September 24, 2019
* Currencies and metals are little moved today
*Chinese give out waivers to U.S. soybean importers…
Good day… And a Tom Terrific Tuesday to you! I do believe that the Pfennig today will be short-n-sweet, as I spent yesterday, in a shell, as it was one of those days where the chemo gets a hold of me wrings me out. So, I slept a lot to keep from having to face the day! I think I’m better today, but I really just want to go back to sleep… Just win baby! The famous line by the Oakland Raiders owner, has been adopted by my beloved Cardinals… Which is a good thing for them considering the Brewers have adopted it too! James Brown greets me this morning with his song: Get Up …. This is a typical James Brown song with great music and a lot of Agggggghhhhh!
Well, after a quick perusal of the currencies and metals this morning and any corresponding stories, I’ve quickly come to the conclusion that today there’s little going on, no real movement in the currencies and metals, no data, and very little to talk about… That is unless you want me to reiterate what I’ve already said about things… I know no one wants that, so … short-n-sweet it is!
My quick perusal of the currencies and metals tells me that the there’s little movement here… The currencies look a little perky, while Gold is down $2 bucks in the early trading… And the news in the markets is all centered on 2 things… 1. The Chinese have decided to issue waivers to companies importing U.S. soybeans… It’s sort of a get out of jail free card, as they won’t have to pay the tariffs as long as they hold the waiver…
The markets in Asia saw this as a sign that China may be backing off the full ahead on Tariff and the Trade War. I guess if I stretch my imagination I can see that too…
The other thing on the markets collective minds this morning is the news that U.K. PM Boris Johnson was told by the Supreme Court in the U.K. that his suspension of Parliament was done illegally… Uh-Oh… That really kicks you in the gut doesn’t it Boris? You just found out that the title of PM doesn’t mean dictator!
Any-old-way, pound sterling , shrugged off the mess in Parliament, and gained a small amount VS the dollar… I’m telling you this now, so you’ll listen to me later, the trading in currencies is so strange these days that what’s up is down, and what’s down is up… There’s no fundamentals used in trading sentiment… It’s a good thing I’m no longer in charge of a currency trading desk, because I don’t know what I would tell the boys and girls on the desk…
I received an email from the folks at GATA yesterday that quoted metals guru Egon Von Greyerz, who said, “We have just entered the explosive phase in Gold & Silver”…. He’s talking about an upward move that would “explosive”… I hope he’s right… I can see it happening, but then I see alot of things that don’t every come to be…
Like me looking again like I’m 30 years old, and not crippled by Cancer… I dream about that all the time… What’s that telling me? That I should have never gotten older? HA!
The U.S. Data Cupboard yesterday was supposed to yield the Markit PMI numbers but those didn’t print and I’m wondering why? Where they that bad that the propeller heads at Markit were told to “got back and sharpen their pencils?” Oh well, whatever, it’ll print when it prints… Today’s Data Cupboard has the July Case/ Shiller Home Price Index (HPI), which has shown price decreases in Homes month after month, and I can’t see how July will be any different…
The HPI is nice to know, but it’s not a market moving piece of data, and so I truly expect the rest of the day to be like the first part… A non-event…
To recap… The markets are stuck in the mud, with currencies and metals showing small moves, and nothing else going on… The Chinese are issuing waivers to soybean importers to waive the tariffs, so good for them. And Boris Johnson found out that being PM isn’t like being a dictator… The Data Cupboard failed to produce the Markit PMI’s yesterday, and Chuck has a snarky comment about that…
For What It’s Worth… I’ve been talking quite a bit about the Repo cash crunch that was going on last week… And so when I saw this article I knew it was FWIW worthy… it’s about The Fed’s Market Operations, and how Goldman believes bond buying is going to be reintroduced in November, and it can be found here: https://www.zerohedge.com/markets/liquidity-scramble-fed-announces-overnight-repos-every-day-next-week-introduces-term-repos
Or, here’s your snippet: “Yesterday we reported that Goldman now expects the Fed to restart Permanent Open Market Operations, i.e., bond purchases, i.e., QE some time in November. For those who missed it, Goldman assumes a roughly $15bn/month rate of permanent OMOs, “enough to support trend growth of the balance sheet plus some additional padding over the first two years to increase the size of the balance sheet by $150bn”, in the process restoring the reserve buffer and eliminating the current need for temporary OMOs.
That strategy would result in balance sheet growth of roughly $180bn/year and net UST purchases by the Fed of roughly $375bn/year over the next couple of years.
However, assuming Goldman is correct, there would be a little over a month before such POMO returned to permanently increase the size of the Fed’s balance sheet, potentially resulting in a continued liquidity shortage for the next 6 or so weeks.
Which probably explains why moments ago, the Fed surprised market watchers who were expecting the Fed to continue conducting only overnight repos, but announcing that not only would it conduct overnight $75 Billion repos every day from Monday until Thursday, October 10, but it would also introduce 2 week term repos with a total size of “at least $30 billion” for the first time since the financial crisis.”
Chuck again… Yes, the Fed is going to introduce 14 day repos and then eventually, they’ll be buying bonds again to give the banks the liquidity they supposedly need…
Currencies today 9/24/19 American Style: A$ .6792, kiwi .6303, C$ .7542, euro 1.0998, sterling 1.2475, Swiss $1.0114, European Style: rand 14.8843, krone 9.0261, SEK 9.7189, forint 304.78, zloty 3.9872, koruna 23.5052, RUB 63.89, yen 107.70, sing 1.3767, HKD 7.8398, INR 70.77, China 7.1069, peso 19.43, BRL 4.1576, Dollar Index 98.59, Oil $58.09, 10-year 1.71%, Silver $18.54, Platinum $955.97, Palladium $1,658.28, and Gold… $1,520.64
That’s it for today… I saw my oncologist yesterday, and I must have looked so weak and fragile that she felt sorry for me, and told me to change the way I take my chemo… In how much, etc. So, I’ve got that going for me, eh? 5 games to play and the magic number is down to 3, for my beloved Cardinals… Gotta keep going, no time to slack off now! Head East takes us to the finish line today, with their song: Never Been Any Reason… My good buddy, Duane, and I go to breakfast from time to time at the Olivette Diner, where the picture for the Album by Head East was taken… Just some cocktail trivia for you… I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!
Chuck Butler