Author: admin

September 14, 2020

* Thursday & Friday last week trading was Meh… 

* Velocity of currency is what the Fed needs to get their inflation! 

Good Day… And a Marvelous Monday to you! A strange weekend weather-wise here, with clouds, and sun, and cooler temps than are normal for this time of year…  Saturday morning, I got a big surprise, and it made me smile like the Cheshire Cat!  Former colleague at Mark Twain Bank, Neil George, sent me an email letting me now that a piece of my Sept. 9, Pfennig, had been picked up by Barron’s!  That’s right I said Barron’s! Years ago, Alan Ableson, quoted me in Barron’s, and that was also a highlight in my career…   I guess there’s hope for the media, if they think the Pfennig is worthy of being printed in their publication!  It costs currency to subscribe to Barron’s… So, being the tightwad that I am, I had Neil send me the publication… Can’t wait to see it!  The Marshal Tucker Bank greets me this morning with their song: Searchin’ For A Rainbow…

Thursday and Friday of last week were really NBD’s… (No Big Deals)  Gold for instance was up 40-cents on Thursday and down $6.50 on Friday…  Silver had the same kind of move… The currencies, however, held their gains from earlier in the week as the dollar bugs had nothing to buy on… The economic data from Thursday was the Initial Jobless Claims and they once again ticked higher than the previous week, and the Continuing Claims also ticked up from 29.21 Million last week to 29.61 Million the following week…  Nothing to get excited about there, right?  

Then on Friday, the stupid CPI (consumer inflation) printed for August and showed that inflation had dipped in August to .4% from .6% in July… So, that’s going the wrong way, eh?  (for the Fed Heads that is)….  You would think that after all these years of hedonically adjusting CPI that the Fed, needing to show that their efforts to get inflation rising was working, would send a memo to the bean counters, and tell them “no mas” on the adjustments, let’r rip!  For as long as the hedonic adjustments continue, The Fed is never going to see their target met….

Besides, as I’ve explained before…  the kind of inflation the Fed Heads are looking for won’t be gained until the velocity of currency begins to spiral higher… And until the currency grabs that the Fed holds goes to main street instead of Wall Street, we won’t see the velocity of currency rise… 

Things are so screwed up in this country when it comes to real, honest-to-goodness economic reports…. I’m just saying…  And have been saying for many a year now….  I’ve been writing the Pfennig for 28 years, now….  And I’m sure in those 28 years, I’ve pointed out the goofiness of economic reporting here in the U.S. a time or two… Do you think?

This week the Data Cupboard has a plethora of data to print, Like Industrial Production, Retail Sales, and so on… But none today…. So we could see more sideways movements in the currencies and metals today… This is a Fed Meeting Week though!  And that meeting will conclude on Wednesday afternoon, with their announcement, and then follow that up with a press conference for Jerome Powell…  I don’t expect anything of importance to be discussed at the Press conference, other than Powell, reiterating what he’s already said about leaving rates near zero for many years going forward….

I can always count on a good quote from economist David Rosenberg when it comes to the Fed, and I pulled this from his Twitter feed;” I realize who Powell actually is: the doctor with the blood pressure monitor at the hot dog eating competition! Investors gorge, get obese, but won’t die. The S&P 500 market cap/GDP ratio, at 132%, just took out the 2000 peak. We know how this ends, we just don’t know when.” – David Rosenberg on Twitter…

The price of Oil didn’t move much the last 4 days either, as those in the Oil business, are finding out, there’s just not enough demand for Oil…. (gas)  I read last week that the Oil tankers/ ships have reverted to storing their Oil offshore…. In the ship…. At sea…. Where there aren’t things like hurricanes and tropic storms brewing all the time this time of year!   You have to scratch your collective heads on that one and wonder, just what they’re thinking…. 

In the overnight markets last night and early this morning… The currencies are pushing higher VS the dollar, with the euro trading 1.1872 early this morning, things are looking like the dollar bugs will be on the run, or, the PPT will need to step in to curb the appeal for the euro, and other currencies…

The Russian ruble sure has been through hell and high water the last couple of months, with the price of Oil dropping, and their continued struggle to get past the gauntlet of economic sanctions from both the U.S. and the European Union, is turning out to be quite the difficult thing to do these days….  I’m still a believer of the ruble, as a viable alternative to the dollar…. But my beliefs are being shaken to the core these days….  I’m just saying… 

OK… Well, I had a lot of time to read this past week…. I’m almost finished with my book on Thomas Jefferson….  You know, I guess I learned this in school, but Jefferson was no fan of Hamilton….  As it was Hamilton that pushed Washington to sign the bill for a national Bank….   Then again, I doubt I ever came across the stuff I’ve learned in this book before in my life!   My new Cormoran Strike book is set to be shipped on the 16^th of this week, so by week’s end, I’ll be set once again with a  3 inch thick book!

Oh, Come on Chuck, who cares about that stuff but you?  OK, sorry, for the detour from the markets, which to me are very boring right now, unless you’re a Robinhood trader,  a zombie Corporation, or some big wheel on Wall Street….    I really get upset when I think about all those zombie corporations that have been given second, third, and fourth chance to turn things around, and they’ve done nothing but stumble, fumble, and have to punt….   But they’re still around….  Taking up space, that some new corporation might use to better the economy, jobs, and CAPEX….

Both longtime reader, Bob, and good friend, Dennis Miller sent me an article this weekend on zerohedge.com’s site…. The article talks about how for many years, it was the goal of children to out earn their parents… But since 1980, that idea is being slowly shot down, and in the middle class, the chance that kids will out earn their parents has gone from 93% in 1940, to 45%….   This was a very telling chart that showed that stagnated wages for the last 40 years have been the culprit…. 

And in the end pointed out that the “upward mobility” of younger folks is going to be a difficult hurdle to clear… But Shoot Rudy, it was not seashells and balloons for us!

OK… well this could become a real problem, especially if Gold continues higher, which I believe it will… The Insurance companies are moving the goalposts on what they will insure….  Longtime friend, David Gonigam, who does an excellent job at the 5 Minute Forecast, pulled this from Bloomerg: “based on a $100 million insurance cap and 400-ounce gold bars,” investors are restricted to storing 127 bars of gold, down from 165 bars at the end of 2019…”   Not that I know of anyone that has that much in Gold Bars, but, the idea here is that once the insurance company reduces their coverage once, they’ll do it a second time, and third, etc.  

On a sidebar…. Remember the couple in St. Louis that brandished firearms to get protesters off their property, and their so-called private street?  They were charged with, oh who cares, what they’re charged for protecting their property?  The news that came through last week was that at least 9 of those protesters are being charged for trespassing…. What took authorities that long to get around to doing that?  My goodness, me…. I just don’t know what to think about what’s going on this country… What happened to “sit ins” ….   Now, I know I’ve gotten old, cranky, and not afraid to say what’s on my mind!

To Recap…  The trading late last week was a big MEH…  But overnight the currencies have the dollar bugs on the run, so it will be interesting to see if this continues or will the PPT step in once again to save the dollar? The data late last week was so-so… But the data on the docket for this week is hefty! So we have that to look forward to, eh?   Insurers are reducing the coverage on insuring Gold held in vaults…  Will this become something that we talk about every 6 months or so?  Chuck thinks so….  

For What It’s Worth….  I first read this on zerohedge.com and then saw it on Ed Steer’s Friday letter, so I new then that it was FWIW worthy!  You can find Ed Steer at www.edsteergoldsilver.com , which I highly recommend… This article I’m talking about, is one that talks about how the Fed didn’t buy any Corp. Bond ETF’s in August, and why that might be, and it can be found here: https://www.zerohedge.com/markets/powell-sending-message-fed-bought-no-bond-etfs-entire-month-august

Or, here’s your snippet: “Is Powell Sending a Message: The Fed Bought No Bond ETFs in the Entire Month of August

For much of the past six months, the biggest story was the Fed’s Blackrock-mediated purchases of corporate bonds, either in the primary or secondary market, or via ETFs. As a reminder, while the Fed pre-announced its intention to purchase up to $750BN in corporate bond (including certain fallen-angel junk bonds) in March, it started purchasing bonds in May, and bond ETFs in June (among which such mainstays as LQD and HYG). By directly entering the corporate bond market – something none of his predecessors dared to do even at the depths of the financial crisis  – Powell created what many believe, as GLJ’s Gordon Johnson writes, “the biggest corporate bond bubble, and junk bond bubble, in history (and that all happened before the Fed even started buying).” And, as expected, bond prices, stocks, and ETFs all surged – completely disconnected from fundamentals – while yields plunged, as everyone was trying to front-run the Fed’s pending massive purchases. In other words, by jawboning alone, the Fed accomplished its handiwork.

Yet something odd happened in the month of August when during the peak summer doldrums it was SoftBank’s turn to steal the spotlight with its now infamous gamma melt up – the Fed did not buy a single ETF.

The fact that the Fed effectively stopped supporting the corporate bond market during August, and did not buy a single bond ETF last month, “seems to us to be a stark, yet surreptitious, shift in Fed policy stance” according to Gordon Johnson.

Furthermore, it seems to have gone completely under the radar – i.e., given all the brouhaha surrounding the Fed’s jawboning about massive bond purchases, we would argue, at best, this is pocket change. When the market figures out the “Fed put” is no longer in place, with the Fed’s bond ETF holdings actually falling by -$64mn in August, the willingness to buy stocks at “ridiculous” valuations may quickly abate.

Could it be that the Fed is starting to telegraph to the market that it moved too far, too fast? As Wolf Richter writes, “Jerome Powell has explained this many times – that the Fed has succeeded in achieving its objective of creating loose credit market conditions. It has in fact succeeded in blowing this bubble in the shortest amount of time, and the Fed itself is perhaps stunned by the magnitude of the bubble and its own success.”

As Johnson concludes, it suddenly seems “that for now the Fed does NOT have “your back” if you’re buying overvalued companies that lose money with no end in sight” and furthermore with CPI starting to run hot “it seems the Fed may be seeing the “fruits” of its recent jawboning (i.e., creating a bond bubble and bailing out asset holders during the worst economy in our lifetime, despite not taking any real action) souring a bit.”

Chuck Again….  Yeah, that’s all fine and dandy, but what will the Fed do when the next major sell off of the stocks comes?  I would bet the farm  (if I had a farm!) that they would reach into their bag-o-tricks and begin buying ETF’s again….  I’m just saying…

Market  prices 9/14/20: American Style: A$ .7273,  kiwi .6692,  C$ .7590, euro 1.1872, sterling 1.3177, Swiss $1.1027, European Style: rand 16.6887, krone 8.9884, SEK 8.7626, forint 301.15,  zloty 3.7466,    koruna 22.4216, RUB 74.87, yen 105.97, sing 1.3651, HKD 7.7499, INR 73.42, China 6.8319, peso 21.22, BRL 5.3170,  Dollar Index 93.03,  Oil $37.12,   10-year .67%, Silver $26.81, Platinum $931.00, Palladium $2,349.00, and Gold… $1,940.00

That’s it for today….  Well, it appears to me that the weather has turned…. The mornings are cooler, and days warm, and  the evenings are cooler….  I’ve said this before but In my opinion, the best weather we get here in this region is the fall weather….  Fall begins next week, and the only thing bad about fall is that winter follows it! UGH!  But since I retired, and now spend winters in S. Florida, I guess I can’t complain about the cold weather, except when I’m here in December!   My poor beloved Cardinals are now on the road in Milwaukee where they will play 5 games in 3 days…. Then go to Pittsburgh where they will play 5 games in 4 days, then 3 in Kansas City, before they come back home to the sea of red…. The Cardinals have also had a rash of pitcher injuries of late, which doesn’t bode well for their performances in the upcoming double headers! UGH!  I’ll hang with them through it all though….  Just like you dear readers have done with me through the years, of being out with cancer, surgeries, infusion confusion, and all the rest….  REO Speedwagon takes us to the finish line today with their song: Golden Country….  Golden Country your face is so red, with all of your money your poor can’t be fed….  (remember that was a mid 70’s song)  and with that, I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

September 9, 2020

* dollar buying continued on Tuesday… 

* What’s causing the disruption of completing the Nord Stream 2? 

Good  Day….  And a Wonderful Wednesday to you! Well, a day/night doubleheader didn’t go without a win, like the last doubleheader did here against the last place Pirates… My beloved Cardinals settled for a split and now get a day off, before they play another doubleheader VS the Tigers… The Cardinals, because of their quarantine after a virus outbreak, will have to play 23 games in 18 days to finish the virus shortened season. Hopefully they don’t collapse before the season ends, and they can hang on to their current playoff spot….  Chilliwack greets me this morning with their song: Fly At Night (In the morning we land) Let’s see a show of hands of people that know or have heard music by Chilliwack! HA! Just kidding….

Well, I told you yesterday morning that it appeared to be one of those days when just about every asset class gets smacked! Stocks, currencies, and Oil, with Treasuries ekeing out a gain, and the metals coming back and making a positive day of what was negative in the early morning trading. 

Remember the song Ooh, La, la, by faces?  Poor Old Grandad,….  Poor Old Oil, it can’t seem to find any demand…. And the price of Oil just keeps dropping… People just don’t drive like they used to… So many people are still working from home, and probably most of them will keep working from home from now on… School Buses aren’t in use, per se, like they used to be, Summer driving by families just wasn’t there… Can you see a family with kids going across the country to see the Grand Canyon, and when they stop for gas, and everyone piles out of the car, they’re given Clorox wipes to use in the gas station if they touch something?  Dad has one on his hand to pump the gas, and then they get their hands cleaned with GermX when they get back in the car….    Oooh, where do I sign up for a trip like that?

So, Gold was able to come all the way back from being down $9 in the early trading to show a gain of $2.50 for the day and close at $1,932.00… Silver gained back a few cents but still ended up in the red for the day by 18-cents to close at $26.72….  For now, it appears, that $1,920 is a resistance level on the down side for Gold, for when it slipped below that figure yesterday morning, the drive to bring Gold back began….  I’m just saying…

In the overnight markets, there was some additional slippage in the currencies and the stock futures are up this morning, so the rot on the tech stocks might take a breather today… Gold is up $1.60 early this morning, and even the price of Oil is showing green this morning… But it’s not a bright green if you know what I mean… 

Well, the CBO (Congressional Budget Office) the guys that count the beans, said yesterday that through the 11^th month of the fiscal year (August) the Federal Deficit was $3 Trillion, with another month to go….  For those of you new to class, the U.S. budget year is September to September….  That number of $3 Trillion is  $1.9 Trillion more than the same period last year, and more than double the largest yearlong deficit on record, according to the CBO, who then went on to give excuses for the size of the deficit was due mainly to the costs associated with the COVID-19 virus spending….  Well, that may be some of the deficit but not all of it…. Before April began our Budget Deficit was already $743 Billion for 6 months of the budget year…. That would have been annualized to 1.486 Trillion… Still an unsightly number if you ask me!  But that information was not supplied by the CBO, they simply wanted to place all the blame on the virus spending…. Which I also saw yesterday a blurb about more virus spending soon to be up for a vote… They might want to wait until Rocktober when the new budget starts…

And this news was sent to me from the good folks at GATA, who got it from Bloomberg.com, and here you go… “A $750 billion industry still struggling to bounce back from the last crisis is cracking under the Federal Reserves lower-for-longer mantra on U.S. interest rates.

Prime money-market funds — a long-time favorite for anyone seeking a cash-like investment with a little extra yield — are facing an existential challenge, just four years after a regulatory overhaul to restore confidence in the wake of the global financial crisis. Assets in these vehicles dropped 20% in just six weeks this year, spurring talk of new reforms. But some of the industry’s leaders are opting for another solution: Shutting them down.”

Chuck again… Shutting them down?  Oh, wouldn’t that be convenient for the stock jockeys, because where are these people going to go with that bundle of funds to get some return on their cash? The stock market that’s where, thus adding the risk of the bubble popping at any time now… Get everybody in and then turn around and have to get everybody out, makes for 2 commissions…  I’m just saying…

And the GATA folks also sent me this… “U.S. banks are increasingly worried about being repaid on loans secured against commercial property, as offices, malls, and hotels continue to stand empty.

The darkening outlook of banks is laid bare by disclosures on so-called criticised loans, which are flashing warning signals about a borrowers ability to pay.

Among the 10 banks with the largest increases, criticised loans rose by 62 percent in aggregate in the second quarter, but criticised commercial real estate loans rose by 144 percent, to $26 billion, according to an analysis by the Financial Times.

The banks with the largest total increases include JPMorgan Chase, Bank of America, and Wells Fargo.”

Chuck again… I keep saying that all this rent that’s going unpaid is going to hurt.. And the Commercial bldgs.. have a real problem and it goes back to what I was talking about earlier with workers not going into an office, and families not going on summer trips, have left hotels empty, and most commerce these days is done online… No need to go to a brick and mortar store…

One of these days Alice! All this debt is going to collapse the financial system…. I’m just saying…

I had reader send me a note that said that “If I didn’t have anything to say about improving the pandemic, that I should not say anything.”   I guess that was in response to me talking about how the economy should have never been locked down…. Oh, well, I thought I was offering an alternative to the decisions made in April…

This drop in the price of Oil has dealt a bad hand of cards to the Petrol Currencies, as the Russian ruble, Norwegian krone, and others can testify…  The drop in the price of Oil isn’t the only thing bugging the ruble…  I was reading something in the 5 Minute Forecast yesterday about how the Nord Stream 2 pipeline, which was about 200 miles from the completion of the pipeline that would bring natural gas to Germany from Russia is getting the brakes put on the construction of the pipeline… 

Seems the West is having problems with the fact that an opposition leader in Russia apparently was poisoned… And all the blame for this poisoning of this fellow (he is still alive)  is being thrown in the lap of Russian leader, Putin, and that doesn’t sit well with the folks in the West…. So, now Germany is having second thoughts about getting into bed with Putin… 

Well the U.S. going back to the previous administration has been against this construction of the Nord Stream 2 pipeline… Seems we don’t like anyone messing with our hold on liquified gas shipments to Germany….  Were they that much against it that they would do some espionage stuff in Russia  to make it look bad for Putin, and thus put the kyboshes on the pipeline?  One insider in Russia had this to say…  “if Putin had wanted the man killed, he would be dead”….    Just something to think about, that could be made into a movie, eh?  And longtime readers know of my love for conspiracy theories! 

In yesterday’s Data Cupboard, the July print of Consumer Credit (read debt) was on display, and it showed that Consumers racked up their debt loads by $12 Billion, a 3.6% increase over the June print of $11 Billion…  After seeing a great fall in Consumer debt in April, the last three months have seen that fall reversed…. The interesting part of the report though was the drop in revolving debt (credit cards)…   Seems folks are out buying new cars, and racking up student tuitions…. 

So, the “great American switch to savers” that everyone talked about in March and April, has fallen flat on its face…  

I told you yesterday that this week’s Data Cupboard was lacking real economic data, for the most part…. And today’s Cupboard is a poster child for that thought…. The only piece of data today is Job Openings….   5.9 Million was the print last month…  Corporations are saying that they can’t find qualified workers…. Come one! Give me a Break here! There are 29 Million people, not counting the Gig workers, that are continuing to draw Unemployment checks, and these Corporations can’t find qualified workers out of 29 Million?   

To me that’s just an excuse for not hiring, so they can keep the Gov’t off their collective backs, and they can keep receiving help from that same Gov’t…    But for how much longer?  I read a blurb on Bloomberg this morning that Bond guru, Jeffry Gundlach says, “the high yield bond defaults may double”…  Yikes! 

To recap…. More dollar buying on Tuesday, as brought the currencies almost back to where the started 10 days ago, with their rallies…. Gold was able to bounce back to show a small gain on the day, although Silver couldn’t do the same. The price of Oil continued to get pushed down, on a lack of demand that Chuck illustrates for us…. And the CBO says our Federal Budget Deficit is $3 Trillion with a month to go! 

For What It’s Worth….  Well there sure seems to be more than just yours truly talking about a change in the currency regime (the end of the dollar’s reserve currency status). I would say welcome to my bandwagon, come on climb aboard, there’s plenty of room for us to remain 6 feet apart! Any way, this is an article about that currency regime change Idea, and if can be found here: https://www.rt.com/business/499957-replace-us-dollar-jim-rogers/ 

Or, here’s your snippet: “The dollar is on the brink of losing its status as the world’s main reserve currency, prominent U.S. investor Jim Rogers told RT, following reports of China’s plans to drop a huge chunk of its American debt holdings.

With a national debt of over $26.5 trillion, “the U.S. is now the largest debtor nation in the history of the world, and it’s getting higher and higher every day,” Rogers said, adding that it’s going to take a toll on the country’s currency.

“Traditionally, the U.S. dollar has been the soundest currency in the world. But tradition changes,” he pointed out, referencing the fate of the British pound and Dutch guilder, which, in previous centuries, were considered the most reliable currencies.

“I’m an American, so I don’t really like saying it, but I’m afraid the U.S. dollar is coming to its century or so of dominance, and something else will replace it.”

The dollar may still show strength next year, after the current turmoil in America caused by the Black Lives Matter protests and the election is over, “but that will probably be its last shot,” Rogers said.”

Chuck again…  It was probably in 2010, or 2011, when I used to give presentations around the country, Canada, and Panama that were titled: The Coming Currency Regime Change….  I saw the debt piling up then, and just knew in my heart of hearts that this would come crashing down on the dollar at some point in the future…. 

Market  Prices 9/9/20: American Style: A$ .7244, kiwi .6656,  C$ .7565, euro 1.1776, sterling 1.2932, Swiss $1.0905, European Style: rand 16.7239, krone 9.0985, SEK 8.7987,  forint 303.60,  zloty 3.7775,   koruna 22.5256, RUB 76.11, yen 106.17, sing 1.3684, HKD 7.7502, INR 73.48, China 6.8393, peso 21.67, BRL 5.3281,  Dollar Index 93.57,  Oil $37.48,  10-year .68%, Silver $26.69, Platinum $916.00, Palladium $2,305.00, and Gold… $1,933.60

That’s it for today and this week….  My monthly visit to my oncologist is bright and early tomorrow morning… As I’ve said for many years, I like make any doctor or scans appointments as early in the day as I can to avoid back ups….  Can you imagine how long next Monday’s Pfennig will be with all this time in between now and then to gather ideas and articles?  Better come ready to read with a full cup of coffee!  I’ve been very happy that my good friend, Duane, has been around the past two weeks, to come down and watch the baseball games with me. Watching baseball is much more enjoyable to me, if I have someone to watch it with….  Billy Squier takes us to the finish line today with his song: Lonely Is The Night….   We used to play Billy’s Don’t Say No, CD on the trade desk all the time!  Ok, with that, I hope you have a Wonderful Wednesday, and will Be Good To Yourself! 

Chuck Butler

 

 

September 8, 2020

* The dollar bugs start the week with the conn… 

* Unemployment Rate drops, but Continuing Claims rise? 

Good Day… And a Tom Terrific Tuesday to you! It was a real Chamber of Commerce weekend here for our Labor Day Holiday weekend, and all I could think about Saturday, was that it would be have the perfect day for the Annual (no more) Butler Labor Day BBQ & Pool Party…. Cards took 3 of 5 from the 1^st place Cubs, who seem to be stumbling… Cards come home after a 5-3 road trip, which in baseball is a big thing to win road games… I’m just saying!  I made my Big Green Egg, work overtime on Friday and Saturday, and now we have tons of food to eat the rest of the week! The late great Otis Redding greets me this morning with his classic song: The Dock of the Bay…

Well, as we start this shortened holiday week, the currencies and metals have had two fair-to-middling days of trading, that took place with most trading houses at the Hamptons starting noon on Friday last week…. And yesterday, the U.S. didn’t participate at all…. Without the price manipulators I would have thought Gold to have a better day than just trading flat to down a few bucks on the day…. The euro rallied above 1.18 again, but who knows just how long the PPT will allow that keep, given their propensity to jump in and buy dollars, whenever the dollar looks iffy….

In the overnight markets…. there’s been a renewal of dollar buying, so we start the week with the dollar bugs dancing in the streets… Gold is down $10.50, and Silver is down 30-cents this morning… And the euro is hanging onto the 1.18 handle by the skin of its teeth…  And the price of Oil has really dropped since last week…. This doesn’t look like it’s going to be a good day for the anti-dollar assets…. 

I saw where the tech stocks got the stuffing knocked out them late last week, and when I checked this morning the futures for the tech stocks are way down, indicating more selling here today…. Kind of reminds me of the dot.com sell off, starting slowly and then breaking through the dam and destroying wealth like a river floods a town… 

Speaking of stocks… I see that today is the day that Apple has announced their dog and pony show. Probably to introduce a new iPhone and iPad, and I get the feeling there will be something else announced today, as there are rumors flying all over, so we’ll see, eh? 

OK, I’m going straight to a list of topics that I want you to know about this morning….  These are important or else I wouldn’t waste my time with them… And don’t forget that I promised you last Thursday that the FWIW article today is a doozy, so let’s see what’s on Chuck’s mind today…

Get this…. Last week it was revealed that the BLS (you know the knuckleheads that give us the hedonically adjusted Jobs Jamboree each month) they have changed horses in the middle of the stream once again, and have changed their seasonally adjusted methodology which, and you guessed it, allows the unemployment numbers look better than they really are…  Why doesn’t someone in Washington just stomp their foot down and so “no mas”!  This is getting ridiculous… and to show just how much the new methodology comes into play… changed seasonal adjustment method on Unemployment data (using additive instead of multiplicative factors) Differences are considerable. Old method would have given 1010K claims, new method gives 881K…    That just gets me in a tizzy folks! But it is what it is, and the Gov’t apparently is ok with them changing the horses in the middle to the stream, so we’re stuck with trying to figure out what the real numbers are each month…. UGH!

Well, I cam across this article on Zerohedge.com this past weekend, and it’s quite scary, check this out: “China To “Gradually” Sell 20% Of Its US Treasury Holdings, May Dump It All In Case Of “Military Conflict. “ and that got that from the Chinese State Dept….  So, it wasn’t fake news! 

About 10 years ago, at the old Everbank World Markets Desk , we had a guest for lunch one day, and it was the famous Jim Rogers… I laid out a scenario I had in my mind for him and he agreed 100% with what I was thinking…. And it was that all the Asian leaders were in a room and sweat was beading off their foreheads, as they waited for the first one to head for the EXIT door, (selling their Treasuries) and then all of them run to the door at the same time, getting all clogged up in the doorway…  This is something that I’ve worried about for many years, as our debt just continued to grow, and we continued to get by on the help of strangers….

Can you imagine what kind of QE / Bond Buying program The Fed would have to come up with, if China started selling their Treasuries?   Just something to think about this fine morning, eh?

And not finally, because I still have the FWIW article today…. But I read this article by David Stockman on the https://internationalman.com/articles/a-rogue-institution-and-a-clear-and-present-danger-to-liberty-in-america/   site, and I told good friend Dennis Miller that this guy sounded like me on the Butler Patio!  Here’s just a little snippet to whet your whistle….  If you want more click on the link above….

“We have never heard more gibberish, double talk, and lies from one podium than we have from Fed Chairman Powell. There is no other way to say it: The Fed has become a dangerous rogue institution that has usurped plenary power over the financial system.” – David Stockman

OK… The data late last week was interesting no doubt….  The Weekly Initial Jobless Claims came in at a lower 881,000 which the Gov’t popped champagne corks over…. But think about this for a minute…. 8881,000 new claims is still larger than any previous number in the history of keeping this data… And here’s an enigma for you…. How could the weekly numbers go down, and the Continuing Claims rise?  Continuing claims were 29.22 Million VS the 27.03 the previous week….  Must be some more funny accounting of the jobs numbers, eh?

And in a not so publicized data print… The August Trade Deficit soared to $63.6 Billion  VS July’s 53.3 Billion…  Now, this can mean a couple of things… Either U.S. consumers were spending more than they have in a long time on foreign goods, or…. And most likely is the case, That foreigners aren’t buying much U.S. Goods….   There have been white papers and theories written about how the Trade Deficit isn’t important…. But I believe it is, and tells a story or paints a picture if you will of how the world is functioning…. And right now, I would say, not very well…

On Friday, there was the Jobs Jamboree… In all its glory…. The BLS told us that 1.37 Million workers went back to work in August, which was a drop of the numbers of folks that went back to work in July which was 1.73 Million….  But the Unemployment rate dropped anyway to 8.4% VS 10.2%… Of course my back of the napkin calculations come up with a different number….  I say the number is probably 9% or worse, because I don’t use the jobs that the BLS adds out of thin air…. Which for those of you keeping score at home is equal to 1,035 Million, since April….  Shoot Rudy, no wonder the Unemployment rate is falling!

This weeks Data Cupboard doesn’t have much to look forward to seeing…. The only real piece of data will be the Weekly Initial Jobless Claims on Thursday… and for those who give two hoots… CPI (consumer inflation) will print on Friday this week…

To recap…. Late last week, there was some fair-to-middling trading and gains in both the currencies and metals, but nothing really to write home about…. And in the overnight markets last night and early this morning, the anti-dollar assets, Currencies, Metals, and Oil, are all getting sold so the start to the week will be a downer… 

Before we head to the Big Finish today… There’s another quote I wanted you to hear and this one is from Ron Paul, who doesn’t pull any punches when talking about the Fed, the economy and so on… here’s Ron: “Once the lockdowns end, the Fed’s actions may lead to a short-term boom. However, the long-term effect will be even more debt, continued erosion of the average American’s standard of living, and the collapse of the fiat money system and the welfare-warfare state. The crisis will likely be brought on by a rejection of the dollar’s reserve currency status. This will be supported both by concerns about the stability of the US economy and resentment over America’s hyper-interventionist foreign policy.

Yes, just like I keep saying about our financial System collapsing under the weight of all this debt…

For What It’s Worth…. Well, I left you on Thursday wondering what I had up my sleeve, ala Bullwinkle, for today in the FWIW section… As promised this is Pam and Russ Martens from www.wallstreetonparade.com with a little ditty that should send a chill up everyone’s spine, and have them wanting to yell at the walls…. Trust me, that’s Ok… go ahead and yell…. This article can be found on their website, but here’s the link any way! https://wallstreetonparade.com/2020/09/wall-streets-felon-banks-to-go-live-with-their-own-stock-exchange-this-month/

Or, here’s your snippet: “Members Exchange (MEMX), a brand new stock exchange, has announced that it will begin live trading of select stocks for the first time on September 21 with a full phase-in on September 29.

Criminal histories are, apparently, no barrier to running a stock exchange in the United States to the deeply conflicted way of thinking of the Securities and Exchange Commission (SEC), which issued its approval to operate the exchange on May 5.

Investors in the new stock exchange are some of the most serially-charged Wall Street banks, including JPMorgan, Goldman Sachs, and UBS, along with the hedge fund, Citadel Securities. BlackRock, which is up to its neck in the Federal Reserve’s deeply conflicted bailout programs, is also an investor, as is the high-frequency trading firm, Virtu Financial, and others.

JPMorgan Chase has been criminally investigated by the U.S. Department of Justice at least four times in the past seven years. A criminal probe in 2013 looked at how the bank had used bank depositors’ savings to gamble in exotic derivatives in London, eventually losing $6.2 billion. That case was known as the London Whale and ended in the bank paying $900 million in fines. No criminal charges were brought against the bank.

In 2014, JPMorgan Chase was charged with two criminal felony counts for how it mishandled the business account of Ponzi mastermind, Bernie Madoff. JPMorgan’s compliance staff looked the other way at screaming red flags of money laundering in the Madoff account for decades. Bank employees told authorities in the U.K. that it thought Madoff might be running a Ponzi scheme. It filed no such concerns with U.S. regulators. The bank pleaded guilty to both felony counts.”

Chuck Again…  Yes, there’s much more in the article that I don’t room for here, but you get the gist of what I’m so upset about…. And if you want more, then click the link above and have at it!

Market  prices 9/8/20: American Style: A$ .7248, kiwi .6665, C$ .7597, euro 1.1803, sterling 1.3048, Swiss $1.0905, European Style: rand 16.9380, krone 9.0397, SEK 8.7949,   forint 305.45,  zloty 3.9647,    koruna 22.4545, RUB 75.65, yen 106.25, sing 1.3690, HKD 7.7502, INR 73.78, China 6.8304, peso 21.79, BRL 5.2999,  Dollar Index 93.27,  Oil $37.55,   10-year .69%, Silver $26.68, Platinum $900.00, Palladium $2,331.00, and Gold… $1,919.00

That’s it for today…. Lot’s to think about today….   You know… You dear Pfennig Readers, get to read all this stuff here first…. And even if I am wrong about the financial system collapsing, it’ll come so close that it might as well go the whole nine yards!  Well, College Football got of to a small sample start this past weekend…. My beloved Mizzou Tigers don’t play until September 26, and then they have to play the might Alabama team in the first game of the year…. Little Evie stayed with us Saturday night, and we had a great time! We played, we danced, she tried to walk, and then I must have wore her out, because she slept all night! Andrew & Rachel (Evie’s parents) say we must have some magic dust that makes her sleep all night, because for them, that doesn’t happen!  Ok, a friendly Spiderman neighborhood reminder that there will only be two Pfennigs this week, today and tomorrow… Del Shannon takes us to the finish line today with his rock classic song: Runaway…. As I walk along I wonder, what went wrong with our love, a love that was so strong….  Only the folks my age and older will be humming that song the rest of the day now…. And with that I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

September 3, 2020

* Another day of “suspicious” dollar buying… 

* Bill Bonner gives us his thoughts on the eviction moratorium… 

Good Day…. And a Tub Thumpin’ Thursday to you! Another yucky day weather wise here where I live in the summer and fall months… I don’t know that it ever really rained, it just looked like it was going to do that all day… That marked 3 days without sunshine… Jimmy Cliff sings a song that goes: Hello Sunshine, won’t  you please come around? Hello Sunshine don’t let me down….   After a night when the Cardinals got 23 hits, and scored 16 runs….  They were only able to muster up 6 hits last night, left the bases loaded in the top of the ninth, and lost in the bottom of the inning…. UGH!  As Tony LaRussa used to always remind Cardinals fans, that winning the series was good… So, the Cardinals took 2 of 3 from the Red, and now go Wrigley for the weekend, after getting their first day off in 19 days in which they played 23 games! Now it’s makeup time with several double headers this month… UGH!  OK…  The Beatles greet me this morning with their song from the Sgt. Pepper’s Album: With A Little Help From My friends…. Joe Cocker did a bang up job doing that song at Woodstock, too….

OK, well, yesterday I gave the idea of simple profit taking with a dash of short paper trades thrown in, a run up the flag pole…. But when I threw it against the wall, it slide right down… So once again the PPT has stepped in to save the dollar….  We can’t have two days where the dollar gets sold any longer without the PPT stepping to throw the dollar a life saver…. You know the kind that saves you from drowning, not the kind that comes in multiple flavors in a role with a hold in the middle of them!

The euro lost more ground, and now their lofty level of earlier this week seems like a distant memory….  The Aussie dollar (A$) also got sold, but at least there was a fundamental reason to do so….  Yesterday, it was announced that Australia had entered into a recession last quarter, their first recession in 29 years!  I was beginning to wonder if the folks that call the recession down under, had forgotten what the parameters were, as it had been so long since they were called on to calculate a recession!

This darn, I really wanted to say the other word there, pandemic is really beginning to get under my skin… Yes, lots of people have died from it…. But haven’t we carried things a little too far too long with this virus? I’m just saying…

Gold lost $26 and ended the day at $1,943.10….  Simply amazing that these guys get away with what they get away with…. My dad always told me, Chuck, be patient, your opportunity or time will come, and when it does you had better be prepared to act….    My dad was the smartest man I ever met… He had such logic about things, and I guess that’s where I learned that from….

Ok, sorry about that… Silver also lost 64-cents on the day to close at $27.54….  Platinum was down, Palladium was down, but Rhodium was up… Go figure, right? All three of them are used in catalytic converters for cars, so why would one be up while the other 2 are down, is beyond my thought process, folks…. So, let’s move along to talk about something I do understand!

And the overnight markets haven’t been kind to both the currencies and metals once again….  Gold has given up $9 in the early morning trading, and the euro looks like it would only take a couple more sell orders to bring it back below 1.18…  I just don’t get it… The Chairman of the most powerful Central Bank in the world, just told the world last week that he doesn’t care about anything else but to get inflation rising…. and that doesn’t get traders selling dollars like funnel cakes at a state fair? Gimme a break! 

Ok, remember last week when I talked about the moratorium on evictions, and expressed my concern about everyone else that’s involved in a mortgage loan, spending most of the time talking about the harm to the mortgage bond, and bond holder.  And then yesterday, longtime friend, publishing guru, and author, Bill Bonner gave us his thoughts on the eviction moratorium….. Take it away Bill!

“And what about the landlords? Will there be a moratorium on mortgage defaults? And what about the banks that hold the mortgages? Will there be a moratorium on bank failures?

And what about real estate prices? If landlords can’t collect rents… and can’t pay their mortgages… won’t real estate prices fall? Should there be a moratorium to stop them?

Maybe Mr. Trump should declare a moratorium on all bankruptcies, defaults, sales shortfalls, profit slumps, crashes, and repossessions… and knuckle-breaking loan shark collections.

And why not put a moratorium on weight gain and COVID deaths, too?” – Bill Bonner

OK… yesterday I told you about how the Fed would keep rates low to be able to keep the bond servicing costs down (interest costs)…. And while perusing Twitter, I found this ditty that plays well in the sandbox with what I told you… (Paying less interest while borrowing more is how we got into this mess in the first place: “Net interest costs on the debt have declined 12% during the first 10 mos. of the fiscal year compared with the same period a year earlier, despite rising red ink.”) – Twitter

So, am I right, well, am I right, well?  Of course I am! Not patting myself on the back here folks, just making the point that even little old me (HA!) can figure that one out all by himself!

Well…. I’ve been out walking…. I don’t do that much talking, these days…. These days I sit on cornerstones and count the time in quarter tones to ten, my friend. Don’t remind me of my failures, I have not forgotten them….  (one of my fave Jackson Browne songs, These Days) The reason I  began this part of the letter with the lyrics to that song is that I began to write about how I was thinking, about…. And the next thing I knew, I was singing that song in my head, and my fat fingers were following along! 

So, what I was really thinking about is what the Fed is doing buying all these Corporate bonds, and bond fund ETF’s….  I’ve come to the conclusion that they’ve painted themselves into a corner, and can’t stop buying now, because doing so would cause a major calamity in the markets, and the Fed Heads don’t want to be pointed to as the reason the bubble burst….  

Longtime trader, and active Twitter supplier, Sven Henrich, had this to say about the Fed and their bond buying: “so rather the attitude is: let the bubble run, hope it sorts itself out, rather than be blamed for pricking the bubble they created. imho.”- Sven Henrich on Twitter…

OK, I had two FWIW stories lined up today, and decided to go with the one that’s below, and save the other one for Tuesday next week (remember Monday is a holiday) and it’s from Pam and Russ Martens of wallstreetonparade.com, so that’ll give you something to look forward to….  Another thing my dad taught me when I began my career in the music industry, he told me, “Chuck, always leave your audience wanting…”  So, that’s what I’m doing today giving you a teaser for Monday….  Pretty suave of me, eh? HAHAHAHA!

The U.S. Data Cupboard yesterday had the ADP Employment report for August, and from what they reported the number blew away the forecast of 162,000, and came in at 428,000 jobs added in August! Well, as the late Great Charlie Daniels said, “Well, you’re pretty good old son, but sit down on that stump and let me show you how it’s done”…. We as a country have laid off over 30 Million people and that doesn’t count the “gig workers”, so when the economy began to open up, shouldn’t the jobs added be blowout numbers? Of course they should!

But short-sighted people don’t see it that way… They see the blowout number, and start singing, we’re in the money, we’re in the money, and clicking their heels way up high!

Today’s Data Cupboard has the Weekly Initial Jobless Claims which two weeks ago was 1 Million on the dot… The experts thing that last week’s number will drop below 1 Million….  I guess we’ll find out very soon, eh?  We’ll also see the stupid Productivity report for August, The ISM Services index for August, and the Trade deficit for July…

To recap…. So much for profit taking, this has turned into another PPT-like rout on the currencies and metals by buying dollars, and delivering short Gold paper trades to the COMEX…  Every time it appears that the dollar is going down a deep rabbit hole, it gets pulled out by its ears, and put on Terra Firma once again….  Bill Bonner asks some good questions about the eviction moratorium…  Chuck talks some more about how the Fed can’t raise rates….  And there was lots of singing going on this morning…. Good thing no one is around at this hour of the morning!

