bouncing off each other and not making any sense… So, since we KNOW that unemployment has a multitude of hedonic adjustments, why don’t we just take the hedonic adjustments out of the unemployment calculation, and come up with a “true unemployment rate?”

I’m just saying… that would be nice, eh? Just like the Chapwood calcs that I showed you a couple of weeks ago, pulling the wool away from our eyes on inflation… We need a Chapwood employment index!

Last week, early on I told you that the U.K. had a slew of data to print for the week, and after the dust settled on the economic prints, the outlook was dreary, as all the prints surprised the markets with how weak they were. No surprise on my part… Well, now the thought in the U.K. is that the economic data set the Bank of England on the path to a rate cut… and sterling rallied on that thought…  Really? debase the currency, but let’s rally the sucker! Opposites still reign… 

The U.S. Data Cupboard is on holiday this week, folks…  There are no economic prints scheduled for today, and the only print that makes any sense in following won’t come until our Tub Thumpin’ Thursday, when Leading Indicators print…  The Data Cupboard is a Big zero this week folks…  I don’t like weeks like this because the markets can be moved by things that don’t have anything to do with fundamentals… 

To recap… The currencies got sold going into the weekend, but in the overnight markets last night they rallied and won back some lost ground. Gold continues to have good days and bad days (reminds me of me!)  There’s no data this week, to speak of, so the markets are on their own to come up with why they should continue to buy dollars…  Looks like a rate cut will be coming from the BOE soon, as recent economic data was very weak… 

For What It’s Worth… Well, since I made a big deal out of the rumor regarding the repo market funding, I thought it would be a good thing to show you the article that brought this all forward, front and center to see… And that article can be found here: https://www.blacklistednews.com/article/76027/944-trillion-reasons-why-the-fed-is-quietly-bailing-out-hedge.html

Or, here’s your snippet:”

For What It’s Worth… Well, since I made a big deal out of the rumor regarding the repo market funding, I thought it would be a good thing to show you the article that brought this all forward, front and center to see… And that article can be found here: https://www.blacklistednews.com/article/76027/944-trillion-reasons-why-the-fed-is-quietly-bailing-out-hedge.html

Or, here’s your snippet:”On Friday, Minneapolis Fed president Neel Kashkari, who just two months earlier made a stunning proposal when he said that it was time for the Fed to pick up where the USSR left off and start redistributing wealth (at least Kashkari chose the proper entity: since the Fed has launched central planning across US capital markets, it would also be proper in the banana republic that the US has become, that the same Fed also decides who gets how much and the entire democracy/free enterprise/free market farce be skipped altogether) issued a challenge to “QE conspiracists” which apparently now also includes his FOMC colleague (and former Goldman Sachs co-worker), Robert Kaplan, in which he said “QE conspiracists can say this is all about balance sheet growth. Someone explain how swapping one short term risk free instrument (reserves) for another short term risk free instrument (t-bills) leads to equity repricing. I don’t see it.”

To the delight of Kashkari, who this year gets to vote and decide the future of US monetary policy yet is completely unaware of how the plumbing underneath US capital markets actually works, we did so for his benefit on Friday, although we certainly did not have to: after all, the “central banks’ central bank”, the Bank for International Settlements, did a far better job than we ever could in its December 8 report, “September stress in dollar repo markets: passing or structural?”, which explained not just why the Septem but also on the demand side, which as Claudo Borio, head of the monetary and economic department at the BIS, explained was the result “high demand for secured (repo) funding from non-bank financial institutions, such as hedge funds heavily engaged in leveraging up relative value trades.”

Incidentally, we harbor a slight suspicion that Kashkari, who also admitted to “finding amusement in needling critics calling them conspiracists or goldbugs” (which is a delightfully ironic statement for a person responsible for the biggest asset bubble in history, and one which we are confident in 1-2 years time he would love to retract), was being disingenuous and knows exactly how the Fed is impacting markets, because in what was perhaps the most important news last week which flew under the radar, the WSJ reported that the Fed was considering lending cash directly to – i.e., bailing out – hedge funds, or as we put it, “Fed officials are considering a new tool to ease repo market stress: namely bypassing the existing system entirely, and lending cash directly to smaller banks, securities dealers and hedge funds through the repo market’s clearinghouse, the Fixed Income Clearing Corp., or FICC.”

And so we once again get to the real issue at hand, namely the bailout of those hedge funds which even the BIS said were on the verge of failure had the repo market not been unfrozen – and which the Fed was all too aware of – and had the massive leverage that some hedge funds operate under collapsed, forcing an unprecedented liquidation cascade.

Sep repo disaster took place on the supply side (i.e., the sudden, JPMorgan-mediated liquidity shortage at the “top 4” commercial banks which prevented them from lending into the repo market)…”

Chuck again… OK, so you can’t believe everything you read on the internet, right? But you can choose to believe what you want to believe, and this rumor makes as much sense to me as to why this is all happening, than that the Repo market was in trouble… Think about that for a minute… But don’t let it get to you, for it’s just an opinion, educated that is, as to what is going on…  take with as many grains of salt that you wish!

Currencies today 1/21/20 American Style: A$.6888, kiwi .6605, C$ .7654, euro 1.1106, sterling 1.3060, Swiss $1.0337, European Style: rand 14.4644, krone 8.9416, SEK 9.5030, forint 301.15, zloty 3.8196,    koruna 22.5120, RUB 61.54, yen 110.07, sing 1.3491, HKD 7.7704, INR 71.08, China 6.8627, peso 18.01, BRL 4.1724, Dollar Index 97.48, Oil $57.81, 10-year 1.80%, Silver $18.01, Platinum $1,013.58, Palladium $2,467, 42, and Gold… $1,556.80

That’s it for today…  Happy Birthday to my good friend, Kevin, aka Webbie…  Yesterday was his birthday, you’re getting old my good friend! OK, I had to call out the folks down here for being soft when it comes to weather… Last night the weatherman said that the shelters were being opened because of the expected “cold” overnight temps…  the overnight temp was forecast to be 55 degrees!  Wait, What?  They think 55 degrees is cold?  I don’t know, I just find that all to be very funny… I guess it’s my sense of humor?  Winter comes tonight here, as the temps will fall below 50, and then begin to warm back up and winter will have come and gone! OK, I’ve got to go!  Steely Dan takes us to the finish line today with their song: Rikki Don’t Lose That Number…   I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler