Author: admin

November 17, 2020

* the dollar continues to weaken, albeit very slowly… 

* What’s up with the 10-year Treasury’s yield? 

Good Day… And a Tom Terrific Tuesday to you! I totally forgot to mention this yesterday.. Over the weekend we learned that youngest son, Alex, learned that his offer on a house, had been accepted (I told him that meant he offered too much! HA!) and he will soon be a Home Care person… He said, you mean home owner? I said, no the bank is the owner, you just take care of the home until the loan is paid off, then you become a home owner…   He was not pleased with that… I told him most people would call him a home owner, so just go with that! I opened Pandora’s Box of replies yesterday, when I said that the election hadn’t been officially declared yet… Well, I now know who they voted for!  America greets me this morning with their song: Sister Golden Hair… 

On a side note, on Saturday, when Evie and Braden were here, I noticed that Evie was finally beginning to grow some hair, and it looked blonde to me, so I called her Blondie… Braden then said, “do they call you nothing, because you have no hair? We laughed and laughed at that…

OK… Yesterday, I told you that Gold was down $12 in the early trading… But soon after hitting “send” the reversal began, and with each hour that passed, Gold gained a little more, and a little more, until by noon the shiny metal has recovered the $12 loss in early trading, and was flat for the day!  Good Show! For the day, Gold ended down 60-cents, acting and trading much like its little brother, Silver, who gained 9-cents on the day… Gold closed at $1,889.60, and Silver at $24.84…   I would think that Gold’s recovery yesterday, saw a lot of people buying at a bargain price… And others? Well, they’re just now getting in on the best investment since 2000….

Speaking of Gold… The good folks at GATA sent me this quote from Egon Von Greyerz, so here goes: “The ETF market is primarily a paper market or at best a market which consists of gold leased from central banks. When there is major buying of the biggest gold ETF, GLD, the Swiss refiners seldom see an increase in sales. Instead the bullion banks are lending central bank gold to the ETF. For that reason, anyone who buys gold for wealth preservation should never buy a gold ETF but real physical gold.”

This is one of the reasons that I’ve always said that physical Gold is the way to own Gold… But if you just want to own the “price” like a commodity, then the ETF is for you…  Just not for me! 

I’ve explained this many times in the past, but here I go again… In the East, Gold is bought as wealth preservation, or a storage of Wealth, if you will… In the west, Gold is bought & Sold as a commodity, and therefore you see swings in price… Until people in the U.S. mostly, begin to view Gold as a storage of wealth, you’ll continue to see swings in prices that get you all lathered up and make you want to sell…  I’m just saying…

And the Dollar Index, which yesterday morning was 92.76 ended the day at 92.47, and you all know what that means, right? That the currencies, for the most part, rallied VS the dollar yesterday… The euro headed higher within the 1.18 handle, and the Aussie dollar (A$) climbed back above 73-cents! The price of Oil slid by about 50-cents on the day, and gave the Petrol Currencies no reason to rally… The reason I mentioned us keeping track of the Dollar Index this week, is that I firmly believe that we are going to see further rot on the dollar’s vine going forward…  Sure, the PPT is always out there lurking, but as long as the downward move is slow, then I think the PPT will stay on the sidelines…

The dollar is like the frog in the pot of water… If you drop the frog into boiling water, he’ll jump out, but if you slowly turn the heat up to boiling, he’ll never notice until it’s too late…   So, currency traders who have had a yen to sell dollars for months now, will be prudent to keep the heat on the dollar slowing rising… 

And this morning, in our daily check-in on the Dollar Index, it has fallen further and sits at 92.34, this morning…  Still weakening, albeit slowly… 

In the overnight and early trading markets we have the currencies maintaining their moves against the dollar, with a little more upward movement. Gold is down $1.90 and Silver is down 17-cents this morning, but yesterday’s price action tells us that those downward moves could turn positive at any time!  

OK, last week I pointed out how the 10-year treasury yield has risen to .96% from around .67%, and wondered what the bond boys were telling us…  But since then the yield has dropped again, and this morning sits at .88%… You don’t think that the Fed decided that the yield was getting too high and decided they needed to buy in bulk to push the price higher, and lower the yield, do you?  Nah… That can’t happen..  Ha! As If it couldn’t happen! 

Well, word going around the street yesterday, is that the European Union and U.K. are very close to having a Trade Deal worked out… This would be HUGE for both entities, since trade between the two have be tenuous since BREXIT… 

And that brings me to a request I had in the Pfennig Replies box, from a dear reader who wanted to know what my thoughts for the U.K. pound sterling, were going forward…  Well… As I explained last week, sterling is one of the major currencies that get bought as an offset to the dollar…  Euros first, then yen, francs and sterling… So, if the dollar is going to continue to weaken, it won’t matter that the U.K. had debt up to their eyeballs, and their Central Bank is considering negative rates, sterling will rally…by nature of being a major currency offset… 

You’ll have investors lining up to get out of the dollar, and buy “anything” that’s not the dollar… of course if we still used fundamentals to determine what currencies to buy, this is when we would use those fundamentals… But these days it’s all “trader sentiment”, and if the sentiment is to sell dollars, you’ll have to watch to see what, for the most part, traders use as the offset currency… But, like I said the major currencies get the most play here…  Throw in the Aussie dollar, and that pretty much gives you the list of currencies to watch…

You might be somewhat leery of a call for a weaker dollar with the stock market still hitting new highs, but here’s something to think about… Yesterday, a new virus vaccine with an effacy rate of 94%, was announced, and the dollar got sold on the day… Now, aren’t those that (with apologies to Grant Williams) make you go Hmmmm…. ?

I read yesterday, that in China it’s a punishable crime to talk in public about your thoughts on the U.S. election…   So, just in passing you say to your friend, “those election results are still questionable aren’t they?” And you’ll get thrown in jail and fined… No soup for you!  I wonder when that civil liberty of free speech will be taken from us? It’s already been taken away on Facebook, and Twitter…  Oh, by the way you can find me on Parler now… Not that I ever sent messages out very often to begin with, but I didn’t want the “free speech police” banning me!

One day they’ll come for the Pfennig… Or maybe I’m so small that it flies under the radar?  That could good and bad… Good that they don’t notice me, and bad that I don’t have enough readers to warrant going after! UGH!   And that brings me to another subject… Readers of the Pfennig…  I have about ¼ of the people that I send the Pfennig to each day, open and read it…  What the heck is the other 3/4’s of the list doing? If they aren’t going to read it, why see it in your email box each day, and ignore it? I find this very strange… Very strange indeed…

Today’s U.S. Data Cupboard will be stretched to the limit with Rocktober prints of Retail Sales, Industrial Production, Capacity Utilization, and added to those three, will be Business Inventories, and Home Builders report…  Ok, the BHI (Butler Household Index) tells me that Retail Sales will be down significantly in Rocktober from September, which saw back to school sales bloat its number.  Who knows what Industrial Production will have for us today? September has IP at -.6%, and one would have thought it would be stronger… Rocktober is expected to be stronger at 1.9%, but that’s an expectation that has nothing behind it, folks… So, we’ll have to wait-n-see what IP did last month..

There will also be Several Fed bank presidents speaking at Fed conference on racism and the economy. And New York Fed President John Williams interviews Mark Zandi of Moody’s Analytics  Man would I love to be the one that NY Fed President John Williams interviewed… I don’t think he would like my answers, but it would be more entertaining that the softballs that he’s going to toss to Mark Zandi!

To Recap… Both the currencies and metals rallied on Monday, with Gold climbing back to flat from being down $12 early… The price of Oil slide 50-cents on the day, and the Dollar Index fell from 92.76 to 92.49…  Thus not allowing the Petrol Currencies to rally on the day, along with euros, sterling A$’s, etc. it appears that the U.K. and E.U. will shake hands on a new Trade pact in the coming days, and Chuck thinks that’s a win-win for both entities.  And Chuck also points out that the dollar got sold yesterday, on a day when a new virus vaccine was announced…  Hmmmm….

For What it’s Worth… I hope you all had the opportunity to read yesterday’s article all the way through…  Well today I have another rant from Charles Hugh Smith, of whom I’ve quoted a few times in the past. In this article he explains that the “Great Reset” has already happened, and it can be found here: https://www.blacklistednews.com/article/78557/the-great-reset-already.html

Or, here’s your snippet: “Put another way: the elites have cannibalized the system so thoroughly that there’s nothing left to steal, exploit or cannibalize.

The global elites’ techno-fantasy of a completely centralized future, The Great Reset, is addressed as a future project. Too bad it already happened in 2008-09. The lackeys and toadies tasked with spewing the PR are 12 years too late, and so are the critics listening to the PR with foreboding.

Simply put, events outran our understanding of them. The future already manifested while we were trying to cram the present arrangement into an obsolete conceptual framework.

In broad-brush, the post-World War II era ended around 1970. The legitimate prosperity of 1946-1970 was based on cheap oil controlled by the U.S. and the hegemony of the U.S. dollar. Everything else was merely decoration.

The Original Sin to hard-money advocates was America’s abandonment of the gold standard in 1971, but this was the only way to maintain hegemony. Maintaining the reserve currency is tricky, as the nation issuing the reserve currency has to supply the global economy with enough of the currency to grease commerce and stock central bank reserves around the world.

As the global economy expanded, the only way the U.S. could send enough dollars overseas was to run trade deficits, which in a gold standard meant the gold reserves would go to zero as trading partners holding dollars would exchange the currency for gold.

So the choice was: give up the reserve currency and the hegemony of the U.S. dollar by jacking up the dollar’s value so high that imports would collapse, or accept that hegemony was no longer compatible with the gold standard. It wasn’t a difficult decision: who would give up global hegemony, and for what?”

Chuck again… Yes, the article is much longer than the snippet, and once again I implore you to read it, please, pretty please with sugar on top?  And I thank long time reader Bob for sending me the link above yesterday… 

Market  Prices 11/17/20: American Style: A$ .7319,  kiwi .6895, C$ .7639, euro 1.1878, sterling 1.3260, Swiss $1.0983, European Style: rand 15.3907, krone 9.0607, SEK 8.6151, forint 304.40,  zloty 3.7827,    koruna 22.2950, RUB 76.69, yen 104.21, sing 1.3432, HKD 7.7526, INR 74.42, China 6.5837, peso 20.34,  BRL 5.43.27,  Dollar Index 92.34,  Oil $41.25,  10-year .88%, Silver $24.67, Platinum $934.00, Palladium $2,345.00, and Gold… $1,887.70

That’s it for today…  Well, I tried to explain to Alex last night that in the first few years of his home loan that he’ll only be paying interest, and not much principal, which might lead him  to thinking of  paying a little more on his home loan each month than the payment scheduled amount. A little fatherly advice that I doubt he’ll listen to, because my other two kids never listened to my fatherly advice! HA!   When I was a young man, and my dad talked to me, I was all ears… But these days kids think they know it all… I’m just saying…   Well the NHL announced that they are moving the start date of the season to January from December…  More time for the Tampa Bay Lightening players to spend time with the Stanley Cup!  Stevie Ray Vaughn takes us to the finish line this morning with his song: The Sky Is Crying…   It’s the live version and it’s a good one!  I hope you have a Tom Terrific Tuesday and please remember to Be Good To Yourself!

 

Chuck Butler

 

 

November 16, 2020

* Currencies & Metals end last week on a good note… 

* There’s news of another vaccine ready to go this morning! 

Good Day… And a Marvelous Monday to you! The Classic IV had a song in the 60’s that went like this: Oh Stormy, Oh Stormy, bring back that sunny day!  Man did we have some wind and rain this past weekend! The wind was the devastating kind, that uprooted trees, and caused damage across the region… Oh Stormy….  Little Evie, and brother Braden came to stay with us for a while on Saturday, she’s growing up so fast! And her brother, just loves her to the beach and back!  I love to watch them interact with each other.  Braden can get her belly laughing, which is so cute!  I thank the Good Lord every day that he has allowed me to live with all that has gone wrong with my health, so that I can watch my grandkids grow up!  And looky here…. The Jefferson Starship greets me this morning with their song: Miracles…  

Another weekend, went by and still no absolute verdict in the Presidential race. I know the media has made the call, but then they went out of their way to make sure the President lost his reelection bid… The media is so controlled these days, which is why you don’t see much “ investigative journalism” any longer… If Watergate would have happened these days, no one would even know….  But  that’s all I have to say about that, before I go down a rabbit hole that I don’t want to, or need to go down….  And that’s that!

The currencies and metals both had good days on Thursday and Friday last week.  On Thursday, when I left you, Gold was up $4 in the early trading, and then went on to gain $11 on the day. And then followed that up with another gain of $12 to close the week at $1,890.20….  It just shows to go you that you can’t keep a good asset down….  The price manipulators completely whacked the crap out of the price of Gold last week on two occasions…  I wrote to a dear reader who asked me why I keep telling people to buy Gold, and then tell people that the price manipulators keep knocking its price down.  I said, “Well, these are simply short-term movements that allow people to buy at reduced prices.” As long as you don’t allow the price manipulators to get to you, you will see how Gold continues to rise after their price engineered take downs.” 

The euro had climbed above the 1.18 figure again on Thursday morning, and stayed above 1.18 the rest of the day and added to its price on Friday to end the week with the euro trading at 1.1837… Remember what I’ve told you about the line in the sand that has been drawn by the dollar bugs, which is around the 1.19 handle…  The Aussie dollar (A$) is still being held down below 73-cents, but it’s only a matter of time for that currency to take off, I do believe…  

One asset that can’t seem to get in line with the other anti-dollar assets, of currencies and metals, is Oil… The price of Oil slid $1 on Friday, thus not allowing the Petrol Currencies to follow the Big Dog euro off the porch to chase the dollar bugs down the street…  Not only did the $1 buck slide in the price of Oil on Friday not allow the Petrol Currencies to get off the porch, It didn’t allow them to even get up, as they lost ground on a day when most other currencies gained ground.

The Big news, markets-wise, this past weekend, was the announcement of a 10 country Free Trade Agreement in the S.E. Asian countries…  Hopefully this will soothe out the relations between China and Australia… Recall I told you how China was boycotting any shipments to China from Australia, because Australia had added their names to the list of countries that wanted a full investigation of the origins of the COVID-29 virus…

Speaking of the virus… here we go again!  Tomorrow, our county will be shutting down businesses and demanding that people say home, unless they are going to work, for groceries, and the gym… Oh, and for doctor appts. Which is was I was happy to see, since that’s the only time I DO get out of the house these days!  The first time they told us it was for two-weeks… And then 6 months later they relaxed the rules…. This time…. Who knows… how long it will be…  All I know is this…. The definition of being Insane is doing something over and over again and expecting a different result…  The lockdowns apparently didn’t work the first time, or else we wouldn’t be going into lockdown again…. I’m just saying…

Do, you know who Tom Woods is?  If you don’t, you should know him, and his thoughts, which he shares with his readers each week, sometimes more than once a week!  He’s a Libertarian and therefore his viewpoints aren’t always those that the mass media would follow… But they are bang on! Trust me when I say, I do believe you would like reading Tom Woods thoughts…  I don’t even recall how I came to read him all the time, as it’s been a long time since I began that process…

In the overnight and early morning trading, the currencies have slipped a little bit, and Gold is getting sold by $14… What is up with these selling days in Gold?  The Dollar Index is 92.76 this morning, as we start the week, let’s see where it takes us throughout the week… My suspicions are that the Dollar Index will continue to get weaker as the days go by… 

And there’s news this morning about another virus vaccine from Moderna, that’s 94.5% effective…  Well, I’m from Missouri, they’re going to have to show me, for me to believe that!  But still… that’s good news, because we’re going to need all the ammo we can get to push the virus across the river! 

OK… back to what’s going on in the markets…  James Rickards was in the minds of the readers at the GATA org. this past weekend, as they posted something from him..  You can find this article in its entirety here: https://dailyreckoning.com/the-bogus-case-against-gold/ … And here’s just a small sample of what he had to say about Gold: “The first one you may have heard many times. “Experts” say there’s not enough gold to support a global financial system. Gold can’t support all the world’s paper money, its assets and liabilities, its expanded balance sheets of all the banks and the financial institutions in the world. They say there’s not enough gold to support that money supply.

That argument is complete nonsense. It’s true that there’s a limited quantity of gold. But more importantly, there’s always enough gold to support the financial system. The key is to set its price correctly.

It is true that at today’s price of about $1,875 an ounce, pegging it to the existing money supply would be highly deflationary.

But to avoid that, all we have to do is increase the gold price. In other words, take the amount of existing gold, place it at, say, $14,000 an ounce, and there’s plenty of gold to support the money supply.

In other words, a certain amount of gold can always support any amount of money supply if its price is set properly.”

Chuck again… Do you know how people that make it big in something, like to write a book and tell people how they did it?  Well, I didn’t make it big in something, but I still like to tell you how you should own Gold! HA!

The U.S. Data Cupboard late last week had the Weekly Initial Jobless Claims, which fell further last week to 709,000, but the Continuing Claims remained above 21 Million…  which the back of a cocktail napkin accounting tells me the Unemployment Rates is 14%…  I would go to my grave arguing with the BLS over what the real Unemployment Rates is, and I know I would be correct, and the BLS would wrong!

OK, but recall last Thursday I said I would bet a dollar to a Krispy Kreme that the U.S. Budget Deficit for Rocktober would be greater than the $100 Billion that was projected?  Well, I would have won that bet, because the Rocktober Budget Deficit printed at $284 Billion!!!!!  OK, let’s just think about this for a moment… Do you think that the Budget Deficit numbers will come down in the coming months or remain at high levels?   Me? I think they will remain at high levels, and could possibly make $284 Billion look like chump change! Oh, and BTW, $284 Billion annualized is $3.4 Trillion… 

Deficit spending has become a way of life for the U.S. And they (the powers that be) believe that none of it will matter… That deficits don’t matter… That running deficits so high, do not drag an economy’s growth through the gutter, and so on….  But they are wrong… And will be proven wrong on judgement day for the financial system…  I’m just saying…

While last week’s Data Cupboard didn’t have much for us, this week’s offerings will be quite crowded at times. For instance, there’s only a regional manufacturing activity report, that I boycott, to print today, while tomorrow, we’ll see Rocktober reports for Retail Sales, Industrial Production and Capacity Utilization…  And then on Wednesday, crickets, and on Thursday we go right back to the Weekly Initial Jobless Claims, etc. and end the week on Friday there’ll be nothing, nada, zip, zero, zilch, a big goose egg! 

For What It’s Worth…  Man, I want to make sure that everyone reads today’s article in the FWIW section! I’ve quoted Egon Von Greyerz before here in the Pfennig, and weekly he sends me his company’s letter… And last week’s was so well written and the to the point of everything I’ve been talking about, so please, set aside a few minutes, and click on the link to read the letter… I wish I had written it, for it is so good! And it can be found here: https://goldswitzerland.com/the-madness-of-crowds-the-sanity-of-gold/

Or, here’s your snippet: “As for central banks who print money out of thin air to buy unwanted sovereign debts, they too are projecting miraculous solutions to otherwise staggering debt problems based on, you guessed it: Creating more debt.

And how will this debt be paid? Easy—with money created by a mouse click at a central bank near you.

Seem a little bit too good to be true for the economic future?

Well, the U.S. Fed’s track record for forecasting recessions is 0 in 10, but that has never stopped them from making inaccurate and contradictory projections which resemble a kind of open madness:

“You will never see another financial crisis in your lifetime.”

-Janet Yellen, spring 2018

“I do worry that we could have another financial crisis. ″

-Janet Yellen, fall 2018

“There’s no reason to think this (bullish) cycle can’t continue for quite some time, effectively indefinitely.”

-Jerome Powell –2018

“The US is on an unsustainable fiscal path; there’s no hiding from it.”

-Jerome Powell–2019

In the post-08 “new abnormal” of deficits without tears and embarrassing new theories which argue that unlimited money creation can never lead to inflation , the fantasy forecasters have been quite busy replacing reason with madness.”

Chuck again… so, if you only read the snippet, you’ve just found out how good this article is… for this is just one part of the whole letter… . Please Read it!

Market  prices 11/16/20: American Style: A$ .7292,  kiwi .6867, C$ .7643, euro 1.1830, sterling 1.3170, Swiss $1.0934, European Style: rand 15.4087, krone 9.0699, SEK 8.6661,  forint 302.65,  zloty 3.7769,   koruna 22.2726, RUB 77.34, yen 104.95, sing 1.3467, HKD 7.7533, INR 74.41, China 6.6053, peso 20.26,  BRL 5.4565,  Dollar Index 92.76,   Oil $41.93,  10-year .92%, Silver $24.43, Platinum $896.00, Palladium $2,366.00, and Gold… $1,876.00

That’s it for today…   Well, I have to say that I’m getting that good Old Revolt feeling…  Several restaurants in our area are threatening law suits to remain open… What to go!  Stay open!  Do not shutter your businesses again!  OK, I finished my book, The Madness of Crowds, and now have a new one waiting for me titled: Taming The Megabanks… I wonder what that could be about? HAHAHAHA! Well, the sun is supposed to make an appearance today, and the wind is gone so it should be a nice day, albeit quite chilly…  The Five Americans take us to the finish line today with their song: Western Union… A great 60’s song, for sure!  And with that… I hope you have a Marvelous Monday, and please Be Good To Yourself! 

Chuck Butler

November 12, 2020 

* Currencies drift higher on Wednesday… 

* Gold gives back its Tuesday gain on Wednesday… 

Good Day… And a Tum Thumpin’ Thursday to you!  It was one of those days for me yesterday, I guess too much going on recently finally caught up to me… Around 1:30 pm I was reading stuff, and I began to feel my eye lids closing and me yawning. I knew I needed a nap… That nap lasted 4 ½ hours! And then all evening I was still yawning. UGH!  Last year, I ditched cable, and decided that streaming TV was what I wanted. So I signed up for YOUTUBE TV…  And all was well, here and in my second home in Florida… But then YTTV hiked their prices… Ok, it’s still about 50% less than what I paid the cable company. But then they announced they were dropping the regional Fox sports stations… That’s where I get my Cardinals and Blues telecasts! This is getting bad…. Then last night, a national outage of YTTV…     I guess it’s time to look elsewhere… UGH!   Credence Clearwater Revival (CCR) greets me this morning with their song: I Put A Spell On You…  

Well, the healing that took place on Tuesday, was wiped out on Wednesday, Gold lost $12.50 to wipe out most of Tuesday’s $14 gain… To close at $1,866.20…. Silver, on the other hand, gained a nickel on the day…  Yes, 5-cents to close at $24.37… Strange day indeed for the metals…  The currencies kind of drifted during the day, up a little , down a little, not really moving much. Yesterday morning the Dollar Index was 93.09, and last night after the close, it was 92.99… So, like I said, drifting. On the day…

In the overnight markets the dollar has gotten sold a little more, and Gold is up $4…  The euro has climbed back above 1.18, and I’ve got some to say about the single unit, so keep reading! 

The news on Monday of a breakthrough in finding a vaccine for the COVID-19 Virus seemed to be a strong indication that things will get back to the way there were…. However, there is still some time that’s going to be needed to organize and plan the distribution of the vaccine… And that’s not helping the Eurozone, who’s deaths from the virus are climbing… And the Eurozone leaders are contemplating a lockdown again… Italy, which suffered the worst of the ravages of the virus last spring, have been demonstrating against another lockdown… We’ll have to see where that takes the region as a whole…

I went through of that to explain what’s causing the weakness in the euro… The euro on Monday was within spittin’ distance of the 1.19 handle, and hadn’t sniffed the 1.18 handle since, until last night that is….  The single unit had traded below 1.18 for three days now, and looks like it wants to drop further to me… But the one thing supporting the euro, is its place as the offset currency of the dollar. So, when traders want to sell dollars, they buy: Euros, first, francs second, yen third, sterling fourth, and then so on down the line… And the thought of selling dollars is weighing heavily on traders right now… Hedge Funds too, are contemplating selling dollars, as are many other large outfits…

I don’t know what it will take for them to pull the trigger on the selling of dollars… But when it comes it will be like the proverbial snowflake that causes the avalanche!  It could be delay news on the vaccine, it could be a final decision of the courts on the winner of the Presidential election, it could be the announcement of a new economic lockdown here in the U.S., it could be a number of things, but one sure seems to be ready to happen, at a moment’s notice… 

I’ve seen the trading outfits all ready to move before, folks… See, that’s what you get when you follow a guy who has been around currency trading since 1992… And in the investment business since 1973…  The last time I saw this, was 2009, when it was rumored that the Fed would begin to demonetize the debt (Quantitative Easing), and then when it was announced in March of 2009, the triggers were pulled and it was an all-out assault on the dollar… The time before that was 2001, and I recognized what was going on and wrote the White Paper: The Decline of The Dollar. Soon, then President Bush announced that he was going to implement tariffs of Japanese steel… And that caused the triggers to get pulled, and sell the dollars,  in February 2002….  

Yes, we’ve had several false dawns in the past couple of years… And each time, I jumped too soon, and thought that the sentiment toward holding dollars had changed… But this time, I have checked all the boxes, and they all line up to a scenario much like 2009, and 2001…   I’m just saying…

OK… well the Aussie dollar (A$) began the week trading above 73-cents, reaching .7320 before backing off on Tuesday… I believe what we’re seeing in the A$ is a  correction, in that the A$ jumped too high too fast and now needs to fill in the gaps…  You know interest rates here in the land down under are still pretty low, with their official cash rate at  0.10%, which most depositors are getting nothing or being charged… When you trade for the A$, the price of the A$ will include forecasts for interest rates….  Let’s listen to the Reserve Bank of Australia (RBA) in their latest (11/6) Economic Statement….

“In Australia, the recovery in activity has been underway for several months after the economy experienced the deepest peacetime contraction since the Great Depression in the first half of the year. The domestic recovery is set to be supported by the further easing in activity restrictions and substantial monetary and fiscal policy stimulus. The baseline scenario for GDP growth has been upgraded a little relative to the August Statement. This reflects stronger-than expected household consumption and additional policy support (including that announced in the Australian Government Budget), though a downward revision to resource exports has partly offset the firmer outlook for domestic demand. Even after the GDP forecast upgrade, the severity of the  downturn in the first half of the year means that GDP is not expected to return to its pre-pandemic level until the end of 2021.” = RBA Economic Statement 11/6/20

So, there’s a lot of central bank parlance there, but what I get out of it is that the RBA feels that while the outlook is for subdued growth, they feel like things will get better as we move along early next year…  So, to me, the A$ is looking like a buy at sub 73.50-cents… 

I just saw a blurb that made me laugh out loud…. Do you want to take a guess at what was the best performing Emerging Markets currency in the last week?  Well, if you happened to guess that is was the Turkish Lira, you would be correct… The bump up in price of the lira was due to the canning of the former finance minister, who had see the lira drop to the lowest level on record during his watch…  I still wouldn’t touch that currency with YOUR ten foot pole!

Ok, back to stuff that we follow… Well, the price of Oil slid downward yesterday for the first time in about two weeks… Oil lost $1 in trading yesterday, and that caused some slippage in the Petrol Currencies… Not much, but some… enough to be able to see with a quick check of the currency values…

The yield on the 10-year Treasury Bond fell a couple of bips yesterday, from .96% to .93%… I had been watching this yield rise from the .68% level a few weeks ago, to where it is today, and kept wondering what the bond boys were telling us…  Do they see inflation as a problem?  Or do they see something else…  Well, now that the daily increases of yield have had a setback, one has to wonder what caused that? And here’s where this is going to sound a bit political but trust me I’m just stating the facts that were reported on CNBC.com   “That a Biden advisor says a 4-6 week lockdown could control the pandemic and revive the economy”…    Bond buyers were lining up to buy bonds on that news folks….

Remember the original lockdown was supposed to be 15 days? And then that went on for months, unnecessarily, in my opinion, but it is what it is….   So, if they tell us 4-6 weeks, that could turn into? Only the Shadow knows how long!

Man do I not like talking about this darn pandemic…. I call it the plandemic, for a number of reasons that we won’t get into here…. But come to the Butler Patio before I head to Florida in Jan, and I’ll be glad to opine…

The U.S. Data Cupboard actually has something for us today! The Weekly Initial Jobless Claims for last week will print, along with the stupid CPI (consumer inflation) for Rocktober…  I’ll be interested in the Continuing Claims which last week were 21.51 Million…   And the other piece of data that will print is the Rocktober Federal Budget… I’ll bet you a dollar to a Krispy Kreme that the Budget Deficit for Rocktober is greater than $100 Billion… That’s Billion with a capital B…. 

Oh, Lordy, me… please protect me from the damages of deficit spending! 

To recap… The healing on Tuesday saw the band aid ripped off of Gold on Wednesday, as the shiny metal lost $12 of its $14 gain Tuesday…  Silver actually gained a nickel yesterday, which is much better than a plug nickel!  Remember how upset you would be when you reached in the coin return box, and pulled out a plug nickel?  Soon vending machines caught up with the use of plug nickels and that didn’t happen any longer….  I saw a sign the other day, that was sad…. “My kids will never know the joys of reaching in a coin return box of a coin operated Telephone.”   

Man! Did I ever go off on a tangent there! Sorry about that! To finish up the recap… Oil slid downward by a buck, and Treasuries rallied. The currencies drifted throughout the day, as there were no new developments on the virus vaccine announcement on Monday.

For What It’s Worth…  There’s been some upbeat news from China in recent times… Inflation is the lowest its been in years, GDP was 5%, and they have the lowest number of Covid cases in the world…. I saw this quote from Ray Dalio and it got me thinking, “Anti-Beijing bias has blinded too many for too long to opportunities” by Ray Dalio, founder, co-chairman, and co-chief investment officer of Bridgewater Associates. And then longtime reader, Bob, sent me a link to an article about China in the FT, and I immediately thought, this is FWIW fodder for sure!  And so you can fine the article here: https://www.ft.com/content/8749b742-d3c9-41b4-910e-80e8693c36e6

Or, here’s your snippet: “For as long as I can remember, people have said that China cannot succeed. Communism doesn’t work. Authoritarianism doesn’t work. The Chinese aren’t creative. They have a big problem with bad debts and property speculation. Yet every day we see China succeeding in exceptional ways.

It has achieved some of the world’s lowest Covid-19 case rates. Over the past year, its economy grew at almost 5 per cent, without monetising debt, while all major economies contracted. China produces more than it consumes and runs a balance of payments surplus, unlike the US and many western nations. This year nearly half the world’s initial public offerings {1} will be in China, including Ant Financial’s $30bn listing {2}, the world’s biggest ever. Even Tesla’s best-selling Model 3 {3}car may soon be made entirely in China.

The world order is changing, yet many are missing this because of a persistent anti-China bias. China’s extraordinary performance isn’t new. In fact, apart from the 1839-1949 “Century of humiliation”, it has historically been one of the world’s most powerful countries and cultures. Just over the past four decades, its economic changes have been remarkable. Whatever criticisms you may have about Chinese “state capitalism”, you cannot say it hasn’t worked, even if you strongly disagree with how Beijing has done it.

All this is to say that China’s rise has giant political, economic and investment implications. Politically, China has become a major issue for both parties in the US, which fears its rise, spreading global influence, and rejects its authoritarian model {5} and treatment of minorities such as the Uighur Muslims {6} in Xinjiang. China’s rejoinder is that a strong hand is needed to maintain order, what happens inside its borders is its business, and the US has its own human rights problems. 

Meanwhile, China’s economy is roughly the same size as the US’s and expanding at a faster pace – so time is on China’s side. It has a growing population of well-educated people, with around a third of the world’s science and technology university majors, three times the US share. It also produces and collects vastly more data to process with artificial intelligence. One way to look at China’s relative power is that, with four times the US population, when its per capita income reaches half the US’s in about 25 years, its economy will be twice as large.

Last, there are the investment implications. As a global macro investor, I think a lot about how much I should invest where, looking at fundamentals and how others are positioned. China’s fundamentals are strong, its assets relatively attractively priced, and the world is underweight Chinese stocks and bonds. These currently account for 3 per cent or less of foreign portfolio holdings; a neutral weighting would be closer to 15 per cent.

This discrepancy is at least in part due to anti-Chinese bias. I think it is about to change. Chinese markets are opening up to foreigners, who can now access at least 60 per cent of them compared with 1 per cent in 2015. Benchmark weights in major indices are rising. {9} As a result, I expect China to enjoy favourable capital inflows that will support the currency, {10} already at a two-year high, and financial markets too. All this argues for a China overweight in my portfolio.”- Ray Dalio

Chuck Again…  This talk about China takes me back to 2003, when we first found out on the EverBank World Markets Desk that we could buy forward contracts in Chinese renminbi… And then made a press release that we could offer renminbi CD’s.. OMG! The phones lit up and stayed lit up for weeks with potential clients wanting to know the details of our renminbi CD…   China has come a long way since then, and now offers a deliverable yuan… I don’t think it would wise to keep an anti-Chinese bias, folks… I’m just saying…

OK, I’ve just got to go down this rabbit hole this morning… Did you see the news that Citicorp got a $400 Million charge by the regulators for doing “unsafe or unsound practices”… The regulators wouldn’t tell us what Citi did wrong.. OK, this has got my goat this morning! First last year the regulators wouldn’t tell us who was having to get the daily injections of money from the Fed, and now they won’t tell us what Citi did…  I know one thing, I’m writing my Senator this morning to let her know that I do not believe this is the right way to be transparent! 

Market Prices 11/12/20: American Style: A$ .7262, kiwi .6867,  C$ .7646, euro 1.1811, sterling 1.3150, Swiss $1.0934, European Style: rand 15.6480, krone 9.1123, SEK 8.6183,  forint 300.56,  zloty 3.8062,   koruna 22.3885, RUB 76.58, yen 105.30, sing 1.3487, HKD 7.7537, INR 74.58, China 6.6171, peso 20.53, BRL 5.4084,  Dollar Index 92.90,  Oil $41.81,  10-year .93%, Silver $24.25, Platinum $871.00, Palladium $2,362.00, and Gold… $1.870.80

That’s it for today… no YTTV last night didn’t shut me out of watching TV… I have ROKU, so there are many other channels I could watch, including ESPN…  So, I had that going for me! I finished my part of the Interview with Dennis Miller yesterday, and sent it off to him… I’m really excited about this one folks… Well, I was excited about the last one, where I gave my explanation about who’s behind the curtain of the price manipulators… Dennis always has a good line of questions for me, and I have to work hard to get them right!  You can still probably read that letter with my thoughts at his website: www.milleronthemoney.com  Journey takes us to the finish line today with one of my fave Journey songs: I’ll Be Alright Without You…  (There’ll be someone else, I keep telling myself!)  I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will please, pretty please with sugar on top, Be Good To Yourself!

Chuck Butler

 

 

November 11, 2020 

* Currencies & metals see some healing on Tues.

* But the overnight markets have ripped the band aid off the wound… 

Good Day… And a Manfred the Wonder Dog  Wednesday to you!  That’s a mouthful to say out loud, just in case you were wondering…  Well… yesterday, I was sitting outside enjoying our last day of nice weather talking on the phone to good friend, Dennis Miller, when the dark clouds began to move across the sky, and discretion being the better part of valor for me, I went inside…  Upon coming inside I saw that I had an email from Dennis, and he wanted my input on an interview we would do on Paul Krugman…  OK… longtime readers my recall me expressing my dislike for Mr. Krugman’s views on economics, and preferring for my own education in economics… So, this was like a layup for me! I was all over this interview like a Cheap Suit!  For Those of you who subscribe to Dennis’ letter, this edition won’t run until December. And for those of you who do not subscribe to his letter…. Shame, shame, shame… in my best Gomer Pyle voice!  Def Leopard greets me this morning with their song: Pour Some Sugar On Me…

That’s an interesting subject, sugar, for me….  Dennis called me yesterday, a little miffed, for leaving him high and dry yesterday, when I said I was at the facility for 4 hours and didn’t tell me what I had found out…. So, if you’re interested I’ll tell you, if you are not interested, skip ahead to the next paragraph…  OK… well, my primary care doc, wanted to see me to talk about my sugar levels. It seems that since May they have skyrocketed to levels that are very dangerous… Well, it was May that I first began to take my new chemo drugs… (yes, there are two that I take at the same time)…  Well, I can’t give up the chemo, so…. It was decided that I would take a drug to keep the sugar levels in check, and hopefully that along with my diet plan of no sugar that I began last month for a different reason, will do the trick, before I turn into a diabetic, which I don’t want, my doc doesn’t want, my oncologist doesn’t want, so you get the picture…   Ok? Now you know… like I said it was just an Oil and Lube job…

Well…. While the  healing was small, there was some healing yesterday in the currencies and metals…. Gold gained $14 on the day and closed at $1,878 and Silver gained a whopping 13-cents to clause at $24.31…  After sending out the Pfennig yesterday morning, I got to thinking more and more about the engineered price takedown on Monday of Gold & Silver…  They, the price manipulators, didn’t have to take Gold so low to get their bang out of the buck on their previous short positions, that they were able to buy back and lower prices, netting them a gain…  But they took Gold back to the price level of Rocktober 30^th… I just don’t see why it took that much of move for them to cover their previous shorts…  Oh well… I can’t change anything, so let’s just move along here Chuck, for these are not the droids we’re looking for…

And it’s not the droids the government are looking for either! How this shorting more than the ounce of Gold that’s above ground, continues to be allowed, just gets me riled up…

OK…  so, we had some healing, let’s hope it carries forward to today and the rest of the week…  The price of Oil also is healing, and last night when I checked it, the price of Oil was $41.99…  This healing in the price of Oil, which could prove to be temporary, given the calls for a new economic shutdown are getting louder, has helped the Petrol Currencies even more….  Currencies like the Norwegian krone get helped or hurt depending on which way the wind blows, with the performance of Oil and the euro… While the krone is not tied to the euro, per se, it does for the most part gain when the euro gains and lose when the euro loses… So, it has that going for it! HA!

I guess I should have checked the current prices before writing that last bit about hoping the healing can carry forward to today… Because in the overnight markets Gold has gone from a $4 gain, to a $6 loss, and the dollar bugs have ganged up on the euro again, and in the overnight markets the euro slipped back below 1.18…   I read a piece on the euro yesterday, where the chartist said that the euro could fall to 1.15, if it doesn’t hold 1.17…    I guess anything can happen, but I’m not buying this idea, as the pressure on the dollar right now is strong… 

To show the move in the dollar overnight… Last night I checked The Dollar Index before going to bed, and it was 92.75, and this morning it is 93.09… While the Dollar Index isn’t a perfect gauge on the dollar’s movement, it’s the standard that’s used so, there you go! 

Today is Veteran’s Day… And longtime readers know I’ve always put a lot of focus on Veteran’s Day… Shoot back in the day, it used to be a holiday for the World Markets Desk, but under their new owners and the fact that they are all working from home these days, it’s no longer a holiday… I’ll have something for us to think about at the absolute end of the Pfennig today, So don’t sign off until you’ve scrolled down to read it…  thank you…

With today being a semi-holiday, there’s no data in the U.S. Data Cupboard today…. It’s nice to see that the Data Cupboard observes Veteran’s Day the way it should be observed!  (like they had any say in it! HA!)  We did have 5 different cartel, I mean Fed Heads talking yesterday…  Apparently none of them had anything important to say, or else it would be all over the internet, instead, all I get is crickets… 

OK… back to the currencies… I wanted to talk about the New Zealand dollar / kiwi… or better yet the Reserve Bank of New Zealand (RBNZ)…. Back in 2002, I was asked by our marketing guru, to come up with a basket of currencies from countries with Central Banks that I would deem to be “prudent”… And so I did, and called the “Prudent Bank CD”… It consisted of the euro, Aussie dollar, kiwi, and Swiss francs, (remember the ECB in the beginning was run my Wim Duisenberg, a staunch hawk if there ever was one!…   Through the years the Central Banks that are associated with those currencies have all faltered… gone downhill… bit the dust… ate the cyanide… whatever, but they’ve all come in line with the Fed Reserve Bank… They print currency, they cut interest rates to zero and beyond, and that’s what brings me full circle to New Zealand… It was announced yesterday, that the RBNZ was contemplating the use and implementation of negative interest rates….  Yikes! What the hell are they thinking? I wanted to call my far away friend, Don Brash, the former Gov. of the RBNZ many years ago now, and ask him what the hell was gong on… But then I realized the only number I have for Don, is the office number from when he was the Gov. of the RBNZ…  

Don is a great man, and was a great Gov. at the RBNZ, back in the day…  5 years ago, when I turned 60, my good friend, and former Big Boss, Frank Trotter, had contacted many of the people I had met through the years doing shows, giving speeches, etc. and  asked them to send me birthday wishes… And, lo and behold, one of the responses with birthday greetings for me, was from Don Brash!