For What It’s Worth….  Well, I’ve been telling you that this feels as though we’re in the beginning stages of a new weak dollar trend for a couple of weeks now…. So, when I saw this article featured on Ed Steer’s letter yesterday, I just knew it had to be our FWIW to end the week!  This about the dollar going into a long multi-year weak trend, and it isn’t me talking! It’s someone else, and it can be found here: https://in.reuters.com/article/usa-markets-dollar-analysis/u-s-dollars-woes-are-only-beginning-some-bears-say-idINKBN25S3KN

Or, here’s your snippet: “ The chief investment officer of currency manager A.G. Bisset believes the U.S. currency will plunge 36% against the euro over the next year or so, taking it to levels it has not seen in more than a decade.

The greenback’s recent weakness “is the beginning of a very large move” that could hurt the droves of investors exposed to it through their holdings in U.S. stocks and bonds, Lindahl said.

Wall Street is swarming with bearish dollar forecasts, though few are as extreme as Lindahl’s.

The U.S. currency is near its lowest level in 27 months and is down about 11% from its 2020 peak against a basket of its peers, with Goldman Sachs, UBS and Société Générale among the banks forecasting more losses.

Hedge fund bets against the dollar in futures markets are at their highest level in about a decade, according to data from the Commodity Futures Trading Commission, while 36% of fund managers in a recent Bank of America Global Research survey named shorting the dollar as their top currency trade for the second half of the year.”

Chuck again… Well, this reminds me of 2001, when I wrote the Decline of the Dollar white paper, and our PR people couldn’t get me an interview to talk about it, until…. Everyone else in the industry began to see the writing on the wall…. And then It was like, “how did you know this was going to happen?”  I would tell them, well, if you line up the tea leaves correctly, they tell the story”… And then I would laugh, and say, no, seriously, all you had to look at were the fundamentals….  These days, what you have to look at are the tea leaves! Seriously, it’s all about sentiment… And if everyone begins to have a sentiment change toward being long the dollar, then Katy Bar The Door!

Market  prices 9/3/20: American Style:  A$ .7292,  kiwi .6730,  C$ .7626, euro 1.1810, sterling 1.3250, Swiss $1.0954, European Style: rand 16.7707, krone 8.9171, SEK 8.7568,  forint 303.28,  zloty 3.7469,    koruna 22.3316, RUB 74.48, yen 106.48, sing 1.3658, HKD 7.7501, INR 73.45, China 6.8310, peso 21.78, BRL 5.3781,  Dollar Index 93.01,  Oil $40.40,  10-year .65%, Silver $27.22, Platinum $908.00, Palladium $2,350.00, and Gold… $1,934.10

That’s it for today…. And tomorrow, and Monday, and while I’m at it…. Next Thursday is my monthly appt with my oncologist, to go over the scans results, which I already know what they are…. So, only two Pfennigs next week, but like I said above, you’re not going to want to miss Tuesday’s FWIW! So, do you have BIG plans for this holiday weekend, the last holiday weekend of the summer?  I don’t, and as I’ve already told you, I’m really bummed out about it…. The Cards and Cubs this weekend with a double header on Saturday, so as long as the weather is nice, I’ll be outside watching them play ball!  I hope to see my kids and grandkids this weekend…  I’ll fire up the Big Green Egg on Friday, and cook all day, so that I don’t have to cook any more thru the weekend!  Supertramp takes us to the finish line today with their song, and my fave Supertramp song: Hide In Your Shell…. ( Hide in your shell, ’cause the world is out to bleed you for a ride…What will you gain, making your life a little longer?)   I simply love this song! I hope you have a Tub Thumpin’ Thursday, and please remember to Be Good To Yourself!

Chuck Butler

September 2, 2020 

* The dollar bugs fought back yesterday and overnight

* Chuck talks more about the Fed’s inflation averaging…. 

Good Day… And a Wonderful Wednesday to you!  WOW! I don’t know what my beloved Cardinals had for lunch yesterday, but they came out swinging against one of the better pitchers in the league, last night and racked up 6 runs in the first inning!  I can hear all of my friends, laughing and saying, “Hey Chuck, I thought you said the Cardinals couldn’t hit?” Ahhh grasshoppers, I said they couldn’t hit the ball consistently….  So, let’s see what they have up their sleeves in tonight’s game before we knight them as Murderer’s Row! Not much going on around here, I can’t even go out and sit in the sun to read during the day, as it’s been  nothing but cloudy and rainy the last two days, and from the looks of it this morning, we could be in for more… UGH!  David Bowie greets me this morning with his song: I’m Waiting For The Man….

Well, yesterday saw the dollar bugs fight back, and the dollar buying went on all day. It was a good morning, good afternoon, good night for the currencies and metals…  But hey! A little profit taking does an asset class some good, as it cleans out the old longs and gets set to move higher….  Gold did eke out a $2.40 gain on the day, to close at $1,970, but… That was nearly $22 below the morning high of $1,991.90…  I’m sure some short Gold paper trades made their way to the COMEX, but all in all it was a day when the dollar bugs fought back. That’s my story, and I’m sticking to it!

In the overnight markets… it was more of the same regarding dollar buying, so this morning we’re looking at much lower prices in both the currencies and metals…. Ed Steer of www.edsteergoldsilver.com says this morning that Silver was really sold in the after markets yesterday…. Now that’s something that really gets in my craw…  After hours trading….  Seems they’re doing something illegal doesn’t it?  In college after the bars closed they would go back to the house and have “after bars”…  Nothing good came from that, and nothing good ever comes from after hours trading… It’s something that I think should be outlawed! And those choosing to continue to trade after hours, if caught would be publicly flogged and put on display for all to shame as they pass by! 

OK… back to the markets….   So, get this…. I went online last night to see if there was any news regarding the dollar rally yesterday, and there were two back to back, belly to belly, articles from CNBC that had one saying: “The U.S. dollar will trend weaker on the Fed’s new strategy:” and then the next one right underneath the first one said: “A U.S. dollar rally might be in the cards.”   Ok, got it?

Those poor investors that go to Google and find garbage like that and have to make heads or tails of it, when they could sign up to read the Pfennig, and find out what’s really happening!  And I’m still sticking to my story of profit taking, and a little short paper Gold Trades thrown in to boot….

Yesterday, I talked briefly about how Russia was getting through with their economy with not only the COVID-19 virus slowing its economy, but also remember there are still economic sanctions on Russia from the U.S. and Europe….   I recall hearing people say that the pandemic would bring the Russian economy to its knees and cause the ouster of Putin….  But they were wrong weren’t they?  And now from the RT I see this: www.rt.com: Russia on course to replace Germany as Europe’s leading economy & enter global top five this year – Putin’s economic advisor.

Now that’s a far cry from collapsing don’t you think?  And last night, the ruble along with the Chinese renminbi were the only two currencies to rally VS the dollar… That’s quite significant to me, folks… but that’s a discussion for another day… That is, as long as I remember to talk about it!  HA!

There’s a country that’s been stealth like with its moves VS the dollar…. And that’s India and its rupee….  Good friend, Dennis Miller, sent me a link to a video of a woman giving 5 reasons why India will pass up China and the U.S. to be the number 1 economy in the world….   Ok, we’re not talking about right this minute, month, year, or decade…. But it was interesting to say the least…. For instance did you know that a large number of the Tech giants are run by Indian CEO’s?   if they could ever figure out how to unlock their consumer led economy….  I’m just saying…

But the rupee, which has lazed around and was happy with trading with a 74 handle VS the dollar, has recently been awaken and got itself on the rally tracks and last night it was trading  with a 72 handle…. It’s nice to see the rupee moving without the sugar fed euphoria of a PM election….  The dollar buying in the overnight markets brought the rupee back to 73 this morning…. 

And talk about a currency, that has been bruised and battered along with the other Petrol Currencies, the Norwegian krone, iwas finding solace and protection being associated with the euro….  that is until yesterday and last night!  A few years ago  the krone had the soaring price of oil and the lofty pricing of the euro going in its favor, but since those two bubbles burst, it’s been famine without the feast for the krone….   Hey, throw the krone a bone will ya, markets? 

I told you longtime readers a long time ago that when the weak dollar trend was real, we would see the Euro-Wannabes, zloty, forint and koruna  on the rally tracks….  And guess which three currencies were stealthily moving higher?  You are so darn smart! Yes, the Euro-Wannabes….   How’d you figure that one out, did I give you too good of a hint?  Oh, well, that’s what was going on, but it has to be sustained and not a false dawn, which we’ve seen a few times in the past couple of years….I want to say…. But for now, it’s game on Garth! Game on Wayne!

The other day I made a Big Deal out of the Ohio Fire & Police pension fund increasing their allocation to Gold by 5%…. And that got me thinking about how other pensions across the country will see this, and think that they should do the same thing?  That could mean large purchases of Gold, coming in the future, folks….  And when push comes to shove, the bullion dealers will look to fill the large orders before they worry about the small ones…. So, why wait to get in line ahead of the big buyers?

This also plays well with what I’m talking about here : Billionaire investor Ray Dalio’s hedge fund  (Bridgewater Assoc.) poured more than $400 million into gold in the second quarter of this year, as the price rallied towards record highs, luring in high-profile and amateur investors alike.

The Big Orders may just be coming fast and furious….  So again, I implore you to get your investments diversified with allocations to metals and currencies, ahead of the Big orders!

Well… talk about reacting to a speech….  There are people on both sides of the fence thinking that they understood Fed Chairman Powell’s speech last week for the virtual crowd at the Jackson Hole Fed Boondoggle….  But I think I laid it out for you in yesterday’s Pfennig, exactly how I view it, and so therefore, we’ll go with that….  That the Fed is going to a average inflation rate target of 2%, which means, if inflation is below the 2% level as it is now, then when it finally rises, the Fed will allow it to go higher than 2%, to average out the rate….  The thing I want to be able to see is them put the brakes on the rising inflation when or if it ever comes….

Paul Volcker tamed inflation with rate hike after rate hike all the way up to 18.39% in June 1980… Remember he even hiked rates out of meeting on a Saturday night? It was called Volcker’s Saturday Night Special….  But… the difference between then and now, was that the U.S. debt that had to be financed was chicken feed…. $900 Billion…  And most of that had been already issued at lower rates….  For the Fed to go on the attack VS inflation with rate hikes, would increase the financing costs tremendously, folks…. So, they, the Fed, are stuck with jawboning rate hikes, and after the initial positive action to the jawboning, the markets will figure out that it was just that, Jawboning, with no rate hikes to follow…. And then inflation will have no predators….  Uh-oh!

The U.S. Data Cupboard yesterday, had the ISM (manufacturing Index) and Construction Spending with both of them coming in as expected…. Today’s Data Cupboard has the ADP Employment Report, which the experts say will show a 167,000 new jobs in August….   Sounds good, eh? Well, not when you consider how many people are still looking for jobs….   And tomorrow we’ll see just how many people filed for new unemployment claims last week….

To recap….  the two-day rally in the currencies and metals came to abrupt halt yesterday, and the dollar buying went into the overnight markets and came out this morning on the upside of most currencies, and especially the metals…  Chuck thought the graceful downward move yesterday was just profit taking with a few short paper trades thrown in… but this morning this has a different taste to it than just profit taking….  And Chuck’s hoping that we were not witnessing another false dawn… 

Before we head to the Big Finish today…. I’m getting gun-shy, about giving out my thoughts on things…. I know, I should just stick to the markets, but if you’ve read me long enough, you know that I have a difficult time keeping everything about the markets…. Because in the end, all things come back to center, and can be the root cause of a market reaction…. I’m just saying….   

For What It’s Worth….  I saw this headline on Twitter, and it talked about how the Fed has bought $1 Trillion in Mortgage bonds since March…. It’s on Bloomberg.com, and it can be found here: https://www.bloomberg.com/news/articles/2020-09-01/fed-s-mortgage-buying-spree-at-1-trillion-with-no-end-in-sight

Or, here’s your snippet:” The Federal Reserve has snapped up $1 trillion of mortgage bonds since March, a record pace of purchasing, as the U.S. central bank tries to blunt the impact of the Covid-19 recession on American homeowners.

The Fed bought around $300 billion of the bonds in each of March and April, and since then has been buying about $100 billion a month. It now owns almost a third of bonds backed by home loans in the U.S. Buying the securities has pushed mortgage rates lower, with the average 30-year rate falling to 2.91% as of last week from 3.3% in early February.

That drop has allowed homeowners to refinance their mortgages, tantamount to giving them a raise by cutting their monthly loan payments. It’s also helped consumers buy homes. But the Fed’s efforts are causing its balance sheet to balloon, and with the central bank owning so many U.S. home loans, it has unusually high power over setting mortgage rates.

The latest statement from the Fed has promised to keep buying “at least at the current pace.” If the central bank does so, by year’s end it will have purchased about $1.4 trillion in mortgage bonds — and added around $900 billion net to its holdings.”

Chuck again….  You know the line that really caught my eye, don’t you?  “with the Central bank owning so many U.S. home loans, it has unusually high power over setting mortgage rates”…. Yeah, that’s the one that kind of sticks in my craw…. Can you imagine this… Please make your mortgage payment check out to: the Federal Reserve….  That opens doors to all sort of things that’s not good…. think about it…. 

