January 5, 2021
* Currencies see some profit taking on Monday…
* Gold & Silver kick the dollar’s tail and take names later…
Good day… and A Tom Terrific Tuesday to you! Another day here in S. Florida, where it was sunny and warm, albeit not as warm as the previous days, but still short-sleeve shirt weather! And if I haven’t told you before… I simply love it! OK, I know I’ve told you before, I was just having some fun… Which I didn’t have going through the Pfennig Replies box yesterday… I’m afraid that my humble little letter has entered into the Twilight Zone… Imagine if you will, a newsletter writer, who is forced to read nasty replies from people that want him to stop writing! I told them… I won’t stop, but I can make certain you don’t have to read the letter any longer! I refuse to allow people who shout loudest to dictate what I talk about! That’s the way it’s done these days, if you don’t go along with the crowd, you’re immediately called a racist, a homophobe, an idiot, etc. And I’m not going to allow that to happen to me! Ok… One of my all-time fave bands: Poco greets me this morning with their song: Bad Weather….
So, now that I’ve gone through all that… The currencies saw some profit taking yesterday, as the day went along… The euro had traded past 1.23, but ended the day at 1.2257… Gold on the other hand was kicking tail and taking names later, and ended the day up $44 to close at $1,943, and Silver ended the day up 84-cents to close at $27.31…. And as usual on a percentage basis, Silver outperformed Gold… the percentage gains were Gold 2.33%, and Silver 3.19%… Doesn’t that just beat all the drums? I mean $44 is much greater than 84-cents… but it is what it is…
So, what got into the price of the metals yesterday? Well, you see we ended the year with the best performance years in a decade, and that was just a precursor to what’s going to be a “golden year”, in my opinion… Currency printing, zero interest rates, and debt that is becoming a major problem, will all contribute to the “golden year”… And yesterday’s price action was just giving notice of what kind of year this is going to be for Gold (& Silver)
In the early trading today Gold is up another $7 and Silver is up 22-cents, so the push higher for metals continues…
I did receive lots of Happy New Year emails, so thank you… And one of them asked me to add the price of Copper to the Market prices roundup… But there are 4 prices for Copper… and they are:
| Bare Bright Wire (stripped/shiny) | $2.85 |
| #1 Tubing (clean tube/ clean fine wire) | $2.75 |
| #2 Tubing (paint/solder/burnt wire) | $2.60 |
| Tin Plated (wire/bus) | $2.60 |
So… which one should I use?
OK… back to the markets… The stock market bubble keeps getting more air blown into it… How on earth does one make a call on this asset class? Trading here is beyond reason, and the P/E ratios continue to grow wider and wider… You know how to stop all this? Talk me into investing all my sidelines cash into stocks… That would be the kiss of death for the market… I know, because it happened in 1999… Oh, you forgot about the dotcom crash? I just came to realize that a lot of stock market participants weren’t old enough to be in the market for the dotcom crash of 2000…. They only know a rallying market…. Yes, we had a short-lived hiccup last March, but the Fed saw to it that the hiccup was drowned with cash, and voila! Hiccup was over!
Enough on that! I’m not a stock jockey, and have never been one either! Although I did spend my first 6 years in the financial markets in brokerage houses… And then I did start a brokerage in my basement… I held a brokerage and two principle licenses during my time in the business…
Let’s see… I’ve talked about the metals, and stocks, and currencies, what’s left to talk about? Oh! Bonds! Well, I think this could be the year that the 10-year finally yields 1.00% once again… Inflation is stirring folks… and the bond boys will be the first to say it really does exist, and they will move the yields higher… The only fly in that ointment is just how many bonds the Fed will he buying in 2021… That figure could very well tip the scales toward continued yields that on a real yield basis (including inflation) are negative…
I believe that the threat of bond buying by the Fed is what has kept the bond boys from moving yields higher to date…. The Fed increased their Treasury buying by 79% last year… And previously I reported that the Fed now owned more Treasuries than the public…
The price of Oil slipped by about a buck yesterday… I think when Oil traders heard the news that I heard that only 4 Million Americans have been vaccinated so far, that their dreams of renewed demand got squashed! But… In the overnight markets the price of Oil has risen above $48 once again…
Now, I do believe that I’ve touched on everything in markets! And it’s time for…. Chuck’s view on what’s could happen in 2021…. Are you ready?
I’m just kidding, because if I gave you my thoughts on what could possibly occur in 2021, you wouldn’t need to come back and read the letter any longer!
