September 24, 2020
* Currencies & metals can’t stop the bleeding…
* JPMorgan to pay a hefty fine for manipulating metals…
Good Day… And a Tub Thumpin’ Thursday to you! Well, yesterday was a day to be forgotten as far as I’m concerned… The sun barely made an appearance, Gold & Silver get rocked again, and my beloved Cardinals lost to the Royals… UGH! They didn’t just lose, they got their butts beat! The road trip ends with a record of 7-6 with the rash of doubleheaders and so forth, in a regular year, that would be a good road trip, but considering there aren’t 162 games this year, every loss is like 3 losses… Now we come to the cheese that binds… 5 games VS the Brewers in 4 days… This will be day 6 alone during the days, I know one thing, I don’t have to put in my noise cancelling headphones to take an afternoon nap! Maroon 5 greets me this morning with their song: Harder To Breathe… Which I find happens to me when I get to the top of the stairs! HA!
OK… Well, here it is…. The dollar bugs are really taking some major chunks out of the currencies and metals. The dollar won back $37 of Gold’s value to close at $1,864.10, and the dollar also won back $1.52 of Silver’s value to close at $22.86… Talk about bringing the thunder down on the currencies and metals! The euro fell further in the 1.16 handle, and so on…. Welcome To the Thunder Dome! The dollar bugs have been heard to be shouting these days…. And I’ll give them credit, when they smelled blood they attacked, and the siege hasn’t stopped…. Gold, Silver and the currencies are beginning to think that they are Davey Crocket at the Alamo! General Santa Anna wouldn’t let up and neither will the dollar bugs…
And in the overnight and early morning markets, the siege on the currencies and metals hasn’t stopped. The dollar has taken back another $7 from Gold, and another 76-cents from Silver… this is beginning to look like it’s never going to stop… but it will, when the sellers have taken enough profits… I’m just saying…
You, know this is where I usually go all crazy about how this isn’t what should be going on, but I’m not going there today…. There are bigger fish to fry, as my dad used to say…. Like the news that JPMorgan has agreed to pay $1 Billion, with a capital B, folks, for their participation in market price manipulation of metals and Treasuries… Now this is a very large fine, right? But what have I told you before about these fines? That you can be sure that the entity being fined made 3 times that amount doing the unlawful trading, and they consider these fines to be “a cost of doing business”…
What would it mean to the asset classes that get manipulated to have the head of JPMorgan go to jail? Well he is the captain of the ship right? I’m just saying that this kind of stuff is going to continue to happen until someone goes to jail…. It’s all fun and games until somebody goes to jail! You thought I was going to say, loses an eye, but that’s a sensitive subject with me!
And once again, I say neener, neener, neener to the folks at my former place of employment that didn’t believe that the metals were manipulated and made me stop talking about it, saying it was just another one of my conspiracy theories…
And this is one kind of price manipulating, but the big fish to fry comes when someone does something about all the short positions that are on the book of COMEX, that have nothing to do with selling a metal and making delivery of it… They are there strictly to manipulate the price of the metal lower… Now THAT would be something if, nah forget it Chuck, there’s no one with the intestinal fortitude to stand up to the price manipulators… UGH!
And in all the Fed Head speeches yesterday, there wasn’t anything said that we didn’t already know…. For instance, Fed Vice Chairman, Richard Clarida, had this to say, “the central bank won’t consider raising interest rates from near zero until it actually achieves 2% inflation as well as full employment.”
Now we didn’t need Mr. Clarida to tell us this news…. We already knew that! Because Chuck told us a long time ago! So, what we have here is a new “Mr. Obvious” in Clarida…. I’m just saying…
Wouldn’t it have been better if Clarida had said, “ We are prepared to keep rates near zero until the cows come home”? Or, how about this, “ we can’t see raising rates until we are all retired from the Fed and won’t be responsible for this awful monetary policy any longer”?
Ok… let’s move on… Well, how about the news yesterday that Johnson & Johnson has begun the final stage of clinical trials for its vaccine… For the Covid-19 virus that is… This news came after a blip that came out on Monday from the FDA, that they are preparing more stringent testing for any virus vaccine… So, what’s it gonna be FDA? That’s ok you won’t see me standing in line to take this vaccine! I’m just saying…
Remember when I told you a month or so ago, that traders were rewarding the currencies from countries that seemed to be putting the pandemic in their rear view mirror? Well, it occurred to me yesterday, that this news about a vaccine reaching the final stage of clinical trials could very well be behind all this dollar buying… But then I came to my senses and said, “Nah Chuck, traders aren’t that smart, this dollar buying still walks like the PPT, talks like the PPT, and quacks like the PPT…
Its’ a herd mentality in trading folks… Take this dollar buying…. Traders were lining up to sell dollars last week, but then the PPT stepped in, and not wanting to fight city hall, traders tore up their sell order and threw them in the circular disposal (trash can)… And once a few traders saw what the PPT was doing, then they began to buy dollars, and then all traders were on that bandwagon…
Look I was one of those guys… I know that each morning they receive a memo from the boss telling them what they are to buy or sell that day…. Now, it wasn’t like that for me, because I wasn’t taking positions for the company… but in talking to these guys through the years, that was their charge…. So, just to “put it to the man” I will say that what we should be doing right now is buying whatever it is they are selling, because this won’t last long, and besides things are very cheap right now!
And early this morning, longtime reader, and good friend, Sharon, sent me this video of one of my all-time fave economists, Stephen Roach, and it was good, so I’ll give you the link and you can view it when you have the time.. It’s good, by the way… https://www.cnbc.com/2020/09/23/us-faces-dollar-crash-high-double-dip-recession-odds-stephen-roach.html
Today’s Data Cupboard has the Initial Weekly Jobless Claims, that as I stated on Monday this week, people are looking at this all the wrong way… They see that the weekly number isn’t 1 Million, and they think that to be cause for celebration… You have to look at the Continuing Claims folks, which have been inching toward 30 Million each week… And that is NOT cause for celebration!
In addition, there will be not 5, not 6, but 7 Fed Head speeches today…. That marks 20 of them so far this week, and we still have tomorrow, which is scheduled to have only 2 speeches on the docket for Friday… Today, we’ll also see New Home Sales, which doesn’t get me excited one iota!
To recap… it was another day of dollar buying and Gold & Silver received the bulk of the damage although the currencies saw some losses too… Chuck decided to forego any talk of how things are not what they should be, today…. JPMorgan is going to pay a $1 Billion fine for manipulating metals and Treasuries… But no one is going to jail… And Chuck asks the question that wonders if the dollar buying is because of the vaccine news?
For What It’s Worth…. Well, I really played arts and crafts with this article, getting what I wanted you to read in the snippet today… It’s a long article but worth the time and effort. It’s by Gail Tverberg, of whom I’m quoted many times in the past, and can be found here: https://ourfiniteworld.com/2020/09/23/reaching-the-end-of-early-stimulus-whats-ahead/
Or, here’s your snippet: “Many people thought that COVID-19 would be gone with a short shutdown. They also thought that the world’s economic problems could be cured with a six month “dose” of stimulus.
It is increasingly clear that neither of these assumptions is correct. Despite the claims of epidemiologists, our best efforts have never been able to reduce the number of newly reported COVID-19 cases for the world as a whole for any significant period of time. In fact, the latest week seems to be the highest week so far.
At the same time, the economy, despite all of the stimulus, is not doing very well. Airlines are doing very poorly. The parts of the economy that are dependent upon tourism are having huge problems. This reduces the “upside” of economic recovery, pretty much everywhere, until it can be corrected.
Another part of the world economy doing poorly is clothing sales. For example, many fewer people are attending concerts, weddings, funerals, out-of-town business meetings and conventions, leading to a need for fewer “dressy” clothes. Also, with air travel greatly reduced, people don’t need new clothing for visiting places with different climates, either. Most clothing is bought by people from rich countries but made by people in poor countries. This cutback in clothing purchases disproportionately affects people who are already very poor. The loss of jobs in these countries may lead to an inability to afford food, for those who are laid off.
Most people think that the issue we are dealing with is a temporary problem associated with a new coronavirus. I think that we are dealing with a much worse problem: The world’s population has outgrown the world’s resource limits. This is why our current problems look so difficult to solve from a financial point of view. This is part of the reason part of the world’s population feels that shutting down the economy for COVID-19 is a good choice. When the economy is already struggling with unprofitability and low wages, shutting down for COVID-19 appears to be a good choice: Keeping people inside stops the many protests related to low wages. The shutdowns appear to restore order to a troubled system.
Overshoot and collapse is a problem that many smaller economies have encountered over the years. If I am right that we are now encountering a similar situation, there is a big change ahead. The change will not be instantaneous, however. The big question that arises is, “Over what time scale does such a collapse take place?” If it takes place over a number of years, it may look more like “overshoot and decline” than “overshoot and collapse” to those who are living through the era.”
Chuck again.. Thanks to longtime reader, Bob, who sent me this article to read, and while reading it said, FWIW article over and over to me… So, here it is!
That’s it for today… This week has seemed to take forever to get along… I don’t know why, it just seems that way to me…. I’m hoping the sun comes out today, I need to get outside and enjoy some sun! I’m also hoping the kids and grandkids come over this weekend to spend some time with me… I know everyone has “life” things to do, but we’ll see, eh? I had some very nice emails in the response box yesterday… All I can do is say thank you, very much, your kind words are truly appreciated! The Hollies take us to the finish line today with their song: The Air That I Breathe…. Kind of funny that to start the day we had a song: Hard to Breathe, and to end the day we have a son The Air That I Breathe…. Hey the iPod is on shuffle, I’ve heard about 20 songs while writing this morning, leading up to the song by the Hollies…. I hope you have a Tub Thumpin’ Thursday, and Please Be Good To Yourself!
Chuck Butler