Author: admin

March 29, 2021

* Currencies & metals continue to be held to the chopping block… 

* One shining light in the currencies is the Indian rupee… 

Good Day… And a Marvelous Monday to you! Well… Chuck was away, and the currencies didn’t rally! See what I’ve been saying? That the world of markets is upside down… What’s good is bad and what’s bad is good… With most of the market activity dominated by the what’s bad is good… I had a great week of vacation with my daughter Dawn, her husband Jerry, and two of my 4 grandkids, Delaney Grace and Everett… Delaney Grace sang the national anthem at Roger Dean Stadium on Tuesday last week and did a bang up job! I’m supposed to be receiving a link to the audio / video of her performance to share with you, but to date, none has come my way… I’ll bug Dawn again to see if she’s gotten it yet, later today. The Stone Temple Pilots greet me this morning with their song: Interstate Love Song…

Well, I don’t know if you’ve heard this in the past week, but a lot of newsletter writers, analysts, etc. are saying that today, Monday, March 29^th, is supposed to be a day of reckoning in the stock market… A major stock sell off is supposed to take place today… Now I have no idea if they will be correct in their calls for a sell off, but just in case, I sure hope you have your stop losses in place…

Did you receive your stimmy check payments? And we did with it exactly what the Government wants us to do with it… We spent it! I didn’t want to… But we needed to make some repairs at home, and with the extra money, we spent it!  And in doing so, we doubled the GDP for that amount of money spent!

Ok… so the currencies didn’t rally while I was gone… Neither did Gold or Silver… The Dollar Index when I left you on the 17^th, was 91.91, and this morning it is trading at 92.85, so up almost 100 bps…  The price of Oil dropped from $64.19 on the 17^th, to a price below $60 at one point last week, only to rally going into the weekend and get back above $60…  But the more than $4 loss in Oil, really sent the Petrol Currencies reeling… The Russian ruble was on a nice run down to 72.81 and then the rug was pulled out from under it and it trades today with a 75 handle… The Canadian dollar/ loonie, had been trading above 80-cents for a month, but succumbed to the pressure of the drop in the price of Oil, and fell below 80-cents. It was the same for the Norwegian krone, which had seen its price perform nicely and trade down to 8.5225, is trading around 8.56 this morning..

The euro, has really been battered about with all this dollar strength… and this morning it is trading with a 1.17 figure…  Crazy days for sure, and I for one am glad I wasn’t here writing every day about this because I would have been yelling at the walls and waking up the kids!  So now, I get to start with a clean slate, and look forward to what I believe is going to be a rough year for the dollar…

Shoot Rudy, even the Chinese renminbi has lost ground in the past 10 days! There is one shining light in the currencies though… The Indian rupee remains steady Eddie with a 72 handle…  I had mentioned the rupee’s gains before I left, and the currency has held onto them just fine… 

Gold and Silver were up one day, down the next for the last 10 days… Gold finished the week on an up note, and closed at $1,734.30, which was higher than the last price on 3/17, which was $1,729.20… Silver wound up losing ground in the last 10 days, going from $25.96 on the 17^th to $25.13 to close last Friday… Leaving me one question… What happened to the supposed short squeeze in Silver?  Come one, Inquiring minds need to know!  I read a short report last week, from an analysts who said that while Gold was suffering now, he still believed it would be trading at $3,000 by yearend…  Of course, he could have been long Gold and wanting to get buyers keyed up about buying it and driving he price higher… But that would not be ethical….

In the overnight markets… There’s been more slippage in the metals, and the currencies … As I said above the Dollar Index is trading this morning at 92.85, and last night it was 92.81, so some minor slippage in the currencies. Gold is on one of those “down days” as it begins the week down $7.30 this morning, and Silver has lost 25-cents early today. Up one day down the next… Gold was up on Friday, so it must be down today… UGH! 

Well, the ink wasn’t dry on the latest round of stimmy checks, when word came from the White House that they are considering a $3-5 Trillion dollar Infrastructure bill… That just riles me up to no end folks… For years I’ve said that the Gov’t needed to get out of the infrastructure business, and allow entrepreneurship to have at it… Sure they would all be toll roads, but… They would be sound and sturdy, and well maintained, unlike what we have now…

And there’s something else I want to talk about that I believe gets the Gomer Pyle treatment of Shame, Shame, Shame…  The U.S. Gov’t has hundreds of thousands homeless people in this country, many of which are U.S. military veterans… People who have fought for our country… And do we spend $86 Million on hotel rooms for them? NOOOOOOOO… But we apparently do for the Illegal aliens, this headline taken from Business Insider: Biden is spending $86 million on hotel rooms for migrants as his administration struggles to handle the surge of families and kids trying to come to the US…. 

For Shame, Sgt. Carter, For shame…

The U.S. Data Cupboard last week showed some real chinks in the economy’s armor with Personal Income down 7.1%, Consumer Spending down -1.0%… Durable Goods Orders down -1.1% and Capital Goods down .8%…  But what did these awful looking economic prints do to the dollar? Well, contrary to what you would believe would happen, the dollar rallied… Go figure!

The Data Cupboard today is bare, so no economic reports today… And basically most of the week will be void of real market moving data, until we get to Good Friday, this week, when the Jobs Jamboree for March will print…  We’re traveling home on Friday… So, I won’t see this data until I change planes in Nashville…

To recap… It’s been a tough 10 days for the currencies, especially the Petrol Currencies, as the price of Oil fell out of bed in the last 10 days…  Gold & Silver didn’t fare much better, although Gold did post a small gain in the last 10 days, after a week of up one day, down the next… Silver saw about 1/2- cent taken from its value during that same time… Chuck is not happy about the infrastructure bill nor is he happy about spending $86 Million to put migrants in hotel rooms, instead of helping the homeless people in this country…

For What It’s Worth…  Well, remember when I told you (on a couple of occasions) that I truly believed that once the U.S. Gov’t came out with their form of a digital currency, that they would do two things… 1. Outlaw folding cash, and 2. Outlaw all other digital currencies? Including Bitcoin? Well… it was nice to see that a Big Time Trader, Ray Dalio, agrees with me… And this article talks about what Ray Dalio sees as the future for Bitcoin and other digital currencies, and it can be found here: Dalio sees ‘good probability’ bitcoin gets outlawed (yahoo.com)

Or, here’s your snippet: “Billionaire investor Ray Dalio, the founder of the $150 billion hedge fund Bridgewater Associates — the world’s largest — made a case that there’s a “good probability” bitcoin could be outlawed, similar to when the U.S. government made it illegal to privately own gold.

As Dalio points out in his upcoming book “The Changing World Order,” the Gold Reserve Act of 1934 made it illegal for individuals to own gold “because government leaders didn’t want gold to compete with money and credit as a storehold of wealth.” Something similar could happen with bitcoin, which has surged against a backdrop of high levels of debt, low interest rates, a lot of liquidity and stimulus, and investors seeking alternatives to bonds and currencies. At the time of this writing, bitcoin’s price was near $56,559.98, spiking after Elon Musk tweeted that you can use it to buy Teslas (TSLA).

“Every country treasures its monopoly on controlling the supply and demand. They don’t want other monies to be operating or competing, because things can get out of control. So I think that it would be very likely that you will have it under a certain set of circumstances outlawed the way gold was outlawed,” Dalio told Yahoo Finance Editor-in-Chief Andy Serwer in an episode of “Influencers with Andy Serwer,” a weekly interview series with leaders in business, politics, and entertainment.

Dalio pointed out that India’s government is currently exploring outlawing bitcoin and other cryptocurrencies altogether.

“[We] have to see what that means,” the investor added.

A government ban could likely cause demand to plummet. While emphasizing he’s not an expert, Dalio also cast doubt that bitcoin’s privacy could be protected.”

Chuck again… I want to thank the folks at GATA for sending me this link this past weekend… As soon as I saw it I knew it was what I wanted as my FWIW article on my first day back!

Market Prices 3/29/2021: American Style: A$ .7644, kiwi .6998,  C$ .7945, euro 1.1770, sterling 1.3628, Swiss $1.06.38, European Style: rand 14.9911, krone 8.5675, SEK 8.5796,  forint 308.26,  zloty 3.9506,   koruna 22.1618, RUB 75.80, yen 109.60, sing 1.3463, HKD 7.7726, INR 72.74, China 6.5405, peso 20.73, BRL 5.7542,  Dollar Index 92.85,  Oil $61.64,  10-year 1.65%, Silver $24.88, Platinum $1,184.00, Palladium $2,662.00, Copper $4.05, and Gold… $1,727.00

That’s it for today… Kind of tough to jump right into the markets after having spent the last week away from them… But I gave it my best college try… I did an interview with good friend Dennis Miller while I was on vacation, for his letter: Milleronthemoney.com. If you haven’t signed up for his letter yet, You might want to just so you can see what I had to say about digital currencies… Well, the last spring training game is today, for me that is… It’s going to be a hot one… like 7 inches from the mid day sun… But it’s the last one, and I’ll be there! My Cardinals had better learn to hit the ball more consistently or else this is going to be a very long season… The Cardinals will pitch well, and play excellent defense, but their hitting is sketchy at this point… Good news is there are 162 games this year, to get it right… I want to thank everyone that sent me a happy birthday greeting email…  We celebrated my birthday a couple days late, on the deck with condo friends, and family.. I grilled steak on a stick for everyone, and a good time was had by all… Steely Dan takes us to the finish line today with their song: Reeling In The Years…  I hope you have a Marvelous Monday, and that you will continue to Be Good To Yourself!

Chuck Butler

 

 

March 17, 2021

* Economic Data is awful, but dollar rallies… 

* Are you wearin’ the Green? 

Top ‘O The Mornin’ to you lads and lasses! It’s St. Patrick’s Day! Are you wearin’ the Green?  I looked in my closet here yesterday to see what I had to wear that was green… I have a shirt that’s a tealy shade of green, and then I have an old EverBank logo shirt that is Kelly green… It’s looks like I’ll be sportin’ the Kelly green shirt today, even though I think I could swim in the shirt, as I’m much smaller now than I was when I used to wear it at shows…  We’ll be going to dinner tonight at our traditional St. Pats’ Day restaurant, and have some corned beef and cabbage…  I have my phone on Sirius XM’s St. Pat’s Day Radio this morning, and they’re playing Dunkin’ Lullabies, by Flogging Molly…  Ok, not your traditional rock and roll this morning, but, when in Rome… 

What on earth happened yesterday? The U.S. Data Cupboard was absolutely awful, and the dollar rallied? Give me a break!  Retail Sales were down 3.0%… Industrial Production was down 2.2%, and Capacity Utilization fell to 73.8%…  Now what in those figures told traders to buy dollars? I’m beside myself with this development this morning! I’m also at a loss for words, which longtime readers will attest is not a common thing for me!

The Dollar Index rose from 91.75 in the morning to 91.88 on the day… Does that make any sense to you, dear reader?  Oh sure, those that believe money grows on trees will tell  Congress that the stimmy checks were needed, but come on… That shouldn’t mean a hill of beans to currency traders…  Gold & Silver also got caught up in the dollar buying, as Gold gave back its early gains of $3.40, and ended the day losing 30-cents.. And Silver never got its feet on the ground to run, and fell 34-cents on the day…

Last night when This Is Us came on, I decided to check the markets and see what was up, and couldn’t believe my eye, when I saw the buying of the dollar goin on …   The Cartel is meeting today, and will not be able to get all the board games out, because it’s just a one day meeting, that will have the Cartel’s decision in an announcement after the meeting this afternoon…  Shoot by then I should be well on my way to an ice cold green beverage! And my annual spring vacation will have begun right after I hit send this morning, and I won’t give two hoots about what Cartel Chairman Powell has to say, because it’s all lies…   Haven’t you heard it’s a battle of words, and most of them are lies? (Pink Floyd)

No baseball for me yesterday, no hockey last night, and that led to a night of going to get the car washed, which took 45 minutes, and I was not a happy camper once I made it to the car wash garage… I just finished another book which puts me at 8 books that I’ve read since arriving down here 2.5 months ago…  In a month from now, I’ll be back home and going to multiple doctor offices… So, I’ll enjoy my remaining time down here where it’s warm, and full of sunshine most days…

In the overnight markets… There was more dollar buying and the Dollar Index is trading at 91.91 this morning.. Not a huge jump, but, it does represent more dollar buying.  The euro dipped below 1.19 this morning, and is going back and forth around the figure. Gold is down $3.10, and Silver is down 4-cents in the early trading…  

I got to thinking this morning, after writing what I have already written and came to the conclusion that traders and investors aren’t that stupid to think it wise to buy dollars when the economy is going to hell in a handbasket…  A study on where people will spend their stimmy check, and it was estimated that $300 Billion will go to the stock market…  All these choices are strange to me… I guess I’m just too old school, to deal with all these moronic decisions…  I’m just saying… 

It’s really beginning to be a drag… waking up each morning and seeing awful economic data, and then watching the dollar climb… The markets are not functioning the way they have always functioned before… Good is bad, and bad is good… Fundamentals don’t count… The Deficit doesn’t count or mean anything any longer, other than numbers… Do you remember the last time we talked about a Debt Ceiling?  I can’t, because it’s just not done any longer…  You know, I’m really beginning to believe that the markets have swallowed this magic money tree stuff, hook, line and sinker…  Why would they get upset that the Gov’t is printing more currency? Why would they get upset that the Fed is promoting runaway inflation? Why, why, why?  See what I deal with every day?

