Author: admin

June 24, 2020

* Gold pushes through $1,750 and is not looking back! 

* Currencies benefit from dollar selling… 

Good day… And a Wonderful Wednesday to you! What a day, yesterday, what a day! One of the most beautiful days I can recall in June… No major problems at the Butler house to deal with yesterday, so my normal routine was not in trouble like it was on Saturday, Sunday and Monday! I’m a “routine” kind of person, and to upset the applecart which is my daily routine, tends to send me spiraling into a funk… But the funk was taken care of yesterday, by the routine being back in place, and the beautiful day! Today is supposed to be a lot like yesterday, so I have that going for me, eh? The breakout for Gold is happening, the currencies gather steam again, and other things about the economy that you’ll probably not hear anywhere else! But before that, the band, Yes, greets me this morning with their song: Rythm of Love… (and yes, they spelled rhythm like that!)

OK, so all my whining and complaining yesterday about the baseball players and owners being knuckleheads was quieted when a report came out that the MLB Commissioner per the agreement from March 26th, has implemented a start to the season which will be July 26th, with players reporting for “summer camp” by July 1st… So, another of Chuck’s routines, watching his beloved Cardinals play baseball will be returning, and not soon enough as far as I’m concerned!

Well… The breakout to higher prices for Gold has begun in earnest, folks… Yes, there could still be an uprising by the price manipulators, but for the most part, the bull-market has dug its heels in and it looks like there’s nothing holding Gold back now…. Gold rose $16 yesterday to close at $1,770… So the parameters I put on whether or not $1,750 was going to be launching pad, was that Gold had to first cross it, and then hold that level… check, check! So, we’re off to find the Wizard the Wonderful Wizard of Oz… What were Dorothy, toto, and her friends told to do? Follow the yellow brick road…. Follow the yellow brick road…

late last week’s drubbing of the currencies by the dollar bugs, appears to be small number now in the review mirrors of the currencies. The currencies, led by the euro was back over 1.13 handle last night, and the Aussie dollar (A$) was climbing toward 70-cents, at .6951. However, in the overnight markets the A$ was brought back to .6915…  

With the price of Oil pushing higher, the Russian ruble has gotten back on the rally tracks… I just wish the ruble was strong enough to pull all the Petrol Currencies, like the Norwegian krone along for the ride! 

I wonder just how much weight, the words of economist, Stephen Roach, has had to do with this rebound in the currencies? Recall, I told you late last week, that Roach, now of Yale University, told an audience that the dollar is getting ready to fall to great lengths, price wise. There was a time 20 years ago, when Stephen Roach said something, people, and traders stopped to listen… I still get excited to see a quote by him… So, maybe, just maybe, ‘cause we just never know, he’s still listened to by traders?

Yesterday, I was a little tough with the beaver…. Oh, come one, Chuck you were just giving the RBNZ, “the business”, Ok Eddie Haskel… I’ll take your word on that… The Reserve Bank of New Zealand (RBNZ) didn’t cut rates as I suspected they would last night, and instead they did something that I would call very prudent! They said that no further monetary policy changes would be made until they saw the total effect of what they have already done, first…. Yay for the RBNZ! Hip, hip, horary! It’s been awhile since I last heard a Central Bank talk with prudency…

I don’t know if you’ve been watching the Swiss franc lately, but a stealth-like move has been going on and this morning the franc is within’ spittin’ distance of $1.06…. I know someone who has been watching the franc’s upward movement, and that is the Swiss National Bank (SNB)… Yesterday, the SNB issued a report reminding traders that monetary intervention is still a tool in their tool belts…. This, rallying currencies,  is going to really cause some problems for all the currencies that rally VS the dollar, as the dollar get sold… All the countries of the world, except maybe Russia, can’t be having their respective currencies on the rally tracks too long, they don’t have inflation right now to fight, and they need all the help they can get with exports… So, they don’t need stronger currencies right now… But unless they want to throw good money after bad money and intervene, they’ll have no choice…. It’s all the dollar’s fault!

The U.S. Treasury Secretary John Connelly had this to say in 1971 (remember when the dollar was losing so much ground after being taken off the Gold standard) “The dollar is our currency, but it’s your problem”

Getting back to the Swiss franc… Remember when the SNB placed a floor on the franc VS the euro and then couldn’t defend it and eventually had to scrub the whole idea? Dolts… certifiable dolts! They tried to tie down the franc, and all that did was present a dare or challenge to traders, who went immediately for the SNB’s throat! All that happened not that long ago folks….

OK… onto other things… Well, remember earlier this month when I said that I wouldn’t trust another economic print, no matter who was printing it? Well, my leeriness with these economic prints is that of Government intervention…. In other words, a guy shows up at the research division’s door wearing a trench coat, shades, and a Sam Spade hat, and says “Vito needs you to goose the numbers this monrh, so they don’t look so bad, got it?” Now, I don’t know if that really happens, but I have my suspicions… speaking of suspicion, that’s a great song from long ago, by Terry Stafford, and it sounds so much like Elvis singing! Just thought you probably should know it’s not Elvis singing, but Terry Stafford…

So, with my suspicions on the data prints, the Markit version of PMI (manufacturing index) for the first part of June printed yesterday, and they claim there was a HUGE recovery from May’s really low number of 39.8, to a 49.6!!!! Really? So, when did Vito visit you at your offices, Markit? And New Home Sales in May skyrocketed higher! So, while the country is on lockdown, and people are supposed to be staying at home, they were able to go out and buy new homes? Really? Come on….

Today’s Data Cupboard has the IMF’s World Economic Outlook for us… The IMF are not easily influenced by the Vito’s of the world so look for this report to be pretty gloom and doom, which is should be given what we know has happened around the world!

I know that I do those Data Cupboard roundups just for my own entertainment, because nobody pays attention to them any longer, unless something sticks out like a sore thumb!

The price of Oil moved past $40 yesterday, I will admit that when I do go to the doctor or hospital for something, there are more cars out on the road these days, than before, so maybe the demand is growing once again… I saw two different car companies’ commercials yesterday that both told people to get back out on the road, for an old time road trip! The problem that I see with traveling by car right now, is that you have to get out and fill up with gas, and go to the bathroom, and you’ll be touching all kinds of things that who know’s who, has touched them already… Then you’ll have to go to a motel…. What are their cleaning practices? When was the last time the room was sanitized? Questions that will need to be asked and satisfied, before staying….

Planes? I think that’s probably pretty safe right now, those folks are becoming what we used to call in S. St. Louis, “a scrubby Dutchman” There were people who used to get on their hands and knees and scrub the sidewalks with soap and water! That’s when people took pride in their surroundings…

Now? Cleaning the sidewalks? That’s what rain is for!…. I’m just saying…

In my daily run through Twitter to see who’s saying what (economists, I don’t get into all that other cr.. )  Danielle Di Martino Booth leads off today with her report on GNC… “GNC filed for bankruptcy protection with the aim of selling itself and closing stores after its latest effort to manage its debt load unraveled amid the coronavirus pandemic.

Yet another retailer that has been encouraged to make its footprint too big bites the dust.” from her Twitter feed…

Next up is David Rosenberg… “I don’t think it is well understood or appreciated that we have a looming crisis in commercial real estate, and the banks are not immune. See “Brookfield Skips Mortgage Payments” in today’s National Post for a wake-up call.” – from his Twitter feed… 

Just two examples of many that are out there, of how badly the economy is, no matter how stupid strong the stocks are…. 

To recap…. Gold finally crossed the $1,750 level that Chuck’s been talking about for months, and now it’s time to follow the yellow brick road! The currencies are seeing gains visa-vi the dollar getting sold,. Chuck wonders if the words of Stephen Roach, got traders thinking about selling dollars? The RBNZ left rates unchanged and wants to wait to see what the previous moves have done in the economy before making another cut… Chuck applauded them, for it’s been a year of Sundays since he last heard a Central Bank talk with prudency…

For What It’s Worth….  Ok, since I talked about this earlier, regarding the bankruptcies and economic gloom and doom, this article that Ed Steer highlighted today seems to be right up that alley, as it’s about rising bankruptcies, and if can be found here: https://www.zerohedge.com/markets/default-wave-arrives-weekly-bankruptcy-filings-soar-financial-crisis-levels

Or, here’s your snippet: “One month ago, when looking at the recent flurry of chapter 11 filings and a striking correlation between the unemployment rate and loan delinquencies, we said that a “biblical” wave of bankruptcies is about to flood the US economy.

 It appears that the wave has now arrived, because according to Bloomberg data, no less than 13 US companies sought bankruptcy protection last week, matching the peak of the global financial crisis. The filings, led by the perennially weak consumer and energy sectors, were the most for any week since May 2009.  

And while energy has been the second-biggest contributor to this year’s bankruptcy surge, there is much more coming here. Chesapeake is preparing for a filing while California Resources got an extension until June 30 to make interest payments originally due May 29. Seadrill is also considering bankruptcy.

A Deloitte analysis has found that almost a third of U.S. shale producers are technically insolvent with crude at $35 a barrel. And while WTI has been trading slightly higher, this does little to prevent 15 years of debt-fueled production growth catching up with many shale producers, Deloitte said in a study. Adding to the pain is the spring redetermination season which resulted in most high-yield borrowers seeing their reserve-based loans. Borrowing bases, which are determined by the collateral value of oil and gas reserves, were cut by an average of 23%, which means that most energy companies now have roughly 25% less access to liquidity.”

Chuck Again…  the most backruptcies filed in one month in 11 years…  Remember 2009?  It was the first year of Quantitative Easing, which fueled the return of the stock market… 

Market Prices 6/24/20: American Style: A$.6915, kiwi .6435, C$ .7372, euro 1.1307, sterling 1.2520, Swiss $1.0588, European Style: rand 17.3134, krone 9.5455, SEK 9.3030, forint 310.64,   zloty 3.9347,    koruna 23.6182, RUB 68.85, yen 106.55, sing 1.3884, HKD 7.7498, INR 75.30, China 7.0637, peso 22.51, BRL 5.2056, Dollar Index 96.73,  Oil $38.64,   10-year .72%, Silver $17.89, Platiun $826.13, Palladium $1,928.28, and Gold… $1,776.21

That’s it for today…  So, how are you doing with the pandemic? I read this morning that the number of cases are soaring again, but…. the number of deaths are falling, does that mean that it’s more like the flu?  Things around the Butler house are getting back to normal, with the kids, and grandkids coming over, soon friends will be here too, and then we can have a big blowout party to celebrate the end of the virus, and the start of the baseball season! Yesterday was the birthday of a former colleague, Neil George, who when I sent him a birthday note yesterday, said, “Maybe next year I’ll make the Pfennig”…  Well, no need to wait until next year!  I have a treat for us today, as Billy Squier takes us to the finish line with his song: Lonely Is The Night…  And with that, I get on to my routine! I hope you have a wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

June 23, 2020

* Currencies rebound on Monday! 

* Chuck explains that the stock market is NOT the economy… 

Good Day… And a Tom Terrific Tuesday to you! Last night they replayed Game 1 of the 1968 World Series, in which Bob Gibson set the World Series record for strikeouts in a game, at 17… I recalled watching the game somewhat in school, on a TV that they rolled into the room. The game was in black and white, which still puzzles me, because color TV was around then… Some classic baseball names were in that game: Gibson, McCarver, Maris, Cepeda, Brock, and flood for the Cardinals , and McClain, Lolich, Cash and Kaline for the tigers. 1968 was the year of the pitcher, and the year that Gibson set the all-time record low for ERA at 1.12…. That record still stands strong today. Baseball lowered the mound after 1968, and in 1969, baseball introduced the divisions with a league championship series to determine who would play in the World Series. Before then to win a pennant meant a whole lot, because you had to beat out 14 other teams in a 6 month marathon… Most youngsters only know the current set up with wild card teams and an extra round of playoffs. Paul Revere and the Raiders greet me this morning with their song: Kicks…. Kicks just keep getting harder to find, you know those kicks aren’t bringing you piece of mind….

Well, with no baseball or little hope of baseball this year, I felt compelled to carry on about 1968 in the intro this morning… And the song to greet us was very appropriate, too! So, let’s get down to work, eh?

The Currencies had a decent day VS the dollar yesterday, as they found a way to move higher VS the dollar in small doses. The euro climbed along with the Aussie dollar (AS) and all others fell in behind these two leaders, one from Europe, and one from Pan Asia… Gold pushed past $1,750 yesterday and closed the day at $1,754…. Ok, now, Gold needs to be able to hold the figure and not play this game of back and forth, for if it does hold on , then I foresee a major upward move in Gold from here… And with everyone talking about a reboot of the virus, Gold has no reason to be looking around for a bid…

For the record, Gold was $11 higher yesterday, and the price manipulators tried like hell to get the price back below $1,750, but they failed and Gold closed at $1,754…  The early morning trading in Gold has the shiny metal up another $5, so my spider sense is tingling again folks… I think the train is leaving the station, if you get my drift… time to get on board, or be left standing on the station platform, with your hat in your hands… 

I told you yesterday that Lola had changed their forecast for Gold upward, to $2,000 in the next 12 months… And what Lola wants, Lola gets! I had to explain that to a younger reader one day, because he had no idea that the Lola I talk about is from the movie Damn Yankees… played by Bebe Neuwirth, very well, I might add…. And not the Lola from the Copa Cabana song by Barry Manilow…

You know… most people, like me included, that own Gold don’t really check its price every day, or really care if it moves up or down…. I only get upset with the price manipulators taking chunks out of the price of Gold, because that’s not natural movements on fundamentals… If the fundamentals called for Gold to get sold, then so be it, but the fundamentals have been in Gold’s favor for some time now, folks… I’m just saying…

Well, it appears that another one is going to bite the dust… I’m talking about Central Banks that have resorted to going negative with rates…. The Central Bank I’m talking about this time is the Reserve Bank of New Zealand (RBNZ)… They really have no more rate to cut. In New Zealand they refer to their internal rate as the Official Cash Rate (OCR) which currently stands at 25 Basis Points, or 1/4 %… There have been rumbling from the RBNZ that they will need to go negative soon… And wouldn’t you know it, the RBNZ will meet tomorrow (tonight for us)…. They may go negative and then they may just go to zero first, before going negative… The New Zealand dollar/ kiwi has been hanging on the coattails of its kissin’ cousin across the Tasman, A$, but with a gloomy outlook from the RBNZ, I would suspect that kiwi would get hit…

Speaking of going negative… I’m still a believer that the U.S. Fed will have to resort to going negative with deposit rates probably before the year is out…. Think about that for a minute… Even with or without a reboot of the virus, the U.S. economy is going nowhere, and even Fed St. Louis President, Bullard, admitted that there was a deflation problem brewing… I had a dear sweet friend call me last week and ask me this question, “if I have three bank accounts, and all banks go negative with rates, thus charging me for holding my money in that bank, wouldn’t it be better for me to combine the three bank accounts into one, and only get 1 charge instead of 3? I said, of course that makes sense, but be careful of the FDIC limits….

Speaking of James Bullard, he must really be in demand as he is on the docket to speak 3 more times this week, starting today… Unless he’s going to give a different speech, I don’t see the need for 4 speaking engagements in the span of a week… But it is what it is….

The U.S. Data Cupboard today has the Markit version of PMI, their flash version of how June is doing so far… This will be interesting to see if the reopening has influenced manufacturing any…. Yesterday, the Chicago regional manufacturing pulse showed a revival of sorts in that area, but nothing to write home about…

I received an email from longtime reader Bob, who forwarded me an article that is really scary, in that it shows that Government Revenues that were used for spending so far this year have dropped from the usual 80-something percent, to just 51% this year… Jackson Brown said it best when he sang, “Someone’s gonna have to explain it to me,” You see… for the last 10 years, we have averaged 80-ish% of spending being covered by tax revenues… But this year, after a corporate tax cut last year, the revenues are only covering 51% of the spending… That drops the U.S. on the economic health meter….

If you cut taxes, but don’t cut spending, you’re asking for Big Trouble, and that’s what we have here and now folks… Congress failed to cut their deficit spending, and now with all the white knights being passed out to help with the pandemic, it’s really gotten out of hand… And don’t forget what I told you a few weeks ago, that put shivers down my spine, that for the first time on record in a 12-month period, money creation exceeded Tax Revenues…. If that doesn’t spell trouble for the dollar, and the U.S. economy, I’ll eat my hat! No wait! I don’t want to eat my hat… But I’ll be thinking about it!

I have another thought this morning that’s not going to make a lot of people happy… But here it is…  The bull-market rally in the stock market does NOT mean the economy is doing well! Come-on! We’ve been through this before, the stock market is NOT the economy!  I’m still waiting for the bear trap door to spring, and I still believe it will come when the earnings season hits and everyone does the V-8 head slap and realizes that they were wrong about all these corporations that the stocks come from….  There! I said it!

So, in my humble opinion, if you are hell bent and whiskey bound to play with the stocks, please make certain that your stop-losses are in place, and that at the first sign of trouble, you will get out of Dodge, you will not pass Go, or collect your $200!

And then before I head to the Big Finish today…  Have you heard of the company, Wirecard?  Well, in the tradition of the S&L meltdown of the 80’s, Enron in 2001, and Madoff in 2008, we have Wirecard in 2020… This company had auditors arrive and not be able to account for or find $2.1 Billion that the Company’s books said was there… Now the folks at this company admitted that the $2.1 Billion was never really there!  Could this be the snowflake that causes the avalanche? 

To recap…  The currencies rebounded on Monday from late last week’s drubbing by the dollar bugs, and are stronger in the overnight markets too…  Gold made its move above $1,750, and closed at $1,754, after the price manipulators knocked $11 off Gold’s high for the day. Gold is up $5 in the early trading today, so is the train pulling away from the station? Chuck thinks so…  Chuck also points out that the stock market is NOT the economy, and that the economy is going nowhere, and that the bear trap door will be sprung on the stocks… 

For What It’s Worth…  OK, yesterday I told the bad news of all those home owners that weren’t making their payments, and then this crossed my screen, an article on Zerohedge.com that details the failure to make home loan payments for far in June… And it can be found here: https://www.zerohedge.com/personal-finance/30-americans-didnt-make-their-housing-payment-june

Or, here’s your snippet: “A stunning 30% of Americans didn’t make their housing payment for June – a figure that is likely going to ripple through the housing industry in coming months. According to a new survey by Apartment List, the rate is similar to May and shows that even though other industries are rebounding, the situation has not yet improved meaningfully in housing.

These figures stood at 24% in April and 31% in May, before falling slightly to 30% in June. One third of the 30% in June made a partial payment, while two thirds made no payment at all.   

Despite the trend of missing payments at the beginning of the month, households have been able to play catch-up later in the month and “narrow the gap” by making payments in the middle of the month. This was the case in May, where the missed payment rate “dropped from 31 percent at the beginning of the month to 11 percent at the end.”

We’ll see how long people can play catch up.

Meanwhile, as the survey notes, delayed payments in one month are a strong indicator for coming months. 83% of those who paid on time in May did so in June. Meanwhile, only 30% of those who were late in May have made their payment in full for June.

This means the data for the beginning of July is likely to be just as ugly as June.

Recall, just days ago we wrote that Americans had already skipped payments on more than 100 million loans while, at the same time, job losses continue to accelerate.

To put this in perspective, let me once again remind my readers that prior to this year the all-time record for a single week was just 695,000. So even though more than 44 million Americans had already filed initial claims for unemployment benefits before this latest report, there were still enough new people losing jobs to more than double that old record from 1982.

That is just astounding. We were told that the economy would be regaining huge amounts of jobs by now, but instead job losses remain at a catastrophic level that is unlike anything that we have ever seen before in all of U.S. history.”

Chuck Again… OK, I pasted the whole article in for the snippet, because this is important stuff folks… The economy is NOT recovering as quickly as we were all told it would do… But you never heard that B.S. from me! 

Market Prices  6/23/20: American Style: A$.6930, kiwi $.6487, C$.7392, euro 1.1288, sterling 1.2447, Swiss $1.0575, European Style: rand 17.2851, krone 9.5085, SEK 9.3015,   forint 309.26,   zloty 3.9280,   koruna 23.5667, RUB 69.31, yen 107.07, sing 1.3919, HKD 7.7498, INR 75.33, China 7.0699, peso 22.57, BRL 5.2467, Dollar Index 96.85,  Oil $37.23,   10-year .72%, Silver $17.82, Platinum $813.00, Palladium $1,858.00, and Gold… $1,759.10

That’s it for today… I have no idea what happened to yesterday! I sent the letter out, and then the next thing I recall is that I woke up from a nap, and it was time to think about dinner!  WOW!  Crazy , eh?  I think that all the activity of the weekend finally caught up with me!  Last night I was singing, rain, rain, go away… And it did! The sun is coming up and the sky is blue! YAHOO! I had been having wifi problems, and yesterday, with the help of Grace, we worked it all out, and everything is back to where it was before… Double YAHOO!  In today’s world, a wonky wifi is not a good thing to have! OK… time to get my feet up, so Carlos Santana takes us to the finish line today with his band’s song: Europa    this is an instrumental song, no words, and it’s one of Carlos Santana’s best guitar work… With that, I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

 

 

 

June 22, 2020

* Currencies give back their gains VS the dollar

* Gold heads to $1,750, will it be met with resistance? 

Good day… And a Marvelous Monday to you! What a day Father’s Day was for me yesterday, as my kids came over and did everything as far as preparing our meal, cleaning up, picking up all the paraphernalia that goes with young kids and a swimming pool, and then we gathered for a two pictures, one of me and my 4 grandkids, and one with me and my 3 kids… Darling daughter, Dawn, had wanted a single picture of the kids and grandkids together, but the best laid plans of mice and men took over… And it turned out to be a beautiful day with no rain during the day, as was forecast by the weather people! Our trip to Columbia on Saturday, turned out to be great! We did all the things we wanted, ate the food we wanted, and had many laughs… Thanks to sons Andrew & Alex for putting that together, and thanks to Grace, aka Boss Taco, for driving us! Van, the man, Morrison greets me this morning with his classic rock song: Brown Eyed Girl…

Well, what appeared to be a mini-rally that could potentially turn to a multi year selling of the dollar to begin last week, ended the week in the shambles as once again, another false dawn was upon us, and the dollar bugs are back in control… You know something… I used to be able to tell when things were going to change for a long trend, just by the fundamentals, but traders don’t use fundamentals any longer, and they certainly don’t use the charts either! Instead, as I’ve said many times in the past couple of years, it’s all about sentiment… Trader sentiment is all that matters any longer, when it comes to deciding when a long term trend will begin or end. And since I’m not a mind reader, per se, I’m as worthless as a pay toilet in a diarrhea ward, these days… And that’s another reason why I believe the currencies are dead men walking…

Gold on the other hand is a bird of a different feather, and here fundamentals still play a big part in determining which direction Gold goes… That and the whims of the price manipulators.. Gold gained $20.90 on Friday, to close the week at $1,743.80… There are so many fears out there right now that we’re about to slide right back into another wave of the pandemic, and that has Gold pushing the envelope to cross the $1,750 level that I believe and I could be wrong, but I believe that is the level in which Gold will start to move higher again, after crossing $1,750 and holding that figure.

We’ve seen Gold climb toward the figure of $1,750 a few times in recent trading sessions, only to be knocked back down by the price manipulators, who, must see what I’m seeing with the $1,750 level… Gold is going to test the waters of $1,750 today, as it’s up $3.50 in the early trading… Which means that at this moment Gold is within $3 bucks of passing $1,750… Will the price manipulators knock it back down once again, or will this be move we’ve all been waiting for?

Well, I did a lot of reading on Friday… And one thing that I kept seeing was that U.S. citizens are falling way behind on their house payments, rents, student loans, auto loans, etc. May’s percentage of non-payers of house payments was larger than April’s! Of course, there’s no worry that these people will be foreclosed on… I’m sure the Gov’t will come up with some sort of plan to allow them to keep missing payments until the pandemic is over, which if all the fears come true, and we are bound to see a second wave of the pandemic, could mean that it would be quite a few months that the lenders don’t receive their payments… That’s a scary thing to think about folks… Because if the lenders don’t receive payments, then the mortgage bonds these loans were rolled into, will begin to default…. Uh ,Oh… spaghetti O’s

And guess who owns a bulk of those mortgage bonds? Pensions… As if Pensions needed another hickey to go with the ones they already have!

You know what I didn’t read about on Friday? All those economists that said that the recession the U.S. economy is in, would be V-shaped… I doubt that they’ve all given up the ship on that thought, but the stragglers have to feel as though they would be opening mouth and inserting foot!

Another thing that I find interesting is that the Fed seems to be pulling in the reins on their alphabet soup listing of programs to buy troubled assets… The Fed’s Balance Sheet for the week ending June 17th, had actually shrunk by $74 Billion… So, what does this information mean for the stock jockeys, and Corporations? Well, one week doesn’t make a trend, but the overall feeling here is that the Fed IS pulling in the reins and that would be a bad thing for the stock jockeys and Corporations… I’m just saying…

Do you think that Fed heads see the writing on the wall, and they don’t want to be stuck holding worthless paper? Ok, we’re giving the Fed Heads more credit than they deserve! I told you before about a cartoon, that makes me laugh out loud… It’s of the three blind mice with shades on, and walking canes, and on their shirts it reads Fed Reserve… I don’t know of anyone or anything that best describes the Fed heads than that!

Speaking of holding worthless paper… I was reading my fave letter last night, Things That Make You Go Hmmm… by Grant Williams, and Grant did a big write up on just how ridiculous all this buying of a stock of a company that’s filed bankruptcy…  But the stock jockeys keep piling in on the stock, that the company itself says in their fine print, that the stock could end up was worthless paper…   Talk about stranger than fiction! 

You know, I could really go on and on this morning regarding the missing debt payments by Americans…  The way I see it, is people are missing their loan payments and instead spending their money on buying stocks…  But I’m going to pass on carrying on regarding this, because, I know it would just get me in a tizzy. I’ll save my thoughts on this for another day when I’m on a roll and don’t care about going into a tizzy! 

Well Lola was back in the news on Friday last week…  For all of you new to class Lola is what I call Goldman Sachs, because what Lola wants, Lola gets, it’s usually that say for Goldman Sachs…  So… Did you hear that Lola raised their outlook on the price of Gold?  Basically, because of their views of currency debasement and the problems for the economy due to the pandemic, they raised they raised their three, six and 12-month Gold price estimates to $1,800, $1,900 and $2,000 per ounce from $1,600, $1,650 and 1,800 per ounce, respectively. 

I guess Lola believes in the $1,750 level being the launching pad for a higher Gold price, like me! 

Last week ended with St. Louis Fed president, James Bullard, speaking… So I checked it out because Mr. Bullard can, at times, say things that make you go Hmmm…   But on Friday, Mr. Bullard became our new “Mr. Obvious”, when he said, “I definitely don’t think we’re out of the woods,” said St. Louis Fed President James Bullard. 

Really? you think? What gave it away, Mr. Bullard, please enlighten us! And then I thought, maybe, just maybe, cause you never know, James Bullard is a Pfennig reader?  And he gets all his ideas about the economy from me? HAHAHAHAHAHAHA! As if! 

The U.S. Data Cupboard is really lacking this week… I just don’t like weeks like this when you have search and scrounge for data prints…  Today’s Cupboard has the Chicago region manufacturing index, and Existing Home Sales… So, noting that will move the markets, that is unless Traders change their minds on something! 

For What It’s Worth… I really get ticked about some things and some things I just don’t care because there’s nothing I can do about them. This is one of those cases where I really get ticked off reading stuff like this, and so to spread the joy, (sic) I thought it best to use it as the FWIW article today… This is the wonderful letter: Wall Street On Parade, and from their website. No hints to what this is about you’ll have to check it out! But you can find it here: https://wallstreetonparade.com/2020/06/as-goldman-sachs-and-jpmorgan-face-criminal-probes-barr-fires-top-prosecutor-tries-to-replace-him-with-banks-former-lawyer-jay-clayton/

Or, here’s your snippet: “Shortly after 9 p.m. last evening, the U.S. Attorney General, William Barr, stunned prosecutors in the Southern District of New York with the announcement that their boss, Geoffrey Berman, was stepping down as U.S. Attorney in that District and would be replaced with the sitting Chairman of the Securities and Exchange Commission, Jay Clayton, who lacks even a shred of criminal prosecution experience. What Clayton does have is a lot of experience representing Wall Street’s largest banks, like Goldman Sachs and JPMorgan Chase, both of whom are currently under intense criminal investigations by the Justice Department. Clayton was a former partner at Wall Street’s go-to law firm, Sullivan & Cromwell, which is currently representing Goldman in the criminal case and representing JPMorgan in various matters.

Geoffrey Berman, U.S. Attorney for the Southern District of New York
The breaking news last night went downhill from there. Several hours after Barr’s announcement, Berman announced that he had not resigned from his job and had no intention of leaving his post until his replacement had been confirmed by the U.S. Senate – which could take months. There is also no assurance that Clayton would actually be confirmed, since some Republicans and Democrats believe that Clayton has been a lapdog for Wall Street in his current post.

Even more problematic, Clayton’s family has ties to an opaque company called WMB Holdings, described by David Dayen in The Nation magazine like this:
“This company and its affiliated partners (Delaware Trust Co and CSC) are conduits for creating shell corporations and other sketchy vehicles used in tax evasion and money laundering. Public Citizen found apparent links between these companies and Mossack Fonseca, the notorious Panamanian law firm at the center of the Panama Papers scandal.”

Chuck Again…  I personally think that all of government is infiltrated with ex-Goldman Sachs employees, and could be the reason we as a country run to help Wall Street every time Wall Street gets their tail caught under the rocking chair! 

Market Prices 6/22/20 American Style: A$.6867, kiwi $.6448, C$ .7362, euro 1.1210, sterling 1.2392, Swiss $1.0522, European Style: rand 17.4165, krone 9.6529, SEK 9.4340, forint 309.11, zloty 3.9706,   koruna 23.7958, RUB 69.39, yen 106.93, sing 1.3952, HKD 7.7498, INR 75.79, China 7.0713, peso 22.54, BRL 5.3117, Dollar Index 97.46,   Oil $39.50,   10-year .69%, Silver $17.84, Platinum $821.04, Palladium $1,915.89, and Gold… $1,747.50

That’s it for today…  Not as long as usual for a Monday, but I wasn’t sitting around reading articles all weekend! Well, I received some good news last Thursday. The wound center doctor proclaimed that my wound on my left leg was “healed”!  Now I need to keep it from swelling and splitting open again, and I didn’t do a good job of keeping the swelling down this weekend, so I need to work on that starting now!  Little Evie was the star of the day yesterday. She just makes me smile, and laugh…  I love it when she’s here!  Well, Usually I would be telling you that I had been left all alone again, as my wife is traveling. But… not this time! Alex is here, although he works during the day, but I least I have someone to talk to and cook dinner for!  Ok… time to get my feet up!  Deep Purple takes us to the finish line today with their song: Smoke On The Water…  a classic rock song for sure! I hope you have a Marvelous Monday, and will Be Good To Yourself! 

Chuck Butler

 

 

June 18, 2020

* it was a nothing day for the currencies and metals… 

* Chuck wants to know why we are erasing our history? 

Good Day… And a Tub Thumpin’ Thursday to you! Once again, on a Tub Thumpin’ Thursday, my visit to the wound center is later in the morning, which gives me plenty of time to get this out before getting ready. So, good morning to you! I’ve always feared there be a day like today, when the markets didn’t move the previous day, and nobody said anything that would qualify them as dolt. No wait! Fed Chairman Powell spoke yesterday, so I get to nit pick his words, but other than that, nothing, absolutely nothing else to talk about today… that has always been in the back of my mind, when I reported to work early in the morning, and pulled up my screen and saw a blank page… I would fear that one day, I wouldn’t have anything to say… Then what? Well, I could be like CNN, and make stuff up… And then apologize for my error the next day, as if it was no big deal. I chose CNN randomly it could have been any of those news stations! So, I’ll give it my best attempt… I’m greeted this morning by Van “the man” Morrison, with his song: And It Stoned me…

OK… well like I said above, the markets didn’t move but an inch and an inch there yesterday… The Aussie dollar (A$) did love about 1/2-cent, so if that gets your motor running this morning, so be it! Gold didn’t really move much either… And in the overnight markets things didn’t change…

Gold has dropped $3 in the early trading today, and the stock futures are down big, so this could end up being an ugly day, for market prices… 

We have N & S. Korea eyeing each other at the DMZ, we have India and China shooting at each other in a border war, we have the whole world in deep dookie after shutting down their collective economies. The IMF actually called the current recession, “not anything ever seen on earth previously”, and I sit here and watch Gold tick downward…  Makes no sense to me whatsoever… 

So, yesterday, I lobbed that grenade from left field for you to read and get hopping mad about… And said that I would pay good money to be at the committee meeting on the Hill yesterday, where Fed Chairman Powell was to testify… Well, things were going along as usual yesterday, with softball after softball being pitched to Powell… But then… Sen Pat Toomey, a Republican of Pennsylvania, said the Fed’s corporate bond purchases were unnecessary and were distorting market signals.

“I don’t see us as wanting to run through the bond market like an elephant…snuffing out price signals and things like that,” Powell said. “We just want to be there if things turn bad for the economy,”

Wait! What did he say? He’s buying Corporate Bond Fund ETF’s, and now Corporate Bonds and he doesn’t see this a distorting the market? Corporations that would have been filing bankruptcy about now, get life breathed into them, curtesy of the Fed printing press, and tax payers of course!

I think we’ll be able to come back in a few months maybe sooner, and see these same Zombie Corporations that took the money, still have to file bankruptcy, and then, will Powell admit their mistake? I doubt it… Later, Powell said the central bank wasn’t buying asset to make it easier for the U.S. Treasury Department to sell the increased debt. This is known as “monetizing the debt.”

“That is certainly not our intention,” Powell replied.

Yeah, right, and I have a pig that flies…. That’s all I’m going to say about his not intending to monetize the debt… In 2009, when the Fed first began to buy bonds, that’s exactly what I called then, and what I’ll continue to call it!

And then he probably got the whole shootin’ match of traders and economists laughing until they cried, when he tried to make us believe that the Fed does not focus on moving asset prices in either direction…  

So, all in all, it was just another day of lies, and deceit…  I’m not calling Powell a liar, per se…  But… “Just because something isn’t a lie does not mean that it isn’t deceptive. A liar knows that he is a liar, but one who speaks mere portions of truth in order to deceive is a craftsman of destruction.” ― Criss Jami 

The U.S. Data Cupboard has the Thursday Weekly Jobless Claims for last week, today… And they will show us the color of the May Leading Indicators Index, which in April was negative -4.4%…  This piece of data, along with Capacity Utilization are the only real, forward looking, pieces of data that we see… 

Friday’s Data Cupboard will really only have the 1st QTR Current Account Deficit for us… This one really will set up the 2nd QTR when all the money / debt creation began… So, to end the week, the markets will not be depending on the data to give them any indication which way to go…. 

Before we head to the Big Finish today, I have something I need to get off my chest… I want to know what’s with all the clearing out of our history? We are a country of people that are descendants of immigrants. Now those immigrants weren’t perfect. They made mistakes, but those mistakes led to us not making them ever again. And many years ago, people erected statues of men that they believed led us to a better life, or at least a better understanding of what not to do. And now all these younger people that have been brought up to not respect anything or anyone but themselves, are ridding the country of our history… The reason this is on my mind, is that the other day, the very first statue of Christopher Columbus was taken down here in St. Louis’s Forest Park. Like I said, he made mistakes, but they were mistakes that we learned from, right? And he was credited with being the first to find our country (the truth is out there). And we no longer can take our kids to the park and say, this is Christopher Columbus? Shame, on everyone that’s a part of all these statues being taken down. It’s our history, it may not always be the best example of what we came to be, but it’s our history! And now I hear that people want to take down the Abe Lincoln statue? God help us if we resort to that!

I know everyone is not going to agree with me on this, but this is how I feel, and that’s that!

To recap… it was a “nothing day” as far as the markets were concerned yesterday, no real movement in the currencies or metals, it is a day that Chuck always feared he would have to write about!  Chuck dissects some of the Powell testimony yesterday, in today’s letter, and then Chuck decides to get something off his chest… 

For What It’s Worth…  Recall last week when I told you how Hertz’s stock was soaring after they had announced Bankruptcy?  I just couldn’t believe that was happening, and that people were drawn to buy that stock.  Well, this article plays with that thought, as Hertz pulled the plans of a new stock offering, while they are in receivership, and can be found here: https://www.zerohedge.com/markets/bankrupt-hertz-kills-plan-sell-500-million-worthless-stock-following-sec-review

Or, here’s your snippet: “As if millions of Jefferies bankers suddenly cried out in terror and were suddenly silenced.

When last week Hertz announced its plans to sell up to $1 billion in bankrupt stock (subsequently trimmed to $500 million) to Robinhooders in an “At The Money” offering from its existing Shelf, there were two reactions i) this is the most insane thing ever attempted, although if it gets done it will be a truly historic outcome, one in which a bankrupt company will have turned over the bankruptcy process on its head funding itself in Chapter 11 not with a super-secured DIP loan but with worthless equity, and ii) where the hell is the SEC on this?

Finally addressing point 2, earlier today SEC chairman Jay Clayton told CNBC that the regulator was actually involved, and contrary to widespread expectations hadn’t decided to ignore what many said was clear daylight robbery from manic Robinhood investors. Moments later Hertz stock was halted for hours.

And now we know why: in an 8K published moments ago, the bankrupt car rental giant said that, following communication with the SEC, Hertz was “suspending” the $500 million offering and as a result “the Company is not currently offering any shares under the ATM Program.”

And so what would have been the greatest ever feat pulled off by a company and its aspiring investment bank, has been shelved indefinitely, as has Jefferies 3% underwriting fee… at least until Chesapeake or someone else tries to pull this magic trick all over again.”