OK… Frank was only returning the favor to me, for I had requested emails to be sent to Frank from all his friends on his 50^th Birthday, a few years ago!   I know that some of you don ’t like it when I go into these talks about things long ago, so I’m sorry… but… I like them… I get to tell stories, true stories that is, and so that’s that!

To recap… There was some healing in the currencies and metals yesterday, but that little bit of healing is still a long way from correcting the engineered price take down on Monday… But, it was a start!  Unfortunately the overnight markets have brought more selling… Chuck announced a new collaboration with Dennis Miller… And talks about his sugar intake change of diet, and aks the question, “what the hell is going on at the RBNZ!” and some other thing…

For What It’s Worth…  Ok. I’ve laid out my thoughts to you previously about how all this debt is going to cause us to default on our debt, and all the bad things that come out of Pandora’s Box when that happens… So, I won’t go through it again… Instead, I’ll let you read an article in Reuters.com that is talking about non-Gov’t. defaults…  and it can be found here: https://www.reuters.com/article/us-usa-fed-stability/u-s-still-faces-possible-default-wave-asset-declines-due-to-pandemic-fed-idUSKBN27P2T5

Or, here’s your snippet: “The United States may still face a wave of debt defaults and “significant declines” in asset prices because of the coronavirus pandemic and recession, the Federal Reserve warned on Monday, in a stark reminder the economy is far from out of the woods.

“As many households continue to struggle, loan defaults may rise, leading to material losses” for lenders, the Fed said in its latest biannual Financial Stability Report. Business debt “has risen sharply as businesses increased borrowing to weather the period of weak earnings. The general decline in revenues associated with the severe reduction in economic activity has weakened the ability of businesses to services these obligations.”

Asset prices “remain vulnerable to significant declines should investor risk sentiment fall or the economic recovery weaken.”

The comments were issued on a day when U.S. stock markets surged on news that a coronavirus vaccine may be on the horizon — a possible boon to businesses and households globally.

“So far, strains in the business and household sectors have been mitigated by significant government lending and relief programs and by low interest rates,” the Fed said on Monday.

But that could change depending on the course of the pandemic and the course of the recovery.”

Chuck again… Yes, a short one today, after yesterday’s long FWIW snippet!  Do you know what I see going on here?   The stock market rejoiced this week on the news of a virus vaccine, because that would mean economic growth to return… But, didn’t the Fed tell us a month ago, that they didn’t see the economy growing again for a couple of years, so they were keeping interest rates near zero?  So, you can’t have both things….  Economic growth would bring inflation, and inflation brings rising interest rates…  So, we’ll have to see which one wins…. I personally think the virus is going to remain with us for some time… But it doesn’t mean I agree with the Fed on interest rates!

Market  prices 11/11/20: American Style: A$ .7276,  kiwi .6874, C$ .7658, euro 1.1770, sterling 1.3234, Swiss $1.0905, European Style: rand 15.6484, krone 9.0739, SEK 8.6457,   forint 302.25,  zloty 3.8113,   koruna 22.4746, RUB 76.43, yen 105.40, sing 1.3493, HKD 7.7535, INR 74.31, China 6.6121, peso 20.40, BRL 6.3846,  Dollar Index 93.09,  Oil $42.52,   10-year .96%, Silver $24.24, Platinum $880.00, Palladium $2,487.00, and Gold… $1,872.10

That’s it for today…  Don’t forget I’ve got my salute to Veterans following this ending… Longtime readers will recall me telling them that my dad was a WWII Veteran…. When I was a young man I wanted to be just like my dad, and sign up for the war (Vietnam war then) and he sat me down and told me that I had no idea what the horrors of war were, and went on to explain them to me, until I was almost sick to my stomach… I then began to protest the war!  But not the warriors! I was eligible for the birthday lottery draft one year… my birthday wasn’t called until #280 (I think) so I was not eligible to be drafted, and then the war ended the next year…  I have another story about how I came about getting my draft card, if you’re ever around me and want to hear it…   OK, so don’t forget to salute or say thank you to a Veteran today, well every day it should be, but today especially!  And with that, Graham Nash takes us to the finish line today with his appropriately titled song: Military Madness…  (Military Madness is killing my country, so much sadness comes over me)…   I hope you have a Manfred the Wonder Dog Wednesday, and please, please, please, Be Good To Yourself!

When you see someone in a uniform,

Someone who serves us all,

Doing military duty,

Answering their country’s call,

Take a moment to thank them

For protecting what you hold dear;

Tell them you are proud of them;

Make it very clear.

Just tap them on the shoulder,

Give a smile, and say,

“Thanks for what you’re doing

To keep us safe in the USA!”

~By Joanna Fuchs

There are many tributes to veterans that can be given, and all should be read or heard… 

Have a great day! 

 

November 10, 2020

* another engineered price takedown in Gold… 

* Currencies retain some of their gains from last week… 

Good Day… And a Tom Terrific Tuesday to you! I spent the greater part of my day yesterday at the medical facility that houses both the wound center and my primary care doc. I arrived at the second of my appointments about 30 minutes early, due to some unforeseen before quick turnaround in the wound center… I admitted my early arrival and took a seat… 20 minutes after my scheduled time a nurse came from the back and told me the doctor was running behind…. I smiled and said, “ok”, but thought to myself, no dookie doc! So, another 20 minutes went by, before they finally took me back to see the doctor…  Just an oil and lube job please…  And got home 5 hours from when I left… UGH!  It would have been John Lennon’s birthday last month, so I’m tardy in playing one of his songs in his honor this morning… Wishing The Wheels (go ‘round) is the name of the song that greets me this morning!

Well… what an absolutely ugly forest day for Gold and Silver yesterday… The currencies were included but not as harshly as the metals… And all because there’s news that a vaccine is nearing completion? Ok, but what it hits a roadblock on the way to our arms? Or what happens if after several trials they find a side effect that’s absolutely a no-go for the vaccine?  Ok, I just had to get that off my chest, I should be putting on a optimistic face, and saying how wonderful this news is that maybe, just maybe we can get back to normal?  I say that with a straight face, because I doubt seriously that we “ever” get back to normal…

So, yesterday’s trading in Gold wiped out the entire previous week’s gains, and then some… Gold ended up down $86.10, that’s right I said $86.10, to close at $1.860.10. And things didn’t look so good over in the Silver trading pits… Silver lost $1.47 to close at $24.19…   Gold was actually lower at one point in the day as it traded down to $1,850…  but had some bargain buyers at the end of the day yesterday to bring it back to $1,860…

Now, see why may alter ego wouldn’t allow me to say what I was going to say yesterday about a weak dollar trend?  I said it yesterday, and then it proved me right, that the wolf is always at the dollar… I’m going to throw in a complimentary comment about the price manipulators piling on once again, but that’s a given these days, so I don’t want to be misjudged as the new Mr. Obvious!

So… what are you waiting for? The stoplight to turn a certain shade of Green?  HA! That’s my usual line when someone ahead of me is playing on their phone, and don’t move when the light turns green…  Well, that same thought can be brought to the Gold buying table…  the buying light is green, folks… are you waiting for a certain shade of green before buying?  You know I’ve always told you I was the biggest smart Alec in my neighborhood….  I once told a McDonald’s person at the window, when she asked me to move forward, I asked her why? And she replied because you’re holding up the line… At which part I made her cry, when I replied, No, young lady it’s you who’s holding up the line”…. 

I’ve matured, good thing, since I’m 65 now! And I still think these things but only to myself now, and don’t blurt them out….  But boy do I feel uninhibited with writing them! HA !

The euro remains above 1.18, proving once again that traders have drawn a line in the sand at 1.19, because as the day began yesterday, the euro was moving nicely toward 1.19, but then the trap door sprung, and the euro took a short ride on the slippery slope. But like I said, the euro remains above 1.18, and that will give the other currencies the strength to hold onto most of their gains from last week too.  

In the overnight markets last night, the euro slipped further downward, but still remains above 1.18 as I write this morning. The Aussie dollar (A$) fell back below 73-cents overnight, but kiwi held steady Eddie…  The Petrol Currencies are stronger again this morning, with the price of Oil remaining above $40… These Petrol Currencies that include: rubles, krone, real, loonies, and others have really been beaten down in recent weeks, so this turnaround is nice to see… 

So, I’ve tried to let the selling in Gold yesterday, slide by without me having a hissy fit about the price manipulators… But, I can’t hold back any further…  What we saw yesterday, was a couple of things… 1. nervous Gold owners thinking they had to sell to lock in a profit, and 2. Another Engineered Takedown by the price manipulators…  I see this morning that Ed Steer of www.edsteergoldsliver.com had this to say, ” One doesn’t know how much more in-your-face the Big 8 shorts et al. can get after yesterday’s engineered price declines in three of the four precious metals.  But we’ll have to wait until Friday’s Commitment of Traders Report to see how well they did.” – Ed Steer…     And that reminds me of what I told you yesterday, that the wolf was always at the door… 

OK, just a couple of other thoughts this morning before we head to the Big Finish…  The yield on the 10-year Treasury has been sneaking through the alley with Sally, I mean sneaking higher, and trading this morning at .94%, the highest its been for some time… What are the bond boys telling us?  (I’m pretty sure they see inflation rising in the future) 

And what’s up with the Japanese yen? The yen had been stuck in the mud around 104.80 for some time, but in a week (last) where the currencies rallied strongly VS the dollar, the yen went the opposite direction… I’m thinking that yen is seeing the same kind of thoughts that are plaguing Gold right now, and that there’s no need for safe havens…  I do believe that those thinking that thought right now, will be crying in their collective beers in the coming months…. 

I told you yesterday that the U.S. Data Cupboard didn’t have much for us this week in the way of economic data reports, and today and tomorrow, is pretty null of reports…  There are some 3^rd tier reports this morning, but that’s it, until Thursday, when we get back to looking at the color of the Initial Jobless Claims from last week. Next week will be the mother of all data weeks! HA! Just kidding, but… it will have much, much more than we will see this week… It will be interesting to see what the Rocktober data brings us, as the COVID-19 virus had begun to sink its teeth into the people of the U.S. again in Rocktober… Like I said yesterday, the 3^rd QTR Data had better had been an upward line on a chart from the 2^nd QTR when we were economically shut down!  We’re still not 100%, free except for S. Dakota and Florida, but things, right now are better, that is until they aren’t any longer!

To recap… Gold got taken to the woodshed and slaughtered yesterday… Chuck has never seen a down day that harsh! Or if he had he had forgotten about, just like he’s going to do with this one! The currencies got sold a bit, but not as harshly as Gold & Silver… Gold was down $96 at one point in the day and saw it close down $86! Silver was down $1.47, which is HUGE for Silver…  Chuck reminded everyone that he said yesterday, that the wolf is always at the door… 

For What It’s Worth…  Longtime readers know my saying that when something happens in the U.K. (except BREXIT, as we had no states seceding) it normally takes about 6 months to hit our shores… So, when I saw this article, it made me think of that saying, and what we could be staring down the deficit spending barrel of next year this time… There’s no guarantee that this will happen, but, you might as well read about how it’s being presented in the U.K. and the article can be found here: https://www.theguardian.com/society/2020/oct/31/covid-job-losses-lead-mps-to-call-for-trials-of-universal-basic-income

Or, here’s your snippet: “A cross-party group of MPs has called on the government to allow councils to run universal basic income trials in response to mass unemployment triggered by the Covid-19 pandemic.

A letter to the chancellor, Rishi Sunak, signed by more than 500 MPs, lords and local councillors says pilot schemes are urgently needed as the pandemic unleashes widespread economic disruption and drives up redundancies at the fastest rate on record this winter. Launching a UBI would mean the state paying every adult a basic sum regardless of their income.

The letter says issues with the benefit system and the end of the furlough scheme mean Britain is ill equipped to support people through the financial insecurity of the Covid recession.

“We must trial innovative approaches which create an income floor for everyone, allowing our families and communities to thrive. The pandemic has shown that we urgently need to strengthen our social security system. The creation of a universal basic income (UBI) – a regular and unconditional cash payment to every individual in the UK – could be the solution,” the letter states.

One UBI option flagged by the group would be to launch an initial £48 per week payment. Demands for such an intervention have gathered pace since the onset of Covid-19 as governments around the world increase spending to help businesses and workers. There have been UBI trials in Finland and Scotland in recent years.

Critics argue that a UBI would be too expensive to operate and would discourage people from looking for work. There are also calls for alternative policies to meet the same goals as a UBI, such as significantly raising funding for public services or expanding the benefit system and targeting it to support the neediest in society.

The Cross-Party Parliamentary and Local Government Group on UBI, however, says Covid-19 had strengthened the case for local authorities in England and devolved administrations in Scotland, Wales and Northern Ireland to be allowed to run pilot schemes.”

Chuck again… remember playing games as kids and hiding something and then telling the other kids looking for that something, whether or not they were hot or cold, according to their distance form the hidden something?   Well, right now, would say that UBI is not just hot, but burning hot, and will be found soon….  And that will make me very glad that I no longer run a department of people, that could if they wanted to, not work so diligently, and go on UBI instead…. Whew! Dodged a bullet there!