Market  prices 9/2/20: American Style: A$ .7338,  kiwi .6758,  C$ .7651, euro 1.1860, sterling 1.3351, Swiss $1.0978, European Style: rand 16.8220, krone 8.7736, SEK 8.6776,  forint 302.21,  zloty 3.7245,   koruna 22.2023, RUB 73.64, yen 106.25, sing 1.3675, HKD 7.7499, INR 73.08, China 6.8252, peso 21.83, BRL 5.4354,  Dollar Index 92.59,  Oil $43.01,  10-year .68%, Silver $27.63, Platinum $940.00, Palladium $2,290.00, and Gold… $1,962.00

That’s it for today…. Man, I had just finished watching the 16-2 bashing of the Reds by my beloved Cardinals last night, when I heard a hissing sound that kept going, and when I found where it was coming from, our hot water tank’s reserve tank had sprung a leak…. And our furnace room was soaked with water…. Good thing I was still awake to hear that, before it went on all night, and flooded our basement!  Now, today, I have to call a plumber… UGH!   It’s always something, right?  Well, I hope the plumber comes soon…. Wink, wink….  This coming weekend is Labor Day Weekend, which means there’s a three day holiday, that for many will become a 4 day holiday….  I won’t be hosting the Annual Butler Labor Day BBQ & Pool Party this year, for the first time since 2001, when I began to do this. I’ll still be smoking some pork butts, and Turkey Breasts, but just not as much as usual, for it’ll only be my family that I’m feeding this weekend! Labor Day marks the end of summer, technically it doesn’t end for a couple of weeks, but when I was younger the day after Labor Day meant the first day of school….  I have two kids, Dawn and Andrew that are teachers, my heart goes out to them attempting to hold something like school these days…. Smokey Robinson and the Miracles take us to the finish line today with their song: Ooo Baby Baby… Which I’m told was the best “make-out” song…. I have no idea if that’s correct, but it’s what I was told….   I get it though with the silky soulful voice of Smokey Robinson singing to you! I hope you have a Wonderful Wednesday, and I ask you to please Be Good To Yourself!

Chuck Butler

September 1, 2020

* Currencies & Metals both rally on Monday… 

* Chuck’s thoughts on The Fed’s Inflation averaging… 

Good Day… And a Tom Terrific Tuesday to you! A real downer day here yesterday with clouds and rain, but by dinner time the sun was out, and it was a nice evening…. I wasn’t feeling up to sitting outside to watch the game last night, as my stomach was questioning the gumbo I ate for dinner…. But I got through it unscathed and was able  to watch the whole game that the Cardinals won…. A dear reader sent me a note yesterday, and said that I failed to mention the 3-2-8 double play the Cardinals pulled off this past weekend….  Now that combination doesn’t happen every day folks!    The Eagles greet me this morning with their big song: Desperado…. Why don’t you come to your senses, come down from your fences, oh renegade….

After last Friday’s Valentine’s Day Massacre for the dollar, it regained its footing, and held ground for the most part on Monday…. The euro inched higher in the 1.19 handle, and the A$ moved upward toward the 74-cent handle…. Gold gained $3 in the morning, and held it the rest of the day, to close at $1,968.40… And Silver at $28.24…. So, all-in-all not a bad day for the currencies and metals, and in the end it’s really the kind days you would like to see take place on a daily basis…. Not too strong, not too weak, just right….  The Baby Bear would love days like yesterday….

In the overnight markets…. The currencies haven’t moved much, but…. but the metals have pushed higher once again with Gold gaining $23 and is up to $1,991 this morning, and Silver has added 70-cents to bring it to $28.94…   We’ll have to see how that sits with the price manipulators today…   Speaking of the price manipulators, don’t you wish they would go away… They don’t have to go away mad, just go away….. 

Speaking of the aforementioned Gold….  I was sitting in my recliner, having finished my book, Sirens ot Titan, and thinking about the Fed’s new “hard 2% Average Inflation Target”  And do you know what I came up with?  That since they announced that they are going to average 2% inflation  and as we all know their version of “inflation” hasn’t been to 2% for some time, so if they are really going to average the inflation target, then they’re going to HAVE to allow inflation to run above 2%, to achieve their goal….  Hey! They said it, they were the ones that put the “average inflation target at 2%”  in stone, and now comes the difficult part…. How to get their version of inflation rising….

Well… if they would simply ask me, I would tell them they their inflation measures aren’t worth the paper they’re printed on, and to go back to computing inflation like they did before the 90’s and the Clinton Administration, who along with Big Al Greenspan worked on a way to get inflation down, so that interest rates could be lowered, and housing could become more affordable to the masses….

I’ve told you all this before… But Clinton put the onus on Greenspan to come up with a plan to lower inflation… Greenspan hired the Boston Commission, who came up with hedonic adjustments to the inflation calculator, and voila! Inflation was lower, and so were interest rates….   The biggest change was to allow substitutions for the items in the basket that were used previously , when their prices got too high…. For instance, if steak got too expensive, they would say that mom’s would substitute hamburger, so that’s what they did, they substituted by taking steak out of the basket of goods, and adding hamburger….  And so on through the years….  They took out housing and substituted rents, they played these games with the Inflation Calculator… So, if they want to figure out to get inflation going again, calculate it like it was pre 1995….

John Williams at Shadowstats.com does a fantastic job of calculating inflation the way it was calculated Pre 1995… Right now, he’s showing that CPI (consumer inflation) is above 4%….  While the CPI that is hedonically adjusted is just .3%….   And don’t forget what I showed you a couple of months ago where the Chapwood Index…. They show the real price increases in goods & services for the top 50 cities, and just for the top 10 their 2020 inflation average is 10.8%….

So, which one feels like the one you live with?  .3%, or 4%, or 10.8%?   As I’ve ALWAYS said, “inflation is a personal thing and will be different among people, but the overall feel will be the same….  For example, I spend currency on baseball tickets, there are those of you who wouldn’t think of spending currency on a ball game, so when baseball tickets keep going up, I feel that inflation and you don’t!

OK, so… in my opinion, of which I could be wrong, but, we’ll have to see about that!  I think that The Fed’s statement last Thursday should have opened the door for Gold & Silver to push higher without speed bumps….  Man I guess I could have just said that instead of spending all morning talking about inflation calculators!

Of course, the decision to allow housing to be more affordable to the masses, was the root cause of the 2008 financial meltdown….  Think about that for a minute, and then you’ll say, “May, he’s right, I should have never questioned him”! HAHAHAHA!  

To believe or not to believe that’s the question that keeps nagging at me, and I’m not talking about religion, I’m talking about the Gov’t’s data prints….  I just don’t see how anyone could trade with 100% surety that the numbers that just printed were real, true representations of the economy….  I’m just saying…

Well, I told you the other day about the Iron Ore prices that were rising, which was because of the nascent recovery in China, which was also responsible for the rise in the Aussie dollar (A$) , for it’s the Aussies that supply the majority of those raw materials to China….  Well, just so you have an idea of the rise…. Yesterday, Iron ore prices surged above $125 per ton for the first time since February of 2014. Just for grins, I went to 10-year chart for the A$, and in August 2014, the last time iron ore prices were above 125, the A$ was 92-cents….  Hmmmm…..

And longtime reader, Bob, sent me a link to an article about the Russian economy, and how it was not going to drop as much as first believed due to the short-term economic shutdown for the COVID-19 virus…. And that got me thinking of just what the heck currency traders want to see from Russia to get the ruble on the rally tracks?  

The U.S. Data Cupboard needed a breather yesterday after the Data Deluge late last week, and so today’s Data Cupboard gets back to printing data releases such as, the ISM (Manufacturing Index) for July, which to tell you the truth, I was absolutely shocked In June when this Index went from the sub 50 number to one that was above 50…. Remember 50 is the line in the sand that decides expansion (over 50) and contraction (under 50)  And the July print is expected to rise even higher than June’s 54.2%….

Later this week, on Friday, that is, it will be a Jobs Jamboree Friday, of which I decided after watching the BLS destroy accounting for the Unemployment rate for the last time, last month, that I’m not paying attention to it any longer…. Oh, sure I’ll report on it, but I’m not going to allow the BLS to get under my skin any longer…. It is what it is… and that’s that!

We’ll also see Construction spending for July today…. June’s print was a negative -.7%….  With all that’s going on I would expect this data to have risen in July… but by how much will decided by the powers that be… 

And in my never ending attempt to show that the economy is not recovering… This word from Zerohedge.com that J.C. Penney, who filed for bankruptcy previously, is most likely headed to liquidation, which would cost 70,000 jobs….   

To recap…. Currencies and metals both had “just right” or a baby bears day yesterday, which is just fine with Chuck, who would rather see Traders take their time with these asset classes, but having said that, Gold is up $23 this morning, and Silver is up 70-cents!  Chuck goes through a long and tedious explanation of how the CPI data gets manipulated, massaged and cooked each month….   And JCP looks like it’s headed to liquidation…. 

For What It’s Worth….   Well, I think that this article’s gist is the reason why Gold is soaring this morning…. This is an article about China and India rattling sabers again, and it can be found here: https://www.zerohedge.com/geopolitical/fresh-tensions-erupt-along-sino-indian-border-causing-financial-tremors

Or, here’s your snippet: “Fresh clashes between Indian and Chinese troops were reported along the heavily contested Himalayan border this past weekend.

India’s Defense Ministry accused Chinese troops of “provocative military movements” late on Saturday night. Here’s the Indian Army’s full statement of their account of what happened:

“On the Night of 29/30 August 2020, PLA troops violated the previous consensus arrived at during military and diplomatic engagements during the ongoing standoff in Eastern Ladakh and carried out provocative military movements to change the status quo.

Indian troops pre-empted this PLA activity on the Southern Bank of Pangong Tso Lake, undertook measures to strengthen our positions and thwart Chinese intentions to unilaterally change facts on the ground. The Indian Army is committed to maintaining peace and tranquility through dialogue but is also equally determined to protect its territorial integrity. A Brigade Commander level Flag Meeting is in progress at Chushul to resolve the issues.”

The latest skirmish between both sides took place in the Southern bank of the Pangong Tso, a glacial lake at 14,000 feet elevation along the Line of Actual Control, a 2,162-mile Sino-Indian border. Both countries have moved troops, tanks, artillery guns, helicopters, fighter jets, and other reinforcements as hostilities continue into the fifth month this week.

 

As for the actual skirmish, Asian News International (ANI), an Indian news agency in New Delhi, reported that Indian sources said Chinese troops tried to ‘infringe‘ on Indian land using a ‘sizeable number of troops‘ but Indian forces were able to thwart the move. The number of casualties or captured troops has yet to be reported by either country.

Indian forces told ANI that Chinese stealth aircraft (Chengdu J-20) have been patrolling the Sino-Indian border as tensions continue to increase. 

Indian Congress chief spokesperson Randeep Surjewala tweeted: “Our armed forces are standing fearlessly to protect Mother India. But, when will Modi ji show his red eyes.” 

Chuck again….  this could end up being a big deal folks… but one has to weigh it against the fact that these two nations have had several skirmishes through the years over border lines….  I guess we’ll have to wait-n-see with this one, eh? 

Market   prices 9/1/20: American Style: A$ .7385,  kiwi .6767, C$ .7688, euro 1.1992, sterling 1.3475, Swiss $1.1046, European Style: rand 16.6534, krone 8.7080, SEK 8.6421,   forint 295.33,  zloty 3. 6618,   koruna 21.8621, RUB 74.02, yen 105.83, sing 1.3575, HKD 7.7498, INR 72.85, China 6.8491, peso 21.76,  BRL 5.4311,  Dollar Index 91.81,  Oil $43.12,  10-year .72%,  Silver $28.94, Platinum $961.00, Palladium $2,327.00, and Gold… $1,991.90

That’s it for today….  A little shorter this morning, and for that you can thank my shaky stomach last night…. UGH!  I just didn’t read that much…  Well, I have  something for you to look forward to…. I do believe that next week, good friend, Dennis Miller (www.milleronthemoney.com) is going to print an interview he did with me…. I don’t hold back any punches with answers to his questions, so you’ll want to be sure you’re already on the list of subscribers before the letter comes out, and you can do that by going to the web address above, and remember… It’s Free!  Looks like another dud day outside right now, UGH! Aliota Haynes and Jeremiah takes us to the finish line today with their rock classic song: Lake Shore Drive….  I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself! 

Chuck Butler

 

 

 

August 31, 2020

* Currencies & Metals both rallied strongly on Friday… 

* Chuck questions just what the heck did Powell say? 

Good day… And a Marvelous Monday to you! Ok, front and center this morning… I had my scans on Thursday morning, and one Friday morning I received the results…  No new cancer was found…. Of course I still have the lesion in my jaw, but right now it’s behaving…. So, I’m good to go cancer-wise for another 3 months…  What has happened to my beloved Cardinals? Well, if you recall me talking about their lack of ability to hit the ball in spring training, then you know the answer to my question!  Now they did find a way to win 1 game yesterday, but that hardly makes up for the 4 previous losses!  I had a visit from a dear reader this weekend, and we had our picture taken together…  You know when I used to travel to trade shows, etc. to speak, I would always have a reader ask to have their picture with me…. I always found that to be quite amazing, and fun!  Graham Nash greets me this morning with his song: Simple Man…  I am a simple man, and I sing a simple song,….  In that beautiful Graham Nash voice!

OK… Well, You can say that I was technically “away” on Thursday and Friday, because the currencies and metals took some frustrations out on the dollar bugs. Yesterday (Sunday) I checked the markets, just for grins to see where we were…. And I was surprised by the strength in the Aussie dollar (A$) . The A$ had blown through the 72-cents handle and is trading with a 73-cent handle this morning. National Australia Bank (NAB) issued a report that their currency team came up with that said that the A$ was rallying on the fact that the U.S. Fed was printing more currency than the Reserve Bank of Australia (RBA) and that Iron Ore prices were rising, which in their opinion was a good thing for the A$, of which I would agree!  NAB went on to say that they saw the A$ rallying to 74-cents by year-end, and trading as high as 75-cents in 2021, but averaging 74.25-cents for the year. 

One thing they forgot to mention was the revival of the Chinese economy , of which we talked about briefly last week, and that’s probably why Iron Ore prices are rising again!  Remember the glory days for the Aussie economy, when China was running on all 6, and they demanded the raw commodities from Australia?  Recall how that scenario pushed the A$ to $1.05 VS the U.S. dollar?  Well, the Chinese recovery is nascent at best at this point, so there’s no reason to think that scenario will return, but… if things keep going in this direction…. You never know!

The euro too, has taken the high road VS the dollar lately…. And this rise all stems from the news that the Eurozone will begin to issue Eurozone Bonds…. Federalization of bonds is what it’s being called, and it’s something I’ve called for the Eurozone to implement for a long time now…  They have a single currency, they should have a single bond….  A couple of weeks ago the euro had reached 1.19 VS the dollar, and then the PPT stepped in a bought dollars, and brought the euro back down, but this morning the euro has moved higher VS the dollar to 1.1936… And inching toward 1.20, which would be the next psychological level for the single unit… 

Gold had a good day on Friday, rising $35 to $1,965… But at one point in the day it was up $44 and had to go through the short sellers’ gauntlet at the end of the day. Silver rallied by 52-cents to $27.57… The Fed was responsible for this move, as Fed Chairman Powell, laid out the Fed’s plans to generate inflation….  I have to tell you, that this all backasswards in my book….  The economy generates inflation , not the central band….  But I guess in this world of opposites that this just plays nicely in the sand box with the other things that not right….

In the early markets trading for Gold & Silver they are both inching higher VS the dollar. The two metals seem to be attempting to sneak around the short sellers this morning, so we’ll see who wins the day, eh? 

Here’s a snippet of Powell’s talk on generating inflation… “In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. Thus, our approach could be viewed as a flexible form of average inflation targeting.26 Our decisions about appropriate monetary policy will continue to reflect a broad array of considerations and will not be dictated by any formula. Of course, if excessive inflationary pressures were to build or inflation expectations were to ratchet above levels consistent with our goal, we would not hesitate to act.”

OK… what the hell did he just say?  Did he just say that the Fed Heads will just shoot from the hip on inflation?  Ok, before I go the whole 9 yards on Powell and the Fed Heads, I’m going to walk away for a minute….  Ok, I’m back now, and have decided to not go the whole 9 yards at this time, because the Fed Heads haven’t proven that they can generate inflation, and at this time I doubt that they could find their rear-ends with both hands! 

And all that confusion over what he DID or DIDN’T say was the reason the dollar lost $35 of value to Gold on Friday…. Now we’ve had a full weekend to digest what the Fed was telling us, and if I’m still in tune with what traders think, I would be that they’re still confused….

Oh!, and one more thing! The thing that really gets my goat is that all the Fed Heads were in agreement to this idea… Not one dissenting vote….  Ok, if they all agree then you don’t need all of them!  Even more of a reason to confirm Judy Shelton for a Fed job….  One of my first bosses in the investment arena was a man named Dave Wren…. In a small meeting he asked who agreed, and then he said something that I’ll always remember…. “Don’t you all agree with me, for if that happens I don’t need all of you!”  So, me being the new guy, was scared to death, and I disagreed…. 

Circling back to when I used to give presentations all over the U.S., Canada, and Panama, I used to tell people that a proper diversification of their investment portfolio should include a 15-20% allocation to Gold & Silver….  And when the metals were in rally mode you would want to increase your allocation to 25%  This past weekend I read where the Ohio firefighters and policemen pension fund had approved an additional 5% allocation to Gold…  That moves their total allocation to Gold to 25%…. You don’t think someone on that pension board attended one of my presentations do you?  HA!  I loved the comment the pension board made after the additional allocation was approved: “OP&F believe that the addition of gold will give the portfolio a strong diversifier to its growth-oriented investments as well as provide an effective hedge against inflation.”

So…. What are you doing with your portfolio allocation?  Well, if you depend on the likes of Scwab, and any other large investment houses, they certainly won’t allow you to have gold as a part of your allocation… So, you’ll have to do it on the side….  And as always, I would prefer you call my metals guru, Tim Smith at 1-800-926-4922, to increase or even start your allocation to Gold / Silver….  And… as always I don’t get paid for telling you to call him…. I do that out of the kindness of my heart! But please tell whomever answers the phone that I told you call!

I received my latest issue of Grant Wiliams’ Things That Make You Go Hmmm. Last night, and so I quickly opened it to read as much as I could before it was time for bed…  Grant was talking about how the stock market has gone crazy, and that if we go back to the time period just before the stock market crash in 1929, Business Week had just printed their first issue… Now tell me if you think this was from then or now?  ““For five years at least,” they wrote, American business has been in the grips of an apocalyptic, holy-rolling exaltation over the unparalleled prosperity of the ‘new era’ upon which we, or it, or somebody has entered.” It had carried the country “into a cloud land of fantasy.”

 

“As the fall begins,” they warned, “there is a tenseness in Wall Street… a general feeling that

something is going to happen during the present season… stock prices are generally out of

line with safe earnings expectations, and the market is now almost wholly ‘psychological.” – snippet taken from Things That Make You Go Hmmm… by Grant Williams…

 

OK, I’m sure you guessed the answer to my question since I set it up the way I did…. But doesn’t that sound eerily like someone could write that today about the stock market?

And it’s not that I’ve become totally interested in talking about the stock market, but right after I read that quote in TTMYGH, I saw this on Twitter from David Rosenberg…. “I realize who Powell actually is: the doctor with the blood pressure monitor at the hot dog eating competition! Investors gorge, get obese, but won’t die. The S&P 500 market cap/GDP ratio, at 132%, just took out the 2000 peak. We know how this ends, we just don’t know when.” – David Rosenberg on his Twitter feed.

OK, I kept telling you that the back end of last week was chock-full-o-data, and so, this is going to be a long report on that data, so either skip ahead, or go along with me through the Data Barn….  First and foremost, the Weekly Initial Jobless Claims remained above 1 Million, making 23 of the last 24 weeks at 1 Million or above…   We received a surprise on Thursday when July Durable Goods Order rose %11.2%. But Capital Goods Orders were only 1.9% which wasn’t anything near what was expected… then we saw the 2nd QTR GDP revision which printed at negative -31.7%!!! 

On Friday the data deluge continued, and Personal Income and Spending printed for July…. Income was .4% but was better than June’s -1.01%, Spending was just 1.9% VS the 6.2% In June….  So, income was nascent and spending hit the skids…. Hmmm… Corporate Profits were down in July to $1.81 Trillion VS $2.04 Trillion in June. And finally, Core Inflation saw a .3% rise in July. 

All-in-all, the Data deluge wasn’t as bad as I expected it to be, but then one never knows who’s driving these data prints to the corral…  right? 

To recap…. The currencies and metals fought back on Friday, as it took a day for traders to attempt to figure out what Fed Head Powell was talking about… Gold was up $35, and the euro and A$ are leading the currencies to higher ground VS the dollar.  Chuck borrows a quote from Grant Williams, and then David Rosenberg adds his two cents in a Twitter comment. 

For What It’s Worth…  Ok, this may be a little long, but it’s well worth reading, as it’s Doug Noland talking about the Fed…. He does a good job of getting to the point here folks, so… you can find it here: http://creditbubblebulletin.blogspot.com/2020/08/weekly-commentary-its-about-jobs-jobs.html

Or, here’s your snippet: “For the most part, equities took Powell’s Jackson Hole speech in stride. Stocks rose – but they pretty much rise whenever markets are trading. Understandably, bonds were a little edgy. Ten-year Treasury yields rose six bps on the announcement to 0.75%, a 10-week high. Investment-grade corporate debt was under notable pressure. The iShares Investment Grade Corporate Bond ETF declined 0.8%, trading to the low since July 1st (down 1.1% for the week).

There is certainly an element of “the emperor has no clothes” in all this. We know from experiences in Japan, the U.S. and elsewhere that central banks don’t control the inflation rate. The shift to an “inflation targeting” regime was ill-conceived from the start. Rather than admit to mistakes, the global central bank community will continue frantically digging ever deeper holes.

Can we at least admit that inflation dynamics have evolved momentously over recent decades? Could we accept that technology innovation has led to a proliferation of new types of products and related services – profoundly boosting supplies of high-tech, digitized and myriad online products? There has also been the seismic shift to services-based output, altering inflation dynamics throughout economies. Moreover, “globalization” – especially the capacity to manufacture endless low-cost technology components and products globally – has fundamentally changed the inflation axiom “too much money chasing too few goods.”

For now, damage wrought to Fed credibility is masked by record equities and bond prices. In the wanting eyes of the marketplace, the “inflation targeting” regime is mere pretense. Bernanke didn’t punt on the Fed’s “exit strategy” due to consumer prices. Below target CPI was not behind Yellen’s postponing of policy normalization in the face of strengthening booms in both the markets and real economy. And Powell didn’t abruptly reverse course in December 2018 because of lagging consumer price pressure, just as CPI had nothing to do with last fall’s “insurance” stimulus measures.

Any lingering doubt the Federal Reserve has adopted a regime specifically targeting the securities markets was quashed with the $3 TN of liquidity response to March’s downside market dislocation.

Earth to former New York Fed President Bill Dudley: We’re today confronting a deviant financial structure unrecognizable to that from 1987. Have you already forgotten March’s near global financial meltdown? Why did a panicked Fed expand its balance sheet by an unprecedented $3 TN? Why has it capitulated and basically signaled to highly speculative markets that they are committed to looking the other way and just letting things run their course?”

Chuck Again….  You tell ’em Doug!  I’m so frustrated with our Fed Reserve, and if it weren’t for the craziness of the stock market, I believe that people would be throwing eggs in the faces of the Fed Heads….  I’m just saying… 

Market Prices   8/31/20: American Style: A$ .7356, kiwi .6733,  C$ .7650, euro 1.1936, sterling 1.3332, Swiss $1.1083, European Style: rand 16.7102, krone 8.7493, SEK 8.6180,  forint 296.75,   zloty 3.6826,   koruna 21.9907, RUB 74.04, yen 105.95, sing 1.3600, HKD 7.7498, INR 73.20, China 6.8603, peso 21.81, BRL 5.3869,  Dollar Index 92.22,  Oil $43.50,  10-year .72%, Silver $28.04, Platinum $934.00, Platinum $2,233.00, and Gold… $1,968.47

That’s it for today…. I know I went in several directions this morning, but I had all these thoughts in my head from the weekend of reading that I had to let them out, or my head would explode!   Had another driveway happy hour on Friday afternoon, this one was just neighbors, and we had a great crowd, with some rare appearances by folks that are usually at their lake houses! Little Evie was with us, spending the night and stuff over the weekend. Man, I become a blithering idiot when she’s around me. She makes sounds but no words yet, I can’t wait for her to tell me everything she’s talking about now…  I’m here all week, try the veal! Yes, no doctor or hospital visits for me this week… YAHOO!   I hope you have a Marvelous Monday, and please Be Good To Yourself!  I’ll see you… In September, See You when the summer’s through….  

Chuck Butler

 

 

August 26, 2020

* A nothing day in currencies and metals yesterday

* Traders wait for Powell’s talk on generating inflation tomorrow… 

Good Day… And a Wonderful Wednesday to you! I had a good day yesterday, and didn’t require a long nap during the day! There are days when I wake up and know that it’s going to “one of those days”, and then there are days that I wake up and say, “I’m ready!”.  Tomorrow morning I’ll have to be on the ball early, to report to the hospital for my quarterly scans… I don’t believe the scans will reveal anything I’m not aware of… So that’s how I’ll get through today and tomorrow until they post my results…  I used to have to wait a few days for results, but not any longer, they post them and send me note that they are on my account to be viewed, the same day….  I’m 2/3^rd’s through the book The Sirens of Titan, which means I’m reading it too quickly! I’m not a reader that can’t put down a book, for when it’s time to quit reading, I quit… And I like to make a book last… Stevie Wonder greets me this morning with his song: Superstition…. Stevie Ray Vaughn also did a good rendition of this classic rock song…

Well… yesterday was a real nothing day in the currencies and metals… The currencies didn’t move much, and the Dollar Index went from 93.07 to 93.04, so some slippage in the dollar but nothing to write home about.  Gold lost 20-cents on the day, and Silver lost a nickel….  You know I look at the Rhodium price every day, and it always amazes me the spread in the Bid/Ask price…. For example last night the bid price was $9,700 and the Ask price was $11,700….  That’s crazy! But we are talking about a rare asset, eh?

OK… Well I’m sure that the traders are pretty well entrenched with their positions until after Fed Head Chairman Powell, will speak. Now, if you read the FWIW article on Monday this week, you’ll already know what he’s scheduled to talk about, and if you skipped over it (don’t tell me!) I can tell you that he’s expected to talk about how the Fed is going to generate inflation….  I believe he’s walking on a thin line here folks…  For if he just talks about generating inflation, and says that the Fed will allow it run hotter than the 2%, that WAS their previous target… I think it’s game on for the metals once again, and the dollar selling….  

But…. If he says something to the tune of: “We’re going to attempt to get inflation rising, but we’ll average its rise”  which would mean they’ll keep a lid on it, then l don’t think we’ll see the doors wide open for a run in Gold and Silver and the euro….  It’ll depend on how confident he makes Traders feel that the Fed can control inflation….

I think what traders should be looking at questioning him just how the Fed is going to generate this inflation? For if I were the one asking him this question, I would add a smart alec comment about “does the Fed have a private tapper in the Eccles building that allows them to turn on inflation when they want it?”  Look they’ve printed more currency than you can shake a stick at, in recent months, but…. And that’s a BIG BUT, the currency has gone to the zombie Corporations, and the Casino Banks, and that’s no way to get inflation going!

I was reading Bill Bonner’s Diary yesterday, and he was talking about something that really gets me fired up, and that is how personal people take being called a name…. When I was a kid, every kid had a name that wasn’t their Christian name!  Shoot, I had a friend in grade school that was a little overweight, and we called him Moby!  Did he bring a gun to school to shoot us?  No…. because everyone had a name! Mine was “butman”….  Did I cry and run home to mommy because someone called me a name?  Hell no, I laughed just like every young boy does when he hears the word, “butt” or “fart”….  Anyway, I don’t know how we got to where we are, but we’re here…. And while you still might be called a name, they aren’t given with heart, they’re given with hate….  I’m just saying…

OK… So the overnight markets didn’t give any indication that they are ready to trade ahead of the Fed….  So, for the most part, we’re trading in the same clothes as yesterday, so nothing ventured, nothing gained…. There was some slippage in the euro which saw Germany print a decline in their economy that’s not been seen before. And the A$ climbed back above 72-cents overnight, and this morning… The Dollar Index is the same level as yesterday… 93.07

I wrote yesterday about how the Chinese renminbi had been on the rally tracks for about a month now, which was opposite of what I thought would be going on given the so-called cold war going on between the U.S. and China….  And then later in the morning in the Greg Gonigam’s 5 Minute Forecast, he highlighted economist Nomi Prins, and her view on the recovering Chinese economy…  So, it was good timing on my part to point out the currency gains….  I’m just saying….  You know my dad told me once to make sure you blow your own horn, because you can’t depend on other people to do so…. 

I sure hope you all are paying attention at this point, because you’re sure going to be glad you were as I explain what I’m talking about here: I really don’t know where to start with this quote….  So, I’ll just blurt it out, but first I want to thank good friend Dennis Miller, for sending me this from the Burning Platform.com   OK, for years now I’ve said that QE, TARP, whatever, only helped the Casino Banks…. And instead of them breaking up the Casino Banks, they’ve become even more Too Large To Fail….  OK, now that I’ve said that, let’s get to the quote…. This quote is by Neil Barofsky, who is according to Wikipedia: a partner in the Litigation Department of national law firm Jenner & Block LLP, focuses his practice on white collar investigations, complex commercial litigation, monitorships and examinerships. And at one time was the head regulator for the TARP money….  So, take in what he’s saying here folks…. And then re-read it for this is very telling about what’s going on these days…

“”The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true. It really happened. These suspicions are valid.”

Neil Barofsky, TARP Inspector General

Well, they sure aren’t suspicions any longer now are they!  This is where if I were still under the thumb of the legal and marketing people, when I was at EverBank. I would have to explain how I had been right in saying this, but couldn’t have told you  about the suspicion in the first place because I was not allowed to talk suspicions, or conspiracies…

But those days are over…. And while I hated leaving all the folks I worked with for so many years, I welcomed the opportunity to write, free and easy, once again, like I did before they decided to put the shackles on my writing!

Well, I’m minus one shiny quarter! The Current print of Consumer Confidence did not rise! It dropped from 91.7 to 84.8….  As Paul Mccartney sang with Wings, “Baby I’m amazed, Baby I’m amazed”  Wonders never cease, eh? But that didn’t stop the stock market from rising on the day….  Hmm…. The Case/ Shiller Home Price Index was flat with regards to a year on year basis…. 

Today’s Data Cupboard will begin to build to its crescendo with July prints of Durable Goods and Capital Goods Orders (CAPEX) And once again I’ll repeat what I always point out here, is that without CAPEX (capital expenditures) the economy won’t go anywhere…. Period!  I know it’s an old-timer’s look at things but these days, that’s what I am, “an old timer”….

Yesterday, I talked about the mounting delinquencies in mortgages, and the voila! Zerohedge.com prints an article with numbers! So, in July, financial firm, Black Knight reported the following: 

The number of homes with mortgage payments past due by 90 days or more rose by 376,000 in July to a total of 2.25 million. Serious mortgage delinquencies have jumped by 1.8 million since July 2019, a decade high, not seen since the last financial crisis.

I’m telling you know so maybe you’ll listen to me later, that this housing mess is going to get really ugly…  These delinquent mortgage payments are going to cause ripples that turn into huge waves…. 

To Recap… it’s as if the markets I follow, currencies and metals came to abrupt stop yesterday, when they realized that Fed Head Chairman Powell will speak tomorrow at the Jackson Hole Boondoggle, and they want to know what he has to say about inflation before they make their next moves….   So, the currencies and metals are trading in the same clothes today as yesterday, and probably tomorrow too, given Powell won’t speak until late afternoon, for us, as he’ll be on Mountain Time.  And Chuck has a time bomb that he set off with a quote from Neil Barofsky….

For What It’s Worth…  Yesterday, I went on about the Zombie Corporations, and the fact that so far in 2020 Corporate bankruptcies were mounting in numbers, and then longtime reader, Bob, sent me a link to this article on Zerohedge.com that talks about the bankruptcies, and it can be found here: https://www.zerohedge.com/markets/us-default-bomb-goes-2020-will-have-record-number-large-corporate-bankruptcies

Or, here’s your snippet: “The disconnect between the all time highs in the stock market and the broader economy has never been greater (with even Janet Yellen, one of the main architects of this disconnect, agreeing), and one of the places where this chasm is most glaring, is in the staggering number of major corporations filing for bankruptcy in 2020. Indeed, this year large US corporate bankruptcy filings are running at a record pace and are set to surpass levels reached during the financial crisis in 2009 (when the S&P was far from an all time high).

According to FT calculations, as of August 17, a record 45 companies each with more than $1 billion in assets has filed for Chapter 11 this year; this compares with 38 for the same period of 2009 during the depths of the financial crisis and is more than double last year’s figure of 18 over the comparable period.

In total, 157 companies with liabilities over $50 million have filed for Chapter 11 bankruptcy this year and as we warned several months ago, many more are coming.

“We are in the first innings of this bankruptcy cycle. It will spread far across industries as we get deeper into the crisis. It’s going to be a bumpy ride,” said Ben Schlafman, chief operating officer at New Generation Research.

The spike in bankruptcies comes despite trillions of dollars in government aid to mitigate the fallout of the coronavirus pandemic on businesses, highlighting the catastrophic and lasting impact Covid-19 is having on the US economy. Or perhaps those trillions in government aid are going to the wrong recipients, and as a result companies that stand to benefit from mass defaults are now sporting record market caps. In fact, the irony is that in its pursuit to crush monopolies such as Amazon and Google, the government has made them bigger and stronger than they have ever been.”

Chuck again…  this all says the same things I’ve been saying about the status of Corporations and the Gov’t payments that went to the wrong places…. 

That’s it for today….  Well, a very boring, long game last night for my beloved Cardinals, who scored 4 runs in the 3^rd inning and then never scored again and then blew the lead to lose….  I was trading emails with former Big Boss Frank Trotter this week, he is a new grandpa…. And loving it from what I could gather in the emails…  I also was trading emails with former colleague going back to Mark Twain Bank, Kathy Glowski/ Butcher….  Back in the day, when I was getting radiation on my jaw, and it was tearing up the inside of my mouth, the only thing I could put in my mouth were shakes/ malts…. And Kathy would go our of her way to bring me a Chocolate shake each day….  What a sweetheart!  Man those were some dark days, but the radiation was taking place while the Cardinals were playing in the 2011 World Series, and all that pain in my mouth didn’t stop me from going to Game 7 with my sons, and watching our beloved Cardinals win the World Series!  I forgot all about the pain in my mouth while we were hugging and jumping up and down after the win! Led Zeppelin takes us to the finish line today with their song, and Mike Meyer’s fave LZ song: Kashmir….   I hope you have a Wonderful Wednesday, and I’ll talke to you again next Monday… Please continue to Be Good To Yourself!

Chuck Butler

 

August 25, 2020

* The dollar bugs were back in control yesterday

* We have Powell talking up inflation and Gold can’t find a bid? 

Good day… And a Tom Terrific Tuesday to you! I received a surprise yesterday afternoon, while I was out back cooking some chicken breasts on my Big Green Egg….  My good friend, Duane stopped by to say hi… I hadn’t seen him since he dropped off that pastrami sandwich to me a couple of weeks ago… I sat out back to watch the Cardinals game, as I have for the last week, but this game was  VS the Royals last night. I will go to my grave never forgiving Don Denkinger for his, I still don’t know how he saw it the way he called it, massively bad call in Game 6 of the 1985 World Series between the Cardinals and the Royals… Instead of wining the series in Game 6, they lost the series in Game 7, which everybody and their brother knew they would lose, going into the game….   So, whenever the Royals play the Cardinals I’m always reminded of that totally blown call at first base by Denkinger… . Simon and Garfunkel greet me this morning with their song: America, which was also featured in the Almost Famous movie and soundtrack….

Another day, and another day when the overnight and early morning rallies for the currencies and metals fizzle out and end up going the wrong way…. And the end of the day yesterday, the euro was barely holding onto the 1.18 handle, and Gold had given back its early $9 gain to lose $13 on the day and close at $1,928.60…. There was nothing in the data cupboard that would want the dollar bugs to go so heavy into the buying dollars…. There also was no headway made on another currency printing stimulus package…. 

Yesterday, I told you about the 1.1 Million more Jobless Claims that were filed the week before… You may recall me telling when this whole economic shutdown began that people were going to find that their jobs weren’t waiting for them to return, and that many companies would not longer be in business…  Well, the Unemployment numbers keep rising, and so too do the number of Corporate bankruptcies… 

I read yesterday, that another large petrol company here in the U.S. has filed for bankruptcy… That’s makes 3 so far this year… That can’t be good for the economy, for it’s not just the Oil Company, it’s all the suppliers that supply them the rigs, and so on that will be affected…. I’m just saying… 

Longtime friend, and publishing guru, and author, Bill Bonner, quoted The Washington Post wit this ditty, that should be scaring the bejeebers out of the dollar bugs….. So, here we go!

“If the unemployment rate stays around 10 percent and no new stimulus is delivered, said Zach Parolin, a researcher at Columbia University, “we can expect poverty rates to rise and climb higher than those observed in the Great Recession.” The poverty threshold for a family of four is $26,200, according to the U.S. Department of Health and Human Services.

Data collected by the Census Bureau capture the financial pain. For the week that ended July 21, the most recent numbers available, roughly 29 million U.S. adults – about 12.1 percent – said their household sometimes or often didn’t have enough to eat the preceding seven days, according to the Center on Budget and Policy Priorities. Nearly 15 million renters said they were behind on rent during the same period.” – from Bill Bonner’s Diary…

OK… back to me….  I can’t understand why traders are so influenced by the PPT, who last week got this whole dollar buying debacle started.  Yes, they can cause harm one day, but so far they haven’t gone as far as coming in on back-tp-back, belly-to-belly, days….  It was a zombie jamboree,…. And they sang, Back to back, belly to belly, I don’t give a damn cause I’m cold stone already….

Pretty soon we’ll be having zombie Corporations having a jamboree, in hopes to stir up more support for their failing company that, is only still here today because of the Fed, buying their over leveraged bonds, and ETF’s….   Ah, yes, it’s all done under the guise of: “The pandemic caused our problems”, and the Fed took that bait, hook, line and sinker!   Of course these Corporations were wearing zombie clothes long before the Plandemic came along!  Yes, I call it the plandemic, for my own person reasons that I won’t get into here….

But a corporation collapse won’t cause the Robinhood crowd from buying the collapsing Corporation’s stocks….  Recall the Hertz ordeal? ….  I’m just saying!

The overnight and early morning markets haven’t provided any help to the battered asset classes of currencies and metals today.  I can see their thinking that why should they go long these two asset classes only to have their gains wiped out by the U.S market….  but this is no time to surrender, Dorothy! Come on…. you can do it! Don’t let the big bad bully U.S. traders push you around, steal your lunch, and give you a wedgie!  

Well, guess what’s going on in Jackson Hole, Wyoming?  Yes, it’s the Fed’s annual boondoggle where finance ministers and economist meet to discuss the economies of the world. Of course we really only care about what the Fed has to say about our economy, and for that, I direct your attention to the FWIW  article today…. 

Speaking of the Jackson Hole boondoggle…  It is here that QE2 was announced by St. Louis Fed President, James Bullard, years ago… So, there are times that actual work is done here…. But most of the time, I can see the fin mins hobnobbing with each other and the economists being like yapping little dogs biting at the ankles of the fin mins for them to stop and listen to what they have to say… 

As I told you yesterday, the U.S. Data Cupboard builds to a crescendo this week, so on Monday there was just The Chicago regional index, which dropped, just like the other regionals, but since they don’t give us any indication of what the National report will show, I’m boycotting these regionals from here on out! 

Today’s Data Cupboard, has the Case/Shiller Home Price Index, and we’ll see the stupid Consumer Confidence….  There’s more than 30 Million people out of jobs, and I’ll betcha a shiny quarter that the Confidence will have risen for this report….   I would bet that the people putting together this index didn’t contact any of those 30 Million unemployed consumers!  I also know that they have never contacted me to ask me if I’m confident…. 

I’m really frustrated with what the price manipulators have been doing to Gold & Silver….  Just last week I had sent a note to good friend Rick, letting him know that Gold had returned to $2,000, but since then it’s been all one way… and that one way is downward….  I also have been following the trial involving the JPMorgan metals trader, for spoofing and other crimes…. There has been little to new news about the trial, and that leads me to believe that there’s some sort of plea deal being made, so that this doesn’t go to trial, and everyone finds out how JPMorgan manipulates metals prices….

Before we head to the Big Finish today, I wanted to mention that  I’ve been watching the Chinese renminbi rally for a month now, and nearly every day there’s a inching up of the value of the renminbi VS the dollar… I find this very interesting in that, what’s being talked about now is that we’ve entered into a cold war with China… I would think if that were truly the case, then the Chinese would be marking down their currency to spite the U.S.  There’s more to this story with the renminbi and intend to research it, that’s for sure, because this rally just doesn’t make sense to me, at this point of our history… 

To recap… The Currencies & Metals lost their early morning gains yesterday, and ended the day with losses…. Chuck just doesn’t get it that traders are so spooked by the PPT…. Come on boys & girls get some intestinal fortitude and stand up to the PPT! The Data Cupboard was basically empty yesterday with only a regional manufacturing report, that Chuck’s boycotting these days! 

For What It’s Worth…. Not as smart alecky as yesterday’s FWIW, but one that needs to be printed. This is an article about what to expect from the Fed’s Chairman Jerome Powell, as he speaks on Thursday this week, and it can be found here: https://www.cnbc.com/2020/08/24/powell-set-to-deliver-profoundly-consequential-speech-changing-how-the-fed-views-inflation.html 

Or, here’s your snippet: “History will remember Paul Volcker and Jerome Powell as standing on the opposite ends of the inflation canyon, with the former taking desperate actions to try to tamp it down and the latter expected this week to announce an unprecedented effort to crank it back up.

 

Chuck again…. See? haven’t I told you over and over again about Powell’s need for inflation?  And Gold can’t find a bid these days?  Now, that’s stranger than fiction folks…. stranger than fiction… 

Market  prices 8/25/20: American Style: A$ .7177, kiwi .6542, C$ .7576, euro 1.1830, sterling 1.3139, Swiss $1.003, European Style: rand 16.7825, krone 8.9292, SEK 8.7330,  forint 298.76,   zloty 3.7153,   koruna 22.0595, RUB 74.53, yen 106.45, sing 1.3684, HKD 7.7501, INR 74.12, China 6.9166, peso 21.90, BRL 5.6086,  Dollar Index 93.07,   Oil $46.76,   10-year .65%, Silver $26.58, Platinum $919.00, Palladium $2,209.00, and Gold… $1,929.19

That’s it for today….  A real thumpin’ put on the Royals last night, by my beloved Cardinals…. I forgot to mention yesterday that our Blues, bowed out of the Stanley Cup Playoffs in the first round this year, even with the delayed start of the playoffs, I think the Blues had a Stanley Cup hangover this year… I only saw them play one game in the series like they played last year on their way to the Stanley Cup Championship…. Probably very frustrating for the coaching staff….  Oh, well, time to get the golf clubs out! I also forgot to bring to your attention that there will only be 3 Pfennigs this week, as on my Tub Thumpin’ Thursday, I’ll be getting scanned once again….  I always ask for the first scan of the day, that way they can’t get behind….  But that means I have to be at the hospital at 6:30 AM, to drink my barium…. Oh boy! (That stuff always upsets my stomach!)  The late, great George Harrison takes us to the finish line today with his song: I Got My Mind Set On You….  I loved his solo stuff, and with the Traveling Wilburys, and we lost him way too soon….  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

August 24, 2020

* Currencies, and metals are both on the rally tracks

* Weekly Initial Claims climb back above 1 Million! 

Good day…. And a Marvelous Monday to you! Another Chamber of Commerce weekend, weather-wise for us here in God’s Country….  And the Cardinals took 3of 4 from the Reds, so baseball-wise it was also a good weekend!  Most of my buddies were off to their respective lakes and lake homes this past weekend, which meant I sat out back watching the baseball games by my lonesome…. Oh woe is me… HA! I was watching a bit of TV last night, and the news was on, which usually turns me off, but they were discussing how the police chase method called PIT had caused 30 deaths this past year… And I yelled at the TV… “if the dolts weren’t running from the police, they wouldn’t have had to use the method”…  Of course, all the bleeding hearts will argue with me on that, and I don’t care, because I’m right, and I know it!  Don’t run from the police, period!   The Music Explosion greets me this morning with their song: Little Bit of Soul….  This is one of the first songs I learned to play on the guitar, with Hey There Little Red Riding Hood being the first!

Well, Friday was an interesting day in the markets…. The dollar bugs continued to pile on the dollar buying, thus following up what the PPT started on Wednesday…  The euro really took it on the chin, and Gold dropped $4 on the day to close at $1,943.40…  And once again I have to put my tail between my legs and take my ball and bat and go home….  The beginning of the weak dollar trend that I talked about last week, failed to launch…. That doesn’t mean that it won’t, it just means that it didn’t when I thought it would….  Blame it all on the Plunge Protection Team (PPT) for they got the ball rolling on buying dollars on Wednesday, and it carried on through to the weekend…  

I can hear the Fed Heads when they gather and talk though their masks…  They are kicking the cobble stones and wondering what they have to do to make the dollar less desirable?  You see, the Fed does want Gold to be on everyone’s minds these days, because….  Are you ready for this?  What does a rising Gold price in most cases tell you about inflation? It tells you that inflation is moving higher, and thus the Gold price moves higher….  So, the Fed Heads think that if they cut rates to zero, print currency like there’s no tomorrow, and talk down the economy, that they can get the Gold price to rise, and in their respective minds, they believe that this would indicate to consumers that inflation is rising, and finally, after all that heavy toiling the Fed would have their inflation! 

But it doesn’t work that way, folks…. That’s like putting the horse before the cart…. I’m just saying…

In the overnight markets last night and early this morning, Gold, Silver and the currencies are attempting to run their respective rallies up the flag pole one more time to see if they can do so without interference… Gold is up $9 this morning, Silver is up $1, and the euro is pushing through the 1.18 handle once again…   So, the week is starting out on a good foot…  And like James Brown sang, years ago…  “I gotta get on the good foot”…. 

And the Data late last week was as confusing as it is for a blind dog in a meat packing plant!  Now, that’s confusing, eh?  Well, how do you have the regional manufacturing indexes all come in weaker than the previous month, but then the national manufacturing index rises?  Now, riddle me this Batman… How does that happen?  Well, if you have people that meddle in the data to make it look better, that’s how that happens, Robin…. And it’s time you learned that fact!  I shake my head in disgust that this goes on, but as long as we all know that’s the case, we won’t be fooled by these rogue reports, now will we?

The Initial Weekly Jobless Claims did just as I suspected they would, they climbed back over 1 Million for the week, which makes now 22 of 23 weeks above 1 Million…  The total came in at 1.1 Million, and the Continuing Claims were above 28 Million…  And don’t forget about the contract or “gig workers” that aren’t counted in these numbers… That could add quite a few more to the Unemployed Category, now don’t you think?    Imagine if you were what was considered to be a “gig worker”, and you were unemployed, you get no unemployment benefits, and the Gov’t doesn’t even count you as unemployed…  Now that would disheartening to me…. 

Oh, but the housing market is soaring! Good for that! I saw on TV the other night that you can get mortgage rates in the 2’s….  Now, wouldn’t that have been nice for me when in 1984, I bought my first house with an interest rate tied to T-Bills, which meant it was 13.5% at that time….  I’ve read a lot of stuff about the young crowd doesn’t believe in owning a home (probably because they can’t fix a darn thing, except to change a lightbulb)  and that they felt that it was not worth it to have that much responsibility…. But Come On! You might never see mortgage rates this low again! And if you are someone that has an interest rate that’s much higher than 2%, you had better be finding out how to refi that loan! Like the TV commercial, “What are you waiting for, John Stamos to knit you a scarf?”  Those are funny! 

Yes, I’m sorry to anyone that takes offense at what I just said about the younger crowd, but seriously… Ask one of them if they know how to change a tire on a car… Or ask one of them if they can replace a toilet’s float, and so on…  

And while new and existing houses are getting sold…. The homes that are already semi-owned by Americans, are seeing the largest amount of delinquencies ever….  Sure the Gov’t said that the bank can’t foreclose on these delinquent home owners, but…. That doesn’t just close the book on this, and allow us to walk away worry free….   You see, most mortgages are sold and put into mortgage backed bonds…. Those bonds have payments that need to be made to the bond holders each month….  After a few months of no payments, I would think that these bonds will have to go into default….  Uh-oh… But don’t let that upset your rose garden!  It’s all a part of the financial system breaking down…. Don’t worry, be happy!

I’m feeling quite sarcastic this morning, if you hadn’t noticed! 

I’ve had quite a few dear readers send me notes recently asking me the same basic question… Of should they fabricate their pooled Gold & Silver now, or continue holding it in the pooled account….  So, I thought I would address that here for all to read….  Basically, I would say to pay for and get your metals minted and shipped to you, buy a safe, put them in there and don’t’ tell anyone you have them in your house….

But, the premiums for fabricating/ minting are through the roof right now… So, I do believe it would be prudent to hold on to your pooled metals at this time, and wait for the minting fees to come down, and when they do, then revert to what I said above….  

OK… got that? Good!   Oh! And also I misspoke last week, when I said that Australian Banks were closing their ATMS’s and some branches…. I should have said the 4 Biggest Aussie Banks are doing that…. So, just a minor correction, but one that one of my Aussie readers pointed out to me!

Did you know that the folks at FXStreet post my Pfennig every day that I write it?  Follow them on Twitter, and you’ll see what I get the biggest kick out of, and that is seeing my Pfennig on Twitter each day…. Now, if we can get it on Parler, then well, it will be wider spread!  If you do follow FXStreet on Twitter, make you click the heart on my Pfennig posting!  That would be greatly appreciated!

This week in the U.S. Data Cupboard starts out slow, but as the week hits hump day… Mike, Mike, Mike what day is it? (I still think that’s the funniest  TV commercial I’ve ever seen!)  The data prints will be coming in hot and heavy, with major economic data prints by the boat load , so we’ve got that going for us this week, eh?

The Data Cupboard today only has one of the regional indexes (Chicago), but what good are they, if they can’t be depended on to indicate what to expect in the National report?  So, I’m boycotting the regionals for now on….  They’re useless to me! 

To recap…. Friday was another day of the dollar bugs having the conn…. It all started on Wednesday last week, when the PPT began to buy dollars to keep the dollar from going down a rabbit hole…. That put the idea in traders’ heads that it was too dangerous to sell dollars, with the PPT lingering…. And so the currency rally that was beginning to get noticed, was stopped in its tracks…. Gold lost $4 on Friday, and is still attempting to pull itself up the boot straps and get on the rally tracks again…

For What It’s Worth….  Ok, there I was working on my crossword puzzles on Saturday morning, and I see an email from the GATA folks. So I stop what I’m doing to see what they have to say, and in the email was a snippet for an article on Bloomberg.com that was made for the FWIW section! It’s a letter to the Fed from the stock market, and it can be found here: https://www.bloomberg.com/news/features/2020-08-21/a-love-letter-to-the-federal-reserve-from-the-adoring-stock-market

 

Or, here’s Your snippet: “ Dear Fed,

Hey there! It’s me, the stock market. I know it’s weird to write you like this, but I felt like I needed to drop a quick thank-you note for everything you’ve done for me this year. I mean, your big ol’ balance sheet is almost $3 trillion larger since early March! You’re backing up the truck and loading it with Treasuries and corporate bonds and bond ETFs, all to keep the competition to stocks from fixed-income yields as limited as Jim Cramer’s understanding of me. It’s been a dream come true, honestly. I mean, fess up: Have you been reading my diary?!

Maybe you’ve noticed, but everything else is a royal mess. Covid-19 is still killing people. Parents are dreading the beginning of “school.” U.S. unemployment is still above 10%, higher than it’s been since the 1980s. The country is facing the biggest economic contraction in its history. Corporate profits are plunging. The recession is forecast to continue at least through the first quarter of next year. And me? I’m soaring! Have you seen these record highs I’ve been setting?

To be honest with you, it’s getting kind of wild—and I’ve seen plenty of weirdness before. I’m more popular with sports fans than March Madness! Of course, there was no March Madness this year, so that’s not really a fair comparison—kind of like comparing my dividend payouts to yields in the bond market. Amirite, or amirite? LOL!

But I’m not kidding when I say things are getting REALLY weird. Have you heard of Dave Portnoy, aka Davey Day Trader, yet? He was just some middling internet celebrity until suddenly he’s going viral for using Scrabble tiles to pick stock ticker symbols. The Robinhood set thinks he’s smarter than Warren Buffett! This probably isn’t going to end well, I’ll tell you that much.

Speaking of Robinhood, that whole Hertz saga was about as weird as it gets. A rental car company was trying to sell new shares while in bankruptcy court, because its stock price was on a tear? Let me repeat that: Hertz. Sold. Shares. While. In. Bankruptcy. I can’t even! You’re sure keeping your pals over at the SEC busy! I mean, it’s so weird out there, Bloomberg Businessweek is resorting to cringeworthy satire to make sense of it all.”

Chuck again… this is one of those articles that I wished I could put here in its entirety! This was fantastic! Especially for a a sarcastic, smart alec like me!

Market  prices 8/24/20: American Style: A$ .7197, kiwi .6560,  C$ .7609, euro 1.1842, sterling 1.3130, Swiss $1.1010, European Style: rand 16.9575, krone 8.9609, SEK 8.7500,  forint 296.42,  zloty 3.7136,   koruna 22.0270, RUB 74.77, yen 105.75, sing 1.3674, HKD 7.7500, INR 73.98, China 6.9143, peso 21.89, BRL 5.6176, Dollar Index 92.93,  Oil $42.73,   10-year .63%, Silver $26.96, Platinum $926.00, Palladium $2,078.00, and Gold… $1,952.77

That’s it for today….  You know I had a dear reader ask me how I did what I do under the circumstances of chemo and cancer…. I told him I knew of no other way other than to soldier on, it was how I was brought up, watching my dad go to work every day, with back problem that would stop most men in their tracks…. If he could do that, I can do this….  I did tell him that there are days I wonder how I get out of bed….  I have to commend the SEC, Big 12, and the ACC for at least attempting to have a college football season this fall!  They may get shut down, but then they may get to play, which is what those college athletes want… a chance to play….  I can’t wait to hear Every True Son, played by Marching Mizzou!  In 2008, I was 1 year removed from the cancer diagnosis, two major cancer surgeries, when I attended the Mizzou/ Illinois football game, and when I heard Marching Mizzou, I began to cry, for at one point in the past year I had wondered if I would ever hear them again….  It was like when I walk out of the concourse at Roger Dean Stadium and see the lush green baseball field once again….   Ok… enough of that!  I’m supposed to be a big strong man that doesn’t get sappy!  The McCoys take us to the finish line today with their song: Hang On Sloopy…. And with that I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler