February 21, 2018
* The Treasury’s Auction Meets Higher Yields!
* Russia continues to add HUGE amounts of Gold!
Good Day… And a Wonderful Wednesday to you! What an awful night for the sports teams that I follow… First off, the USA Men’s hockey team lost in a shoot out last night. What a horrible way to end a game, with a shoot out! UGH! There was no T.J. Oshie to save the U.S. this go around! Our Blues lost, the St. Louis Billikens lost, and the one that hurt me the most was that my beloved Missouri Tigers lost on their home court! UGH! The Gin Blossoms greet me this morning with their song: Hey Jealousy…
The topper on all those losses was the fact that Lola aka Goldman Sachs, says that all this fuss about debt worries are not to worry about, and the dollar shouldn’t be getting caught up in the worries… So, OK, I don’t have any idea if this scenario actually happened, but in my mind this is how it came about… The U.S. Fed gives Lola a call… “Hello, yes, I can hear you just fine… What’s up? The Fed: We need some help… you see we’ve been telling everyone from the Gov’t. to the sheeple that the economy is just fine, no worries on the debt, and that to not worry, be happy… But “things” keep popping up telling everyone differently… Could you spread the word that everything’s right on the night? Lola: Of course! We would be glad to, for it helps us to get stocks out the door!” OK, this call never happened right? Right…
And the sheeple followed, and before you could say, What happened? The dollar buying became the thing to do again, and all those currency and metals levels from last week that looked like they were ready for a moon shot higher, are no longer on the launch pad. They’ve been shuttled back to the storage garage… I’m so tired of these “manipulators” that swing assets to their way of thinking or someone else’s way of thinking that they agree with!
Here’s something for Lola and the rest of the manipulators to think about… Speaking of the rebound in the stock market… Longtime readers know that I often say, “I’m not a tock jockey”… But I do follow stocks, and I follow people who write about stocks, and the other day, I had an article sent to me from a guy that really follows the stock market… He claims, like I often do, that the Plunge Protection Team (PPT), which consists of the Fed, Treasury, the SEC, and the CFTC, was responsible for propping up the stock market last week… In fact, he points to a report from a good friend of his that works at a large public pension fund, who claims that his firm did a “stress test” with the data he had provided to him from the Big public pensions… And he says…
“Based on all current stated underfunding at every big pension fund, if the DOW/ SPX declined 10% or more over a sustained period of time (3-4 months) that EVERY PUBLIC PENSION FUND IN THE COUNTRY WOULD COLLAPSE!!!! He then goes on to show that every 10% drop in the stock market since August 2015 has been met with an equally forceful recovery… I found this at www.investmentresearchdynamics.com The study is pretty convincing to those that don’t believe in the PPT…
Well, I told you yesterday morning that Gold was getting whacked at that time by $15, and the whacking didn’t stop there, as Gold finished the day down $17… Why? Because the short Gold paper traders saw to it that it happened! I have a challenge for you dear reader… Write your Congressman / woman, or representative in the House, and tell them 1. The Fed needs to be audited, and 2. To put pressure on the CFTC to come clean with their findings of Gold & Silver price manipulation… Will you do that for me?
OK… Recall me telling you many times over and over again that this dance is gonna be a drag? No Wait! Not that! I’ve told you over and over again that the accumulation of debt by the U.S. was going to eventually cause problems with selling Treasuries to finance the debt? And that yields on those Treasuries would have to move much higher to get foreigners interested in buying them…
Well, the higher levels are being demanded already by buyers, as yesterday’s auction of $179 Billion of 3 and 6 month Treasury Bills saw the markets demand higher yields on the Bills, and the yields on these two Bills rose to levels not seen since 2008! Oh, and the Treasury has $258 Billion of longer bonds to auction still this week… Hello Mr. Treasury yield, what floor are you going to? The top floor, please, and don’t stop along the way for me!
I told you yesterday that there’s not much in the way of U.S. Data for this week, but we will see the color of the Fed’s FOMC Meeting Minutes this afternoon… and the markets are waiting with much anticipation to see why it was that central bank officials pledged to make “further gradual adjustments” in interest rates as opposed to simply “gradual adjustments” at last month’s gathering. To me, I couldn’t give two hoots to find this out, but the markets seem to be Nervous Nellies about this, so I’m talking about it..