Chuck again… You know, when I first began putting articles that made you think differently about stuff, in the Pfennig, this is the type of article that would have been front and center…  The absurdity of this whole idea just sends me off the cliff! 

Market prices for 6/18/20 American Style: .6870, kiwi .6444, C$ .7375, euro 1.1242, sterling 1.2572, Swiss $1.0537, European Style: rand 17.3607, krone 9.4935, SEK 9.3648, forint 306.75,   zloty 3.9741,   koruna 23.7140, RUB 69.62, yen 106.98, sing 1.3926, HKD 7.7499, INR 75.94, China7.0862, peso 22.37, BRL 5.2398, Dollar Index 97.13,  Oil $38.30,   10-year .71%, Silver $17.54, Platinum $821.90, Palladium $1,924.32, and Gold… $1,723.17

That’s it for today… There you go! The long awaited Shorter Pfennig! I can hear the shouts from the mountain top! HA!  Well, this Sunday is Father’s Day…  On Saturday, Chuck and his two sons, Andrew and Alex are heading to Columbia for the day, I believe that some burgers at Booches, and pizza at Shakespeare’s is on the docket!  That’s their Father’s Day present to me… Longtime readers know that I learned a ton from my dad, as I quote him quite often in the Pfennig…  I get a chill thinking about him…  And Pfennig Tradition calls for a Father’s Day poem at the end, so I’ll carry that tradition on today… The band, Poco, takes us to the finish line today, with their song: Bad Weather…  I’ve always enjoyed the sound of the band Poco… Ok, with that, I want to hope that you’ll have a Tub Thumpin’ Thursday, and will Be Good To Yourself!

Chuck Butler

I love you and I miss you, Dad,
and though you’ve passed away,
you’ll never be forgotten,
for I think of you each day.
If heaven celebrates this day
how special it will be.
A gathering of the many dads
upon our family tree.
Your father and grandfather
and great grandfather too.
How wonderful it is, if they
can spend this day with you.
 May you know how much I love you
though I’m here and you are there.
Happy Father’s Day in heaven
to the best dad anywhere!
~ By Ron Tranmer

 

June 17, 2020

* Currencies couldn’t hold their Monday gains on Tuesday

* Is Hong Kong really in a tight spot? 

Good Day… And a Wonderful Wednesday to you! I don’t know what we did to deserve this run of beautiful weather, but I’m not complaining! And I know that all good things must come to an end, and eventually that will happen here… The mornings are so pleasant that I can sit out on our deck and drink some coffee while listening to classical music… Soon the mornings will already be hot, and I won’t be able to do that any longer, but for now, it’s just a peaceful and pleasant way to begin the day! 3 of the 4 grandkids were here yesterday to swim. My sons helped me do a Big Job in our Tiki hut out back, so thanks to Andrew and Alex, with a helping hand from Grace… Graham Nash and David Crosby greet me this morning with their song: Southbound Train…

Well… I really don’t want to start the letter today with this HUGE story, but, with little else going on that’s new, I don’t have a choice… So, sit down, because this story is going to rock your socks! OK, remember back in September of 2019, when I kept asking the question about why did the Fed need to inject Billions of dollars of liquidity into the repo market? And these injections didn’t just stop in September, or Rocktober, or November, or December, oh, Chuck, stop it, they are still going on!

I kept saying that there was something up, with the banks that needed this liquidity… And then we learned that JP Morgan/ Chase (JPM) had withdrawn their funding, out of the blue, and that brought about the question as to why did JPM need their allocated repo money? Something was awry with the banks and nobody, except Chuck, was making a Big Deal Out of it…

When the economic shutdown came along, I would say at a very opportune time for the Fed, because now the Fed could blame the pandemic for all their money creation… Oh, did I tell you that the Fed’s Money creation has exceeded U.S. Treasury Tax Receipts in the last 12 months? So, where was I? Oh, they could blame all their money creation on the pandemic, to keep Congress from asking questions about why we needed to bail out banks again 12 years later?

But what If I told you that the Fed Heads were planning for a bailout of the economy before the Pandemic even showed up in China? You would say, “no way Chuck, that’s false news”! How could the Fed know they would need a bailout from a pandemic, before there was even a pandemic? Well, this is where this gets good, folks… The Fed planned a bailout because they knew the banks were hurting, and would need another bailout, and the timing of the pandemic was like manna from heaven for the Fed Heads…. Ok, I hear you saying, where’d you hear that?

Well, remember G. Edward Griffin, the author of the book The Creature From Jekyll Island? He sent me a note yesterday that said, “BlackRock, an investment manager of $7- trillion in stock and bond funds, revealed plans by the Federal Reserve for a bail out of financial institutions and corporations in August 2019, months before COVID-19 appeared and long before the public was aware of any financial crisis.”

You can read the entire article at: https://needtoknow.news/2020/06/blackrock-authored-the-federal-reserves-bailout-plan-before-there-was-a-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=blackrock-authored-the-federal-reserves-bailout-plan-before-there-was-a-crisis

Now, if I were a Congressman, I would be hopping mad right now, and couldn’t wait to get Fed Chairman Powell back in front of the finance committee! But I’m not, instead I’m just a little old economics writer from a little river town southwest of St. Louis, Mo. And I’m still Hopping mad about this, that the Fed Chairman basically lied to us all for months, telling us that the repo problem was nothing to look at, and that the banks were solid…. Oh, wait, guess who’s going to Capitol Hill today to testify? None other than Jerome Powell himself!

OK, boys and girls, this is your opportunity to grill the Fed Chairman, will you do that, or just cow-tow to his fed speak, and throw him softballs? This is it… this is your Big chance, what will you make of it?  Your reelection depends on your performance today…  (wouldn’t that be great, if their reelection did depend on their performance today?) 

OK… no FWIW story today as this has to qualify for that, but only at the top instead of the bottom! The currencies lost ground to the dollar bugs again yesterday, one day up, next day down… Traders can’t make up their minds… Did you ever have to finally decide? Say yes to one and let the other one ride? There’s so many changes and tears you must hide, did ever have to finally decide? A little Lovin’ Spoonful for you this morning!

Gold couldn’t hold its early morning $5 gain, and ended up closing flat to up a buck or two on the day VS Monday… One of my fave economists, David Rosenberg, was speaking recently, and said that his number one investment is Gold… So there you have it! Rosenberg likes Gold above all other investment choices, what else is there to know? Nothing, absolutely nothing, say it again!

Gold is down $7.70 in the early trading today, so let’s see if Gold can buck the trend recently of wiping out the early morning performance… 

OK, yesterday’s dollar rally was fueled by the absolutely stronger than the man of steel, Retail Sales, Industrial Production and Capacity Utilization reports for May… Now I know that there is no such thing as a “real honest to goodness economic report” any longer… The Economy was shutdown in May, but somehow Retail Sales grew 18%, Industrial Production grew 1.4%, after 2 previous months negative reports, and so on… But Retail Sales grew 18% (actually 17.7%) well, bust my buttons! I told you yesterday that the Butler Household Index (BHI) had indicated that a rebound in Retail Sales would exist, but not to the tune of 18%!!!!!!!

And furthermore… David Rosenberg had this to say about the rebound in Retail Sales for May, on Twitter, “As we get today’s reflexive bounce in May retail sales, keep in mind at as of June 6th, the Johnson Rebook survey shows a -9.7% trend in chain-store receipts as of the first week of June. How’s that for (i) sustainability and (ii) the pent-up demand fairy tale?” – David Rosenberg…

There’s not much coming from the Data Cupboard after yesterday’s explosion of data… So, we’ll just move along now for these are not the droids we’re looking for.

The price of Oil is stuck in the mud around $35-$38, and can’t seem to push through the $40 handle… The Saudi’s announced new production cuts, and even those don’t carry the same weight as they used to.. Maybe when demand gets stronger with the reopening of economies, but I guess we’ll have to wait-n-see, eh? 

The Petrol Currencies that include: Russian rubles, Norwegian krone, Canadian dollars, Brazilian real, and others, are champing at the bit to get stronger, but the lollygagging of the euro and the price of Oil is just disappointing them.  Not that I want to pay more for gas, but these poor Petrol currencies need some love, folks…  

OK, a dear reader sent me a link to a YOUTUBE video of an interview of Kyle Bass. Kyle Bass is someone that you stop to listen to whenever he speaks, so I stopped to listen to what he had to say… And in the interview, he talks about the trouble Hong Kong is in, with their leveraged debt, leveraged currency, and falling housing prices… 

After watching the interview, I remembered that many years ago I wrote about how I believed the Chinese would have the honker go from a pegged currency to the dollar, to a free floating currency, so that they could get their feet wet, with regards to whenever they decided to float the renminbi. And then just fold the honker into the renminbi, and voila, one big happy family with one big floating currency…  Of course I use the term “floating” loosely, as we all know the renminbi is a very manipulated currency! 

I found this interview to be quite interesting in that nobody is talking about Hong Kong’s problem (except for Kyle Bass), most analysts have been focusing on the housing / prices problems in Australia and Canada… Well, now we have another country to add to our “Worry Wall”… 

Speaking of a “Worry Wall”… things are heating up in Korea, as N. Korea’s leader said that he was going to send troops into the demilitarized zone (DMZ)…  I’m no fan of wars, or conflicts or anything with guns, but don’t you think that N. Korea’s leader (Kim Jong Un) has stayed around too long? I can tell he never got spanked as a child, for he’s still a spoiled brat….  But we have to be careful here, because Un’s sister, is reportedly more brutal than her brother!   I don’t believe that this is anything more than a tempest in a teapot, but, one never knows, now do they? 

And meanwhile, back at the ranch, Japan continues to go their own way, which is a prudent thing to do right now. No reason to bulk up and show your hand to the N. Koreans at this time…   I’m just saying… 

Well, that rounds out our trip to Asia..  The World to me is a powder keg just waiting for its fuse to be lit… it will get lit, eventually, but what sets it off is the question… There are a ton of things that could light the fuse, and in the end, the one question that everyone will be asking is: Got Gold? 

To recap… The currencies couldn’t hold their ground on Tuesday, and gave way to the dollar bugs who also wiped out Gold’s early morning gain of $5. Powell, heads to the Hill today to testify… I would pay good money to be able to grill him, wouldn’t you? Oh, and Blackrock revealed that they were given plans for a bailout of banks last August, which if you check the calendar, was WAY before the pandemic, that is being blamed for all the money creation, and the bailout, was even a simple flu!

Market Prices today 6/17/20 American Style A$.6900, kiwi .6463, C$.7393, euro 1.1250, sterling 1.2569, Swiss $1.0540, European Style: rand 17.1187, krone 9.5206, SEK 9.3418, forint 306.03,  zloty 3.9513,    koruna 23.6010, RUB 69.55, yen 107.35, sing 1.3928, HKD 7.7499, INR 75.91, China 7.0808, peso 22.20, BRL 5.1660, Dollar Index 97.06,   Oil $37.72,   10-year .76%, Silver $17.48, Platinum $818.89, Palladium $1,937.94, and Gold… $1,718.81

That’s it for today… A little different letter today, but… in the end it’s all the same… I did a ton of reading last night, as the only thing I could find on TV that was interesting was a replay of the Braves/ Cardinals NDS Game 1 from last year… So, I started reading… I learned something last week, in my book Sam Houston, and the Alamo Avengers… That beloved American pioneer, Davy Crockett, who as I learned in school was killed at the Alamo, but in reality he survived the Mexican onslaught of the Alamo, and Santa Ana had him killed after the fighting was done. That made me very sad to learn that he lost his life that way… OK… this has gone on long enough this morning… Al Wilson takes us to the finish line today with his great song: Show And Tell… And with that, I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

 

June 16, 2020

* Currencies win back some lost ground from last week

* Gold fights back! 

Good day… And a Tom Terrific Tuesday to you! Another Chamber of Commerce day here where I live the summer and fall… Before I go ballistic today, I want send a great BIG Shout Out to my former colleague, and the guy I consider to be my metals guru, Tim Smith, who along with his wife Nicole, welcomed their first born into the world on June 3rd… Tim and Nicole are very happy with their strapping young man, named Jason… So, congrats to you two! May you get a lot of sleep in the coming weeks…. HA! I got to see all 4 of my grandkids on Sunday, and the highlight of the day went to little Evie, who is now 9 months old! She’s going to be walking soon, I would bet! Chicago greets me this morning with their song: Stay The Night… Hey! Remember when the radio stations wouldn’t play the Rolling Stones song: Let’s Spend The Night Together? The FCC has come a very long way, haven’t they?

Well, well. Well. What have we here? Longtime readers, Bob, sent me an article yesterday that made me sit up in straighter in my chair… The article states a passage from the OECD ( Office for Economic Cooperation and Development) where they believe that U.S. banks that are the custodians for many Corporate and Gov. pensions, were in deep dookie in February, and to prevent them from going negative with their returns, the Fed bailed out those banks…. And we were wondering how the picking of who got what, was going to take place… now we know!

Look, I don’t want pensions to have problems… But the Fed comes in on their White horse and saves them, when it was the Fed’s actions that caused them to have problems! So, don’t be getting out the bouquets of flowers for your favorite Fed Head… They caused the problem in the first place!

Another thing that crossed my writing desk was Dallas Fed Chairman, Robert Kaplan spoke yesterday, and told his audience that he didn’t think capping the yield curve was a good idea, because he didn’t feel as though there was a way to control it…. But Kaplan could just be the straw horse here, to lead us away from what the Fed is really going to do… And like I said last week, before Powell spoke I might remind you, I believe not only interest rates are going to capped, but also the Treasury yield curve…

Alrighty then we have those two thing out of the way and off my chest…. Well, the currencies, led by the euro, fought back yesterday, and won back some ground they had lost late last week. I left you yesterday, with Gold down $20 in the early trading, but the shiny metal fought back to only close down $5, on the day at $1,728….  And that mini-rally in Gold yesterday, rolled over to this morning, and Gold is up $5 in the early trading today.  

Speaking of Gold, there is a little story here to lighten the mood… Seems a rider on a Swiss train, got off at his stop and forgot his Gold haul…  The Swiss authorities have attempted to find the owner of $191,000 worth of Gold, but nobody has turned up, so the authorities have decided to go public with the information… There were no details on what the authorities would do to confirm the owner…  I left my phone on plane once… And thought it to be a catastrophe! Imagine this guy…. 

Longtime readers will recall a Sunday Pfennig, when I gave readers: Chuck’s Debt Solutions… And one of the main things in the letter was to close all foreign military bases, those countries don’t want us there anyway…. The Threat of Russia running all over these European countries is null and void these days, so they don’t need the U.S. military there to protect them, any longer… Talk about HUGE money savings! Look, I told you all last week that “the order” is no longer a thing… Each country is going to have to look out for themselves, and as the Order winds down, I believe we’ll see more news like the one yesterday where it was reported that of the 52,000 troops in Germany, we’re bringing home 27,000 which will leave them with just 25,000… (see that new math I just used? Amazing! )

I always thought that the protection of Europe against  Russia was a bunk, but “the order” allowed countries to grow their exports and thus their collective economies, and that’s a BIG DEAL folks!  Without “the order” The seas would have been chaotic, never knowing if your shipment would get to where it was going or not…  So… here’s where the rubber meets the road, folks… with no protection, what’s the new situation with exports going to look like?  And with every country having to defend themselves, who’s going to look around and say, “hey! we still have a big military, it’s time we used it?” 

No looking to the U.S. for help… We’re out of that game…  We got tired of being taken for granted and advantage of…  Here’s an instance… Germany, wanted protection from Russia, but then signed a trade agreement with them to import Russian Oil…   Now, the U.S. is paying huge bucks to defend Germany, you would think that Germany would buy their Oil from the U.S., right?  Just one of many instances where the U.S. was taken advantage of…

 OK… time for something else… let’s see…. Oh, the rally in the Aussie dollar (A$) in recent weeks was something to behold, given that there was no global growth to feed the A$ rally. I even pointed that out a couple of times in the Pfennig. And then last week there were reports of a 2nd Wave of the virus, and the rug was pulled out from under the A$…  Remember me telling you to be careful there? 

The selling of the dollar is building steam… I saw where one of my former fave economists, Stephen Roach, gave a long dissertation on how the U.S. dollar is going to collapse…  I used to hang on every word that Stephen Roach said, but then he disappeared and I lost track of him…  But if he’s back now, that’s a good thing!  I’ll attempt to get through his latest writeup on the dollar, but I can tell from scanning it, he really does believe that the dollar is in deep dookie… 

I’m going to repeat this every day until it sinks into Traders’ collective minds that this is a very bad thing….  “The Fed’s Money Creation Has Exceeded U.S. Treasury Tax Receipts”…. 

The U.S. Data Cupboard gets back in business today with their prints of May Retain Sales, which the Butler Household Index, indicates will be better than the April report which saw a negative -16.4%, but the forecasters believe that May’s report will be far better than April’s and have Retail Sales growing 8%…  I’m thinking that’s a bunch of bunk, so we’ll have to wait-n-see in a bit… 

The Data Cupboard also has the May prints of Industrial Production and Capacity Utilization, two BIG “real economic reports” for us to view today…  But I somehow keep getting this feeling that I’m the only one that worries about these economic prints…  Oh well… It is what it is… 

To recap…  The currencies won back some ground lost late last week to the dollar bugs, yesterday… And Gold found some terra firma and recovered from an early morning $20 loss to just a $5 loss on the day, and is up $5 in the early trading today!  The fears of a 2nd wave of the pandemic sent the A$ to the woodshed late last week…  And Dallas Fed Head, Kaplan, doesn’t see how the Fed could control a Treasury yield cap…  Come on Rob… You can do it, if you really try!  HA!

For What It’s Worth…  OK… up to now, the Fed has only broken their rules by buying ETF’s… but it seems they are lining up another rule to be broken, as they announced that they are ready to buy Corporate Bonds… I do not like it when the main story is carried by CNBC ( I have a long running grudge against them!) But if that’s what it takes, then so be it, and you can find the article here: https://www.cnbc.com/2020/06/15/the-fed-says-it-is-going-to-start-buying-individual-corporate-bonds.html?

Or, here’s your snippet: “The Federal Reserve is expanding its foray into corporate credit to now buy individual corporate bonds, on top of the exchange-traded funds it already is purchasing, the central bank announced Monday.

As part of a continuing effort to support market functioning and ease credit conditions, the Fed added functions to its Secondary Market Corporate Credit Facility.

The program has the ability to buy up to $750 billion worth of corporate credit. Its March 23 initial announcement is largely considered a watershed moment for the financial markets, reeling from the coronavirus threat spread.

“The decision to buy a broad portfolio of corporate bonds represents a shift to a more active strategy for the secondary market corporate credit facility, rather than the passive approach originally envisioned,” said Steven Friedman, senior macroeconomist at MacKay Shields.

Under the latest guidelines, the Fed said it will buy, on the secondary market, individual bonds that have remaining maturities of five years or less. Those purchases will go along with the ETFs the Fed already has been buying, which are balanced toward investment-grade indexes but also include some junk bond funds that track debt which had been investment grade before the crisis but had been downgraded after.

The intent of the individual debt purchases will be “to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds,” the Fed said in a news release.”

Chuck again… All the Fed is doing here folks, is creating a zombie economy, with zombie corporations, and fake money… But here I am pointing this out, and no one on the outside world thinks this is a bad thing… Am I the crazy one here?  No, wait! don’t answer that, for I fear what you’ll say! HA!   And old Fleetwood Mac song had lyrics that went like this, “don’t ask me what I think of you, I might not give the answer that you want me to”… 

Market Prices Today 6/16/20 American Style A$.6917, kiwi .6465, C$.7376, euro 1.1312, sterling 1.2650, Swiss $1.0557, European Style: rand 17.0945, krone 9.5086, SEK 9.3102, forint 305.34,   zloty 3.9165,   koruna 23.4842, RUB 69.94, yen 107.28, sing 1.3905, HKD 7.7498, INR 75.86, China 7.0908, peso 22.11, BRL 5.1049, Dollar Index 96.66,  Oil $37.84,   10-year .74%, Silver $17.40, Platinum $814.16, Palladium $1,949.09, and Gold… $1,730.63

That’s it for today…  Ok, last night on TV, they showed the replay of Game 7 of the 1982 World Series… I was at that game 38 years ago, it was a very cold night, but as I recall I didn’t feel the cold after the 6th inning…  Bruce Sutter came in to start the 8th inning, and in the end it was 6 up, 6 down, for Sutter…  I’ve always said that whenever Sutter came into a game, that the opposing team would start to pack up their bats! We used to park for the games at the old Mark Twain Bank downtown across the street from the ballpark. After the game we went back to the car to find a slew of Bank employees and customers standing around celebrating. It was a long night, and I recall it was an ugly morning..  But I got to see a Game 7 win… James Taylor takes us to the finish line today with his song: Don’t Let Me Be Lonely Tonight…  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself! 

Chuck Butler

June 15, 2020

* The Fed and PPT were out in force late last week… 

* Another false dawn for the currencies… 

Good day… And a Marvelous Monday to you! OMGosh! Yesterday couldn’t have been a more beautiful day here in the St. Louis area, than it was… Warm, no make that very warm in the sun, but with a cool breeze blowing all day, made the day as delightful as it could be yesterday! Friday night had just me, Alex, and good friend Kevin sitting out and avoiding the rain… It was just like old times, when Kevin and Chuck sat outside listening to baseball games.. Only this time there were no baseball games to listen to, so Chuck tried to fill the air with stories of his past… Alex seemed to enjoy them, as he never knew about his dad as a young man… Spoiler alert here, I was wild and crazy! But look how I turned out! I’m still a believer that a young man needs to go out and push the envelope before he settles down to a life of marriage, and kids… It worked for me, that’s all I have to say about that! Gerry and the Pacemakers greet me this morning with their song: Ferry Cross The Mersey… This song played Friday night and I said, “I used to sing Alex sleep every night singing this song, and friend Kevin, said, “And he still went to sleep? “ Ha, as If my voice wasn’t good enough!

Well.. The Plunge Protection Team (PPT) came upon the scene Friday, and said, “ I heard that the stock market lost 1,800 points on Thursday, and we’re here to correct that” And stocks recovered 477 points of their 1,800 points lost on Thursday… The stock jockeys were rejoicing in the streets once again, but a quick reminder to them would have brought them back from embarrassing themselves, but that’s for another day, eh? I would have to think that the PPT will be hard at work from here on out, because, the American public isn’t a bunch of idiots… They too can see the writing on the wall, that Corporations, that issue these stocks, aren’t going to have the earnings to support their lofty stock prices… But one day of rebound does not make a bull market, folks… This is a Bear Market, and it’s going to take the Fed spending like they’ve never done before to support the stocks… I’m just saying…

Maybe, the PPT, or the Fed hasn’t gotten the memo yet, that we are in the middle of a deep recession… Wait! Surely the Fed has gotten word that we are in the middle of a deep recession, but that’s not going to stop them from spending money they haven’t got to buy ETF’s of corporations that would have folded if not for the Fed’s bailout program. 

Alrighty time to move on… the currencies proved what I talked about last week, was real… And that is that it had been another false Dawn, to think that the dollar was going to succumb to a multi-year selling scene… Why, just last week, early, the Aussie dollar (A$) had moved above 70-cents, and this morning it is trading with a 68-cent handle, and the euro , which last week had traded over 1.14 briefly is trading with a 1.12 handle this morning. The sentiment of traders can change in a heartbeat, or NY Minute, if you will, and never think about who they may have hurt with their sudden change of sentiment. Luckily, you have me to point out these false dawns!

Last week had seen Gold climb close to the $1,750 level and got brought back down, and Friday was no different… Gold actually climbed to 1,746, before setting in at $1,730., up$3 on the day… I had a dear reader send me a note last week, and said that they agreed with the $1,750 as the launching point for Gold… But wanted to know what that price would be for Silver… And I responded, that I just didn’t know what figure to put down for Silver, as there are too many inputs that make up the Silver price, and then add in the over 180 days of production it would take to equal the ounces of Silver sold short… So, don’t expect Silver to follow Gold move higher, dollar for dollar… It’s going to move higher, and on a percentage basis, probably outperform Gold, but the spotlight will remain on Gold, folks… 

Ok, le’s move on… Ok… Long ago and far away in a galaxy a million light years from now, I used to get the 5 Minute Forecast every day, and just loved the way Dave Gonigam would compress the news into an easy to read 5 minute format. Then one day the 5 stopped showing up… I contacted Dave, and asked him if I had become persona non gratis. He assured me it was his system.. And now the folks at Agora, have changed their delivery system, and I get the 5 once again! YAHOO! And that means more pfodder for the Pfennig! YAHOO! And every now and then, Dave will quote me from the Pfennig, which is always a hoot! So, with that long intro… I have this ditty for you today from Friday’s 5…

“For the first time on record, Fed Money Printing exceeds U.S. Treasury Tax Receipts over a 12-month period.”

Ok, I don’t know about you, but… Those words sent chills down my spine… We’ve basically gone to MMT without anyone noticing… Modern Monetary Theory, or the Magical Money Tree, is upon us, and it seems as though no one is noticing? I’m shocked and awed that the dollar is still strong… OK, I guess it’s going to take dumb as box of rocks, traders to get the message, and figure out what’s happening with all this, before they take action… I’ll give them a break on that, but… should the dollar remain strong, I would have to then question their intelligence or motives…

Well, the U.S. Data Cupboard was a mixed bag-o-nuts late last week. First on Thursday, the Weekly Unemployment figures printed… There was another 1.5 Million people filing Initial claims, but the thing I want to point out is that the continuing claims were 29.5 Million, that means that even with the states opening up again, and the slow slog to bring back employees, there were still 29.5 Million people out there that are unemployed…

Of course, no talk about the total unemployed would take place under my watch, if we didn’t talk about how the total unemployed is still a fake number… You see if a person in unemployed and their unemployment benefits run out, they are no longer counted as “unemployed”… So, the Labor Participation Rate would be better to look at here… And at around 63%, that’s quite a low number of people actually working, folks… So, let’s see here we all know that the labor total number of people working was around 150 Million… so, only 63% of that number are actually working… Which is 94.5 Million… I don’t think the economy can be that strong when only 63% of its work force is actually working… I’m just saying…

There were other prints, but they didn’t make a hill of beans difference to the markets, so I’ll let them slide… One thing I noticed late last week that wasn’t a part of the economic calendar was the fact that Caterpillar posted their worst monthly return in profits since 2010… North America sales plunged 36% on a rolling three-month basis, the most since January 2010 and far worse than the 27% drop posted in April… Caterpillar is an iconic American Company, folks… I’m just saying…

And for all you folks that like to go to gyms to workout… First it was Gold’s Gym that closed, and now there’s word that 24 Hour Fitness is about to file for bankruptcy…  I get this feeling that once the all-clear horn has sounded that many folks are going to need to get to a gym, after being held under house arrest for the last 3 months…  

There is one thing that’s gone on under the House Arrest, and it is that Americans have slowed their intake of sugar…  I know, for me, that’s a fact, because, I have Alex and Grace here to eat all the sweet stuff before I get a chance to! HA! 

Take all those bad things going on in the U.S. economy, and tell me it wasn’t the PPT that had to come in to save stocks late last week, and the dollar while they were at it…. I’m not buying it, as a correction… I’m thinking that it was a case of the PPT, and Fed buying stocks and dollars with your tax dollars, folks… Think about that for a minute and tell me it doesn’t make you angry… I get it… tax dollars pay for those items that the local authorities and the Gov’t provide us to ensure our safety and way of like… But when the money doesn’t go there, and instead is used to bail out Wall Street, I get just a little wound up! And you should too!

Most of the people see the Fed and the PPT jumping in to save Wall Street, and think, well that’s Ok, they’ve got my back! And it comes for free! Ahhhh, grasshopper, come sit, and learn… There’s no free lunch… And the sooner you come to believe that the better of you’ll be and not take the Fed’s buying stocks as a way to help your investment portfolio… 

The Data Cupboard for this week, gets back to business, starting tomorrow, with May Retail Sales, and that’s followed in the same day with Industrial Production and Capacity Utilization…  So, a BIG DATA day tomorrow… But the markets don’t pay attention to data any longer, They’ve all become “Comfortably Numb” with the negative prints. They see them, shrug them off, and get back to buying stocks and dollars… 

To Recap…  The rallies that the currencies and metals were booking VS the dollar got derailed once again late last week… Chuck is convinced that it was the PPT and the Fed in buying and spending money they don’t have once again to save Wall Street…  Chuck also came across some very chilling words in the 5 last week… “For the first time on record Fed money creation has exceeded U.S. Treasury Tax Receipts in a 12 month period”…  Think about that and see if raises the hair on the back of your neck like it did mine.. And Gold is down $20 this morning… What gives? 

For What It’s Worth…  Ok, remember last week when I talked about how the Fed will eventually put a cap on interest rates, and the Treasury yield curve?  Well, the good folks at GATA sent me this article on how the capping of the yield curve would be bullish for Gold, and it can be found here: https://www.voimagold.com/insight/why-yield-curve-control-by-the-fed-will-be-bullish-for-gold

Or, here’s your snippet: “On Wednesday, Fed Chair Jerome Powell stated he is considering “yield curve control.” Previously, in the 1940s, when the Federal Reserve controlled the yield curve, it created deeply negative real interest rates. If repeated today, this would cause the gold price to sky-rocket. 

Due to the current economic crisis, the U.S. federal deficit is reaching “unprecedented” levels. Preliminary data suggests the federal deficit will be $4 trillion dollars this year, which is more than 15% of GDP. Although, as the crisis unravels, it’s likely these numbers will be even worse by year end. Throughout history, only in the First and Second World War deficits of this magnitude have occurred.

As GDP is declining and the federal deficit rising, the “public debt to GDP ratio” is escalating rapidly. According to usdebtclock.org, U.S. public debt to GDP is 130% at the time of writing. Just a few months ago this ratio printed 110%. In the chart below, you can see public debt to GDP rising at a pace comparable to when the Second World War broke out. 

What many people don’t know is that at the start of World WarII, the Federal Reserve implemented “yield curve control.” The central bank of Japan wasn’t a pioneer when it embarked managing the curve in 2016.
Starting in 1942, the Fed put a cap on yields of government bonds across the curve. From that moment on “the Fed effectively abdicated its responsibility for monetary policy despite its concern about inflation and focused instead on helping the Treasury finance the conflict” (Humpage, 2016). “

Chuck again… Very interesting thought, that yield curve capping would create deep negative rates (when you factor in inflation) and that would be a real feather in the cap of Gold…  Very interesting… 

Market Prices today 6/15/20 American Style: A$.6817, kiwi .6436, C$.7328, euro 1.1255, sterling 1.2520, Swiss $1.0522, European Style: rand 17.2080, krone 9.6823, SEK 9.3610, forint 308.33,   zloty 3.9425,    koruna 23.7330, RUB 69.68, yen 107.34, sing 1.3945, HKD 7.7498, INR 75.76, China 7.0824, peso 22.59, BRL 5.0481, Dollar Index 97.15,   Oil $35.43,   10-year .67%, Silver $17.18, Platinum $815.00, Palladium $1,927.91, and Gold… $1,711.20

That’s it for today…  Well, thanks to all who sent along congrats to the Butlers… Yesterday was Flag Day… Did you fly your flag?  Yesterday was also a day of remembrance for me, as it was 13 years ago yesterday, that I had my first cancer surgery…  On the 27th of June it will be 13 years since I had my second cancer surgery…  Yes, less than two weeks apart… 13 years I’ve been on some kind of chemo… some pills, some infusions, and other medicines to keep me going… As my friend, Ty says, “better living through chemistry”… I would be the poster child for that! Bob Marley takes us to the finish line today with his song: 3 Little Birds…  “don’t worry, about a thing, ’cause every little thing is going to be alright”…   And with that thought, I hope you have a Marvelous Monday, and will continue to Be Good To Yourself!  

Chuck Butler

June 11, 2020

* Currencies rally strongly on Wed. but soften overnight

* Gold soars on news that interest rates will remain near zero! 

Good Day… And a Tub Thumpin’ Thursday to you… This should be shorter than usual this morning, as I need to get ready to go see my oncologist this morning. Here’s something I doubt you’ll ever hear from any other cancer patient… “ I love to go see my oncologist” I’ve had 4, counting my M.D. Anderson doc, so I should have a pretty good idea as to who’s good and so on… Two of my former oncologists have retired… So, you know you’ve done a good job of surviving when you outlast your oncologist! HA! My allergies have really been beating on me this spring… Every time I go out to the back yard, everything has an inch of pollen accumulated on it… Yellow in color, and monstrous to my sinuses! The Beach Boys greet me this morning with their song: Wouldn’t It Be Nice… here’s Chuck’s version.. Wouldn’t it be nice if we could wake up, in the morning when the day is new, and never have to worry about the economy, because it hurts the whole day through…

Well, well, well… What did I tell you yesterday about how zero interest rates aren’t going anywhere and that eventually they will be capped off to prevent the markets from pushing them higher… And then about 6 hours later… Fed Chairman Jerome Powell, told reporters at his press conference, that “zero interest rates are here to stay through 2022”… Powell made sure the reporters were clear on the fact that the Fed will keep rates near zero until they are confident that the economy has weathered the storm, successfully….

He then went on to talk about GDP… And here’s where I believe he made a big mistake… He said that GDP for 2021 will be 5%, and in 2022 3.5%… I’m not buying it with YOUR MONEY! Or as I used to say about the S. African rand, I wouldn’t touch that with YOUR TEN FOOT POLE!

So, the bullets the dollar bugs were sweating yesterday morning ahead of the FOMC meeting adjournment were bonafide, and for goo cause… Because you can’t defend the dollar when the Fed Chairman says interest rates are staying near zero, not just the rest of this year, and not thought next year, but into 2022!

The Currencies, led by the euro, took off for higher ground VS the dollar, and Gold kicked some tail too. So, all you naysayers that wouldn’t buy Gold because it’s a non interest bearing investment… Well, where are you getting your interest on your investment now? I’m just asking…

Gold closed the day up $24 with Silver tagging along.  But something happened overnight, because the currencies and their lofty levels of yesterday afternoon, have had the wind taken out of their collective sails, and Gold is down a couple of bucks early this morning.  I’m in a good mood this morning, so I’m just going to put this pullback in the overnight markets down to profit taking…  And then move on… 

OK… now this really rankles me… There’s an economist out there by the name of Stephanie Kelton, who wrote an article in the NYTimes, (go figure, right? ) saying “Why I’m not worried about America’s Trillion dollar deficits”… Go ahead and google it and read it, that is if you want to get sick to your stomach, and lose today’s lunch… What a looney tunes! Apparently she never took an economics class, I Mean a real economics class, where you learn about Adam Smith, etc. And she obviously never studied the economics theories of Misys… But a stray here… Here’s the main fact that she seems to forget, or probably never learned, is that the larger the deficit the harder it is for a country’s economy to thrive… I don’t think we need any more proof of that than just looking at Japan… They’ve taken the deficits spending to heart, and for over 20 years their economy is… well, there is no economic growth to speak of…

Today’s analysts, I guess that’s what they call them, have no idea what looking under the hood, is all about… The get fixated on a something and soon it’s the “call of the month” and they want everyone to read about what they’ve come up with… It embarrassing to me, someone who learned economics at the knee of the great Hy Minsky, to see this going on… But it is what it is, and hopefully not too many people think much about what she had to say…

Well, another one bites the dust…. I read yesterday that Shale pioneer, Chesapeake Energy had their shares stopped on the NYSE, due to rumors that they will file bankruptcy… Remember when I told you months ago that the shutdown was going to really put some stress on the shale producers, because, they had loaded up on debt, and with no income coming in, to pay on that debt, things get really sticky… Well, fast forward to yesterday, and this was the news article that printed: “Shale gas pioneer Chesapeake Energy, once worth $37.5 billion, has warned of a possible Chapter 11 bankruptcy filing in order to restructure some $9 billion in debts.”

Just another sign that the economy isn’t going up… instead, it’s going down…. 

The U.S. Data Cupboard had the stupid CPI report for May yesterday… The consumer price index (CPI) showed that deflation wasn’t as bad in May as it was in April, as May printed at -0.1%, VS the April print of -0.8%… John Williams over at www.shadowstats.com shows inflation, calculated using pre 1990 methods, i.e. before hedonic adjustments, shows CPI at just below 4%… I mean what does it take to get people upset with the CPI’s version, when the real cost of living is near 4%, and that’s after the drop in April because of the lockdown.

There was also a reveal of the Federal Budget for May… The Federal Budget had a deficit of $399 Billion, which blew April’s deficit of $208 Billion out of the water! A couple hundred Billion here, and a couple of hundred Billion there and pretty soon you have a multi Trillion annual deficit! Take the average of these last two months, and get $303 Billion deficit per month, and then multiply that by 12 and you get an annualized deficit of $3,642 Trillion… Then add that to the current debt, and you see why / how we’ve gone from a current deficit of $5.7 Trillion in 2000, to $7.2 Trillion in 04,  to $10.2 Trillion in 08, to 15.3 Trillion in 12, to 19.6 Trillion in 16, to $25.9 Trillion today… All of these numbers come curtesy of the www.usdebtclock.org…. Oh, and just for grins, they let me go forward, based on the trend in deficit spending now… In 4 years, 2024… The current U.S. Deficit will be $46 Trillion!!!! And our Unfunded Liabilities will be $188 Trillion…

Of course, I don’t believe we’ll get to those numbers… Because this is all becoming just too much for the financial system to bear… It might be different if, say the second largest economy, China, ran a surplus, but no, they too have gone down the deficit spending road that leads to dead man’s curve… And the 3rd largest economy, Japan, is up to their eyeballs in debt, and the 4th largest economy, ah, never mind, I think you get the picture…

To recap… The Fed left rates unchanged, and Fed Chairman, Powell, told reporters that the Fed plans to keep rates near zero into 2022…  Not just the rest of this year, and not all through 2021, but into two years from now!  This news sent Gold higher on the day (by $24), and the currencies kicked some sand in the dollar’s face… But in the overnight markets there must have been some profit taking, (Chuck’s in a good mood this morning) because the currencies have backed off their levels of yesterday afternoon.  And another one bites the dust, as another Shale producer has filed for bankruptcy… 

For What It’s Worth… Well, this article is all over the internet, so you don’t need me to give you the link to the story, simply Google it… But for those of you wanting to know more, this is an article about U.S. Pensions running out of money in 8 years… And it can be found here: https://burypensions.wordpress.com/2020/06/10/ft-seven-major-us-public-pensions-to-run-out-of-money-by-2028/

• Or, here’s your snippet: “Over 320,000 members of the New Jersey Teachers and Chicago Municipal public pension plans: “A slow recovery for the US stock market could result in Chicago Municipal’s funded position falling from 21 per cent this year to just 3.6 per cent by 2025. This would leave assets to cover just three months of the fund’s retirement payments…”

• New Jersey Teachers: “…funded position projected to decline from 39.2 per cent to 23.2 per cent over the next five years. By that time, New Jersey Teachers would have assets to cover 19 months of retirement payments.”

• Police and fire departments: “public pension plans of Kentucky and Providence along with Dallas Police and Fire, Charleston Fire and Chicago Police could all end up with less than three years of retirement benefit payments saved as assets.”

• “Chicago has particularly high pension risks. The city has built up very large unfunded liabilities through years of very weak pension contributions,” a senior credit officer at Moody’s.”

Chuck again… I’ve been talking about a problem for pension plans for years folks, have you been listening? There’s another bailout from the Government in the offing… I mean we bail out Corporations now, why not Pension Pans?

Market prices 6/11/19: American Style: A$ .6915,  kiwi .6477,  C$ .7408, euro 1.1360, sterling 1.2660, Swiss $1.0606, European Style: rand 16.8413, krone 9.4146, SEK 9.2360, forint 303.10,  zloty 3.9356,   koruna 23.4358, RUB 68.56, yen 107.08, sing 1.3880, HKD 7.7500, INR 75.61, China 7.0634, peso 22.39, BRL 4.9098, Dollar Index 96.23,   Oil $37.96,  10-year .70%, Silver $17.96, Platinum $834.18, Palladium $1,933.60, and Gold… $1,732.96

That’s it for today… See? I can keep it shorter, when time is of the essence! HA! Well… On Wednesday this week, it was the Birthday for  one of my fave people on earth … Laura Baur…  Then last night was the Birthday of good friend… Mike Kettler…  Happy Birthday!  Tomorrow is Chuck & Kathy’s anniversary… This will be 44 years…  I know I’ve told you all how the two of us met in 1972…  but I’m going to tell it again…  I was a what you would call a country strong football player, and in the summer I would run the track at the high school to keep in shape for the upcoming season. One day, I was running the track, and the cheerleaders were having a practice, and my eye immediately went to the beautiful young lady with red hair. I stopped, called a friend of mine over to ask her what that young lady’s name was… And we met… And the rest, they say, is in the books…  Blood, Sweat & Tears take us to the finish line today with a song that’s very appropriate after the story I just told you… You’ve Made Me So Very Happy…  Ok, with that, I need to get going, so please go out and have a Tub Thumpin’ Thursday, and Be Good To Yourself! 

Chuck Butler

 

June 10, 2020

* Currencies continue to move higher VS the dollar

* Gold gets back on the rally horse! 

Good Day… And a Wonderful Wednesday to you! Well, the reports of a heavy rain for yesterday, turned out to be wrong, as usual… Have you ever encountered a profession that could be so wrong all the time, and still be employed? Not that I’m complaining about the lack of rain, the sun did make a late afternoon appearance that allowed me to go outside for some reading… I’m into my new book on the history of Sam Houston… You know the Avengers of the Alamo? Where iconic American heroes of the day, Jim Bowie, and Davy Crockett both died defending the Alamo… I love American history, the real history, not the stuff they teach in schools these days…. OOOPs did I say that out loud? I guess I did! Oh well, we’ll just carry on as if I didn’t say that out loud! HA! Neil Young greets me this morning with his song: When You Dance, I Can Really Love….

Well, it looks as though the dollar bugs are sweating bullets ahead of the Fed’s FOMC meeting that will adjourn this afternoon with a rate announcement and a Press Conference, featuring Fed Chairman Jerome Powell… I say that because for no other reason than that, the euro rallied on Tuesday, and climbed above the 1.13 handle, to close the U.S. market side, at 1.1340… What have I always told you since 2002? That the euro is the second most traded currency in the world, behind the dollar, and therefore is the offset currency to dollar crosses… So, when the dollar bugs are running scared, and the dollar is getting sold, the euro will rise, whether things in the Eurozone warrant the rise or not…

The overnight markets had more sweating by traders, as the euro continued to move higher, and the A$ moved past 70-cents!  I’ve talked about the A$ quite a bit lately, but more on the line of I didn’t believe the rally was solid…  I’m still not completely sold, but this all has a familiar feeling to it, and that feeling is a loss of confidence in the dollar..  We’ll have to see more of these kinds of moves to say for sure this is what we’re seeing, but it sure does feel like it is… 

The European Central Bank (ECB) can always jawbone the euro back down, much like former ECB President Mario Draghi used to do at every opportunity, throwing the euro under a bus… But that’s really all they can do… They’ve already cut interest rates into negative territory, they’ve already implemented a bond buying program, and their economy is in a state of muck… But the dollar bugs are running scared, and so the euro rallies….

The reason I chose 2002, as my year above, is because that was when I wrote the white paper titled: 2003, The Year of the Euro… And it well became just that! But back then there were compelling reasons to buy the euro, not like today when all we’ve got is it being the offset currency to the dollar. That White Paper brought in so many new investors to the World Markets Desk, with them all wanting to buy euros… And soon the euro would rise to levels not even seen as available to me… The euro would rise to a high of 1.56 in June of 2008… And it hasn’t seen or sniffed a 1.50 level since 2008…

In 2011 the hidden debts of Greece, Italy and Spain were uncovered, and all hell broke loose with the euro, and it went into a deep slide that it has never really recovered from… Why? Well, those debts were made worse with more debts, and there’s been nothing done to reduce them… The grand austerity plans that Germany made the countries with the outrageous debts agree to abide by, have been burned and all that remains are the ashes…

Ok… time to talk about something else beside the euro, Eurozone, and so forth… Well, this isn’t that far away from a discussion about the euro, but I’m going to talk about it any way! 

About 4 maybe 5 years ago, when I was still with EverBank and I wrote a monthly newsletter to clients only, called The Review & Focus, I highlighted what I saw as the problems that were being laid at the doorstep of German Banking Giant, Deutsche Bank… I had to fight to get that letter through the review process, because it wasn’t really about what the clients were wanting to read… But I proposed that it did, in that, if this Banking Giant collapsed, then all those derivatives that I had been warning about would be coming home to roost, which would damage not only the euro, but the dollar, for not only did Deutsche Bank have its tentacles in Germany, but also all over the world, including here in the U.S. If any longtime clients still have a copy of that particular R&F, I would love to see it and read it again, because…. Longtime reader, Bob, sent me an article that said that Deutsche Bank was nearing filing Bankruptcy…

Or maybe they’re not really going to close, but instead, using the Hertz playbook, to  see if filing  bankruptcy as a means to get their stock price to rise! I know, I know, this is serious stuff, and here I am having fun with it… Well, if you read what I had to say about this bank 4 years ago, this announced bankruptcy would be coming to you as no surprise!

Gold got back on the rally horse yesterday, gaining $17 on the day and closing at $1,716, and the shiny metal is up another $3 this morning. Silver on the other hand was not allowed to rally yesterday along with Gold. Silver lost 21-cents to close at $17.55, but Silver has erased that loss yesterday in the early trading this morning…  

Well… Yesterday I did the spoiled brat thing and reminded you that I kept telling you that the problems in the economy were already happening before the COVID-19 virus showed up in the U.S. and then I saw this from Russ and Pam Martens of www.wallstreetonparade.com and thought I would rub it a little more, because… well, that’s what spoiled brats do! So, lets’ listen in on what Russ and Pam Martens have to say… “Wall Street On Parade has previously written that a financial crisis was already well under way before the first case of COVID-19 was reported anywhere in the world. This should matter greatly to Americans because the Federal Reserve is attempting to blame the financial crisis on the virus to avoid Congressional investigations of its second epic failure in a dozen years at regulating the behemoth Wall Street banks.

America needs a comprehensive investigation of what really triggered this financial crisis in order to restructure the U.S. financial system away from a casino culture into one that doesn’t regularly need massive Federal Reserve and government bailouts. These bailouts are piling more and more debt on the shoulders of taxpayers and becoming a crushing drag on the U.S. economy, notwithstanding Fed Chairman Jerome Powell’s dismissive remark to Congress that we’ll worry about the debt later.”

I love the way the folks a WSOP put things… They put things into prospective, so that everyone understands what they are talking about… And do so with a punch to the gut!

Well, just when the demand for Oil began to increase, Libya announced that they were shutting down their largest Oil rig…  Could this bring about a huge spike in the price of Oil? Maybe… There are so many inputs to the price of Oil, that I hesitate to make any call on Oil…    But…  just for grins, I was searching through the Pfennig Archives yesterday, and saw that I had talked about the direction of the price of Oil several times in the past… I must have been sleep typing because I sure don’t recall those times! 

I read the other day that the Fed had pumped more money into the repo market… I find this to be interesting in that with all the COVID -19 stuff going on, and the Trillions of dollars the Fed poured into the economy, that the problems in the repo market seems to have moved to the back page…  But remember, this is what I said back in September when the problem first arose… ” How can Jerome Powell keep telling us that the banks are solid, when they have to bail out the repo markets each and every day?”   I point back to that time, to remind everyone that the problems in the economy were around long before the pandemic showed up on our shores….  I’m just saying… 

The U.S. Data Cupboard has the stupid CPI (consumer inflation) report for May…  And the Federal Budget deficit for May, and that’s all before the Fed adjourns their meeting this afternoon…  I read on Bloomberg this morning that they wonder how long the Fed will keep rates at zero… I laughed and said to myself, “How long have you got?”  

You see… I’ve thought long hours on this subject, and see the Fed having to cap interest rates in the future, to keep them from rising too much, given the amount of debt servicing that’s on the docket. I also think that a yield cap on Treasuries will be implemented. yes… take the “free markets” out of bonds would be the result of that, but a Fed has to do what it has to do to keep the economy from imploding… 

And now we turn to Chuck Butler for “deep thoughts”….   Yikes!  I had better return to the lighter side here before everything turns dark, eh? 

To recap…  The dollar bugs are sweating bullets wondering what Fed Chairman Powell will say this afternoon about rates and the economy…. Will Powell speak with a forked tongue, or a true tongue?   So, with the dollar bugs running for the hills, the currencies, led by the euro have really gone on a run, moving higher VS the dollar. So, is this a short-live move in the currencies, or a change in sentiment toward the dollar?  That has to be the question of the day, and one that cannot be answered today, but in the days to come… 

For What It’s Worth…  Well, I’ve talked about Jeffrey Gundlach many times in the past, for he’s the new Bond King, and when he talks, people listen. It’s that simple… So, when Jeff talks, I highlight it and put it in the FWIW section!  Today’s Gundlach talk is about, the stock market, the Fed, and Gold…  (sounds like a Pfennig! )   And it can be found here:https://www.zerohedge.com/markets/superman-jeffrey-gundlach-live-webcast

Or, here’s your snippet: “Gundlach Warns Stock Market Likely to Fall From “Lofty Perch” Despite “Superman” Powell, Says Buy Gold” 

Chuck again… Nah… I’m just kidding… I have more for you from Mr. Gundlach… I’ve listed the take aways from his webcast here for you:

The stock market is likely to fall from its “lofty” perch. “The big, experienced smart money is skeptical of this little-guy created, epic rally.”

The Fed violated the Federal Reserve Act of 1913 by buying high-yield bonds and ETFs. Gundlach expects Fed Chair Jerome Powell to follow through on controlling the yield curve should the 30-year rate come unhinged.

Traders think that Powell is Superman, and that the chairman will keep the fed funds rate at zero for the next two years.

Quantitative easing and zero rates don’t work, otherwise “we wouldn’t be back at them on steroids 10 years later.”

Negative rates are the biggest kryptonite of all, given that they’re “fatal” for the banking system, he said.

In the long term, the bond manager is bullish on gold, saying it will reach new highs. Alternatively, he’s sticking to his weak-dollar call, saying the greenback can devalue against most other currencies.

Coming in waves: Gundlach sees waves of corporate credit downgrades and white-collar unemployment. He said the lockdown has him questioning the usefulness of middle-management, supervisor-types and that he could “easily see” layoffs hitting people earning $100,000 a year.”

Chuck again… And you think I’ve turned to the dark side?  Boy this Jeff Gundlach is a hoot to talk to at a cocktail party don’t you think?   I can see Chuck and Jeff in a corner talking economics, and people all standing around waiting to hear something good… 

That scenario happened somewhat in the past… I was in San Diego attending the memorial service for the great, legendary Richard Russell, and there were three seats with a table outside, and I sat down. Soon, friends, John Mauldin, and Bill Bonner sat down too, and we began to talk about this and that, and then when I got up to leave, I saw this huge crowd of people standing around us, listening to whatever we had to say… 

Market prices today 6/10/20 American Style $.7007, kiwi .6555, C$.7471, euro 1.1373, sterling 1.2772, Swiss $1.0574, European Style: rand 16.5411, krone 9.2512, SEK 9.1825, forint 302.00,  zloty 3.9166,    koruna 23.4075, RUB 68.50, yen 107.32, sing 1.3842, HKD 7.7498, INR 75.32, China 7.0780, peso 21.78, BRL 4.8585, Dollar Index 96.09,  Oil $37.96,   10-year .80%, Silver $17.73, Platinum $832.05, Palladium $1,958.73, and Gold… $1,719.08

That’s it for today…  Well, I don’t know about tomorrow at this point… if I get up early enough, there will be a pfennig before I head to the oncologist, if I don’t, there won’t be one…  The Baseball draft will take place today… They cut the number of rounds down from 40 to 5…  So there will be a lot of graduated either from college or high school players that will be wondering what they are going to do if they don’t get drafted…  the minor leagues will be cut, and baseball is in trouble….   The players and owners better get their collective heads out of their sit upons and work something out so they can play this year… I’m just saying….  Robert Plant takes us to the finish line with one of his best solo songs: In the Mood… And with that I hope you have a wonderful Wednesday, and please continue to Be Good To Yourself! 

Chuck Butler

 

 

 

 

 

 

June 9, 2020

* Currencies and metals rest on Monday… 

* The BLS points out a footnote that was a part of their jobs report… 

Good Day… And a Tom Terrific Tuesday to you! Another day in paradise, is what it seemed to be yesterday, with Blue umbrella skies, very warm sunshine, and it was the end of our run of warm, dry days, as the remnants of the Tropical Storm Christobal has come our way… But with the sun you have to have a little rain sometime! Rainy days make you appreciate, the sunny days even more! Much like Glenda told the munchkins, it’s safe to come out now… For all of you who thought maybe I had gone over the edge with my reporting of the BLS Jobs report last Friday, yesterday, can calm down, because I’ve gotten over it. Besides there’s not a single thing I can do about it, and if there’s one thing I’ve learned through the years, it’s that there’s no sense getting all worked up about something you have no control over… Besides, there was a voice speaking to me yesterday, and that voice is now gone, except in the morning song… The Moody Blues greet me this morning with their song: The Voice

The morning after the chaos created by the BLS and their “made up” jobs report, had traders looking around and saying, that was too much… That and the fact that the BLS actually came out and pointed out a small print footnote in their report, that said, there was a glitch in the system, and that the Unemployment rate “could be 3 percental points higher”, thus brining it to 16.3%… OK, I get it, but why print anything if you know it’s not honestly correct? The markets depend on correct reporting to make trades, and after Friday’s sell, bonds, currencies and Gold, you now want to come out and say that what you reported on Friday, was underreported?

Back in the day, I used to prepare the monthly income statements for the Bond Division at Mark Twain Bank… I shudder to think of how quickly I would have been shown the door, if I had presented the income report, and said, “But it could be higher or lower, I’ll need more time to figure that one out”… But that’s exactly what the BLS did yesterday… OK… enough of that, I’ve said what I’ve said, and I can’t says no more! – Popeye!

Besides, we’re still light years away from what I believe the Unemployment Rate should be (27%), and the made up number of the BLS, even using their footnote number (16%)… So, what difference does their footnote really mean to me? Nothing, nada, nil, zilch, a big fat goose egg! 

Yesterday’s action in the currencies and metals were very muted… There may have been some volume but the movements either way, just weren’t there! The euro inched a bit higher, and Gold found a way to hold on to $5 of its early $8 gain, as the day went along. It was more like the currencies and metals were licking their respective wounds from Friday’s action, all day on Monday, and they weren’t ablt to get back into the game while still nursing their wounds…

The overnight markets didn’t bring any changed either, so we star this morning in the U.S. just about where we were with the currencies yesterday morning, and Gold is down 98-cents so far this morning, so basically unchanged… 

You know… There just aren’t any real markets any longer… Everything, and I mean everything is manipulated…. What? You don’t think stocks are manipulated? Ok, I guess the fact that the Fed is spending Trillions to buy ETF’s (basically buying stocks) is manipulation? Come on…. Don’t be like “that” guy… You know the guy who turns a blind eye toward anything he doesn’t agree with or believe…. But Shoot Rudy, I would think that as long as the Fed’s spending their hard earned money, no wait, their newly printed dollars, on stocks, then everyone should join in… You put your left hand in you take your left hand out, and you shake it all about…. Come on, let’s do the Hokey Pokey! Because buying stocks is what it’s all about! Until it won’t be…

How many of you remember the dot.com stock market rally that seemed to go on and on, until one days somebody said, “Hey these dot.com stocks don’t have any earnings” and that was the end of the dot.com rally, and soon all those gains were wiped out…. Come on, it was only 20 years ago! And what do you think will be the straw that breaks the stock market’s back? The same thing, ok, I’ve got to say this here, this is my opinion, and I could be wrong… but it think what  the end of the dot.com rally, will be the same thing…. After being shutdown totally for 2 months, and half-shutdown another month, when the earnings season for this period prints…. Someone is going to say, “These corporations don’t have any income”

Did you hear the news, there’s good rockin’ at midnight? Well, besides that, the BIG news yesterday was the we have been in a recession since February… And this is where I start acting like a spoiled brat, and saying, I told you so, I told you so, I double, double told you so! Remember last month when I kept reporting the March numbers, and kept saying, “see the economy was having problems before the pandemic hit our shores”

And also a month ago, I gave you a piece of research I had done when writing the Dow Theory Letters, about how stocks perform during a recession…. And it’s historically not good… So, if you want to follow the herd, and buy stocks, you have better do so quickly, before there’s this wall of rain that will fall on the Fed’s stock market buying parade…

The U.S. debt accumulation continues unfettered…. We’re about to go over $26 Trillion in Current Debt and we’ve got more than 3 more months to go till we get to the fiscal year-end for the U.S. Our debt to GDP ratio is now at 130.05%… Years ago, not thinking that we would cross the rubicon with debt like this for years, there were some economists that said when an economy has a debt to GDP ratio of 90% their economy will suffer… Hmmm… I know they’ve changed how kids learn match these days, but I would like for them to explain how if 90% is bad, then 130% isn’t that bad…. BECAUSE IT IS VERY BAD!

What’s it gonna take to stop all this debt creation? A war? A debt jubilee? Or a debt default? I’ll take what’s behind curtain #3, Monty, because, we have experience in dealing with a debt default, the other two I don’t want any part of…. A war speaks for itself… and debt Jubilee, is fraught with devastation for the dollar….  Just like a debt default , but with a debt jubilee, there are too many unknowns. And with either of them the question would be who’s going to trust anyone selling debt ever again?

Aren’t I just a bundle of good news this morning, eh? HA! Wait till you get to the FWIW article today….

I watched and listened to a zoom meeting presentation by Grant Williams, and Egon Greyerz, of whom I’ve quoted and cited their thoughts several times through the years. They really didn’t tell me anything I didn’t already know, except this little ditty….  OK… remember a week or so ago, me telling you that Hertz had filed bankruptcy? Well that indeed did happen, and since that filing, the stock of the company has soared? Who knew that buying the stock of a company in bankruptcy was the thing to do?  

And that right there my friends, is another HUGE reason that the stock market dead cat bounce is about over…  The stock jockeys have gone off the deep edge, they’re being ridiculous with their buying. They’re probably using the old dart method, where you throw a dart at a target made up of stock names, and wherever the dart lands is the stock you buy… 

I don’t travel any longer like I used to… But if I were still traveling, I’m sure that in these times, that when getting into a cab, the driver would ask me what I did, and then proceed to tell me about a stock tip he had received… 

A thing or two that I want to mention this morning, is one… I had a fat finger incident yesterday, and had the wrong price for loonies… The correct one is posted today… And have you noticed the Brazilian real lately? Yesterday, it slipped below the 5 handle for the first time in, well, what do I aways say, “A month of Sundays!”  With the Russian ruble leading the Petrol Currencies they sure have a revived look about them, don’t they? 

The U.S. Data Cupboard is basically empty again today with some 3rd tier reports on the docket… The only piece of data today that is a bit interesting is the April print of Job openings… Besides that… forgetaboutit! 

Don’t forget though that tomorrow will bring us the FOMC meeting and a press conference from Fed Chairman, Jerome Powell…  As I said yesterday, that I don’t care for what he’ll have to say, because it will be full of lies, and Fed Speak…. 

To recap…  The day after the chaos created by the BLS and their made up Unemployment Report, was a day where traders, took a breather, and said, that was too much!  The currencies and metals are starting today with the same clothes that they wore yesterday.  The Recession actully began in February, folks… Hate to tell you but I was right once more!  

For what It’s Worth…. A former neighbor of mine, sent me a link to this article last night, and after reading it I thought, this is ripe for the FWIW article on Tuesday! So, thanks Brad, for sending that along… The title of article is: A Crash In The Dollar is Coming… and it can be found here: https://finance.yahoo.com/news/crash-dollar-coming-210024166.html?.tsrc=fin-srch

Or, here’s you snippet: “ The era of the U.S. dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end. Then French Finance Minister Valery Giscard d’Estaing coined that phrase in the 1960s largely out of frustration, bemoaning a U.S. that drew freely on the rest of the world to support its over-extended standard of living. For almost 60 years, the world complained but did nothing about it. Those days are over.

Already stressed by the impact of the Covid-19 pandemic, U.S. living standards are about to be squeezed as never before. At the same time, the world is having serious doubts about the once widely accepted presumption of American exceptionalism. Currencies set the equilibrium between these two forces — domestic economic fundamentals and foreign perceptions of a nation’s strength or weakness. The balance is shifting, and a crash in the dollar could well be in the offing.

The seeds of this problem were sown by a profound shortfall in domestic U.S. savings that was glaringly apparent before the pandemic. In the first quarter of 2020, net national saving, which includes depreciation-adjusted saving of households, businesses and the government sector, fell to 1.4% of national income. This was the lowest reading since late 2011 and one-fifth the average of 7% from 1960 to 2005.

Lacking in domestic saving, and wanting to invest and grow, the U.S. has taken great advantage of the dollar’s role as the world’s primary reserve currency and drawn heavily on surplus savings from abroad to square the circle. But not without a price. In order to attract foreign capital, the U.S. has run a deficit in its current account — which is the broadest measure of trade because it includes investment — every year since 1982.
Covid-19, and the economic crisis it has triggered, is stretching this tension between saving and the current-account to the breaking point.

The culprit: exploding government budget deficits. According to the bi-partisan Congressional Budget Office, the federal budget deficit is likely to soar to a peacetime record of 17.9% of gross domestic product in 2020 before hopefully receding to 9.8% in 2021.”

Chuck again… OK… tell me when you’ve seen this, because I never have… The gov’t starts spending money on something, and when the problem is on its way to being solved, the Gov’t pulls back its funding…. It’s never happened and it probably never will!

Market prices today 6/9/20 American Style A$.6945, kiwi .6498, C$ .7435, euro 1.1275, sterling 1.2663, Swiss $1.04.82, European Style: rand 16.7228, krone 9.3436, SEK 9.2389, forint 305.72,   zloty 3.9420,   koruna 236105, RUB 68.27, yen 108.20, sing 1.3912, HKD 7.7499, INR 75.36, China 7.0742, peso 21.70, BRL 4.9190, Dollar Index 96.88,   Oil $38.12,   10-year .83%, Silver $17.65, Platinum $839.50, Palladium $2.021.03, and Gold… $1,697.55

That’s it for today…  What will it be today for Gold? I know that I seem to be fixated on the price of Gold, but in reality I’m not… I bought it years ago, own it, and don’t really care what the price is because I’m not selling it!  And basically, I don’t want to see Gold soar higher all at once, because then investors won’t be able to get any Gold… Gold is a store of wealth, period. Eric Clapton’s love song to George Harrison’s wife, takes us to the finish line today… Layla, the rock classic, was in the middle of a messy love situation, when Eric was being a low-down polecat, and that’s all I have to day about that!  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself! 

Chuck Butler