Market  prices 11/10/20: American Style: A$ .7282, kiwi .6832,  C$ .7673,  euro 1.1805, sterling 1.3035, Swiss $1.0923, European Style: rand 15.5113, krone 9.0230, SEK 8.6360,  forint 302.58,  zloty 3. 8172,   koruna 22.4180, RUB 76.69, yen 105.25, sing 1.3485, HKD 7.7541, INR 74.18, China 6.6138, peso 20.54,  BRL 5.3533,  Dollar Index 92.80,  Oil $40.57,   10-year .94%, Silver $24.22, Platinum $874.00, Palladium $2,570.00, and Gold… $1,878.90

That’s it for today… Well, I’m through with dr. appts. and hospital visits for the next 2 weeks. YAHOO! While I do appreciate the opportunity to get out of the house and go “somewhere” , I just wish there were other places to go!  I turned on the TV last night, and it was showing the Jets & Patriots playing football… As if I wanted to watch that! So, I turned the TV off and picked up my book and read…  no baseball, is not my fave time of year! Speaking of baseball… with no revenue to speak of this past year, I wonder if my beloved Cardinals will be active this winter… I doubt it, as they seem to think they can get by with what they have, which is a bunch of .200 hitters that strike out too much…  But that’s just me thinking out loud there!  The Average White Band takes us to the finish line today with their song: Pick Up The Pieces….  For an instrumental song, it’s not bad… I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

November 9, 2020

* Currencies & metals have a great week, last week

* But in the overnight markets, Gold & Silver have gotten sold… Big Time! 

Good Day… And a Marvelous Monday to you! What a strange week it was last week… All the forecasts of the election being chaotic came to fruition, and we ended up with a new president, that is unless the courts decide otherwise…  Besides all that, it was a beautiful week here, with temps that were warmer, and lots of sunshine! Not like the previous week with gray, cold, rainy days… But you have to have those to fully appreciate the sunny, warm days! Sad news received on Sunday… Alex Trebek had finally succumbed to pancreatic cancer at age 80… I don’t like to hear about how cancer took another life, and there are more than 600,000 that succumb to this awful disease each year. I lost my mom, dad, oldest sister, and another sister to cancer… So, when I was told over 13 years ago that I had cancer, I was dead serious about beating it… But in reality I didn’t have that much to do with my still being alive today, it had more to do with the advances in cancer medicines, and the Good Lord answering the thousands of prayers said on my behalf… My doggedness had a little to do with it, I guess… The Beatles greet me this morning with their song: Michelle…  I used to sing this song to my former latte buddy, Michelle….   I just had a tinge of sorrow in my missing of my former colleagues… I’m just saying…

Well, one prognostication that came to fruition and meant more than the other one, and that is Chuck saying on Monday last week ,that with all that was going on, he expected Gold to have a Good Week… And that it did! Last Monday morning, Gold opened at $1,880.00… And ended the week at $1,950… That’s a $70 gain last week… I would say that was a good week, eh?   Silver also had a good week, but I didn’t have to tell you that, did I?

The currencies also had a good week, with the Big Dog euro, leading the little dogs off the porch to chase the dollar bugs down the street… The euro climbed through the 1.17 handle, and didn’t stop until it was trading at 1.1890 on Friday afternoon….  The euro wasn’t the only currency that pushed through some levels they hadn’t seen in a while… The Dollar Index began the week at 94.04, and ended the week at 92.19…  The dollar couldn’t find a bid anywhere, and even the beaten down Petrol Currencies got in on the act of rallying VS the dollar last week!

I do believe that the currency traders see more and bigger stimulus coming in January, and they are already taking the dollar bugs to the woodshed for that additional deficit spending and currency printing… Now, having said that, I am fully aware that the PPT is out there lurking in the weeds, waiting for the right opportunity to intervene once again… The wolf (PPT) is always at the door, folks… Well, that is until a multi-year weak dollar trend is carved in stone… Then even the PPT will see that buying dollars is a lost cause…  But, we’ve been here before, with the euro knocking on the door of 1.19, and The Aussie dollar (A$) trading with a 72-cents handle, only to see it all be subjected to PPT intervention (buying dollars)…

Maybe, just maybe, cause, you never know… this will be… No! STOP right there! Before you say another word, Chuck, you’re not going to be allowed to jinx or put your kiss of death on a rally… OK… I get it… I won’t say what I was going to say, but I bet longtime readers know where I was going with that start! But when the Dollar Index falls to 90…. Then I ‘ll be allowed to say what I was going to say!

Well… all that goodness in the metals has been wiped out in the early trading today, with Gold down $58.90, and Silver down over $1… This surprised the heck out of me, so I went to investigate… Seems there’s news this morning that Pfizer’s virus vaccine is proving to be effective, so far that is… And that news has taken the starch out of Gold’s shirt, that seemed to be all crisp and boxed up on Friday… But that’s what happens in these markets folks… You throw all reasons you bought something yesterday, because of a news story today… And that may be the way to go about things these days, but I’m staying on the high road, and not selling any Gold or Silver, because I do believe that better days are ahead, and this is just “one of those days!” …. 

The Oil traders like the news that we’re closing in on a vaccine, and the price of Oil has jumped higher to a $41 handle…  You see… in essence what we have here are the two non-dollar assets of metals and Oil, that has been subjected to the ups and downs of a virus, while the currencies haven’t participated… so far… that is… 

OK, we’re well into the month of November, my least favorite month for a number of reasons, that I don’t want to share with you, for I don’t want to get depressed on a Monday morning! So, what are your plans for Thanksgiving? I would think that a lot of people will pare down the guest lists this year, or just have household Thanksgiving… Well, I’m here to tell you it would be over my dead body, if we didn’t have everyone that we usually have for Thanksgiving… Shoot, Rudy, they were just all here for little Evie’s 1^st Birthday party! And it’s been a month, and no one got sick!  Life is full of risks folks… When you walk out of your house you put yourself at risk, but these are things that we don’t think about, but if you put as much thought into those risks like you do about the pandemic, you would never leave your house…. I’m just saying…

Well… The U.S Data Cupboard last week, showed that the 3^rd QTR was doing much better than the 2^nd QTR… But we would be in one hell of mess if the 3^rd QTR didn’t out due the economic shutdown of the 2^nd QTR, right?  But I have a bone to pick with the BLS once again… They say that 638,000 worker were added in Rocktober, and that the Unemployment Rate fell to 6.9%…. Really? Ok… first, lets start with the 638,000 jobs reportedly created in Rocktober… 334,000 of those 638,000 were created out of thin air after the surveys were received by the BLS…  So, the number wasn’t as great as it was reported to be… And then we have the Unemployment rate at 6.9%….  On Thursday last week we saw that the Initial Jobless claims weren’t as strong as the week prior, and that a total of 21.51 Million folks are still receiving Unemployment Checks…  So… a quick calculation on the back of napkin tells me that the Unemployment Rate should be 14.05%….  So, put that in your pipe and smoke it BLS!

Where they get their numbers always baffles me… They report them, and then try to pass  them off as better than the average bear numbers, thinking that we won’t see what they’re up to!  Hey! I may only have one eye, but I see very clearly, now that the rain is gone, no wait! I see very clearly, and that’s that!

So… the economic data wasn’t strong enough to pull the dollar out of the woodshed, and usually that only happens when… No! Chuck, you were told not to mention the WDT words!  

The U.S. Data Cupboard this week is big letdown from last week’s chock-full-o-data Data Cupboard… I’m just going to say this once (as if!) but, if you think the last administration was hooked on deficit spending, wait till you see the results from the next administration…

My fave writer, and podcast person, Grant Williams of Things That Make You Go Hmmm… (TTMYGH) sent me his latest letter last night, and I, as usual, went through it from start to finish, and he pointed something out that not only I wasn’t aware of, but probably most of you too…  It had to do with the Banking sector’s 3^rd QTR results, which all beat the estimates..  but did you know the secret of their earnings surprise? They reduced their loan loss balances….  What’s so bad about doing that? Well, grasshopper, and Grant so eloquently showed us in his letter… The loan losses for banks after the Leman Brothers collapse and the start of the financial meltdown, didn’t occur until 6 months later…  That’s right… after everyone thought the banks were in like Flint, They began to book loan losses, and well… They showed then that they were not patient enough to let the muffins rise… so to speak… And they could very well be on their way to not being patient enough this time too…. 

OK… I guess, it’s like everything else I talk about… These are things you should be very wary of, folks… I’m just saying..

To Recap…  The currencies and metals both had great weeks, now let’s see if they can carry that forward… The overnight markets are telling us yes, so far… But as Chuck is reminded twice in this letter, we’ll have to wait-n-see… The election didn’t bring as much chaos to us as was believed to be the case beforehand, but it did bring us a new President, as long as the courts agree, I guess… Like I said above they have until December when the electoral college will cast their votes, and then of course January for the inauguration…  Chuck believes the markets are already seeing more deficit spending and currency printing coming, and that’s whey they have taken the dollar bugs to the woodshed…

For What it’s Worth…  I realized this past weekend when I received a number of emails from people that talked about how China and Russia are making the moves, be it right or wrong, to remove the dollar and the U.S. from their well being…  The main article can be found on www.asiatimes.com under the writer’s name: Pepe Escobar

Or, here’s your snippet: “ Whatever the geopolitical and geoeconomic consequences of the spectacular US dystopia, the Russia-China strategic partnership, in their own slightly different registers, have already voted on their path forward.

Here {1} is how I framed what is at the heart of the Chinese 2021~2025 five-year plan approved at the plenum in Beijing last week.

Here {2} is a standard Chinese think tank interpretation.

And here {3} is some especially pertinent context examining how rampant Sinophobia is impotent when faced with an extremely efficient made in China model of governance. This study shows how China’s complex history, culture, and civilizational axioms simply cannot fit into the Western, Christian hegemonic worldview.

The not so hidden “secret” of China’s 2021~2025 five-year plan – which the Global Times described {4} as “economic self-reliance” – is to base the civilization-state’s increasing geopolitical clout on technological breakthroughs.

Crucially, China is on a “self-driven” path – depending on little to no foreign input. Even a clear – “pragmatic” {5} – horizon has been set: 2035, halfway between now and 2049. By this time China should be on a par or even surpassing the US in geopolitical, geoeconomic, and techno power.

That is the rationale behind the Chinese leadership actively studying the convergence of quantum physics and information sciences – which is regarded as the backbone of the Made in China push towards the Fourth Industrial Revolution.

The five-year plan makes it quite clear that the two key vectors are AI and robotics – where Chinese research is already quite advanced. Innovations in these fields will yield a matrix of applications in every area from transportation to medicine, not to mention weaponry.

Big Capital – from East and West – is very much in tune with where all of this is going, a process that also implicates the core hubs of the New Silk Roads. In tune with the 21st century “land of opportunity” script, Big Capital will increasingly move towards East Asia, China, and these New Silk hubs.

This new geoeconomic matrix will mostly rely on spin-offs of the Made in China 2025 strategy. A clear choice will be presented for most of the planet: “win-win” or “zero-sum”.

Chuck again…  There’s a lot more to this article than I’ve snipped out here…  let me state right here, right now, that I do not believe in communism… The reason I’ve talked about this stuff is that it will, in time, put heavy burdens on the dollar… And that’s it!

Market  prices 11/9/20: American Style: A$ .7317,  kiwi .6835, C$ .7716, euro 1.1872, sterling 1.3175, Swiss $1.1025, European Style: rand 15.2900, krone 9.0246, SEK 8.5895, forint 300.65,  zloty 3.7570,   koruna 22.3109, RUB 77.37, yen 104.94, sing 1.3426, HKD 7.7528, INR 73.63, China 6.6104, peso 20.15,  BRL 5.3635,  Dollar Index 92.37,  Oil $41.14,   10-year .90%, Silver $24.556, Platinum $878.00, Palladium $2,479.00, and Gold… $1,894.90

That’s it’s for today…  Well, it appears from the weather people that today will be the last in our current run of nice days… So, I’ll get back outside and continue reading my book: The Madness of Crowds, by Douglas Murray… So, far it’s a very interesting book, and quite different than my usual reading material! I finished my Jack Reacher book in 3 days!  I have another new book lined up to read next, it’s title is: The Taming of the Mega Banks… I’ll get all pumped up while reading it I’m afraid, only to be disappointed going further out in time… My Good friend, Dennis Miller, of www.milleronthemoney.com  ran an interview he did with me on the not so funny business of metals manipulation… If you don’t already get Dennis’s excellent letter once a week, what are you waiting for! There are only a handful of guys left in the world, folks, that speak the truth…  And two of those guys are in one letter!  Oh! Last week I made an error, when I said I was already listening to the smooth jazz Christmas music station on SXM… I meant to say on Pandora!   Not trying to make any excuses but I listen to SXM almost all the time, so you can see where my error came from! The late Great Marvin Gaye takes us to the finish line today with his song:  Let’s Get it On….    I hope you have a Marvelous Monday, and I ask you to please Be Good To Yourself!

Chuck Butler

November 3, 2020

* Currencies, metals and Oil all rally overnight… 

* It’s election day!  Make sure you make a plan to go vote! 

Good day… And a Tom Terrific Tuesday to you! Well, baseball is over for this year, and now we head to the hot stove league… The Cardinals are in dire need of a heavy bat to hit behind Paul Goldschmidt… There will be plenty of free agents out there, but who knows what any team can afford after a year with no ticket revenue… And there’s a chance that next year could be the same, or with maybe 25 or 50% ticket revenue… I’m still waiting for the folks at Roger Dean Stadium to contact me about next years Spring Training games… They don’t know, I’m sure… But I do have, I think 4 more games to credit to next year’s games… I always get excited when I see the envelope from Roger Dean Stadium in my mail box… That means that Spring Training is only 3.5 months away! YAHOO!  The Ryan Street band greets me this morning with their song: When The Lights Go Down…

And that’s what will happen tonight at 7pm… The lights will go down at the voting venues… Except if there are people that arrived to vote before 7, the venues have to let you vote!  But don’t wait that long, and you won’t have to worry about it!  I sure  hope the rioting and chaos that is expected if one team loses, doesn’t happen, and that it was all talk and no walk… fingers crossed! 