But today is a happy day! I’m Irish, so kiss me!  I never had a green dress shirt, so for years, going to work in a suit and tie, I usually wore plain white shirts, for they go with everything!  On St. Pats’ Day, I would wear a dark blue shirt, and tell people that I was wearing Notre Dame Green…  If you follow Notre Dame sports, you’ll get that one…

I was minding my own business when along came publishing guru, and NY Times best selling author, Bill Bonner, with something for us to think about today… “We need to remember,” says Joe Biden, “that the government isn’t some foreign force in a distant capital. No, it’s all of us. All of us.”

We don’t recall ever making any decision for the government… nor ever having the slightest influence over any decision the government ever made. Nobody ever asked our opinion, and our vote was inconsequential. Apparently, “all of us” does not include us.

Instead, decisions are made by others – lobbyists, legislative aides, bureaucrats, hacks, and cronies. They are the ones, for example, who wrote the latest 600-page American Rescue Plan.

How could you expect them to neglect rescuing themselves?” -Bill Bonner, @rogueeconomics,com

I say that same thing with they send out the surveys for Consumer Confidence… They never ask me! Nor did they ask me if I thought it would wise to keep deficit spending…  Sort of like years ago, at a bank I was called into a meeting of Bank leaders and was told they were thinking of hiring a consultant, and asked me my opinion… I told them that hiring a consultant is like giving him your watch so he can tell you what time it is… Did they listen to me? No… they hired the consultant and a couple of million dollars later, we saw the results…  UGH! 

The U.S. Data Cupboard doesn’t have much in the way of market moving economic data today, just a couple of housing reports… But later in the day we will see what the Cartel has to say about the economy… But remember it’s all lies…   Tomorrow’s Data Cupboard will have the usual fare of Weekly Initial Jobless Claims, and in addition we’ll also see the color of the latest Leading Index… But if tomorrow is anything like yesterday was… I’ll be glad that I’m on vacation and not following these bassackward markets…

To recap… The economic data yesterday was just plain awful, and the dollar rallied… Chuck was beside himself this morning on that news… Gold gave back its early gain and ended the day, basically flat, but in truth, down 30-cents… Silver gave back all its gains from the day before, and ended up down 34-cents…  The overnight markets there’s been more dollar buying and the Dollar Index is up to 91.91 this morning, and the euro has bounced around the 1.19 figure. The currencies look dreary this morning except the Russian ruble! 

For What It’s Worth…  Ok, whenever I see Doug Casey in the news or in my email box, I think back to a conference that EverBank and the Sovereign Society co-hosted in San Diego, (La Jolla actually), and after a dinner Doug Casey and Chuck Butler sat around a fire outside, and puffed on cigars… He told me something that night I’ll always remember, he said, “Chuck, you’ve always been a purveyor of the truth, don’t ever change that.”   So, anyway, this is the email that Doug Sent me yesterday, it’s about the stimulus money, and it can be found here: www.internationalman.com

Or, here’s your snippet: “It has been one year since the COVID lockdowns and restrictions were first instituted. In that time, everyday life has drastically changed—businesses, social interactions, and human interactions were altered by government decree.

But here’s the single biggest and alarming move made by Washington DC politicians and central bankers alike.

During those 365 days, there has been over $5.9 trillion in stimulus printed and disseminated.

The $5.9 trillion in stimulus represents OVER SEVEN TIMES the lost US GDP.

By any measure, this represents the most dangerous threat to your money.

Worst of all, this trend is only getting started… the Biden Administration and US Treasury Secretary Janet Yellen are committed to keeping the stimulus going.

Here’s the thing, historically, countries that have chosen to print money to finance everything and hand out free stuff have resulted in fiscal disaster—for everyone except those closest to the money spigots.

As the US and other countries head down a perilous path to destroying their citizens’ wealth and purchasing power (and anyone holding their currencies), you need to be prepared, so your money doesn’t become a casualty.”

Chuck again…  Well, I’ve said enough, along with Bill Bonner, James Rickards, and now Doug Casey, about the stimulus Bill… I think the timing of my spring vacation couldn’t have been better, I need to get away, and so… I will!

Market Prices  3/17/21: American Style: A$ .7720,  kiwi .7173,  C$ .8016, euro 1.1900, sterling 1.3896, Swiss $1.0782, European Style: rand 14.9218, krone 8.4940, SEK 8.5225,  forint 308.95,  zloty 3.8764,   koruna 21.9437, RUB 72.81, yen 109.18, sing 1.3471, HKD 7.7661, INR 72.65, China 6.5006, peso 20.69,  BRL 5.6068,  Dollar Index 91.91,  Oil $64.19,   10-year 1.66%, Silver $25.96, Platinum $1,202.00, Palladium $2,548.00, Copper $4.09, and Gold… $1,729.20

That’s it for today… Happy St. Patrick’s Day to you!  It occurred to me this morning that I had forgotten to talk about Shrove Tuesday, a couple of weeks ago, on what’s known as Fat Tuesday… Shroves are Irish pancakes, and the object was to eat as many shroves as you could to fatten up for lent…  I’m going to travel to Ireland before I kick the bucket, and stay at the historical Butler House… Not this year, but hopefully in 2022…  I wanted to go when I turned 60, but life got in the way…  Another night game tomorrow night for me at Roger Dean Stadium, should be a very comfortable night, weather wise… Kathy’s sister is down here now, so she’ll have someone to talk to during the baseball games… A Happy Birthday to my new drinking buddy, Pete Landers tomorrow… And I have a special treat for you today… Through the years, I’ve never heard a song that made me laugh out loud like this one… And so it is that will supply the lyrics, you’ll have to make up the melody…  It’s not Irish, but… it sounds like one… it’s Title is: The Scotsman… 

Well a Scotsman clad in kilt left the bar one evening fair
One could tell by how he walked that he’d drunk more than his share
He fumbled round until he could no longer keep his feet
Then he stumbled off into the grass asleep beside the street

Ring-ding-did-a-little-la-di-oh, ring-di-diddly-eye-oh
He stumbled off into the grass asleep beside the street

About that time two young n’ lovely girls just happened by
One says to the other with a twinkle in her eye
“See yon sleeping Scotsman so strong and handsome built
I wonder if it’s true what they don’t wear beneath the kilt”

Ring-ding-did-a-little-la-di-oh, ring-di-diddly-eye-oh
I wonder if it’s true what they don’t wear beneath the kilt

They crept up on that sleeping Scotsman quiet as could be
Lifted up his kilt about an inch so they could see
And there behold for them to view beneath his Scottish skirt
Was nothing more than God had graced him with upon his birth

Ring-ding-did-a-little-la-di-oh, ring-di-diddly-eye-oh
Was nothing more than God had graced him with upon his birth

They marveled for a moment then one said, “We must be gone
Let’s leave a present for our friend before we move along”
As a gift they left a blue silk ribbon tied into a bow
Around the bonnie star the Scot’s kilt did lift and show

Ring-ding-did-a-little-la-di-oh, ring-di-diddly-eye-oh
Around the bonnie star the Scot’s kilt did lift and show

Now the Scotsman woke to nature’s call and stumbled towards the trees
Behind a bush he lift his kilt and gawks at what he sees
And in a startled voice he says to what’s before his eyes
“Ah, lad I don’t know where you’ve been but I see you won first prize”

Ring-ding-did-a-little-la-di-oh, ring-di-diddly-eye-oh
“Ah, lad I don’t know where you’ve been but I see you won first prize”

I hope you have a Wonderful Wednesday, that also happens to be St. Patrick’s Day… And please Be Good To Yourself!

Talk to you in 10 days…

Chuck Butler

March 16, 2021

* dollar sees some selling in the overnight markets

* Rickards says the U.S. is in a liquidity trap… 

Good day… And a Tom Terrific Tuesday to you! Well, it was a hot one yesterday at the ballpark, but not too hot… The real problem in the heat is wearing that damn face mask, except when seated and eating or drinking… So, guess what I try to do all game?  For the last year, I’ve worn compression wraps on my lower legs to keep them from swelling… And when you watch a baseball game, on TV,  from Roger Dean Stadium, you see my black compression wraps… To someone not knowing what I’m wearing, they might think that I’ve gone full Cleveland on the world with knee high black socks! I really don’t know what baseball is thinking making people, who are already in pods, and more than 6 feet away from anyone else, sitting in the sun, wear masks…  Makes no sense to me, but then the economic shutdown and the lockdowns don’t make much sense to me either…   The Guess Who greets me this morning with their song: These Eyes…. “These eyes cry every night for you”…

Well… I was right! I was right! There was little to no movement in the currencies yesterday, and in the metals, Silver was the top performer… So, let me take you back to yesterday when I said, “So, I really don’t think we’ll see much movement in the currencies and metals today, as traders want to see the color of these reports before making may definitive moves…”… And I was right when I said this about Silver yesterday, “Silver is up 18-cents, so a good day so far for Silver…”…  So, just to prove what I’ve been crowing about this morning, The Dollar Index was 91.77 yesterday morning, and 91.82 at the end of the day… And Silver was up 16-cents and ended the day up 31-cents, or up 1.20% on the day…

Ok, that was yesterday, and yesterday’s gone… But I did want to point out that Gold gained $3.10 yesterday to close at $1,732.00, and as previously stated, Silver gained 31-cents to close at $26.34…

I was reading an article by James Rickards that really made a lot of sense, especially given the scenario I wrote about a week or so ago, about a dear reader who saw the price his coin dealer was offering for Gold was much higher than the stated price for spot Gold…  I was taught a very long time ago, by my dad, that the “stated price” isn’t really the correct price… Because the correct price is agreed upon by two parties, one buying and the other one selling… And that goes for land, houses, cars, pencils, erasers, etc. etc…. I heard from my former colleague, Chris Gaffney last week, who thanked me for the mention of where to go to get physical Gold & Silver…  So, I’m going to mention this one more time… If you want to buy physical metals, you need to call my metals guru, Tim Smith @1-800-926-4922…

On a sidebar, 926-4922, was created by the Mark Twain Bank Bond Dept… the numbers spell out WAM 4 WAC….  Weighted Average Maturity 4 Weighted Average Coupon…  And old bond swap, that was heard many times across the office on the Bond Dept. …  When Frank Trotter started up the Foreign Exchange Desk, which would become the World Markets Dept. The Bond guys threw him a bone, and handed him this 800# for his new startup… And so… the history of the 926-4922, 800#… Aren’t you glad you asked? No Wait, What? You didn’t ask? Then I’m sorry I went off on this sidebar…  (not really, just being the nice gentleman that I am)

In the overnight markets last night… There was some slippage in the Dollar Index as we start today with it trading at 91.75… The movements in the currencies lately have been really muted, and nothing to call home about…  Gold is up this morning $3.10, but Silver is down 16-cents… Up one day, down the next… Crazy price action of Silver will cause you to claim you saw UFO’s if you allow it…  The price of Oil slipped a bit in the last 24 hours, and trades with a $64 handle this morning. 

Speaking of up one day and down the next… The 10-year Treasury’s yield seems to be tied to a yo-yo these days…  You know, I’ve discussed this before, but it’s worth it to discuss it again… And that is… with every dollar of deficit spending, the U.S. issues Treasuries to finance the deficit spending…  So, basically the Debt Clock tells us the current national debt is more than $28 Trillion… That means that $28 Trillion in Treasuries have been issued and bought…  Recently the primary banks, those responsible for buying whatever is left at a Treasury Auction, told the Fed that they are at their max for owning Treasuries…  And now… with the help of Congress, another $1.9 Trillion will be issued in Treasuries to finance the Stimulus bill…  Who’s going to step up and buy these bonds?  There’s your major problem for you right there!  Need me to explain any other major problems?  

You know, I’ve spent a lot of time talking about the latest deficit spending, currency printing, $1.9 Trillion stimulus bill… Have you ever had a good friend, or relative, come to you and ask you for financial help, and you were in no position to dole out cash to them? What did you do, go into the back room and print some counterfeit dollars to make sure they got the cash they needed? Probably not… Because there are rules, right?  But those rules that apply to you and me, don’t apply to the Fed Reserve, Congress, and the Treasury…  Their constituents came to them with their hands out in need of cash… The Gov’t doesn’t have any cash to give them so they went into the back room and printed up some currency in the form of 1.9 Trillion, which will probably end up being more than 2.5Trillion in the end… Now Millions of people will get their Stimmy Checks, and rush to deposit them to their Robinhood brokerage account to buy stocks…

All the while the taxpayer will have to foot the bill… Robbing Peter to pay Paul… Seems like a losing deal to me, but then I think with logic and reason… I know for a fact that Congress doesn’t!

And I just couldn’t pass this quote up from the Economist magazine… “Yet, though today’s policymakers have a guaranteed place in economic history, they may not come to be seen as heroes. That is because America is running an unpredictable three-pronged economic experiment that features historic levels of fiscal stimulus, a more tolerant attitude at the Federal Reserve towards temporary overshoots in inflation, and huge pent-up savings which no one knows if consumers will hoard or spend. This experiment has no parallel since the second world war. The danger for America and the world is that the economy overheats…

Mr. Biden’s stimulus is a big gamble. If it pays off, America will avoid the miserable low-inflation, low-rate trap in which Japan and Europe look stuck. Other central banks may copy the Fed’s new target. Massive fiscal stimulus may become the normal response to recessions. The risk, however, is that America is left with rising debts, an inflation problem and a central bank facing a test of its credibility.” – the Economist…

So, today should be a lot more active given the three pieces of real economic data that will print this morning… First up is Retail Sales, and I have to say that the Butler Household Index (BHI( indicates to me that Retail Sales for February will be disappointing…  With the only thing I bought last month was my baseball tickets… no other deliveries were made throughout the month, and that usually means that Retail Sales will disappoint…  Then Industrial Production and Capacity Utilization, will be hard pressed to match or better January’s numbers, which were +-.9% and 75.6% respectively… if these were the old days, when fundamentals mattered, soft numbers printed today would mean a soft dollar… But we’ve discussed how fundamentals no longer mean a hill of beans, and it’s all about Trader Sentiment now…

To recap… The currencies didn’t move much yesterday, with the Dollar Index only gaining 5 points… Gold found enough buyers to close up and so did Silver… In the overnight markets…   the slippage was in the dollar, and Gold is up and Silver is down this morning…   Chuck talks about how the stated price in Gold is NOT the real price… Chuck also talks about the stimulus Bill, and includes a quote from the Economist…  The Data cupboard should provide more action in the currencies today, so get ready for that!

For What It’s Worth… Well, I mentioned James Rickards above, so when I saw this on the Daily Reckoning, I thought it would be best to use it for our FWIW article today… Mr. Rickards is talking about the stimulus and what it’s going to take to get the economy moving again, and that discussion can be found here: The “Bros” Are Preparing Their Next Attack – The Daily Reckoning

Or, here’s your snippet: “What is not as well-known is that a lot of the money for the Bro’s trading came from the $1,200 COVID relief check the government handed out last spring and the $600 checks handed out at the end of December.

Many Bros were tech-savvy, unemployed and stuck-at-home, so using the government’s “free money” to have fun trading stocks was a great form of entertainment during the lockdowns. Now it’s happening again!

Young retail investors plan to use their new $1,400 government checks from the $1.9 trillion Biden bailout bill to engage in a new round of speculative trading.

The U.S. economy is about 70% dependent on consumption; savings and investment are essential, which can be beneficial in the long-run but do nothing to expand GDP in the short-run.

Biden has said that we need the massive spending package “to grow the economy.” But it will only slow the economy because the added debt causes Americans to save more and spend less in anticipation of higher taxes down the road.

The “stimulus” actually keeps people from looking for jobs because the handouts are often more than they could be making at work. Meanwhile, the higher taxes needed to pay for the handouts also slow the creation of jobs because businesses have less money to invest or hire workers.

The only sustainable way out of the COVID recession is real growth, which comes from getting people back to work and reinvesting corporate profits. It doesn’t come from the printing press or its electronic equivalent.

Whether Americans save the money, pay down debt or invest in stocks (even as speculation), they are not spending. That’s more evidence that the U.S. is in a liquidity trap, and the Biden bailout will not help economic growth.”

Chuck Again…  Another analyst on my bandwagon of dissing the stimmy checks… 

Market Prices 3/16/21: American Style: A$ .7737,  kiwi .7186,  C$ .8020, euro 1.1945, sterling 1.3850, Swiss $1.0810, European Style: rand 14.8139, krone 8.4466, SEK 8.4851,  forint 307.20,  zloty 3.8470,   koruna 21.9242, RUB 73.08, yen 109.14, sing 1.3455, HKD 7.7660, INR 72.58, China 6.5000, peso 20.63, BRL 5.5687,  Dollar Index 91.75,  Oil $64.55,  10-year 1.60%, Silver $26.18, Platinum $1,213.00, Palladium $2,442.00, Copper $4.09, and Gold… $1,735.10

That’s it for today… I can feel my vacation growing nearer and nearer, it’s so near I can almost taste it! HA! I watched my beloved Cardinals win their game yesterday VS  the Nationals… Max Scherzer, a St. Louis and Univ. of Missouri Pitcher that pitches for the Nationals (why he doesn’t pitch for the Cardinals is a long very disappointing story) and he looked great for 4 innings yesterday, But with it being spring training and pitchers building their arm strength he was taken out after 4 innings, and that’s when the Cardinals attacked! Back to the normal regimen today and tomorrow… Tomorrow is St. Patrick’s Day! I’ll maybe change things up a bit tomorrow… maybe… Oh, shoot, I know darn well and good that I will, for I’ve got that Irish blood in me!  Stevie, guitar, Miller takes us to the finish line today with his song: Serenade (one of good friend Kevin’s faves)  I hope you have a Tom Terrific Tuesday and will Be Good To Yourself!

Chuck Butler

March 15, 2021

* Currencies saw some slippage on Friday… 

* Gold stages a Big Comeback on Friday… 

Good day… And a Marvelous Monday to you!  Well… My beloved Cardinals won 2 of 3 over the weekend, the Blues lost 2 games, and Mizzou found itself in a real tournament bind. For if they find a way to beat Oklahoma, they then would play #1 and undefeated, Gonzaga… That’s really a bad draw for my Tigers, but they brought it on themselves… My St. Louis U. Billikens didn’t make the tournament, as their covid shutdown for 3 weeks really hurt their chances… It was chamber of Commerce weather here this past weekend, and I spent most of my time outside, in the sun! The Great Ray Charles greets me this morning with his song: You Don’t Know Me…

OK… Well, Friday was interesting for the metals… Gold which at one point in the day was down $17, found a way to rally at the end of the day to gain $4.80, while Silver fought back to close down just 16-cents on the day…  Gold’s closing price was $1,728.90, and Silver’s was $26.03…  

The currencies which had seen a couple of days of rally notched in their belts, pretty much ended the week flat on Friday… The Dollar Index rose from 91.56 on Thursday morning, to end the week at 91.67…  There wasn’t much to move the dollar to be bought on Friday, it just seemed to be the thing to do to end the week… Again, let me repeat… I just don’t get it that traders are buying dollars, right now… The $1.9 Trillion in new deficit spending was passed at the end of the week, and before the President’s signature in ink, dried, there was talk of a $3 Trillion infrastructure Bill that’s coming…

Oh, sure, why just $3 Trillion? Why not make it $5 Trillion or $10 Trillion?  It’s just money, and contrary to what my mother always preached to me… Money does grow on a tree… The Magic Money Tree…  And don’t worry about how it will be financed, because the Fed is the buyer of last resort… I can’t begin to tell you just how wrong  this type of thinking is… But I’ve already told you before and I’m not gong to be accused of having dementia and forgetting that I had already told you!

In the overnight markets last night… There has been some additional dollar buying, as the Dollar Index has moved higher to 91.77…  The moves in the currencies aren’t really noticeable, with the euro, taking on most of the damage of the dollar buying.  This surprises me because of what the ECB said last Thursday… Oh, shoot, we may as well get into that now… but first, Gold is up a buck or two in the early trading and Silver is up 18-cents, so a good day so far for Silver… 

Did you happen to read or hear what European Central Bank (ECB) President, LaGarde, had to say last week about how the ECB would react to the rising yields in Bonds?  In her best, Fed Chairman Powell, voice, she said that the ECB would step of their buying of bonds to keep yields in check…  So, what’s good for the goose is good for the gander, right?  The ECB is simply aping what the fed is doing… Hey, if one’s going to go down, we may as well all go down together!  Well, you may as well get used to the idea now of them all going down together, because in my opinion, this is exactly what’s going to happen eventually…

So, as I was saying above, the slippage in the euro has surprised me, because if the dollar gets kudos for having a bunch of knuckleheads in their Central Bank, then it only goes to reason that the euro would get kudos for showing that their Central Bank also has a bunch of knuckleheads! But Nooooooooo!   Now there’s no rule or regulation that requires currency traders to buy a currency whenever their Central Bank shows no monetary intelligence, but it just goes to reason that if the dollar gets love for this, then the euro should too… 

And if you’re one of those people that truly believe that the economy will soar once everyone has a vaccine, then you might as well move along, for what’s coming is not the droids you’re looking for…

I will concede that the initial jolt to the economy of starting up again will be impressive, but it won’t have lasting or follow up power, and then what will we as a country do?  Do you know that the U.S. has spent $5 Trillion in deficit spending since a year ago when the pandemic was first announced? And what has it produced so far? I’m just saying…

I’m sitting here, watching the sun rise out of the ocean this morning, with no clouds to block the view… One huge orange ball that lights up the day… I think to myself when I’m alone here in the morning, writing this letter, and watching the sun rise that I sure am a lucky person… 

The U.S. Data Cupboard last week  was interesting in that the Weekly Initial Jobless Claims slipped to 712,000 from 754,000 the previous week, and the pundits were all slapping each other on the back and congratulating themselves for writing that the economy was turning around… But, as usual, I would like to take a different look at this number…. Yes, it was lower, but….  at 712,000 its still a number that’s greater than any during the Great Recession of 13 years ago… Think about that for a minute… the number of jobless claims is falling but… it’s still greater than any number of jobless claims during the Great Recession… I believe that to be quite telling about how tentative this economy is… 

We also saw the PPI (wholesale inflation) surprise the heck of me, as you may recall that January’s PPI had shot higher to a 1.3% gain, and I was fully expecting February to follow up January’s gain, and it did, but not by much only gaining .5% in February…  For those of you new to class, the wholesale inflation feeds into Consumer inflation… But these indexes are so cooked, massaged, and manipulated to tell us what the Gov’t wants us to know…  I’m just saying… 

Tomorrow’s Data Cupboard will have the Big economic reports of Retail Sales and Industrial Production and Capacity Utilization… So, I really don’t think we’ll see much movement in the currencies and metals today, as traders want to see the color of these reports before making may definitive moves… 

To recap… The dollar ended the week being bought, not by the truck loads, but being bought…  Gold was down BIG on Friday, but then came back to end the week up $4.80… Silver was also down Big, but couldn’t get back to even and ended up down 16-cents…  In the overnight markets last night, there’s been more dollar buying, but again, not by great numbers, just some general buying, as if the currency traders are saying, “give us a reason to sell”… 

For What It’s Worth…. I just knew that longtime friend, and publishing guru, Bill Bonner, would give me the low-down on the Stimulus Bill… And so, I thought that it would be great to give you his thoughts as well, and so… I couldn’t find the article on Bill’s site, but found another site that carried the letter and you can find it here; Biden Delivers a Sucker Punch – Money Spending For All (rumrebellion.club)

Or, here’s your snippet: “Oh, don’t be silly, Dear Reader. Most likely, not a single life will be saved as a result of this boondoggle. Nor does it really redress the harm done by government busybodies, when they created a panic and shut down the economy.

GDP fell about 2.3% last year. That’s about $498 billion. Last year’s “relief” measures have already offset that with $3.1 trillion. This latest “relief” package brings the total “stimulus” handed out by the feds in response to the coronavirus pandemic to $5 trillion – more than 10 times the actual economic loss.

And according to the Committee for a Responsible Federal Budget (CRFB), many of these provisions in the latest “stimulus” package have sunset clauses… meaning they are scheduled to expire sometime in the future. That is how the total cost – as grand as it is – stays under $2 trillion.

But what will most likely happen is that as the sun begins to set, the politicians will agree to extend the programs. In the end, says the CRFB, the cost will probably end up closer to $4 trillion than to $2 trillion.”

Chuck Again…  I keep saying over and over again that a bad precedence had been set by showing the citizens of the U.S. that their Gov’t could just print up some dollars and send them checks for not doing a single thing, and soon they would be crying for more… Well, the ink isn’t dry on this set of checks being sent out, and already the crying has begun…

Market Prices 3/15/21: American Style: A$ .7746,  kiwi .7195,  C$ .8026, euro 1.1933, sterling 1.3926, Swiss $1.0776, European Style: rand 14.8323, krone 8.4408, SEK 8.5375,  forint 307.75,  zloty 3.8425,   koruna 21.9201, RUB 73.23, yen 109.05, sing 1.3444, HKD 7.7645, INR 72.53, China 6.5068, peso 20.63, BRL 5.5501,  Dollar Index 91.77,  Oil $65.80,  10-year 1.61%, Silver $26.21, Platinum $1,222.00, Palladium $2,427.00, Copper $4.11, and Gold… $1,730.70

That’s it for today… A little shorter than usual… I’m still on that rotation of shorter Pfennigs, for no particular reason, it’s just how they come out! Well, this will be the last week for me as I head to my annual Spring Vacation on Thursday, the day after St. Patrick’s Day!  No parades, no festivals this is going to be a real bummer of a St. Patty’s Day… I’ll still celebrate my Irish heritage, with some corned beef and cabbage, and green beer, but not like I used to celebrate it!  I’ll be going to Roger Dean Stadium for the ball game today… It’s going to be a hot one… like seven inches from the midday sun! But I love it!  Daughter Dawn and her family will be down here at the end of the week, and my darling granddaughter Delaney Grace will sing the national anthem at Roger Dean Stadium. I can’t wait to hear that, I know now that there will be misty eyes…  Ok…  The great Stevie Wonder takes us to the finish line today with his song: My Cherie Amour…  (love that song!)  I hope you have a Marvelous Monday, and will Be Good To Yourself…  

Chuck Butler

March 11, 2021

* Currencies and metals rally on Wednesday & overnight!

* Who’s going to buy our Treasuries? 

Good Day… And a Tub Thumpin’ Thursday to you! Ahhh, the end of another week… Next week at this time I’ll be signing off for about 10 days as I start my traditional summer vacation… Another day of sunshine yesterday, and I almost finished the book I began reading on Monday!  My beloved Cardinals lost another spring training game yesterday, good thing these are just exhibition games and they don’t count on your regular season record…  In days passed, I would attend more spring training games, than I do now, traveling up and down the coast to see my Cardinals play… Port St. Lucie, to Ft. Lauderdale, and West Pam Beach… But I don’t feel the need to do that any longer… I’ll see 13 games at Roger Dean this spring, and that’s good with me! Here’s one for the old-timers like me… The Drifters greet me this morning with their song: Under The Boardwalk…

Well… The Currencies did push back the dollar bugs yesterday, but the pushing was more like nudging…  The euro rose back above 1.19, The Aussie dollar (A$) rose back above 77-cents, and the Dollar Index fell to 91.85 on the day…  Gold was bid up by $10.50, to close at $1,727.90, and Silver also was bid up 27-cents to close at $26.30… 

Regarding Gold… I get so tired of listening and reading pundits talk about how Bitcoin has surpassed Gold as a safe haven… They point to Bitcoin’s ability to be used to buy things, and Gold is just a shiny rock…  For 5,000 years, Kings and Pharaohs have hoarded Gold… For less than that time, investors have hoarded Gold as a store of wealth…  There have been dozens of investment fads through the years that people say will overtake Gold as the store of wealth, and none of them even exist today… I reckon it’s akin to bands like The Bay City Rollers, The Knack, Oasis, who were all touted to be better than the Beatles… And where are they now?

So… Yesterday, the stupid CPI (Consumer Inflation) printed and it gained .4% in February, and the pundits out there were saying things like: “Inflation is till tame”….  Really?  If you annualize CPI the annual inflation rate jumped in February to 1.7% from 1.4%…  But as long as these so-called experts are using CPI to determine if inflation is growing or not, they’re going to be led down the wrong path…  John Williams at Shadowstats.com says consumer inflation is more like 9.4%.. Which I would think would be nearer to your own experience… Remember I’ve always said that inflation is a personal thing, what one person experiences with inflation won’t be the same as the next person’s experience with inflation..

Maybe the story I told you about yesterday regarding the guy that bought a truck load of Copper (10,000 tons of Copper) and when it was received it was a shipment of copper painted landscaping bricks, that caused Copper to lose a couple shekels yesterday… Or maybe the pundits claiming that inflation is tame, caused some copper owners to back off the inflation fears meter…  Me? I’m thinking that the slippage in Copper had more to do with the former…

In the overnight markets…. there’s been more dollar selling, and we start this morning with the Dollar Index having fallen to 91.55, from 92.11, where we started with it yesterday. Gold is up $7 in the early trading today, and Silver is up only 3-cents…  The euro continues to climb back toward 1.20, and the Aussie dollar (A$) is looking quite perky once again. The aforementioned Copper, is up to 4.10 this morning, as all is forgiven, and the focus returns to rising inflation… 

OK.. I know this has nothing to do with currencies, economies, and dolts… But it does have something to do with… Something that’s new!  Do, do you know what an NFT is?  Well, if you do you’re ahead of me, because I just found out last night! And NFT is a “non-fungible token”… And the reason I looked it up is I saw this headline: Rob Gronkowski will sell NFTs of his best Super Bowl moments….   OK, here’s the skinny on an NFT from Bloomberg.com: “Think of them as digital certificates of authenticity. A non-fungible token, or NFT, is a unique, irreplaceable identifier created by an algorithm: A distinct barcode for a digital piece of art or collectible. It’s a solution of sorts to a problem that’s long faced digital artists: how to create scarcity for an item that can be infinitely reproduced.”

So, when Gronk wants to sell his memorabilia he wants people to know it’s authentic… one of a kind, etc. and so it will have an NFT….    Makes sense?   See? You learn something new nearly every day with me!

Now, back to regular programming…  So, the dirty deed done dirt cheap was finally voted on and sent to the President for his signature… I’m talking about the Stimulus Bill…  Sending money to people that we don’t have money to send, but will have to be printed up by the Fed, and we’ll all go our merry way…  Longtime readers will recall me telling you back when the first stimmy checks went out, that it was setting a bad precedence, and that once people began to see that Gov’t could just print money and send them checks, they would demand more, and more… And now we’re on the second, “and more”…. Jeffrey Gundlach of Doubleline Fund had this to say about all this: “People Are Starting to Believe That Stimulus is Permanent”

Oh, the unintended consequences of what we as a country do… So, when do you think the masses of people will begin to demand another stimmy check?  I would put my money on 6 months from now… 

The U.S. Data Cupboard today just has the Weekly Initial Jobless Claims, which last week was a full week of claims…  We already talked about the stupid CPI earlier today, and tomorrow’s Data Cupboard will have PPI (wholesale inflation), which last month jumped higher and should have been reflected in this month’s CPI, but, as I always say, CPI has all those hedonic adjustments that keep it from telling us what inflation is really doing…

To recap… The currencies & metals both rallied yesterday… Their moves were muted a bit, but they were gains nonetheless…  In the overnight markets, there’s been more dollar selling, and all the currencies, sans yen, are rallying VS the dollar. Gold is up $7 in the early trading, and Copper has returned to the scene of the crime, (inflation)…  Chuck talks about NFT’s, and inflation and other things this morning. 

Before he head to the Big Finish today, I want to talk about something that really bothers me… And it’s neighbors snitching on neighbors…  This whole “if you see something, say something” has gone way too far…  Neighbors are supposed to support each other, when times are bad, and regale with each other when times are good….  Not call the police because you see several members of the family next door entering their house for a dinner!  I find this behavior to be reprehensible…  As Doug Casey recently said, “1984 was supposed to be a warning, not a manual on how to do things”….

Quick Question… have you read the book 1984?  If you did and you remember the gist of the book, you’ll see the similarities of the great George Orwell book and now…. I’m just saying… 

For What It’s Worth….  The good folks at GATA sent me this note, and the link to the story, so I thank them. The article is about how the Commercial Banks are now using their funds to buy Treasuries instead of making loans, and it can be found here: Fed Policy Is Smothering Private Lending – WSJ

Or, here’s your snippet: “he Federal Reserve’s seeming willingness to provide inexhaustible financing of U.S. government debt is raising concerns about future inflation. Record-breaking growth in the money supply from the Fed’s quantitative-easing bond purchases threatens price stability. But an even greater risk—one that goes to the heart of economic opportunity under democratic capitalism—is the effect of Fed decisions on private bank lending.

Banking institutions have traditionally provided the pipeline that routes loanable capital to businesses and households. Yet commercial banks are increasingly opting to reduce the share of total assets devoted to loans while expanding their holdings of Treasury debt and government-backed mortgage securities.

The 25 largest U.S. banks currently hold 45.7% of their assets in loans and leases, according to Fed data released Friday, down from 54.1% this time last year. Meantime, their year-over-year holdings of Treasury and agency securities increased 33.5%. This reflects more-stringent borrowing standards and diminished loan demand. But it also reveals a subtle yet persistent change in how banks operate.

Banks have pulled back from making risky loans in favor of engaging more directly with the Fed—avoiding the type of lending that spawned stricter regulatory standards after 2008 while readily accommodating the Fed’s expressed satisfaction with an “ample reserves” regime. Bank lending to small businesses has remained low throughout the postcrisis years, with the largest declines in small-business lending at large banks, as shown in a 2018 report commissioned by the Small Business Administration.”

Chuck again… Shame, shame, Shame, as I use my best Gomer Pyle voice! Previously it was banks using their funds to buy back their own stock… And now it’s funding the deficit spending lollapalooza that’s going on in this country… Shame, Shame, Shame…

But who else is going to buy the Treasuries that are issued to finance the ever rising debt?  With yields so low, individuals are staying clear of owning Treasuries, and the pensions that have to have so much in Treasuries are probably maxed out…   This is becoming a major problem for this country, folks… We keep racking up debt, because it doesn’t matter to the magic money tree folks, and it has to be financed, and no one is at the auction window to buy up Treasuries… Uh-oh….  So, banks will buy them until they are up to their eyeballs with Treasuries, and then it will be the Fed buying them to monetize them…  (error admission here, the other day I used the word demonetize and I meant monetize)   And when the rest of the world sees what the Fed is doing….  All hell will break loose, and the dollar will be sent permanently to the wood shed… 

Market Prices 3/11.2021: American Style: A$ .7774,  kiwi .7229, C$ .7952, euro 1.1965, sterling 1.3959, Swiss $1.0813, European Style: rand 14.9385, krone 8.4227, SEK 8.4485,  forint 306.01,  zloty 3.8282,   koruna 21.9084, RUB 73.84, yen 108.50, sing 1.3396, HKD 7.7588, INR 72.58, China 6.5071, peso 20.73, BRL 5.7523,  Dollar Index 91.56,  Oil $65.21,   10-year 1.49%, Silver $26.33, Platinum $1,225.00, Palladium $2,400.00, Copper 4.10, and Gold… $1,734.90

That’s it for today… and this week of course since I no longer write on Fridays… Well, I heard from good friend Rick Baur, as he thanked me for calling out his birthday yesterday… I also received a note from the Great Mogambo Guru yesterday! He wished me a happy birthday… I told him I truly appreciated the birthday wishes, but my birthday isn’t until 3/22… He replied, “You’re welcome, but just hold onto it; it will get better with time!  Hahaha!   Ahhh, wise words from the Mogambo Guru! Who by the way is doing well, but very sad that he no longer gets to play his beloved banjo at gigs… I keep reminding him that I need for him to stay with us for a long time to come!  I just wish he would write every now and then again…  My Missouri Tigers play in the first round of the SEC tournament tonight, and it’s not on late, so I’ll be able to watch it! YAHOO!  Tomorrow night will be the first night game at Roger Dean for the Cardinals in probably 10 years!  It will different not having the sun beating down on you all game…. Which I love by the way!)  Ok… Weezer takes us to the finish line today with their song: Island In The Sun…  “On an island in the sun, We’ll be playin’ and havin’ fun, And it makes me feel so fine, I can’t control my brain”  I hope you have a Tub Thumpin Thursday, and a mighty grand weekend, and I’ll talk to you on Monday morning, God willing… And please don’t forget to Be Good To Yourself!

Chuck Butler

March 10, 2021

* There was no follow up in the currencies yesterday… 

* Gold & Silver gain throughout the day on Tuesday… 

Good day…. And a Wonderful Wednesday to you!  Well, things were back to normal yesterday, after my morning routine, I went out to the deck with a book and started reading, in the sun… 2 hours later it was time to come in from the sun and take a nap… And then it was a get together around the pool with condo friends…  I kept a watch on Gold all day yesterday, to see if the price manipulators came on the scene… But they didn’t and so it was a good day for me!  The Cardinals regulars were leading 3-0, when it was time for the minor leaguers to come in the game, and as I always say, The other team’s scrubs beat our scrubs… That’s spring training games for you in a nutshell…  Yes, greets me this morning with their song: It Can Happen…  “it can happen to you, it can happen to me, it can happen to everyone eventually.”

Well, after the overnight selling of the dollar, there was no carry forward to the European or U.S. sessions yesterday, and we ended the day with the Dollar Index at 91.99, the same level it was early in the morning…  Gold gained a whopping $33.50 to close the day at $1,717.40, and Silver gained 83-cents on the day to close at $26.03…  I think it’s nice of the price manipulators to give us these days, don’t you?

I received an email from a dear reader yesterday, telling me that he took what I said about buying physical Gold at cheaper prices to heart and called his coin dealer, who said that he didn’t have any Gold for sale at $1,700… But he did have some at $2,100…   A total waste of his time I would say, and I hope that everyone didn’t run into the same bait-n-switch that this guy did…  You see, the drop in the price of Gold came so quickly and so harsh, that everyone got caught owning Gold in their inventory at much higher prices…  Sort of kin to last spring when the price of Oil dropped like a rock, and even went negative one day, but the price at the gas pumps didn’t change that quickly… Because the gas they had pumped into their gas tanks cost them “X”…. 

I always think that when Gold drops in price that a buyer should be able to find Gold at the cheaper price… But coin dealers don’t work like that…  That is unless you are my metals guru, Tim Smith at 1-800-926-4922…   he’s always on the lookout for the cheapest price available! 

In the overnight markets… Well, there has been some slippage from the levels in the currencies and metals that we saw yesterday afternoon. The Dollar Index is back above 92, at 92.11. So, as you can see not much of a move higher but a move higher nonetheless.  Gold is down $5 in the early trading today, and Silver has given back 29-cents…  Let’s see if these two can drum up enough interest to turn those negative numbers into positive ones today..  Unfortunately, what usually happens is you get a little slippage in price and the price manipulators act like sharks with blood in the water, and send there guys to the COMEX with arms full of short Gold paper trades…  UGH! 

Ok, on Monday this week I had to bite my tongue to keep from dissing the markets’ reaction to the Jobs Jamboree number from Friday that set off the onslaught of dollar buying…  The report just didn’t make sense to me, so you had to look under the hood to see what it was made of… And instead of me telling you what was under the hood, let’s listen to what economist David Rosenberg had to say about the Jobs report last week…

I just happened to be perusing Twitter yesterday to find stories on my beloved Cardinals, when I came across this tweet from David Rosenberg.. “First time in my 35 years in the business that I have ever heard so much bullish narrative over a jobs report that saw a 0.9% contraction in the workweek, a 3.1% slide in factory overtime, a 0.6% slide in labor income and 122k plunge in full-time employment.” – David Rosenberg on Twitter

Now, I doubt seriously that the currency & metals traders looked under the hood, and if they had they wouldn’t have the faintest idea of what it was they were looking for… So, I doubt that it was the fact that they had found some chinks in the jobs report’s armor, that brought about the dollar selling…  Instead, I think it was a case of being overbought for the dollar, and oversold in the currencies and metals… 

So… it will be interesting to see what today has in store for us…  I was talking to a condo friend last night and she was telling me that she had watched a documentary about blockchain and Bitcoin… I asked her what she thought of it, and she said that she was amazed at the changes that are coming…  I then explained to her that Bitcoin probably won’t be the digital currency that is used when all countries have converted to blockchain for Trade…   Just something to think about on this Wonderful Wednesday!

OK… So, China has made great strides in the development of their own digital currency…  The digital yuan as it’s known, has been tested in several different markets around China and the Chinese believe that it is ready for prime time… The digital yuan, domestically branded as the Digital Currency/Electronic Payment (DCEP) project, is not only set to disrupt the country’s well-developed mobile payment industry and create new efficiencies in the Chinese economy, but could also challenge the supremacy of the  dollar.  

In 2010, I went out on a limb and said that by the end of the decade that the renminbi would be the next reserve currency… And although, technically I was correct, when the renminbi was added to the IMF’s Special Drawing Rights (SDR’s) as a reserve currency a few years ago, the actual replacing of the dollar as the reserve currency hasn’t happened…  And now I think China has switched horses in the middle of the stream, and decided that their digital currency has a better chance of disrupting the dollar as the reserve currency…  I have an additional article on this for you in the FWIW section today.

The U.S. Data Cupboard will have the Feb. CPI (consumer inflation) for us to view today… Personally, I don’t care what the stupid CPI says… I know that food prices are up probably 6%, and gas prices are significantly higher than they were 3 months ago… Insurance costs, drug costs, home prices, everything is higher in price, and it’s because of inflation, that’s already creeping into our economy, and the stupid CPI isn’t going to show us true inflation because it can’t!  There’s been too many hedonic adjustments done to this data set, to even give the index a chance of reporting true inflation…

The Commodities know what real inflation is, and they are creeping higher each day in price… I’ve been telling you about Copper’s price increase, and it’s not just Copper that is seeing its price increase…. 

Speaking of Copper did you see where a buyer bought a truck load of Copper and when it was received he got copper painted landscaping bricks?  You know when an asset is getting up there in price when it is being stolen and refabricated….  I’m just saying…

To recap… Our Turnaround Tuesday didn’t have any follow up from the previous overnight session, and only Gold & Silver carried on and added to their early morning gains throughout the day. The Dollar Index started the day at 91.99 and ended the day at 91.99… There’s been some slippage in the overnight markets last night, and the Dollar Index is up to 92.11… Not much of a gain, but a gain nonetheless…  China’s digital currency is ready for prime time, and they are signing up trade partners to use the digital yuan in trade…   

For What It’s Worth…  Well I told you I had a follow up article on China’s digital yuan for you today, and so without any further ADO, you can find that article here: Beijing is exploring digital yuan cross-border payments by joining with Hong Kong, Thailand, UAE and the Bank of International Settlements | South China Morning Post (scmp.com)

Or, here’s your snippet: “Beijing has joined Hong Kong, Thailand and the United Arab Emirates (UAE), along with the Bank of International Settlements (BIS), to explore cross-border payments for digital currencies, a move that could potentially create a new path for China to promote the use of yuan in global payments and weaken the US dollar’s position as the world’s dominant reserve currency.

The People’s Bank of China’s (PBOC) Digital Currency Institute, the arm of the Chinese central bank in charge of minting the country’s sovereign digital currency, announced on Tuesday that it was joining the Multiple Central Bank Digital Currency Bridge, a cross-border payments project initiated by the Hong Kong Monetary Authority and Bank of Thailand in 2019, according to a press release. The UAE’s central bank joined the project at the same time.

The expansion of the project has received support from the Bank for International Settlements (BIS) Innovation Hub center in Hong Kong, a unit created by the Basel, Switzerland-based organization to study key financial technologies for central banks. The project was originally named Inthanon-LionRock, referencing the highest peak in Thailand and the iconic hill in Hong Kong. The new name hints at a more inclusive project that is open for others to join.

It is too early to know where the project might lead, but it aligns with Beijing’s long-term ambition to use its sovereign digital currency to boost the use of the yuan in international payments. While the proof-of-concept project is currently an alliance between just Beijing, Hong Kong, Bangkok and Abu Dhabi, backing from the BIS means it is supported by an organization owned by 63 central banks.

The deal also comes weeks after the PBOC’s Digital Currency Institute set up a joint venture with SWIFT, the dominant network facilitating international payments between banks.”

Chuck again… This has got to be a real pain in the side of the U.S. having China, a communist country, beat them out of the starting gates with a digital currency…. I’m just saying…  But you know the hype that will come with the U.S’s digital currency that it has to be the best there is, and all that comes with that… 

Market  prices 3/10/2021: American Style: A$ .7698,  kiwi .7158, C$ .7905, euro 1.1890, sterling 1.3870, Swiss $1.0736, European Style: rand 15.3123, krone 8.4766, SEK 8.5210,  forint 308.83,  zloty 3.8474,  koruna 22.0566, RUB 74.10, yen 108.80, sing 1.3471, HKD 7.7625, INR 72.93, China 6.5139, peso 21.18, BRL 5.8431,  Dollar Index 92.11,  Oil $64.29,  10-year 1.55%, Silver $25.74, Platinum $1,169.00, Palladium $2,360.00, Copper $4.04, and Gold… $1,712.10

That’s it for today… Except to sent a great BIG Happy Birthday to my good friend Rick Baur… it’s also the birthday of friend Chris Landers…  In the old days before I began to spend my winters in S. Florida, I would have Rick out to my office and we would share a veggie pizza to celebrate his birthday…  My spring training buddies  aren’t coming to Florida this year…  So, I won’t see Rick, Duane, and Kevin, aka webbie, until I get back home in April…  If they thought my Roger Dean Stadium seats were great before, they would love the ones I’m sitting in this year! But so bad, so sad…  Traditions… And that’s all I have to say about that!  Seals & Crofts take us to the finish line today with their song: We May Never Pass This Way Again…  That was a song that was big when I was a senior in high school, I remember nominating it for our Class Song, but some other stupid song won instead… Oh, well water under the bridge… I hope you have a Wonderful Wednesday today, and will continue to Be Good To Yourself!

Chuck Butler

 

March 9, 2021

*Currencies & metals rally overnight… 

* Asian retail Gold buyers return! 

Good Day… And a Tom Terrific Tuesday to you! Another tie for my beloved Cardinals yesterday. I believe that I’ve seen more ties (3) so far this year, than I’ve seen total through the years! During the game, that I attended with youngest son Alex, there were probably at least 4 weather fronts that moved through… I had a light pull over that I kept putting on and taking off! No more games for me this week until Friday. And Friday’s game will be a night game… Something rare for the Cardinals at Roger Dean Stadium.  Maybe I’ll be able to get back to my regular morning routine this week… We’ll have to see, eh?  Oh, my oncologist sent me a message yesterday telling me that my bloodwork looked normal and that everything is good… The late great, Leon Russell greets me this morning with his song: Delta Lady… 

Well… after the onslaught of dollar buying that began last Friday and carried through to the overnight session of Sun/ Mon. Things calmed down a bit on Monday… And while the dollar buying continued it was more muted buying than what we saw in the previous two sessions.  The Dollar Index on Monday closed the day at 92.31. Gold got whacked again, losing $17.20 on the day to close at $1,683.90, and Silver lost 11-cents to close at $25.20… 

The GATA folks sent me a link to an article by Jan Nieuwenhuijs, formerly known as Koos Jensen…  Koos was his writing name, and now he’s just going with his given name of Jan Nieuwenhuijs…  In the article, Jan attempts to explain why Gold keeps getting whacked…  Let me see if I’ve got this straight…  The 10-year Treasury TIPS (Treasury inflation protection) is seeing a rise in the yield, and a rise in the inflation fears,  So… what you do with a TIPs bond is you take the given or bought yield, and add in the the current inflation rate to the stated yield…  So, if a TIPS buyer gets his bond at 1% yield, he then can add what ever inflation is running to that stated yield…  For example… if you own a TIPS at 1% yield, and inflation is running at 3%, the TIPS owner gets 4% total…

Now, yesterday, I went out on a big fat limb, and said that I thought that the Fed would soon implement a new round of Operation Twist, where they sell the 2&3 and maybe the 5 -year Treasuries and buy the 10-year Treasury bond…  This would bring about a flood of buying which would drive the price of the bond up, and the yield down…  So, if this plays out the way I see it playing out, then the yield on the 10-year Treasury will be brought down, and thus remove the buying of the bond, and bring back a bid for Gold…

Just about 10 days ago, the Treasury held an auction on the 7-year Treasury note… And the interest in the bond was very, very weak…  Normally, the primary dealers are left with about 30% of an issue to buy… But the foreign interest was so weak for this bond, that the primary dealers were left with over 65% of the issue to buy… Uh-oh…  For you may remember me telling you a couple of weeks ago that the primary dealers had already told the Fed and Treasury, no mas on buying more Treasuries…

This means that the Fed is buying the bonds… Demonetizing them…. SHHHHHH, don’t say that out loud, for if the markets get wind of the Fed demonetizing the debt, there will be hell to pay…

OK, in the overnight markets last night… There was no dollar buying overnight, and the currencies rallied, along with Gold, which is up $25 in the early trading today…   I wanted also to point out something that I think is relevant…  A couple of years ago, the Swedish krona passed the Norwegian krone and has remained the stronger of the two currencies since… Until now… The krone has passed the krona once again, and things are back to normal…  I just never got the idea that the krona was more valuable than the krone… 

Of course, the krone has the double dose of support, from the euro and the price of Oil… And with Oil rising, this all makes sense once again for the krone. 

The price of Oil, which late last week, soared higher, has seen that lofty price of $67 at the close of business on Friday, get eaten away and this morning it is trading with a $65 handle… The 10-year Treasury yield also saw some slippage and came back from a 1.6% high, to 1.53%… Has the new Operation Twist began without any public notice?  Ahhh grasshopper, one never knows for sure, and we may not know for sure until the Fed is finished and they then want you to know that they saved mankind and the life of wine and roses…

I have to tell you this because it’s important to know…  I had a dear reader ask me if yields continue to rise will they be the death knell for Gold…  And I replied, “Well, if rates are rising because the economy is running on all 8 cylinders, then Gold could suffer… But if rates are rising in reaction to rising inflation, ala the 70’s, then Gold should bask in the sun with a plethora of buying…  Whenever someone tells me that Gold can’t survive in a high interest rate environment, I point out the 1970’s… Treasury yields were north of 15%, and inflation was running very high, and Gold… it had one of its best decades in its history… So, don’t even begin to tell me that interest rates along can hurt the price of Gold…

I recall the days of high interest rates fondly, for I was brought along to the Mark Twain Bond Dept., to trade short term instruments, CD’s BA’s, T-Bills, etc. I recall making clients very happy with T-Bill yields above 12%…  I also ran a repo book… and the rates on those short term repos were something to write home about!  Sure inflation was eating away at my earnings, but I was young then, and figured that things would all balance out… They didn’t of course…

I remember years later, talking with a former colleague, Neil, about how Germany could use some inflation, and he vehemently opposed me saying that… But it was true, a country needs to have a small dose of inflation to keep things moving along… Deflation shuts everything down, so to speak… It’s a fine line between a small dose of inflation and large does of inflation… Our Fed, and all their genius economists they employ, are shooting for a large does of inflation… And once it begins, I don’t think the Fed has the arrows in the quiver to stop inflation from running away…

Our friends (NOT!) at OPEC seem to be confused as to what it is they are attempting to achieve with the price of Oil… So, whenever it is that these guys get their acts together, then we will see a real direction of the price of Oil…

With the price of Oil higher these days, it does bring back some of the fracking / shale Oil producers as they can book a nice profit from this rise of the price of Oil. Oh wait! The new administration is against fracking! So, the administration is telling all you shale Oil Producers, take your rigs and go home… don’t go away mad, just go away! 

As I told you yesterday, the U.S. Data Cupboard  was lacking at best for economic data yesterday, and today’s docket also… Today’s Data Cupboard has the Small Business Index, something we’ve never followed, and probably won’t begin to either!

To recap… The onslaught of dollar buying the previous two sessions, finally backed off some. The dollar was still getting bought, but not by the truck load as before… Gold got whacked again, and one of Chuck’s fave writers attempts to explain why this is happening to Gold right now… The overnight markets have turned the tables on the dollar and it began to get sold again. Gold is up $25 this morning, and the Dollar Index has fallen back to 91.99… So, it’s a Turnaround Tuesday! 

For What It’s Worth… With the price of Gold much lower than it was a couple of months ago, the word on the street is that the Indian and Chinese retail buyers have flocked to coin dealers to buy Gold at these suppressed prices… And this morning this article talks about the Indian Gold buying and it can be found here: Indian Gold Buyers Pile in as Prices Dip to One-year Low (news18.com)

Or, here’s your snippet: “Retail consumers in India continued to buy up physical gold this week as prices retreated to a near one-year low, while lower rates also injected fresh activity in other hubs, especially Singapore.

Dealers charged up to $5 an ounce over official domestic prices, inclusive of 12.5% import and 3% sales levies, compared with last week’s premium of $4.

“Demand has significantly improved in the past few days. Retail buyers are making purchases, especially for weddings,” said Mangesh Devi, a jeweller based in Satara in the western state of Maharashtra.

On Friday, local gold futures fell to 44,217 rupees per 10 grams, a trough since April 7.

Jewelers were also making healthy purchases in the first half of the week, but now a few of them have paused expecting further fall in prices, said a Mumbai-based dealer with a bullion importing bank.

“Jewelers don’t want to get stuck with high cost inventory,” the dealer said.

In Singapore, premiums of $1.60-$2 an ounce were charged, with strong demand arising from low local prices.

“We’ve seen an increase in demand, in particular from retail clients, for both gold and silver, as prices have come down a bit,” said Brian Lan, managing director at dealer GoldSilver Central, adding that wholesalers are also covering their short positions.”

Chuck again… Well it sure is nice to see the Asian retail buyers stepping back to the Gold window to buy Gold once again!  U.S. investors should take this Asian buying as a clue, and get out and buy their own stash of Physical Gold ASAP! 

Market  Prices 3/9/2021: American Style: A$ .7702,  kiwi .7166, C$ .7936, euro 1.1900, sterling 1.3877, Swiss $1.0740, European Style: rand 15.3609, krone 8.4796, SEK 8.5255,  forint 308.37,  zloty 3.8553,   koruna 22.0726, RUB 74.37, yen 108.81, sing 1.3457, HKD 7.7630, INR 72.91, China 6.5166, peso 21.23,  BRL 5.7323,  Dollar Index 91.99,  Oil $65.73,  10-year 1.53%, Silver $25.82, Platinum $1,174.00, Palladium $2,390.00, Copper $4.05, and Gold… $1,709.20

That’s it for today… Well, I tried to stay awake for the Blues game again last night, but fell asleep in my recliner, and then woke up at 3 am… UGH!  The Blues  lost for a second consecutive game in overtime…. double UGH!      The Blues finished a long road trip last night, a very successful road trip I must say!  Alex and Grace left for the airport this morning, and now we will not have any guests until the 20^th, when daughter Dawn and her family will arrive for a week…  I was walking into the condo yesterday, and I heard, and felt a pop in my right knee… about 10 days ago, it did the same thing and hurt like hell for a couple of days… Then it was better, until… it wasn’t! UGH!  9 days until my annual spring vacation begins… It’s getting close.. ” I have to say that going to the baseball games this year is very strange, in that there’s only 1,400 people in the stands that seats 6,700, and another 1,000 in standing room…  But there are no lines at the concession stands… no lines in the bathrooms….  No lines to get into the stadium…  But… I would much rather have it like this than to not be in the stadium at all! Nazareth takes us to the finish line today with their song: Holiday… “ Mamma, mamma please, no my face lifts, I don’t know which one you is” I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

March 8, 2021

* currencies & metals  both get sold by the tuck load

* What will the Fed do to limit the 10-year’s yield rise? 

Good Day… And a Marvelous Monday to you! What a weekend! Besides Saturday which had some rain, the weather was great, and youngest son, Alex, and girlfriend, Grace, enjoyed the warm sun and ballgames!  My teams did not have good weekends… Mizzou and SLU lost their respective basketball games… I think Mizzou will make the NCAA Tournament, but SLU, is going to just miss making it… The Blues split a pair of games, but the way they lost the one game was disheartening, as they gave up a 3-goal lead…  I should be hearing back today or tomorrow from my oncologist about my blood test last week…  No worries, for me…  The Rolling Stones greet me this morning with their song: I Can Hear You Knocking…  Great guitar work in this song by Keith Richards…

Well, Friday is a day that most currencies not named the dollar, would like to forget… The dollar bugs came out of the wall boards and soon were dancing in the streets, as the dollar climbed higher and higher, with the Dollar Index climbing to 91.94, from the last reading on Wednesday last week of 90.93…  So, it appears to me that what was once looking like a new weak dollar trend, has been thrown to the wayside, and we’re back to dollar strength… 

I’ve said this before, so forgive me if I sound like a broken record, but I just don’t get this dollar strength… Friday’s dollar rally started with the BLS Jobs Jamboree, which said that the U.S. created 379,000 new jobs in February… Wait! What?  Yes, 379.000 new jobs created..  Even if you back out the jobs created from thin air, 131,000, it was still a bang up job of job creation in February…  From what I could see in the numbers the largest gains were in hospitality and leisure…   You know… bartenders, etc.  Not that there’s anything wrong with a bartending job, it’s just that it’s not going to allow you to live a life of luxury… Or, contribute to the local economy…

So, the markets got al ga-ga over the jobs numbers, and didn’t stop to think that most of these jobs created in February, if they were created at all but that’s a story for a different day, are jobs that will not help the economy grow…   But it is what it is, right? And so today we pick up the currencies from the canvas…  

Gold ended the day on Friday with a $3.20 gain on the day… Although at one point in the day, it was must higher… Silver lost 11-cents on the day… Gold’s closing price was $1,701.10, and Silver’s was $25.32…

In The overnight markets… There’s been more dollar buying and the Dollar Index is 92.30!  The currency pendulum has really swung back in the dollar’s favor. Shoot Rudy, even with the price of Oil soaring, the Petrol Currencies can’t find a bid, and the Aussie dollar (A$) and kiwi, two of the stronger currencies recently have given back most of their gains… 

Last night before I went to bed, I checked Gold’s price and saw it up $12, but that didn’t last as overnight Gold got sold and in the early trading today the shiny metal is down $14.40… And Silver has given back another 14-cents…  Well… according to the Big Mac Index, the dollar was overvalued before this turn around… I would say it’s really overvalued now…

Last week, GDP for the 4^th QTR was revised to 4.1%…  What a bunch of bunk as far as I’m concerned… Remember when I told you that in the 4^th QTR Consumer Spending was down 10%? So, riddle me this Batman, how does an economy that depends greatly on consumer spending, grow at its fastest rate in over 10 years when Consumer Spending was down 10%?  And that got me thinking…

OK… do you remember 2013?  It was not only the 100 year anniversary of the ill-fated implementation of the Federal Reserve, by the all-time worst president, but it also was the year that the GDP calculations were changed to include the amount spent on intellectual property outlays such as pop song production and drug patents… I recall talking about this back then and how stupid it was, as who could calculate intellectual property? But the inclusion of these two items would increase GDP by 2-3% per year…  I got to thinking about this because a dear reader reminded me that I had talked about this back in 2013…

So… As I’ve documented here for many years that since the Great Recession, we as a country have only averaged 2.10% GDP every year…   So, let’s us use the previous way GDP was calculated before those hedonic adjustments were added in 2013, and we end up with 0% growth for the last 7 years! And the 4^th QTR real GDP was only 2%…   But let’s not get in the way of all the spin doctors’ singing about how great this economy is…

And that got me thinking about what could be done here in the U.S. to turn things around…  I thought long and well, I thought long… and came up with this…

I think it would behoove us as a country to elect a leader that would have the intestinal fortitude to bring back the “Heyday” of 20th Century capitalism, when workers’ wages were still on the rise, when college tuition and health care were still affordable, and when the American Dream was still within reach of the average guy. People were happier then because they felt that if they applied themselves, worked like hell, and stashed their savings in the bank; they’d eventually reach their goal. But that’s not true anymore. People are much more pessimistic now and no longer believe that America is the land of opportunity….  I’m just saying…

And don’t think for a moment that little old me came up with that thought on his own…  Russian President, Putin, is the one that came up with that thought… Let that sink in your head a bit… now we’ll move on… 

Yes, the American Dream…  It’s still alive, but barely has a pulse…  And that’s a shame, for what will the young people starting out in jobs use as their inspiration to do a good job?  Oh well, I’m an old retired guy and know that I have nothing to do or add to help young folks with their, whatever it is, American Dream…  And the folks that we elect should be  all over this like a cheap suit… 

The price of Oil soared higher at the end of last week, and this morning, the price of Oil is trading with a $66 handle!  That’s quite a jump from last midweek’s price of $60.83…   Whatever it is that pushed the price this higher in what seems like a blink of an eye, I know that I paid about 30-cents more for gallon of gas than I did the last time I filled up…  

The 10-year Treasury’s Yield rose to over 1.60%, but then fell back to 1.58% by the end of the day… This rise in the yield is really beginning to grab the attention of the Fed Heads, Treasury geniuses, and economists…  I truly believe that the Fed is not going to sit idly by and watch the Treasury market dictate rates to them…  I, of course have always said that the bond markets should set the interest rates, and not the Fed…  but since that’s not the case, I believe the Fed will introduce another round of Operation Twist… Selling short term Treasuries and buying the 10-year, thus brining yields back under control… Mark my word on that folks… The Fed is NOT going to allow the bond markets to dictate interest rates, or the Treasury yield curve!

The U.S. Data Cupboard this week will be lacking for data again…  And there’s really nothing today or tomorrow to speak of, and it won’t be before we get to Wednesday when the stupid CPI (consumer inflation) for February prints… I’m thinking that there’s got to be some give in the CPI print and that inflation will begin to show up… The so-called experts think that inflation will rise by .4% in February… I’m thinking that even with all the hedonic adjustments in the CPI, that it will show real inflationary pressure…  

There is one thing I want to point out from here on out…  Last March we began the shutdown of the economy… So, going forward, anytime some economist tries to make 2021”s prints look good, by comparing this year with last year, will be trying to pull the wool over your eyes!   So, keep that in mind, and I’m sure I will remind you of this…

To recap… The currencies would like to forget about what happened on Friday, as the dollar bugs came out of the wall boards and began dancing in the street… The Jobs Jamboree said we created 379,000 jobs in February, and Chuck calls them out on that number… Gold found a way to gain $3.20 and Silver lost 11-cents on the day…  Chuck talks about how we need to get back to what we were good at… working hard, and saving money…  And the Data Cupboard this week is lacking at best…

For What It’s Worth…  Well, for along time now I’ve expressed my liking of the Russian ruble… But on Friday, that liking was put to the test, due to the word traveling around that the U.S. and U.K. could be adding additional sanctions on the Russians… And that threw some cold water on the ruble’s recent attempt to rally alongside the rally in the price of Oil.  So, now the ruble has to go back to the drawing board and start over… This article talks about those sanctions and can be found here: Ruble Rocked by Rumors of Tough New Sanctions – The Moscow Times

Or, here’s your snippet: “ The Russian ruble and government bonds sank Friday morning on reports that the U.S. and U.K. are considering a second round of tough sanctions against Russia over the poisoning and jailing of Kremlin critic Alexei Navalny.

Washington and London could be prepared to slap asset freezes and travel bans on Russian oligarchs deemed supporters of the Kremlin and put new restrictions on trading Russia’s government debt, Bloomberg reported, citing anonymous sources familiar with the deliberations.

That would be the most dramatic escalation of sanctions against Russia since 2018, when the U.S. shook global markets by placing Russian metals giant Rusal — controlled by oligarch Oleg Deripaska — on its sanctioned list, triggering a surge in worldwide commodities prices.

Placing more restrictions on Russia’s sovereign debt has been dubbed the “nuclear option,” as it could trigger a multibillion dollar sell-off of Russian bonds and hike borrowing costs for the Kremlin.”

Chuck Again…  One of these days, we’re going to kick the dog while it’s down and it is going to jump up and bite us…  I’m just saying…

Market  prices 3/7/2021: American Style: A$ .7657,  kiwi .7114,  C$ .7878, euro 1.1865, sterling 1.3836, Swiss $1.0708, European Style: rand 15.5090, krone 8.5813, SEK 8.5830,  forint 309.71,  zloty 3.8743,  koruna 22.2598, RUB 74.31, yen 108.60, sing 1.3485, HKD 7.7687, INR 73.28, China 6.4912, pesos 21.51, BRL 5.6892,  Dollar Index 92.30,  Oil $66.23,  10-year 1.59%, Silver $25.18, Platinum $1,138.00, Palladium $2,388.00, Copper $4.00, and Gold… $1,686.70

That’s it for today… Well, we’re coming into birthday season… This week will have a few and then the following week more, and then there’s my birthday later in the month! You know, I never really got into celebrating a birthday, but, ever since I was faced with the idea that I may not get to celebrate any future birthdays, I have not taken them for granted any longer! Each year, that I grow older, I thank the Good Lord for allowing me to live this long and watch my kids become adults, and have kids of their own… NCAA Tournament Selection Sunday will come at the end of this upcoming weekend… And yesterday I sat in the seat I’ll be sitting in for the remaining games at Roger Dean Stadium… Right behind home plate! In the wheelchair section of course, but I’m not going to complain one iota about my view of the game! The Electric Light Orchestra (ELO) takes us to the finish line today with their song: Telephone Line…  Oh, Oh, telephone line, give me some time, I’m living in Twilight…  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

March 3, 2021

* Currencies & metals rally on Tuesday, but get sold overnight!

* Aussies do something they haven’t done in 60-years! 

Good Day… And a Wonderful Wednesday to you! Well, at the last minute yesterday we decided to go to the baseball game, where the Cardinals were the visiting team, but still at Roger Dean… There weren’t 1,000 people there, and we had some great, hot,  seats out by the Marlins’ bullpen… But a nice breeze was blowing in and we watching another tied game… My good friend, and spring training buddy, Gus, said “well if they tied every game it’ll be easy to remember their record this year”…  I laughed, and my adult beverage almost, oh well, I don’t need to go further…  My former boss, and good friend, Frank Trotter will like this one… Jethro Tull greets me this morning with their song: Locomotive Breath… “And old Charlie stole the handle, and the train it won’t stop going, no it won’t slow down”

Well… the obsessive dollar buying stopped on Tuesday… The Dollar Index, which began the day, yesterday at 91.15, ended the day at 90.78…  And Gold found a way to hold on to its early morning gain and add to it for the first time in what seems to be a month of Sundays! Gold began the day at $1,730.40 and ended the day at $1,739.30, up $13.50 on the day, and Silver gained 23-cents to close at $26.50…   So, all-in-all, it was a good day for the currencies and metals on Tuesday…

It’s nice to see when the price manipulators decide to back off for a while and allow the currencies and metals to run higher isn’t it? I wonder, whenever the price manipulators decide to stick their noses into the markets, just what it is they are trying to achieve? I mean I know that they are under the guidelines of the Gov’t to keep a lid on things that might persuade investors from selling dollars, but besides that, what else are they attempting to achieve?  Because I get so fed up with them that it makes me want to yell at the kids… Well, I don’t have kids at home any longer, so that wouldn’t do me any good… Maybe yell at the walls, because no matter where I am when I’m writing, there are always Wall around to yell at! Unlike kids who seem to come around when their hungry, or want something!  OK… I’m just kidding there… I thought I would do my best impression of the Great Mogambo Guru!

In the overnight markets, Gold has seen the price manipulators return and is down $15.20 in the early trading today… Silver isn’t doing any better and has given back 23-cents this morning. The Dollar Index starts the day at 90.93, up a few shekels from the close of 90.78 yesterday.. 

There was good news to support the recent rise of the Aussie dollar (A$), yesterday…  For the first time in 60-years, The Aussie economic growth was above 3% for two consecutive quarters!  I would say that’s a trend, but my wife says I don’t see very well, so I’ll leave that discussion for someone else… HA!  This report really stunned the economists that follow Australia, but that’s nothing new… Two handed economists… “On one hand we could see this, and on the other hand we could see this”…  Worthless! 

Yesterday, I talked briefly about how Copper was rising in price and reflecting inflation fears… And then I saw this on Twitter, “Framing lumber prices are soaring as are foodstuff prices. This headline: “Soaring lumber prices add $24,000 to new house price since April”. And my favorite headline: “U.S. Homebuilders Urge Biden to Help Ease Sky-High Lumber Costs.”

Inflation is all around us folks, and sooner or later it will be reflected in the CPI (consumer price index) but… the CPI Index, as I’ve explained before was changed under the Clinton administration to allow hedonic adjustments and changes to allow inflation to remain low, and keep interest rates low, to allow everyone to buy a house…  The problem is….  Even house prices are going through the roof right now! It’s everywhere, It’s everywhere, it’s everywhere!  Inflation that is… and you had better get your inflation hedges in place, which in my opinion is Gold & Silver…  I’m just saying…

The Fed has said that they will allow inflation to rise past their 2% target… And I’ve said that once inflation is rising it will be difficult for the Fed to stop it…  Think about that… OK, now that you’ve thought about it, let me see if you’re thinking like me (heaven help you!)   To combat inflation a country increases their interest rates…  if interest rates were increased to a normal level and not even one associated with fighting inflation, which would be 6%, The bond servicing level on our outstanding debt would become a major problem for the U.S. and probably cause it’s financial system to collapse! I’m dead serious about that folks… those kind of interest rates would put the kyboshes on this economy… and financial system. 

Jerome Powell claims that the Federal Reserve is not blowing up bubbles, there is no inflation threat, and that its easy money policy will continue for years…  Yeah, right to all of that! The Fed has blowing the stock markets bubble since Big Al Greenspan, and they will not idly sit by too long as inflation rises…  I’m just saying…

And before I leave this discussion about inflation… This was on Reuters.com… “The world’s biggest central banks will happily live with higher inflation and investors now aggressively betting on a quicker end to monetary stimulus are all but certain to be proved wrong.

After a decade of underestimating inflation, central bankers in the United States, Europe and Japan have every reason keep money taps open and policymakers are even rewriting their own rules so they can let price growth overshoot their targets.

If anything, central banks are more likely to nudge up stimulus, particularly in the euro zone, keeping borrowing costs depressed and ignoring the inflation hawks at least until growth is back to pre-pandemic levels — and not just fleetingly.”   Chuck again.. OMG!

OK… let’s talk about something else, for that discussion was giving me a rash! Ok… I guess I don’t have anything else on my mind this morning, except inflation and how Central Banks around the world, including the Fed will ignore the rising inflation until it’s too late… It’s too late baby, now, it’s too late, thought we really did try to stop inflation…

How about some “news from the weird”…  I read on Bloomberg.com this morning that Air Jordon sneakers are now an Asset Class…  Wait, What? That can’t be, but this was the headline, “Sneakerheads Have Turned Jordans and Yeezys Into a Bona Fide Asset Class”…   Go figure, pretty soon this so-called asset class will be more valuable than Bitcoin!  HA! 

The U.S. Data Cupboard this morning is still lacking… What gives with this schedule for the data releases? I don’t get it… makes no logical sense to me, but… it is what it is, right?  So, the Data Cupboard today has the ADP Employment Report for February… This report is supposed to be a harbinger for the BLS Jobs Jamboree that will come this Friday… Last month the ADP reported 174,000 jobs created for January, and the BLS reported just 49,000 jobs created…  I’ve always said that the ADP report should be the jobs report that the markets use, because ADP has the paycheck systems for just about every business, and they would know when employees have been let go, or hired before the BLS gets around to calling in their surveys… 

To recap… The currencies and metals both rallied on Tuesday, but are back on the chopping blocks this morning, and overnight.  Chuck points out how inflation is rising everywhere… And how this could be the end-all for the financial system that we’ve all come to love…  Australia did something they hadn’t done in 60-years!  And there’s a new asset class folks… and you’ll never guess what it is, so you’ll have to go back and read that part to find out! HA! 

For What It’s Worth…  Well, I’ve talked a lot about Russia’s plan to de-dollarize through these past couple of years, and how they’ve recruited China to join them… Well, this article was featured on Ed Steer’s letter this morning, and so it qualifies as worthy of being a FWIW article! This is about how Russia could achieve their de-dollarization easily, and it can be found here: Russia could ditch dollar by lifting tax on gold purchases – economist — RT Business News

Or, here’s your snippet: “The Russian government could achieve its goal of de-dollarizing the economy by taking one simple step: dropping the tax it currently charges its citizens for the purchase of physical gold, an economist has said.

Russian citizens would get rid of their dollar savings to buy up gold bullion if the 20-percent value added tax (VAT) were eliminated, according to economics professor Valentin Katasonov, as cited by Russia’s business news agency Prime. He noted that the potential selloff would inevitably drag the greenback down.

However, the economist said that the country’s Ministry of Finance is likely to reject moves to lift the VAT as it would probably cause revenue shortfalls in the federal budget. 

According to Katasonov, Russians could stop hording U.S. dollars if investment in gold was more profitable. This could trigger a domino effect in many other countries that would welcome an opportunity to challenge the exclusive status of the greenback, he added.

But the expert sees this reason as a weak excuse, since the number of investment transactions in gold is so small that the loss would be insignificant in the overall context of the Russian budget.”

Chuck again…  Well, I like Ed Steer, had thought that this tax had been reported as removed a long time ago, but then I guess it apparently wasn’t!  This is scary stuff when you consider that a major country wouldn’t use dollars at all…  That could be a virus that spreads across the world… I’m just saying… 

Market  Prices 3/3/2021: American Style: A$ .7810,  kiwi .7276,  C$ .7918, euro 1.2062, sterling 1.3951, Swiss $1.0900, European Style: rand 14.9134, krone 8.4846, SEK 8.3929,  forint 301.52,  zloty 3.7586,   koruna 21.6706, RUB 74.08, yen 107.01, sing 1.3313, HKD 7.7568, INR 72.88, China 6.4694, peso 20.67, BRL 5.6606,  Dollar Index 90.93,  Oil $60.83,  10-year 1.44%, Silver $26.63, Platinum $1,206.00, Palladium $2,416.00, Copper $4.20, and Gold… $1,724.10

That’s it for today…  And unfortunately, tomorrow and this week too… I received confirmation yesterday that I am to report to the hospital for a blood test early in the morning… So, that pretty much puts the kyboshes on writing tomorrow morning… they sent me a QR code to access the testing area, strange ways we do things these days, eh?  It’s a game day again today!  My beloved Cardinals have 12 hits in two games this spring, and only one of them was a ringing extra base hit! But hey! the other teams have the same problem, as pitching is dominating right now… That will change as spring goes along… Hopefully!  The Blues come on at 9:30 tonight, so once again I’ll only be able to watch one period, before feeling sleepy!  Ok…  Clarence Carter takes us to the finish line today with his 70’s song: Slip Away…  I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself! 

Chuck Butler

 

 

 

 

March 2, 2021

* Currencies & metals continued to get sold on Monday… 

* What’s the 10-year Treasury yield’s tipping point? 

Good Day… And a Tom Terrific Tuesday to you! What a day yesterday! Simply beautiful and we didn’t do much but relax in the sun! We ended the day with a trip to the Palm Beach Ice Cream Co. I didn’t partake since I’m supposed to be watching my sugar intake…  But a fun day, Monday, was had by all! My St. Louis U. Billikens won their game last night, improving to 13-5… And the Blues played late last night out in Anaheim, so I had to check the score this morning…  And I see that they won 5-4…   The Blues have really hit a bump in the road recently, with a lot of injuries, and losses… But two consecutive wins for them now, maybe has turned things around… We will have to wait-n-see…  Johnny Rivers greets me this morning with his song: Summer Rain…. “Summer rain taps at my window… “

Well, another day of dollar strength yesterday, has me wondering what the heck are currency traders doing?  But it is what it is, and so, I won’t harp on and on about how the U.S. is going to print $1.9 Trillion in new dollars, and knowing that alone should have currency traders lining up to sell dollars… But Nooooo!  And so life goes on… But eventually this will all come crashing down on those dollar holders… I’m of the full mind and thought that this will happen…

Gold also couldn’t find a bid after it had gained $7.80 in the early trading, and found itself down $10.80 on the day to close at $1,525.80. Silver lost 17-cents on the day to close at $26.63…  That’s a two day losing streak for Gold, folks… But again, I’m not going to harp on and on about price manipulation today… We all know it’s there right before our eyes, and there’s nothing we can do about it, except buy physical Gold by the truck load and make the short position holders of Gold feel the hurt…  That would make my day, week, month, year, decade… 

The price of Oil also took a shot to the midsection yesterday, and lost $2 or so…. The 10-year Treasury bond saw some buying yesterday, and the yield dropped 3 BPS on the day…  I don’t know if you read the FWIW article yesterday, but it was a very important article to make you aware of the funding problem the U.S. is experiencing…  Fed Chairman Powell, says that demand for Treasuries is strong… But I beg to differ with him on that… If that’s so, I would like to call him on that, and ask him why then are Treasury yields rising?  You see, as bonds are bought, the price rises, and that causes the yield to drop..  So, if the demand is so strong, why are yields rising, Mr. Chairman?

In the overnight markets, the dollar buying has continued, but not as damaging as the previous two days…  The Dollar Index yesterday morning was 91.06, and this morning it is 91.15, so, not much movement but some dollar buying nonetheless…  Gold is up $4.60 in the early morning trading today, but since it couldn’t hold yesterday’s early morning gain, this doesn’t look promising to me…  Silver is down 21-cents this morning, so the two kissin’ cousins are going in opposite directions today… 

OK… here’s something that scares the bejeebers our of me…  According to zerohedge.com “27% Of All Household Income In The US Now Comes From The Government.” Wait! What? Yes…  going further into the article on zerohedge.com, “Following today’s release of the latest Personal Income and Spending data, Wall Street was predictably focused on the changes in these two key series, which showed a surge in personal income (to be expected in the month when the $900BN December 2020 stimulus hit), coupled with a far more modest increase in personal spending.

But while the change in the headline data was notable, what was far more remarkable was data showing just how reliant on the US government the population has become.

We are referring, of course, to Personal Current Transfer payments which are essentially government sourced income such as unemployment benefits, welfare checks, and so on. In January, this number was $5.781 trillion annualized, which was not only up by nearly $2 trillion from the $3.8 trillion in December it was also $2 trillion above the pre-Covid trend where transfer receipts were approximately $3.2 trillion.”

Chuck again… Ok, simple question, tough answer… What happens when the Gov’t’s transfer payments dry up? So, spend those Gov’t dollars while you can, spend, spend, spend… not only will you help inflation rise, but also run you dry… And once you’ve been run dry, there’s no more rain / dollars falling from the sky… That is until they implement Universal Basic Income!   And that thought sends shudders down my spine!

So, let me take you back in time… not too far back, just to September 2019, months before anyone in the world had contracted the Covid-19 virus… Remember me ranting and stomping my feet that the Fed was bailing out the banks that participated in the Repo Market?  There was a total of $9 Trillion dollars that were applied to allow the repo market participants to continue to borrow funds at cheap rates.  I kept pointing out that this was not a good thing, and that someone needed to explain to the public why the repo markets needed these funds, and to whom was receiving them… 

Yesterday, Pam & Russ Martens of Wallstreetonparade.com brought September 2019 back to everyone’s,  that reads their letters, minds… Their point was that no one in Congress is of mind to investigate where the $9 Trillion went… And so it’s just gone… flittered off into the wind…  We have 20 Million people without jobs, collecting unemployment, we have a large number of businesses that have closed since September 2019, and people that have lost their wills to carry on, and somehow the members of Congress don’t feel it’s worth their time to investigate where the $9 Trillion went…  But they have time for other nonsense… I’m just saying… 

Doesn’t that kind of stuff just make your skin crawl? It does mine, and longtime readers will recall me stating over and over again back in 4th QTR of 2019 that there were problems with the banking industry then, otherwise they wouldn’t need the Fed to intervene in the repo market.  Yes, we are 18 months removed from that time, and the banks are still operating… So, maybe it doesn’t matter?  NOT!  This just means that they have papered over their problems, and moved on down the line, but when the paper begins to get pulled back… Uh-Oh….  

There was a surprise in the U.S. Data Cupboard yesterday, when the ISM Manufacturing Index rose higher than expected and went from 58.7% to 60.8%…  Well, that’s all good and such, but what it should do in my humble opinion, is really ramp up the inflation fears… 

Speaking of inflation fears… You know all the while, Gold & Silver are seeing the price manipulators showing up at the COMEX with arms full of short contracts in Gold & Sliver, that the base metal, Copper, keeps pushing the inflation meter higher… Copper is up to $4.18, and trades each day with a strong bid…  I’m telling you now, so maybe you’ll listen to me later, that Copper rising in price is telling us that inflation is on its way, if not already here… 

The U.S. Data Cupboard only has Motor Vehicle Sales for February today, and that’s not anything that’s going to move the markets, so we’ll just move along for these are not the droids we’re looking for!

To recap… More dollar buying yesterday and overnight, has the currencies & metals  down on the canvas and the Referee is beginning his 10-count! Chuck talks about a problem with 27% of U.S. Household Income comes from the Government… Yes, that’s a growing problem folks… One that needs to be addressed by Congress… Another thing that needs to be addressed by Congress is what happened to the $9 Trillion dollars that the Fed gave to the banks participating in the repo market in Sept, 2019? 

For What It’s Worth…  Yes, with the two snippets above I could have had 3 FWIW articles for today…  But this is the one that gets the flood lights shined on it… I’ve spent some time recently talking about the rising Treasury yields, and when I saw this on zerohedge.com I thought this is interesting, as it’s about the tipping point for Treasuries, and it can be found here: BofA: 1.75% Is The “Tipping Point” For Bonds | ZeroHedge

Or, here’s your snippet: “Almost two months ago, Nomura correctly predicted that once the 10Y breaches 1.50%, stocks would freak out and sure enough that’s precisely what happened (with Nomura’s forecast becoming self-fulfilling and sparking a stop loss cascade one the 10Y hit 1.50% last Thursday, sending the 10Y as high as 1.61% in a matter of seconds following last week’s dismal 7Y auction).

So now that 1.50% is yesterday’s news, Wall Street is scrambling to define the next critical level for 10Ys beyond which there will be blood. As a reminder, yesterday Goldman hinted that 2.10% is what traders should be looking at, but that seems a lot, especially with many far more accurate forecasters saying that the Fed will have to engage YCC around 2.0%, and for that to happen stocks would need to crash first. Therefore, the next critical level is likely one between 1.50% and 2.0%.

One such level was proposed by BofA’s chief equity strategist, Savita Subramanian who today writes that “history suggests that 1.75% on the 10-yr (the house forecast and ~25bp above current levels) is the tipping point at which asset allocators begin to shift back to bonds” and thus sell stocks in the next wave of aggressive liquidations.

Why 1.75%? Because that yield on the 10Y is decisively above the S&P’s dividend yield, and where according to BofA “there is an alternative to stocks”. 

So after last week’s fireworks, will bonds continue to rise from the current level of 1.43%, and how fast until they reach the new “tipping point”? 

Nomura estimated

“that the 10yr UST yield is currently about 30bp above the fair-value yield implied by trend-following strategies. Short-covering by CTAs and other speculators for the sake of locking in profits may serve the purpose of reeling the 10yr UST yield back in.”

Chuck again…  Lot’s of talk about how the yield of the 10-year Treasury has about topped out, I believe can be misleading…  But, we’ll have to wait-n-see, now won’t we? 

Market prices 3/2/21: American Style:  A$ .7801,  kiwi .7264,  C$ .7906, euro 1.2034, sterling 1.3912, Swiss $1.0905, European Style: rand 15.0352, krone 8.5030, SEK 8.4243,  forint 302.26,  zloty 3.7692,  koruna 21.7258, RUB 74.18, yen 106.93, sing 1.3307, HKD 7.7570, INR 73.43, China 6.4638, peso 20.64, BRL 5.5994,  Dollar Index 91.15,  Oil $60.65,  10-year 1.44%, Silver $26.42, Platinum $1,191.00, Palladium $2,416.00, Copper $4.18, and Gold…  1,730.40

That’s it for today…  Well, we’re supposed to see some rain today, but no biggie, that will bring another cold front through, and our highs for the next few days will be in the high 70’s…  Again, still warm, and sunny!  The weather should be great for youngest son Alex’s visit this weekend… Alex has not visited down here since we moved to the 3rd Floor 3 years ago… As I look out the glass I see the ocean, and it looks like a lake today, with no chop or strong waves…  That means the wind has died down…  Once the rain goes through, should be another fun day!  3 Dog Night takes us to the finish line today with their song: Easy To Be Hard…  This is the live version from an album I had as a teenager, that I played over and over again, until it wouldn’t play any longer!   UGH!   I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler