April 22, 2021
*Currencies & metals rally on Wednesday…
* You don’t want to miss this, Chuck thinks he’s in line for a Nobel Prize!
Good Day… And a Tub Thumpin’ Thursday to you! A bonus Pfennig day to boot! Man was it cold here yesterday! I went outside for a moment, and turned right around and went back inside, for it was too darn cold for me! Remember, I spent 3 months in a very warm climate, and therefore my body is unaccustomed to having cold air blow on it! HA! And today and tomorrow won’t be much warmer! UGH! From what I see, I won’t be back outside to sit in the sun until Sunday! Sunday, Fun day, as my good friend, Duane often says… Cardinals blow two chances to win the game yesterday, and blow a great pitched game by their pitcher to lose 1-0… UGH! OK, all you 70’s bands fans turn up your machines, because today, Vanilla Fudge greets me this morning with their song: You Keep Me Hanging On… I love this version of the song, and for once the remake was better than the original…
OK… Well the all clear horn sounded yesterday morning giving currency traders the green light to sell dollars, and that the PPT was gone, for now that is… Tuesday saw the currencies give back a good portion of their previous 3 days of trading gains… And yesterday morning the PPT was still hanging around to scare off any dollar sellers… But midday on, the dollar selling began again in earnest, and the Dollar Index fell from 91.42 in the morning to 91.13 by the end of the day… The euro and the Aussie dollar (A$) recovered nicely, and the currencies that didn’t succumb to the dollar buying on Tuesday, added to their gains…
And Gold & Silver really swung a mid section punch at the price manipulators, and moved higher on the day, all day, until the normal trading hours closed, and then these two metals didn’t stop gaining VS the dollar… Or, as I like to think of it, the dollar lost ground to the metals… Gold was up $14.80 on the day to close at $1,794.60, and Silver really took a chunk out of the dollar’s armor rising 73-cents on the day to close at $26.65…
Here’s you last chance saloon to sign up for the virtual Money Show presentation this afternoon, featuring The Aden Sisters, Omar Ayales, and yours truly… Click this link to take you to the sign in page with all the info you need…
In the overnight markets… The currencies have continued to push the currency envelope across the desk, and have the dollar bugs on the run as I write this morning… The Dollar Index begins the day at 91.09, which is down from last night’s close of 91.13… The European Central Bank (ECB) met this morning and left all their stimulus in place in hopes of an economic rebound soon… yeah… sort of like crossing your fingers and hoping… The ECB used to be dynamic, and now they sit on their hands, cross their fingers and hope… I just got a thought in my mind here, that hopefully you won’t mind me sharing…
Back in the last weak dollar trend from 2002 – 2011, I used to type European Central Bank (ECB) nearly every day, for they were always in the news with their currency trading hot every day… But they’ve faded from the news front, and take a back seat to the Cartel now… Funny how times change, eh? Ok, back to the overnight markets!
Gold & Silver start the day in the red this morning… Don’t know why this is going this way this morning, but it doesn’t mean it will be the way these two trade all day… Gold is down $9.80 this morning and Silver is down 22-cents… Up, down, Up, down, it’s like the price manipulators are making these two metals do their exercises! UGH! Oh well, these two have had good weeks so far, let’s not lose fact of that!
I received an email in the Pfennig Replies box yesterday that got me thinking about something that could very well be coming down the pike… It was just a couple of days ago that I read an article by an “insider” who said that strong regulation on digital currencies, like Bitcoin, was coming from the SEC… And then I noticed that Bitcoin and the other digital currencies were all backing off their recent highs… Could this news be what’s scaring the digital bugs? I still truly believe that once the U.S. has their own form of a digital currency that they will outlaw owning the other digital currencies. I say that from my history with how the U.S. does not like competition with the dollar… Look at all the years of the price manipulators trying to scare investors from buying Gold…
OK… There was another piece of news that I talked briefly about last week, and that is the $814 Billion in Margin Debt… And how right before the last 2 stock crashes, margin debt ran up very high, not this high, but high… And what really got my goat about the news was that when Cartel Chairman Jerome Powell was asked about the size of the debt, he replied that he didn’t follow it so he couldn’t comment on it… Wait! What? Well, if any of the economists that you employ, at the Cartel, happen to be reading this right now, maybe they’ll share this bit of information with you so you can do something about it… In 1929 only 2.5% of Americans owned stocks, and you think that stock crash brought about a lot of misery? Well, today 55% of Americans own stocks, and if there is a stock crash, there will be pain and misery all around and about… Especially if a ton of these Americans have their stocks leveraged with debt…
Here’s what you can do right here, right now, and it’s something that Big Al Greenspan should have done in 1996 when he said that the stock market was full of irrational exuberance… And that is… drum roll please, because I should get a Noble Prize for this suggestion… RAISE THE MARGIN RATE TO 65%!
Back in 1974 when I was doing margin for a brokerage firm, the initial margin rate was 65%, and it kept all those little accounts that shouldn’t be buying on margin from doing so, because margin gives you leverage, that can end up going either way… Stop this now Jay… stop it from getting too much larger, and you’ll be made a hero…
OK… I was going through Twitter to look for something yesterday that I thought I saw come across on my phone, and I came across this…
Commodity prices over last year… Lumber: +265% WTI Crude: +210% Gasoline: +182% Brent Crude +163% Heating Oil: +107% Corn: +84% Copper: +83% Soybeans: +72% Silver: +65% Sugar: +59% Cotton: +54% Platinum: +52% Natural Gas: +43% Palladium: +32% Wheat: +19% Coffee: +13% Gold: +3%
And you wonder why these items are all heading higher in price? Egon Von Greyerz tells us why… Let’s listen in on his latest Twitter donation:” As of April 2021, the M1 supply has gone from $4.5T to $18.1, a rise of 450%.
Such data represents a pretty bad report card for the Fed’s failed monetary experiment of unlimited #QE.
The Fed’s solution to the problem? Hide it. – Egon Von Greyerz on Twitter
Chuck again… Well, our current National Debt is greater than $28 Trillion, that’s $80,000 liability for each citizen is greater than $85,000, and if they only divvy it out to tax payers the bill would be $225,000… Ok, do you want to stop the illegal immigration of people into the U.S.? Have them sign a document telling them to become a citizen they will have to divvy up $225,000 to remain… Now that would cause a lump in one’s throat, now wouldn’t it?
And that’s just the current debt… The Unfunded Liabilities are $162.7 Trillion! Folks, that’s never going to be paid off, so we might as well just go ahead and default on it now and get it over with!
All I can say about all of these things that keep causing a swell to form that eventually will turn into the Perfect Storm on our Financial markets, is… Got Gold?
The U.S. Data Cupboard is finally going to produce something for us to look at today, with last week’s Initial Jobless Claims… Recall that the previous week saw a huge drop in the number of claims filed from 769,000 to 576,000… recall that I pointed out that the previous week’s numbers were 1 day short, so maybe we’ll see this all illustrated with today’s data, and then maybe we won’t, only the Shadow Knows…
To recap… The currencies rebounded nicely yesterday after the all clear horn had sounded signaling to currency traders that the Big Bad Wolf, I mean PPT, had gone home, for now… The Dollar Index fell on the day from 91.42, to 91.13. Gold & Silver gained again on Wednesday, with Silver really outperforming its kissin cousin, Gold… Silver gained 2.85% which was equal to 73-cents… Chuck talks about all kinds of things that are piling up against the U.S. financial system, and so therefore you had better not skip to my daisy through the letter and go back to read it! Chuck thinks he might be up for Noble prize… Yeah, as if! HA!