Well…  The dollar bugs didn’t come out to play yesterday, and the currencies drifted but stayed pretty Steady Eddie all day. Yesterday morning the Dollar Index was 94.04, and when I looked at things yesterday afternoon, the Index was still 94.04… no change on the day!  Gold however, continued to add to the early morning gains and ended up gaining $17.20 to end the day at $1,896.80, and Silver gained 44-cents to $24.18… 

The price of oil dropping to $35 this week, really has the Petrol Currencies on tented hooks…  I’m really frustrated with how the Russian ruble is being treated these days… The price of Oil may be down significantly, but it doesn’t mean the revenue from Oil has seen the spigot shut off!  The ruble is one of the few currencies that still pays interest on deposits…  Longtime reader, Bob, knows how much I like the ruble as a currency to hold, but when it loses 23% of its value in one year to the dollar, one has to scratch his balding head to be talked into holding it further…  So, Bob, sent me this note from Tass, the Russian news agency… Check it out…

“The Russian authorities are managing to minimize the volatility of the ruble exchange rate and to maintain macroeconomic stability, Kremlin spokesman Dmitry Peskov told reporters on Monday.

“The ruble is breaching psychological thresholds, but volatility is minimized by the efforts of our regulator,” a Kremlin spokesman said, commenting on the depreciation of the ruble.

He drew attention to the fact that “now any world currency is under serious negative pressure from a number of circumstances in the global economy.”

“This includes the dynamics of energy consumption and changes in prices for petroleum products and oil – of course, all this has an impact,” the official noted.

“But in general, if we talk about macroeconomic stability, it is being maintained, as the president [Vladimir Putin] stressed.”

Chuck again…  Sounds to me like the is need of some intervention… buy rubles, sell dollars…  Come on Russian Finance Ministry, you can do it!  There are other fears in traders’ collective minds these days that are causing this downward movement in the ruble… And those fears include the thought that if Biden won the election, that he would introduce more economic sanctions on Russia…  (I don’t make this stuff up folk, so contact the FT if you don’t like it)

In the overnight markets, all the non-dollar assets are rallying… Currencies are stronger VS the dollar, Gold is up another $5 in early trading, and the price of Oil soared overnight to $38.  OK, first the currencies… I do believe that this could be short-lived, in that it depends on who is the winner in the presidential election today. Then, Gold & Silver, are just fulfilling the prophecy of Chuck… HAHAHAHAHA! As if! And then the price of Oil… Well it appears that the Russians did have something up their sleeve, ala Bullwinkle, as they announced that they will delay the output reductions that our friends at OPEC (NOT!) had scheduled to start…  So, now you know why we’re seeing the dollar dissed by the non-dollar assets… 

OK… I’ll move on… Yesterday, I talked about how the European Central Bank (ECB) was probably going to go more negative with deposit rates at their next meeting, and that would weigh heavily on the euro, unless the dollar is getting sold like funnel cakes at a state fair. 

Then later yesterday morning, my attention was directed to Twitter, where there was quite a bit of space given to the story that ECB President, LaGarde was recently talking about how the ECB was developing a digital euro…  Some thought that this would be good news for the euro…  I’m not seeing it that way, but I guess in this world of opposites going on, that would qualify!  I did get a chuckle out of one person’s view in relation to the announcement… He said, “I would think that before you can issue a digital currency, you would have to prove that you can deal with positive rates”…. HAHA!

An article on CNBC.com is titled: “Out-of-work Americans are outraged that Congress has yet to pass another coronavirus stimulus deal”… 

The article is filled with tear-jerker stories about people who’ve lost their jobs and angry with congress for not shelling out more stimulus…  While I feel sorry for these people, I also want to point out that this is the slippery slope that I talked about months ago… Once you provide free cash to people, they’re going to want more, and then more, and more…   Once people figure out that they can make more and do nothing, than when they were working, they’ve gone down the slippery slope…

But then there are those that believe that money grows on trees, and that if they pick the money off, more will grow back… There really are those people, folks…  It’s called the Magic Money Tree…  To them it matters not what the deficit numbers are… or what the free money does to a society… It’s human nature that if you get something without effort, you’re going to see if you can get more… And that’s all I have to say about that… today that is…  So, I’ll move on…

The U.S. Data Cupboard had a big surprise for us yesterday… The ISM Manufacturing Index soared in Rocktober to 59.3 from 55.4 in September! WOW! Where’s all this manufacturing being done? Half the country is dealing with riots and chaos, and so forth… Oh well, they say manufacturing is going full steam, so we might as well go with it, eh?  Construction spending in Sept. fell from .8% gain in August to a .3% gain in Sept. So, that wasn’t that great…. 

Today, we’ll see the Rocktober print of Factory Orders… Now, if this data is weak, then you’ll have to come to the conclusion that I have and that is the ISM is full of dookie!  We’ll see soon enough… The experts think it will have risen in Rocktober from Sept…

To recap…  The currencies didn’t move very much at all on Monday, with the Dollar Index remaining at 94.04 all day…  But Gold & Sliver added to their early morning gains throughout the day on Monday, and ended up the day with gains of $17.20 and 44-cents respectively…  I want you all to remember that I told you on Monday that I expected Gold to have a good week, considering the election outcome delays that are forecast. 

For What It’s Worth…  I was at a loss this morning for a FWIW article, and then it came to me…  and then it was there in front of me… An article about Bank strength or lack of strength, its title is: Biggest U.S. Banks Aren’t as Strong as They Appear, says Group…  and it was here all the time, now click your heals together and say There’s no place like home three times!  Longtime reader, Bob, sent me this and you can find it on Bloomberg.com

Or, here’s your snippet: “The largest U.S. banks are less healthy than they appear, boosted by temporary accounting and capital-relief measures as well as massive market support from the Federal Reserve, an advocacy group said.

Although the six biggest banks’ leverage ratios reported at the end of June averaged almost 2 percentage points above the regulatory minimums, the actual average would have been only 0.84 percentage points above without the relief measures, Americans for Financial Reform said in a report Monday.

Regulators have allowed banks to delay the hit to their capital ratios from billions of dollars in loan-loss provisions they’ve put aside this year. Massive increases in their holdings of cash and Treasuries are also temporarily excluded from the calculation of the leverage ratio, which has become the binding constraint for the largest banks during the pandemic.

Even if firms wouldn’t be on the precipice of insolvency without the support measures, the allowances have let most banks continue paying dividends, according to the advocacy group.

“We’re not in a 2008 situation where major banks are facing collapse, but we’re going into an uncertain future due to the pandemic, and the big banks aren’t in as good a shape as they appear,” Marcus Stanley, policy director at Americans for Financial Reform, said in an interview.

In addition to the accounting and capital-relief measures, the banks have also benefited from the Federal Reserve’s unprecedented intervention in capital markets, the organization said. That boosted their trading income by at least $19.6 billion in the first half of 2020, which has also helped them appear healthier than they actually are, according to the report.”

Chuck again… I really think that the casino banks have been in trouble since September of 2019… Remember me going all ballistic on the Fed for not announcing who was receiving the daily injections of billions of dollars?  That began last year, and has continued on throughout the year… I’m just saying… 

That’s it for today, and unfortunately this week… I did have a dear reader, ask me to write a Pfennig On Friday with my take on the elections outcomes… But that’ll be a hard pass on that… sorry… I think it’ll be better for me if I don’t comment on the election outcomes, until Monday when I’ve had plenty of time to think about them…  I’ve already tuned in my SXM radio to the smooth jazz Christmas station… Probably the earliest I’ve even done something like that!  I love this station! And if people didn’t make fun of me, I would listen to it all year round! Just kidding, I’ve never really cared what people think of my choices!  I would think I would grow tired of it by March…  Make sure you get your “I voted” sticker today and wear it proudly! I wore mine for a couple of days, then decided to stick it up on my writing desk pictures display… Youngest son Alex just went to vote, and he came right back saying the line went around the building!  He’ll try again later…  Modern English takes us to the finish line today with their song: I Melt With You…  A classic 80’s song for sure!  I hope you have a Tom Terrific Day, and please get out and Vote, and while you’re voting, please think about Being Good To Yourself!

Chuck Butler

 

November 2, 2020 

* Currencies & metals rally on Friday… 

* Gold looks ready to resume its upward climb… 

Good Day… And a Marvelous Monday to you… This will be a shortened week, with only today and tomorrow on the docket for a Pfennig… Wednesday morning I head to the hospital for an echocardiogram. It’s been a year since they did one, so I’m on the docket for one on Wednesday, and then on Thursday, it’s my monthly visit to my oncologist… That was some sad news this past weekend that 007, James Bond, had passed away… Sean Connery certainly had a full life, living to age 90… To me, he was the best to play the role of James Bond, in which he did it 7 times, and all were successful movies… My beloved Tigers took one on the chin to the Florida Gators on Saturday night… Speaking of Saturday night, we had more trick-or-treaters this year than we’ve had the last two years combined! The Strawberry Alarm Clock greets me this morning with their song: Incense & Peppermint…  “Who cares what games we choose?   Little to win but nothin’ to lose” A great 60’s song!

Tomorrow is election day… And one of the things I keep reading about is that the outcome of the election probably won’t be known for a few days, maybe even a week…  Well, they have until Jan. 20^th, when the inauguration has to take place… So, what this is going to do is put an “unknown” into the markets… And class, what have I taught you through the years, about unkowns?   That’s right, traders don’t’ like them, and usually unknowns like this could cause major upheaval in the markets… But not to worry, I’m firm believer that Gold is set to rally big time in the coming days… And if I’m wrong about the election results taking a few days, Gold will still be in the batter’s box ready to hit the long ball… Let’s hope that the election results don’t take days… Remember what that was like after the Bush/ Gore election race?  It made the U.S. look like a 3^rd world country, with the hanging chads, and legal proceedings and how long it took to finally announce a winner…

OK… So, the currencies and metals both rallied on Friday, while stocks got sold like funnel cakes at a state fair… We could be seeing a crumbling of the outrageous values in the stocks, as I’ve seen something the last couple days last week, that is a complete reversal of what was going on with stocks… What had been going on is that individual stocks would rise in the face of bad earnings… And last week I saw a couple of stocks that had good earnings get sold… Something is going on here, folks… I sure hope you have your stop orders in place…

Enough on the stock jockeys’ problems…  Non dollar investors have had enough of their own problems to worry about lately… So… Gold rose $11.30 on Friday, to close at $1,879.60, and Silver rose 41-cents to $23.74… I was listening to my fave writer, and speaker, Grant Williams and his podcast that he does with Stephanie Pomboy, of Macro Mavens, on Friday, and they had the Gold legendary John Hathaway on to talk about Gold… I learned a new word during the podcast… Grant Williams called John Hathaway a “doyen”…  For those of you who were like me and had to look up the word, it means: “ the most respected or prominent person in a particular field.” And just from listening to John Hathaway talk, I had to agree! 

John Hathaway didn’t  get into talking about the price manipulators and instead preferred to talk about how this move backward in Gold was due, and now Gold is ready to move higher once again…  So… there… a different point of view, for you….  You can find Grant Williams podcasts on Apple podcasts…

In James Rodgers’ book Hot Commodities, he has a chart that lists the Bull Markets for Commodities throughout history… And if you average them all up, the average Bull Market for Commodities lasts between 17-20 years… This new Bull Market for Gold (a commodity) began in 2015…  So, we’ve got a long way to go… It’s too bad the price manipulators don’t read books like that, because then they would see that they are fighting a losing battle! 

Ok, last week a dear reader sent me a note, and asked me if I knew where he could find data for M2… Unfortunately, the answer is no… So, I rely on different sites to give me ideas what M2 is doing… M2 represents money supply growth, the amount of paper dollars floating throughout the economy, and has grown by about 30% this year.  Now, before there were price manipulators, you could almost trace the movement in Gold with that of M2… With that in mind, recall last week when I said, “Gold should be at $2,500 right now?” Well, if you look at M2 increase, that’s exactly where Gold should be given its historical relationship with M2… 

Unfortunately, these days, these days I sit on cornerstone, and count the time in quarter tones to ten… My friend, don’t confront me with my failures, I had not forgotten them….   Ahhh, one of my fave Jackson Browne songs this morning, of course he sings better than I do, but then I don’t care… I sing because I love to sing… And before the radiation on my jaw tore up my mouth, and throat, back in 2011, I used to have a pretty good voice… These days? Not so much!

Anyway, what I was saying before I went all rock-n-roll on you, was that unfortunately, these days, there ARE price manipulators…  But one of these days, their games they play with Gold & Silver, will be brought to a halt… And then…. In the words of Buzz Lightyear… “To Infinity and beyond!”

Well, the euro found a way to add about ½-cent on Friday in the fave of all that dollar buying last week… But I doubt the good times for the euro are going to be something that we continue to talk about, because The European Central Bank (ECB) may have left rates unchanged at their last meeting, I doubt that relative calm is not going to last, and the ECB will be going more negative with interest rates at their next meeting…

Negative rates haven’t hurt the Japanese yen, or Swiss franc… yet that is… So, you kind of see what the ECB is thinking, right? “if The Japanese and Swiss can keep investors confused, then we can too, and if the Bank of England is going negative with rates soon, we will be in good company”…  But what they aren’t thinking about is the unintended consequences… I told ou my feeling about negative rates in last Monday’s Pfennig, so I won’t rehash that, except to say, “Please do not allow our Cartel, I mean Fed Reserve, to go negative here in the U.S. …

So… either the dollar bugs go into hiding for a while, to allow the euro and other currencies to rally based simply on dollar weakness, or… The dollar bugs hold steady Eddie…  I’m thinking that with all the unknowns and currency printing that the dollar bugs are in trouble… But I honestly don’t have a strong feeling either way here… So you’ve got that going for you! HA!

The overnight markets have kept things pretty steady Eddie for the currencies, but… Gold had gained $9.70, and Silver has gained 30-cents in the early trading today, adding to their Friday gains, so it appears that my thoughts on Gold this week are coming to fruition? 

The U.S. Data Cupboard had the Sept prints of Consumer Income and Spending on Friday… Both saw gains in Sept from August, and that had me scratching my bald head… I get the Spending data, it was back to school time in Sept (Instead of August, because of the delays in starting school) but the Income gains? When the Gov’t’s mental giants were sending out checks to the unemployed that were greater than the money the unemployed made, I could see where there would be income gains… But now?  Oh, well, it is what it is, right? 

This week’s Data Cupboard will be busy with data prints like the ISM manufacturing index, Factory Orders, the ADP Employment Report, the Weekly Initial Jobless Claims, and finally on Friday, the Jobs Jamboree… So, as I see things, the election results will be up in the air, and that will dominate the markets’ collective minds, not the data… 

For What It’s Worth…  Back in 2002, I received a Christmas present from our Marketing Director, David Galland… It was Stauss & Howe’s 4^th Turning book… I thought, at first, I guess there’s something in here that he wants me to learn…  But it wasn’t that at all… The book written in 1997, told of the 80-year cycles that bring about things… Anyway, this is a long article that can be found here : https://www.theburningplatform.com/2020/10/22/fourth-turning-election-year-crisis-3/

Or, here’s your snippet: “The next Fourth Turning is due to begin shortly after the new millennium, midway through the Oh-Oh decade. Around the year 2005, a sudden spark will catalyze a Crisis mood. Remnants of the old social order will disintegrate. Political and economic trust will implode. Real hardship will beset the land, with severe distress that could involve questions of class, race, nation and empire. The very survival of the nation will feel at stake. Sometime before the year 2025, America will pass through a great gate in history, commensurate with the American Revolution, Civil War, and twin emergencies of the Great Depression and World War II. 

I read The Fourth Turning in 2006, after seeing it described in John Mauldin and Doug Casey’s newsletters as an uncannily accurate assessment of American history based upon generational configurations which recur on eighty-year cycles, a long human life. Strauss and Howe wrote the book in 1997 and used their generational theory to predict the Crisis that would begin in the mid-2000’s and come to an indeterminate climax in the mid-2020’s.

As a student of history, the theory spoke to me. I have been writing articles since 2009, using the Fourth Turning as a guide to interpreting what has been happening and what might happen as this crisis period accelerates towards its violent culmination. The quotes above perfectly capture exactly what has happened since this crisis began in September 2008, with the Fed/Wall Street created financial collapse. The existing social order is disintegrating, but they are willing to destroy the country rather than relinquish their wealth, power and control.

Strauss & Howe identified the core elements of this Crisis as debt, civic decay, and global disorder. No one can argue the severe distress engulfing the nation and the world traces its origins to these core elements, with the catalyst for this Crisis being the 2008 central banker manufactured financial collapse. Nothing has been normal since 2008. And 2008’s epic implosion was driven by the disastrous financial, political and military decisions implemented by the puppets of the Deep State from 2000 onward, with the Federal Reserve obligingly creating bubble after bubble as the “solution” to the previous bubble.

And now we are here again, in the midst of the greatest bubble in the history of mankind. A bubble of willful ignorance. The obliviousness of most Americans to the danger awaiting them is akin to the day before Fort Sumpter was bombed, the day before Pearl Harbor was attacked, or the dinosaurs unaware of a giant meteor rushing towards the planet and about to transform their future in a challenging way.

Real hardship has beset the land, for those not in the .1% or Deep State lackeys being rewarded for propagating mistruths, outright lies, fear, and propaganda on behalf of their oligarch benefactors. These apparatchiks mainly consist of corrupt politicians, central bank lackeys, mainstream media hacks, neocon warmongers, surveillance state traitors, and big pharma captured health “experts”. The severe distress does involve class, race, nation and empire, but most of the distress has been artificially created by those pulling the strings – Bernays’ invisible government manipulating the masses.”

Chuck again… Remember this book was written in 1997… And I thought I had a feather in my cap when I  was the first to talk about the housing bubble in 2003!

Market Prices 11/2/20: American Style: A$ .7040,  kiwi .6627, C$ .7521, euro 1.1645, sterling 1.2929, Swiss $1.0886, European Style: rand 16.2564, krone 9.5530, SEK 8.9000,  forint 314.50,  zloty 3.9521,   koruna 23.3026, RUB 79.36, yen 104.69, sing 1.3655, HKD 7.7518, INR 74.41, China 6.6830, peso 21.24, BRL 5.7398,  Dollar Index 94.04,  Oil $35.00,   10-year .85%, Silver $24.04, Platinum $855.00, Palladium $2,232.00, and Gold… $1.889.30

That’s it for today…  The sun finally came out on Saturday, and the temps were a bit warmer, which allowed me to sit outside and begin to read my new Jack Reacher book…  We’re having our first freeze of this season, as it is 28 outside this morning… BRRR….  The gout has attacked my left elbow once again, and since I use my left arm to hold my cane to walk, I can barely get around this morning… if you’ve ever had the gout, you know how painful it is… I take a medicine that’s supposed to keep my uric acid in check, but from time to time it fails to do its job…  Ok, this will be a busy week for me…  Have you made your plans to vote tomorrow?  I voted early, so don’t allow the thought of long lines at the voting venues, deter you… Get out and Vote!  Earth, Wind & Fire take us to the finish line today with their song: September…  This song gets me dancing in my chair… I hope you have a Marvelous Monday, and Please Be Good To Yourself!

Chuck Butler

 

 

Rocktober 29, 2020

* an ugly day for all asset classes but Bonds… 

* Has the Fed run out of Firepower? 

Good Day… And a Tub Thumpin’ Thursday to you! When is the sun ever going to make an appearance here again? This is getting so N.W. that it’s making me feel depressed… I had to go to the wound center yesterday, and it was so cold out, I had to break out my winter coat! In Rocktober! And now we’re supposed to be getting pelted with rain from Zeta that made landfall yesterday… So… we’ve got that going for us! I know there are people around the Gulf that have has a horrendous Hurricane season, but I’m not on the coast, at this time of year. And I’m sick of not seeing the sun! The Chi-Lites greet me this morning with their song: Oh Girl…  (I wouldn’t blame you if you left me now) 

What a nasty day yesterday for Gold & Silver… Gold closed the day down $31.50 to $1,877.10… And Silver closed the day down $1.01 to $23.44…  A very ugly day… That began in the overnight markets when the ECB announced that they were keeping rates unchanged…  Of course, what the heck that has to do with Gold is beyond me… But the price manipulators saw this as a great opportunity to sell Gold Short…  Dirty Deeds Done Dirt Cheap! To illustrate this… only $7.25 of Gold’s $31.50 loss was due to dollar strength… That leaves $23.85 for sellers…  Do you know of anyone selling their Gold?  

And to start today, Gold is down $4… so the selling hasn’t stopped, I would think that the price manipulators have gotten Gold’s price down to where they can make a profit, and then turn around and wait for the next big move up…  I guess we’ll have to see as the day goes on… 

But… the thing this pull back has done is open up a buying opportunity for those out there that have procrastinated and not bought yet, or for those of you who realize that you don’t have enough Gold or Silver… James Rickards says that investors should allocate 10% of their investment portfolios to Gold… I’m of the opinion that when an asset class is in a bull market, that the allocation should be moved higher to 15-20%… 

Speaking of the Bull Market for Gold…  Mr. Rickards gives us some history that I found in the 5 Minute Forecast yesterday, that I gave you the link for last week…  here’s Rickards with his history of Bull Markets… ““The first great bull market (1971–1980) produced gains of 2,100% in nine years. The second great bull market (1999–2011) produced gains of 670% in 12 years.

“The third great bull market began in 2015 and is still underway,” says Jim. “Gains so far in the new bull market have been about 100% in five years.”

Assuming “a simple average of the first two bull markets would produce expected gains of 1,400% in 10 and a half years.

“Starting from a base of $1,050 per ounce,” Jim says, “if the new bull market tracks the average of the prior two, we should expect to see gold prices at $14,700 per ounce in early 2025.

“In fact, the rally is not constrained by the average and could easily exceed the record bull market of the 1970s.”

Chuck again… Well that concludes our discussion of Gold today, folks…  but from $1,888 to the prices Rickards just talked about, is quite a move, ? … now on to other asset classes!

In the overnight markets, the dollar bugs have gone the whole nine yards in buying dollars, and the euro is in danger of losing the 1.17 handle, the Aussie dollar (A$) has lost more ground, and the only currency that has held its ground is the Japanese yen… Go figure… the currency from a basket case country is the only currency holding its ground… Hmmm… 

When I left you yesterday morning, the dollar bugs were dancing in the streets once again, but during the day, their dancing abated, and the euro was able to claw back of its lost ground…  But, the Petrol Currencies of Norway, Russia, Canada, Brazil, (and others) can’t find a bid these days, with the price of Oil slipping in price with every 24 hours passing by.

And the Aussie dollar (A$), just kept giving back recent gains as the day went along yesterday, as it was a double whammy for the A$… First it got caught up in the dollar buying early in the morning, and then traders woke up to the fact that Aussie exports to China were being boycotted by the Chinese… I said yesterday, that I thought this news would be bad for the A$, and it has turned out to be just that!

And I don’t like to talk about stocks… But OMG has the trap door been sprung under the stock jockeys? Yesterday’s losses were the broadest since June, when back then when we were hypnotized by Dr. Fauci, and the doomsayers…  Well, according to the pundits that follow stocks, they all say that the recent run up of positive cases has investors shaking with fear…   

And the stock market futures are in the red again this morning, so the selling there hasn’t stopped either…  You know, as I look at the markets, the only asset class I see that has held steady Eddie through all this selling is Bonds… The ten year Treasury’s yield is steady at .77%…  I saw a blub online the other day with a stock jockey telling people that they should sell bonds and buy stocks…  Really?  I’m not enthusiastic about buying Treasuries with that low of a yield, but the bonds I do own, I’m not selling, that’s for sure! 

I saw a great sign yesterday… It said: “ There is a spike in COVID cases, because there’s a spike in Testing!  If we had more IQ tests, there would be a SPIKE in Morons!”

Now that’s not only funny, it’s true… I tell my kids all the time that there are more people in the world, and therefore there are more idiots…  

Even with the dollar surge the yesterday morning, according to the folks at Reuters.com, “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 Societe Generale among the banks forecasting more losses.”

Makes sense to me… But the gains for the currencies have come in bits and spurts, and nothing that feels like a trend, just yet…

Well… remember Bill Dudley?  He was the President of the Fed NY from 2009 – 2018… And now he’s an economist, who had this to say to Bloomberg, “Central bank officials aren’t bluffing when they say that only government spending can rescue the U.S. economy.” 

Of course I would argue that even that statement is somewhat incorrect… As the Gov’t can’t help us… Oh, there are those in the U.S. that believe that helicopter money will save us…  And I’m telling you now, so maybe you’ll listen to me later, that printing fake dollars, as one of my fave economists, Bill Bonner, calls helicopter money, will not save us…  It’s simple economics folks… too much of something lowers its value… So now take that to dollars… too much fake money, will lower its value… And when it lowers its value, it lowers the buying power that citizens that hold dollars have… And to me, that’s like a additional tax… So… while you might have some extra cash in your pocket, what’s it going to buy? And that’s where the idea of helicopter money gets grounded…

In addition, you add more to the national debt, and with every Billion of debt that gets added to the national debt, the closer we get to the whole shootin’ match collapsing!  But don’t let that get in the way of getting “free cash” from the government! 

OK, I’ve to to talk about something else or my blood pressure is going to go through the roof!  At doctor’s offices they always take my blood pressure, and then look at me and say, “You’re doing a great job keeping your blood pressure in check”… And I always respond.. “Better living through chemistry!” HA!

But fear not about losing buying power due to our national debt being so monstrously high… Ted Cruz is here to save us…  check this out: “Republican Sen. Ted Cruz says the mounting national debt will reemerge as a major concern for the GOP.”  Now? Now it’s going to reemerge as a concern?  I do believe that we’re way past the point of being concerned about it, Mr. Cruz…  But if you want to see what you and your henchmen, I mean fellow congressmen & women, can do about getting inflation to rise you would be helping out the Cartel, I mean the Fed… for they haven’t got a clue why inflation is rising right now…    I’m just saying…

Bill Dudley, the same guy above, also told Bloomberg that “The Fed Is Really Running Out of Fire Power”…  No, duh!  Interest rates are near zero, they can only go to zero, before being negative, so that pretty much tells us that they are near the end of the road… The Fed has bought Treasuries, bought Munis, bought ETF’s, and Corp Bonds, and the economy still isn’t back to normal, which before the pandemic hit we, as a country, had settled for a new norm in GDP which had averaged about 2.1% for the last 10 years…   But, what was I talking about? Oh, that’s right, the Fed running out of Fire Power…  That would be a good thing in my books… The Fed not being able to screw up price discovery any more would be a great thing!

OK… time for class… what does price discovery mean?  According to Investopedia, it means: “Price discovery is the overall process, whether explicit or inferred, of setting the spot price or the proper price of an asset, security, commodity, or currency.”

And I believe that the Fed has destroyed price discovery in almost all markets… Stocks, bonds, and so on… They did this by buying stocks, bonds, etc. in the markets place at whatever price, and creating a short squeeze in the asset…  This is so wrong… The Fed was supposed to be the lender of last resort for the member banks, not the buyer of last resort… I really feel that this has got to stop…

The U.S. Data Cupboard has the 3rd QTR GDP first print this morning… Yesterday, I went through the math and explained how the 30% forecasted gain for GDP wasn’t the same as the 30% drop back in the 2nd QTR… But I doubt the traders will do the math, and start singing, “We’re in the money, that sky is sunny, Old Man Depression you are through, you done us wrong.”  But they’ll be so wrong that no one will notice!  

We’ll also see the Weekly Initial Jobless Claims which the previous week showed a big drop in the number, that surprised me… So, no surprises this week…  There’s just so many people that have dropped off the unemployment roster, these days… you have to wonder if we’ve saturated the employment roster of people?  about 150 Million people did work before the pandemic hit…  I’m just asking… 

To recap… it was an absolutely ugly day in the markets, stocks, currencies, Oil and metals all got sold down the river… The only asset class to hold its ground was Treasuries… Hmmm…   Gold got sold by $31 yesterday, and is down another $4 in the early trading this morning…  A buying opportunity? Chuck thinks so… 

For What It’s Worth…  Well… Since I spend a good part of the day talking about Gold today, I thought I might as well end it with another discussion of Gold.. .This one I pulled from Ed Steer’s letter this morning… you can always find Ed here: www.edsteergoldsilver.com… And the article is about China’s consumption of Gold and it can be found here: https://www.brecorder.com/news/40029403/china-gold-consumption-rebounds-in-q3-as-strong-wedding-market-lifts-sales 

Or, here’s your snippet: “China’s gold consumption rose 28.7% in the July-September period from the previous quarter, the China Gold Association said on Tuesday, supported by a stabilising economy and a rapid recovery of the wedding market.

Consumption in China in the first nine months of 2020 stood at 548.09 tonnes, down 28.7% year on year, the association said on its website, which implies third-quarter consumption was 224.8 tonnes, down 8.2% from a year earlier.

Demand in the world’s top gold user had been hit early in the year as coronavirus-led lockdowns and high prices for the precious metal kept retail buyers at home.

“Spot gold prices gained around 24% in the first nine months of 2020, but have eased about 8% from an all-time high of $2072.50 notched on Aug. 7.

 

Consumption has gradually recovered since the second quarter, fuelled by Beijing’s stimulus measures.

“With the sustained and stable recovery of the domestic economy and the rapid recovery of the wedding market, gold consumption has picked up significantly,” the association said.

Sales of gold bars and coins in the third quarter increased by 66.73% from the previous quarter, the association said.”

Chuck again… physical demand is still strong in Gold & Silver., folks.. .the bull market for metals is in place, don’t let an engineered take down scare you from what’s ahead for Gold… I’m just saying.. 

Market  Prices 10/29/20: American Style: A$ .7026,  kiwi .6622, C$ .7482, euro 1.1705, sterling 1.2943, Swiss $1.0960, European Style: rand 16.4514, krone 9.5311, SEK 8.8988,  forint 314.97,  zloty 3.9655,    koruna 23.4201, RUB 78.23, yen 104.24, sing 1.3663, HKD 7.7518, INR 74.43, China 6.7116, peso 21.43,  BRL 5.7224,  Dollar Index 93.69,  Oil $35.87,  10-year .77%, Silver $23.08, Platinum $860.00, Palladium $2,216.00, and Gold.. $1,873.30

That’s it for today… and this month! Rocktober will turn to November, my most disliked month, when we next talk on Monday…  When I used to have a job, my assistant was Christine, who’s husband was a basketball coach, and the basketball season would begin in Nov. So, she and I would commiserate together about how we disliked November!  I have no one to commiserate with any longer, so I’ll just hunker down and try to forget about what month it is…  Well… Saturday is Halloween! Will you be doing the Monster Mash?  I hear that it will be a bit warmer on Saturday, which is good… I’ll sit outside and give out treats, to the kids, who venture out.. The doomsayers say Trick-or Treating will be dangerous… I don’t think you can take this away from the kids, period.! The Temptations take us to the finish line today with their song: Papa Was A Rolling Stone…  And with that I’ll bid Rocktober goodbye, and hope you have a Tub Thumpin’ Thursday, and a haunting Halloween on Saturday… My beloved Tigers play Saturday night, so I might have to move the extra TV we have outside! Go Tigers! Please continue to Be Good To Yourself, and I’ll talk to you again on Monday… God willing and the Creek don’t rise… 

Chuck Butler

 

Rocktober 28, 2020

* No movements yesterday, but major moves overnight

* Chuck does some math for you… Better check his work! HA 

Good Day… And a Manfred The Wonder Dog Wednesday to you! Man what a treat yesterday, having little Evie here with us for the day! We played “I see you”, and she was all over the place now that she walks… She has the cutest smile, that she can show off, whenever, you least expect it!  Now, I guess, I’ll have to wait until she begins to talk… I can always get her laughing when she picks up her monkey, and I make monkey noises… Now, she does her own monkey noises… So funny!  The O’Jays greet me this morning with their song: Back Stabbers… Whenever I hear this song, I’m reminded of the one back stabber I ran into in my life in business…  Grudges never die!

And neither do old rivalries… Ok, to set this up, Roosevelt H.S. (my school) and Southwest H.S. were about 5 miles about, and we were like Mizzou/ Kansas in the dislike we had for each other…  So, a few years ago, I came out of the grocery store and there was a man sitting at a table full of cook books, and he said, “ Would you like to buy a cook book written by the mothers of Southwest H.S.?” I said, “I wouldn’t touch that with your ten foot pole!” and he yelled, “You went to Roosevelt didn’t you?”  Old rivalries never die…

OK… Well, that supposed “Trading shutdown” disappeared in the overnight markets last night… The European Central Bank (ECB) got things started by announcing more stimulus for the Eurozone economy, but held interest rates at their current negative level.  This news sent the euro to the woodshed, and the rest of the currencies got sold too. Gold has given back over $20 this morning, and things just look like there’s something else going on that’s not fundamentals trading… 

According to Kitco, this morning, Gold’s $20 loss so far today consists of $9 of loss due to dollar strength, and that leaves $11 of loss to “sellers”… And we are expected to believe that Gold owners lined up this morning to sell their Gold because the ECB left rates unchanged? Give me a Break!  This smells like, walks like, talks like and looks like a classic example of the price manipulators piling on to Gold’s losses, with short sales, to make it look as though the whole shootin’ match of losses is because of dollar strength… 

  In yesterday’s trading, the dollar got sold, the euro rose, and Gold did gain about $5 on the day to close at $1,908… I went to bed last night, after watching the World Series come to an end with the Dodgers victorious, and everything was looking good… But then came the news, early this morning, that the dollar bugs were buying dollars, because the ECB left rates unchanged…  My goodness, what the heck happened here? 

I’m just not buying the thought that because the ECB left rates unchanged that everything but dollars is getting sold?  Come on… I didn’t just fall off the turnip truck!  I’m going to stop talking about this because I’m really getting all keyed up, and I might say something that gets me into trouble with you dear readers! 

There was one piece of news yesterday that really had me taken back on it’s content… Seems, the Chinese are getting very sticky with who they’ll do trade business with…  Remember when China’s boom was going on, and they took any and all exports of raw materials from Australia?  Well… the news yesterday is that the 3 major Chinese ports were instructed to Not Accept Any Australian Coal shipments, even if the trade has been previously concluded…  There has to be a reason for this change of horses in the middle of the stream for the Chinese…

Seems the Australian recently called for an investigation regarding where the COVID-19 virus orginated… And The Chinese went all Tump on the Aussies, boycotting all Australian imports by China…  Yowsa! Are you kidding me?  Ok, Chinese you’ve got to learn that “sticks and stones may break my bones, but words can never hurt me!”  I’m just saying.. .

The news didn’t faze the Aussie dollar (A$), as it remained above 71-cents throughout the day , but has gotten caught up in the dollar buying  this morning., and has lost about 1/2 cent… One would think that it would hurt the A$ in some way… 

Ever since our Marvelous Monday, when I listed the economic prints due this week, and mentioned the 3rd QTR GDP, I’ve been thinking about how to talk about this when it happens tomorrow… You see, what I’m talking about is the idea that 3rd QTR GDP will have gained 30%… I know that the dollar bugs will react as though things are getting better, and the economy is out of the woods… But, cooler heads should prevail here… And realize that when something goes down 30%, when it comes back 30%, it doesn’t bring the something back to the original point… 

Here’s the math… Say you own a stock that you bought for $100, and it loses 30%, that brings the stock’s value down to $70… but then it reverses and comes back 30%…  You’re still down… Because 30% of $70 is $21, which makes your stock now $91…  See?  See how this works? 

Well, transferring this math over to GDP… Even if the 3rd QTR GDP does come back 30%, it will still be more than 4% below its level at the end of 2019… And that would be more than the farthest the economy ever was from its prior peak in the Great Recession.  

So, will traders take the time to do the math, so to speak? Nah… they think that they don’t have time for that, and 30% is 30%, and that’s good!  Well, it is “good”, but does not totally reverse the rot on the vine …   I got some of this information from the Brookings Institute, which you can Google and go to…  So, are you going to argue with the Brookings Institute? I didn’t think so… 

The U.S. Data Cupboard had some surprises for us yesterday… Sept. Durable Goods and Capital Goods Orders were stronger than expected, and that surprised me… Of course, the CAPEX (Capital expenditures) was not as strong as it should be, but it was stronger than expected, so I’ll give it 1/2-credit…   The Case/ Shiller Home Price Index, shot higher in August to a 5.75% increase VS 4.8% increase in July… This one didn’t surprise me, one iota… And the Stupid Consumer Confidence Index slipped a tiny bit from 101.3 to 100.9… 

To recap…  The supposed “Trading shutdown” got uprooted in the overnight markets last night.. The ECB left their negative rates unchanged, and that sent the euro to the woodshed, where it dragged all the other currencies, and Gold is getting sold this morning by more than $20… Chuck isn’t buying the thought that the ECB leaving rates unchanged caused all this damage…  The Chinese are boycotting Aussie coal imports, and Chuck does the math, on GDP… You won’t want to miss that! 

For What It’s Worth…  Talk about timing! Yesterday I talked about China’s renminbi/ yuan and how I viewed it as a currency to be reckoned with going forward. And lo and behold, the Good Folks at GATA sent me a link to an article about how the renminbi is not ready for prime time… And it can be found here: https://asia.nikkei.com/Opinion/China-s-yuan-nowhere-near-cracking-US-dollar-hegemony

Or, here’s your snippet: “The yuan is higher than it has been in more than two years, and foreigners are suddenly showing interest again in holding the Chinese currency.

Earlier in the decade Beijing brought the yuan into the spotlight through an aggressive effort to take the currency overseas through swap agreements with foreign central banks and offshore bond issuances denominated in the currency.

This time foreigners are coming to China to get yuan. Chinese assets stand out at a time interest rates in much of the world are at zero or below and many currencies are sagging. Beijing has meanwhile been making access easier for foreign buyers.

Yet for all Beijing’s ambitions of cracking the hegemony of the U.S. dollar in the face of Trump administration sanctions, the yuan still has a long way to go. While this week’s meeting of the Communist Party Central Committee looks likely to take up the cause of yuan internationalization, the currency will not be taking the greenback’s place on the world scene any time soon. …

What all this seems to imply is that China is indeed fully aware of the risk of conducting most of its international trade and investment transactions in dollars and of holding most of its foreign assets in dollars. The way to reduce this dependence, beyond diversifying into use of other foreign currencies as has also been happening, is to boost the yuan. …

Available data suggests that after plunging abruptly in 2015, international use of the yuan started to recover just last year. This year, foreigners have been snapping up yuan to put into domestic Chinese bonds and stocks, with holdings of such bonds alone rising by more than a quarter to 2.8 trillion yuan ($419.3 billion).

It goes without saying that the general weakness of the dollar since the COVID-19 pandemic began pounding the U.S. economy in March has been a blessing for the Chinese authorities’ attempts to attract inflows, boosted by the juicy interest rate differential between the two nations’ benchmark government bonds.

Looking deeper into current international use of the yuan, trade settlements in the Chinese currency have slightly picked up since last year, especially in services transactions.”

Chuck Again… So… I was wrong about the timing… But will I be wrong about the ultimate goal for the renminbi? Only Time will tell… eh?

Market  Prices 10/28/20: American Style: A$ .7075, kiwi .6658, C$ .7536, euro 1.1725, sterling 1.2952, Swiss $1.0971, European Style: rand 16.3853, krone 9.3480,  SEK 8.8415, forint 313.03,  zloty 3.9453,   koruna 23.3827, RUB 76.72, yen 104.36, sing 1.3647, HKD 7.7499, INR 73.72, China 6.7051, peso 21.31, BRL 5.5447,  Dollar Index 93.50,  Oil $37.72,  10-year .76%, Silver $23.93, Platinum $868.00, Palladium $2,289.00, and Gold… $1,888.10

That’s it for today… Congrats to the Dodgers for winning the World Series… It just shows to go ya, that Money Can Buy You Love, I mean a World Series!  So, LA has the baseball and basketball champs… Money, money, money…  Ok, enough of that!  I got a decent night’s sleep last night, so I’m back to normal… Thanks to all you dear readers for listening, and not filling my Pfennigs Replies box with emails telling me how awful a person I am regarding my take on the virus testing. I did get a reader who asked me what “that” had to do with markets and economies… Oh well, maybe from now on I’ll keep this letter to just about markets and economies…. Nah! it’s my letter, and I’ll talk about what I want to talk about!  George Harrison takes us to the finish line today with his song: While My Guitar Gently Weeps…  For those of you who don’t know, Eric Clapton did most of the guitar work on that song… This of course was before Eric began courting George’s wife… And so on….   I hope you have a Manfred The Wonder Dog Day today… And will continue to Be Good To Yourself!

Chuck Butler