May 19, 2020
* Currencies and stocks rally on antibody news…
* Gold gets taken down after reaching $1,775….
Good day… And a Tom Terrific Tuesday to you…. Well, I sure did stir up a hornet’s nest with my letter yesterday… If today were April 2nd, I could have said today, April Fool’s! But it’s not April 2nd, and there is no April’s Food prank… I said what I said about the future of currencies as we know them today, and I’m not taking it back! Some of you were kind with your words, and some of you were having me fitted for a white coat! That’s ok… I’m sure the first guy to say that the earth was round, got those same kind of comments! And it’s not that I wanted to be “the first” to tell you about what debt is going to do to the currencies, I just wanted you to hear that from me! And with no one that I know of in the writing business calling for an end to the currencies, I don’t have to worry about being first! OK… The Allman Brothers greet me this morning with their first song played on the radio: Ramblin’ Man…. I remember my first Allman Brothers album, Eat a Peach, and it had on it my fave song by them…. Melissa…. There were so many great songs on that album, but Melissa is my fave!
OK, what a day, what a day…. Gold was up more than $20 in the early trading, but by the time the markets heard the news, “There could be a huge breakthrough on finding a possible treatment to help fight the coronavirus. An antibody cocktail is being tested that they have high hopes for…. The market reacted as if we had found a cure, like the small pox cure, and stocks rallied over 900 points, the currencies around the world rallied, and Gold got sold like funnel cakes at a state fair, dropping $10 on the day, from its previous close… However, at one point during the morning, Gold had climbed to $1,775, only to close at $1,732…. Tsk, tsk, tsk…
Look folks, was simply another engineered takedown of Gold, that the price manipulators saw as opportunity with the drug news, to take down Gold…. What should we do with these price manipulators? I say, we hang ‘em, I say we shoot ‘em, then we hang ‘em, and in my best PeeWee Herman voice, I say, let ‘em go! Yes, I said let them go, because one of these days they are going to feel like that got their hand slammed in desk drawer, when all the losses mount on them having to close out their shorts…. But until then… buy your Gold on the dips…. That’s my sage advice to you…. Because one of these days, people are doing to see that they need Gold, and they won’t be able to get it, and that will cause Gold to gap up big time, on a daily basis!
So, tell everybody you know…. You’ve got some rock-n-roll soul… No wait! Tell everybody you know to go buy some Gold or Silver….
And regarding the antibody cocktail…. It still has quite a few rounds of testing to get through, so why wouldn’t prudent people wait until the test is through or at least near through? Everybody wants to be the first one on your block to buy, so at the next cocktail party, they can proudly say…. “I bought early, and got my rear end handed to me when the second wave of stock selling came”….
I listened in to another Grant Williams Hummmminars yesterday, this one with investment guru, Jesse Felders…. They talked a lot about what it’s going to take to bring people back to reality of what’s going on here in the U.S….. These broadcasts are free to listen to…. I would simply Google Grant Williams TTMYGH….
The economic data last week was just plain awful, but the stock jockeys didn’t care, and haven’t cared about fundamentals for a very long time, because why? Oh, I know you all know the answer to that, come on sing along with me… Because the Fed’s got your back! My Fed Head’s back and you’re going to be sorry, Hey now, Hey now, my Fed Head’s back!
Trying to stay on course here this morning, but Shoot Rudy… I’m a happy camper, as the tumor in my mouth has finally shrunk and is gone for all to see, that is if you want to look into my mouth! YUCK! I still have to take my chemo drugs, because, if we just go back 2 months ago, when I went off my old chemo for a few weeks to get it out of my system, before starting the new one, the tumor grew like weed! So… I get all the joys of Chemo, wrapped up in 4 different pills each night…. Lucky me!
Well, some restaurants re-opened yesterday in both the city and county here in St. Louis…. The film taken of the stores, with their “Open” signs, wasn’t encouraging…. I didn’t see people rushing to get in the doors…. I’m just saying…
It’s going to be a long difficult haul for businesses…. Because if your business plan is to have 3o tables turned over 3 times each night, with every stool at the bar taken, and you now have to spread people out at your bar, and only get to use 15 tables, how long are you going to remain in business? But hey! No worries, just go down to your local bank and get a loan… What? You already have a loan? Well then get another one, the bank won’t care, everybody’s borrowing at these low rates, right? Ahem… not so fast there Tim! Most businesses are borrowed up to their eyeballs now… I can’t see a bank giving them more money, and if the bank officer does give them more money, He’ll be hung out to dry when the business can’t make their payments!
But if enough of them go out of business and all complain to their representatives that this was a result of the COVID-19 virus, then they might see more “stimulus from the Gov’t” to remain open…. I’m telling you folks, this may all be make believe but it’s going to be reality very soon for a lot of these businesses, and we as a country and taxpayers, will buck up once more, instead of just letting the business file Chapter 11, and proceed with going out of business…
I’m not cold hearted, but…. Before 1971, and the whole credit system began, do you think businesses got Gov’t handouts when they couldn’t pay their bills? I don’t think so! Another business would just move in, and attempt to make a go of it… I think that way of doing business with businesses was far better, for the overall economy, than the way we do it now…. I’m just saying!
The U.S. Data Cupboard is a non-event today, with April Housing Starts, as if we don’t know that they are going to take a hit! Jerome Powell, will testify to the banking commission today…. I wonder which representative is going to ask him to explain what he meant when he said, “There’s more I can do to combat the recession”…. This could get interesting, very…. Or, the representatives can all bow in his honor and throw softball questions at him, like they usually do! I have the Powell 60 minutes snippet for you today in the FWIW section…
I had to chuckle a bit this morning. I saw a headline story on Booomberg.com that, well, I’ll just print it and see what you think… “Buy Aussie on U.S. recovery”… Really? And when will that recovery be taking place? I just shake my head in disbelief that people in this country still believe this economic recession/ depression we’re in is going to be short-lived…. I say depression because the other day I saw a film clip on a local news program that showed a line of people around the local Food Bank building… Reminded me of the soup kitchens, and the lines from the Great Depression…
OK… one more thing… Youngest son Alex is back home for awhile… It would be nice to have him here to watch baseball games with, oh, that’s right, there are no baseball games! UGH! He starts his new job on June 1…. It’s funny, to hear him talk about all the things he’s going to buy with his first paycheck… I told him he had better hold off on the expenditures, as the Gov’t hadn’t taken out their “fair share” yet! HA! Thanks to everyone who sent along congratulation notes for Alex, to me last week, I told him about them…
To recap…. Gold was up in the early morning, and got taken down as the day went on but especially after there was news of a possible antibody cocktail for the COVID-19 virus… Stocks soared closing up 900 points on the day…. And this all has Chuck scratching his bald head once again…. The Currencies and stock jockeys had the best days yesterday… Now, I’m really scratching!
For What It’s Worth…. Ok. Did you see Fed Chairman, Jerome Powell on 60 Minutes Sunday night? I didn’t… I had forgotten that he was going to be on that show…. But the folks at MarketWatch.com saw to it that all that missed it didn’t miss anything, and so here is the link to that article: https://www.marketwatch.com/story/feds-powell-tells-60-minutes-hes-not-out-of-ammunition-to-fight-the-recession-2020-05-17?mod=the-fed
Or, here’s your snippet: “The chairman of the Federal Reserve on Sunday said the central bank has not exhausted its power to help the economy get through the coronavirus pandemic.
“We’re not out of ammunition by a long shot,” Powell said in a transcript of his interview aired on the CBS news magazine “60 Minutes.”
The Fed chairman said there was “no limit” to what the Fed can do to lend money to financial markets.
“So there’s a lot more we can do to support the economy, and we’re committed to doing everything we can as long as we need to,” Powell said.
Powell said the Fed could enlarge existing lending programs or start new ones. The central bank’s balance sheet is already approaching $7 trillion.
The central bank could try to lower interest rates to make commitments about the future path of policy, a strategy called “forward guidance,” or could also “change our asset-purchase strategy,” Powell said. That’s a reference to the hundreds of billions of dollars of Treasurys and mortgage-backed securities the Fed has been buying.”
Chuck again…. I highlighted his statement about “the Fed could try to lower interest rates”… See? What did I tell you yesterday about Negative rates?
Also… notice that he said there was no limit to what the Fed can do to lend money to financial markets? When is he going to get it into his head that by giving money to financial markets doesn’t stir the economy? Probably never….
Prices today… American Style: A$.6535, kiwi .6080, C$ .7177, euro 1.0947, sterling 1.2236, Swiss $1.0294, European Style: rand 18.2315, krone 9.9728, SEK 9.6555, forint 320.07, zloty 4.1578, koruna 25.1086, RUB 72.94, yen 107.80, sing 1.4173, HKD 7.7504, INR 75.13, China 7.1091, peso 23.63, BRL 5.7618, Dollar Index 99.41, Oil $32.39, 10-year .73%, Silver $17.07, Platinum $814.71, Palladium $2,027.06, and Gold… $1,733.84
That’s if for today…. I think I’m going to pull an old name that I used to use for my Dow Theory Letters, and call the letter: Thoughts From The Butler Patio… what do you think about that? I hate to put the “Pfennig” to bed, after 28 years, but it’s time…. Yes, 1992, was when I began writing a short note to the salespeople of the happenings overseas, and they would fax them out to their clients…. I have a box that I brought home from Mark Twain Bank, that contains a lot of those hand written notes, maybe one day I’ll get them out and read them…. But probably not! Besides, knowing my better half, she probably already threw the box out! I went out to the Butler patio the other day, when it wasn’t raining, and down at my feet was about a foot and half long black snake, slithering along side me…. I simply used my cane as a stick and got him to wrap around it and pushed him the flower garden next to the pool…. I was surprised he wasn’t already in the pool! Now that’s one way to get “everybody out of the pool!” HA! James Taylor takes us to the finish line today with his song: Don’t Let Me Be Lonely Tonight…. So, go out and make this a Tom Terrific Tuesday, and remember to Be Good To Yourself!
Chuck Butler