Well, this is shorter than usual this morning, because I’m not on top of the world today… But keep in mind that currency trends are not ONE-WAY Streets and there is volatility within the trend… So, I’m going to look for bargains here and think it would be a prudent thing for all investors to do.. I’m just saying…
Oh! I almost forgot to point out two things this morning… First, U.K. Unemployment ticked higher last month, which is not going to help Bank of England Gov. Mark Carney’s quest to hike rates… Sterling got sold on the data, and the other thing is that Russia added 600,000 ounces of Gold to their stockpile last month… At least they tell us what they’re adding, as opposed to China who keeps everything under their coats…
To recap…. The dollar is back to being bought, courtesy of Lola, and Chuck has a scenario that he made up that makes a ton of sense… Gold got whacked badly yesterday losing $17 on the day, but is flat this morning so far. The Treasury is about to find out just how much demand there is for their Bonds that need to be sold to finance the exploding debt… The Treasury got a glimpse of what will be needed yesterday, but has a ton of more bonds to auction this week… And the Fed’s FOMC Meeting Minutes will print this afternoon…
For What It’s Worth… Well, with the President trumpeting his new Tax Cut Bill as the reason for this turn around in small business growth, I thought it would be good to highlight the growth.. a good story for once, eh? And it can be found here: https://www.cnbc.com/2018/02/20/small-business-confidence-hits-record-in-2018-after-tax-reform-win.html
Or, here’s your snippet: “Small-business confidence is surging in 2018 as optimism rises among small-business owners about the newly enacted tax-reform package, according to the latest CNBC/SurveyMonkey Small Business Survey, released Tuesday.
The CNBC/SurveyMonkey Q1 Small Business Confidence Index saw an increase of five points, from 57 to 62, a record high and the largest quarter-to-quarter move the index has seen since CNBC and SurveyMonkey began measuring last year. This is the first survey since President Donald Trump signed the Tax Cuts and Jobs Act into law on December 22, 2017.
In the Q4 survey, small-business owners were split evenly on the core question about the effect that tax policy would have on their business. Opinions have shifted significantly: Twice as many now expect changes in tax policy to have a positive rather than negative effect on their businesses. Forty-six percent of those surveyed say tax policy changes will have a positive effect, up from 38 percent in the fourth quarter. The number of those saying tax policy changes will have a negative impact fell sharply, from 36 percent in the fourth quarter to 23 percent in the most recent survey. ”
Chuck Again… Well isn’t that all just peachy? I’m just saying…
Currencies today 2/21/18… American Style: A$ .7850, kiwi .7340, C$ .7898, euro 1.2320, sterling 1.3914, Swiss $ 1.0670, … European Style: rand 11.7193, krone 7.8400, SEK 8.0980, forint 253.20, zloty 3.3720, koruna 20.5717, RUB 56.50, yen 107.45, sing 1.3207, HKD 7.8248, INR 64.81, China 6.3443, peso 18.72, BRL 3.2416, Dollar Index 89.89, Oil $61.35, 10yr 2.89%, Silver $16.48, Platinum $996.19, Palladium $1,026.24, and Gold.. $1,330.90
That’s it for today… That was a heartbreaker, the U.S. Men’s hockey game last night… No Miracle movie for this team… The wind is still present outside this morning, but the sun is shining so I won’t complain! In just two weeks, my spring training buddies will be here… My first game at Roger Dean is this Sunday, with some friends here in the building. I can’t wait to walk up the ramp for us not able to negotiate steps too well, and see the field, I always get a chill down my spine, and tear in my eye, the first time at the ballpark, because, well, if it were up to the American Cancer Society, I would not be able to experience the ballpark any longer… I’m lucky, and I know it… And with that, James Taylor takes us to the finish line today with his song: How Sweet It Is To Be Loved By You… Now, go write that letter, and have a Wonderful Wednesday, but remember to be Good To Yourself!
Chuck Butler