For What It’s Worth… Well, I mentioned leverage above, and then Ed Steer highlighted an article about how there’s too much leverage, and thought, well, by jove, you’ve got yourself a FWIS article! And so here it is, this is an article about leverage in the U.S. and if you think it can’t come back and bite us in the rear, then let me introduce you to Bill Hauwn of Archegos… Any way, the article can be found here: Stock Market Leverage in La-La Land, Rises to Historic WTF High | Wolf Street
Or, here’s your snippet: “Archegos shows how leverage is the great accelerator of stock prices on the way up, and on the way down. One of its bets, ViacomCBS, after skyrocketing, collapsed by 60%.
Vast, unreported, and at the time unknown amounts of leverage blew up Archegos Capital Management, dishing out enormous losses to its investors, the banks that brokered the swaps, and holders of the targeted stocks. The amount of leverage became known only after it blew up as banks started picking through the debris. ViacomCBS [VIAC] was one of the handful of stocks on which Archegos placed huge and highly leveraged bets, thereby pushing the shares into the stratosphere until March 22, after which they collapsed by 60%.
Archegos is an example of how leverage operates: It creates enormous buying pressure and drives up prices as leverage builds, and then when prices decline, the leveraged bets blow up as forced selling sets in. Most of the leverage in the markets is unreported until it blows up. The only type of stock-market leverage that is reported is margin debt – the amount that individuals and institutions borrow against their stock holdings as tracked by FINRA at its member brokerage firms. Margin debt is an indicator for overall leverage, and it has reached the zoo-has-gone-nuts level.
FINRA reported on Friday that margin debt jumped by another $9 billion to $823 billion in March, having soared by $163 billion in five months, and having exploded by 72% from March 2020 and by 51% from February 2020, to historic highs”
Chuck again… well… looky there margin debt rose $9 Billion more in the past week! But how much of it would have actually been booked if the Initial Margin Requirement was 65%? I’m betting a free undercoat with your paint job, no wait! I’m betting it would have been a much lower number… the other thing here with this article, is that Bloomberg magazine just arrived the other day with the front page in big block letters: How TO LOSE $20 BILLION IN JUST TWO DAYS! That’s the damage from the Archegos failure…
Market Price 4/22/2021: American Style: A$ .7744, kiwi .7186, C$ .7997, euro 1.2045, sterling 1.3894, Swiss $1.0918, European Style: rand 14.2739, krone 8.3975, SEK 8.3975, forint 301.85, zloty 3.7798, koruna 21.4574, RUB 76.71, yen 108.08, sing 1.3278, HKD 7.7594, INR 75.00, China 6.4934, peso 19.92, BRL 5.5676, Dollar Index 91.06, Oil $61.02, 10-year 1.57%, Silver $26.43, Platinum $1,209.00, Palladium $2,916.00, Copper $4.29, and Gold… $1,784.80
That’s it for today, Well, not quite… Today is EARTH DAY So let’s go celebrate EARTH DAY! When I was a young hippie with long hair, and wore ragged jeans and wife beater T-shirts, we used to celebrate EARTH DAY at Forest Park flying kites, as a local radio station KSHE provided the tunes… Man, now that I think about that, it was a very long time ago! UGH! Go hug a tree, or lay a kiss on a flower bud… Oh, I know there are real things that people can do, but I’m not here to tell people how to live their lives… My wife has been ill the past two nights, and so that leaves me to make something for dinner… the first night it was pizza, and last night it was chips and salsa… I really know how to live it up, eh? HA! I’m looking forward to Sunday, Fun day, since that will be the only day in the next 4 that will be worth bragging about… The Cardinals will be playing the Reds, in a day game on Sunday, so I’ll be able to sit outside and watch it! YAHOO! Day Baseball! The Rolling Stones take us to the finish line today with their song: Can’t You Hear Me Knocking? One of Keith Richard’s best guitar works… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow, and please, pretty please with sugar on top, Be Good To Yourself!
Chuck Butler