The Dollar Index is trading this morning at 89.63, just a couple of blips above where it was yesterday morning… In the overnight markets the selling of the dollar continues… You see… in the Asian and European markets, traders there can sell dollars without fearing retaliation by the Fed, or the Plunge Protection Team (PPT)… I’m just saying…
Remember when I told you how the Chinese were boycotting the steel imports from Australia, because they got their feelings hurt by something that Australia said? Well, a month later, the Chinese realized that they had cut their nose off in spite of their face, and that they needed the steel imports, and so very quietly, they began to accept the imports again… The Aussies never budged from their position, and you’ve got to give them kudos for that! So, all in all we’re just moving along as before here… No saber rattling, or name calling needed…
The U.S. Data Cupboard gets back online today with a real economic data print, the Dec. ISM (manufacturing index)… Yesterday we saw the color of a 2nd tier print, Construction Spending, which as expected fell in December… I read something yesterday, that Construction workers segment is being hit very hard by the virus… And that’s definitely coming into play here with this data…
To recap… The currencies saw some profit taking yesterday but have rebounded in the overnight markets, as the dollar is back on the chopping block. Gold gained $44 yesterday! Chuck gives his reasons that he believes this is going to be a “golden year”… Chuck throws his hands in the air, and discusses stocks… Bonds, and Oil… The economic data for December will begin to stream in starting today…
For What It’s Worth…. Since I spent a good part of the letter today talking about the stock market, I found this article to be a sister article to that discussion, and it can be found here: “Look Out Below”: Carl Icahn Issues Major Warning On Markets, Warns Rally Will End In “Painful Correction” | ZeroHedge
Or, here’s your snippet: “It has been a difficult year – and decade – for billionaire investor Carl Icahn, who despite making $1.3 billion by shorting malls via CMBX 6, a trade we first pitched as far back as 2017 as the Big Short 2.0, failed to make waves with any other prominent investments and in fact has been anecdotally net short during the market’s historic surge in the past two years.
Yet despite a spotty recent investing track record, the 84-year-old legendary corporate raider remains bearish on the fence about the market’s ludicrous ascent, as he made clear in an interview with CNBC’s Scott Wapner in which Icahn warned of the possibility of a significant decline for stocks, and predicted that “wild rallies” in the market always meet a dramatic end.
“In my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below,” Icahn warned ominously adding that “another thing they have in common is it’s always said, it’s different this time. But it never turns out to be the truth.”
The relentless gains prompted some less bullish Wall Street strategists to warn of imminent turbulence: as we reported earlier, Morgan Stanley chief equity strategist Mike Wilson repeated his earnings from late last year, and said in his first note of the year on Monday that the market was “ripe for a drawdown” as the “risk/reward has deteriorated materially.”
Chuck again… I loved that he flatly stated that “nobody can predict when it will happen… ” And anyone that says they can… Well, you need to walk away …. slowly so they don’t notice you walking away… HA!
Market Prices 1/5/21: American Style: A$ .7707, kiwi .7202, C$ .7848, euro 1.2280, sterling 1.3583, Swiss $1.1367, European Style: rand 14.9202, krone 8.5310, SEK 8.2009, forint 293.03, zloty 3.6999, koruna 21.3496, RUB 73.91, yen 102.86, sing 1.3187, HKD 7.7525, INR 73.19, China 6.4692, peso 19.93, BRL 5.2106, Dollar Index 89.63, Oil $48.50, 10-year .93%, Silver $27.53, Platinum $1,089.00, Palladium $2,478.00, and Gold… $1,950.20
That’s it for today… I watched the sun rise out of the ocean this morning while I was writing… Very beautiful, indeed! The wind has died down the last two days, so sitting outside and reading is a little easier, without having to hold down the pages! Remember last year at this time, I had to drive an hour north to Port St. Lucie to a wound center two times a week? Well, I don’t have that pain in the rear trip to do this year! I still have two spots on one leg that need dressing, but nothing like last year! Thank goodness! Long ago in a bank that no longer exists, I brought in a computer system to deal with our bond business, and I met a young programmer that was super! We’ve stayed in contact, somewhat through the years, and yesterday was her birthday! So… Happy Birthday, D.W.! Ok, the letter is shorter today, hopefully that’s the trend going forward! I Crosby, Stills & Nash (CSN) take us to the finish line today with their song: Ohio… What if you knew her, and found her dead on the ground? Classic 70’s song! I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!
Chuck Butler