Author: admin

August 31, 2020

* Currencies & Metals both rallied strongly on Friday… 

* Chuck questions just what the heck did Powell say? 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

 

August 26, 2020

* A nothing day in currencies and metals yesterday

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

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

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

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

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

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

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

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

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

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

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

Neil Barofsky, TARP Inspector General

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

August 25, 2020

* The dollar bugs were back in control yesterday

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

Chuck Butler

 

August 24, 2020

* Currencies, and metals are both on the rally tracks

* Weekly Initial Claims climb back above 1 Million! 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Or, here’s Your snippet: “ Dear Fed,

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

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

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

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

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

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

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

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

Chuck Butler

August 20, 2020

* Traders buy dollars on Wednesday… 

* Another engineered takedown of the currencies & metals… 

Good Day… And a Tub Thumpin’ Thursday to you!  The weather here has reverted back to late May-like temps… I was able to sit outside, in the sun, soaking up Vitamin D, for almost 2 hours before I succumbed to my daily call for a nap….  Well, I flipped a coin and it came up that I would continue reading Kurt Vonnegut’s Slaughter House 5, I’ve got his book: The Sirens of Titan queued up too!  And by the time I get through those, it’ll be September, and  the new C.B. Strike book will be getting delivered to me!  Someone asked me the other day why I never mentioned that I read economics books or investment books… I replied: “I read for enjoyment”….   Not exactly a “morning song” except if you can’t wake up…. But AC/DC greets me this morning with their song: Back In Black…

Well… 2 steps forward, and then a step backward….  Wednesday saw the currencies and metals drift most of the day until the afternoon, after the Fed’s Meeting Minutes were printed….  And then for some unknown reason, currency traders all bought dollars…. The euro which had climbed to 1.1935 saw a full figure taken from its value, and so on for the currencies. Gold got sold like funnel cakes at a state fair once again, and finished the day at 1,929….  Yeah, that’s a far way’s down from the early morning price of $2.006….

And all because something spooked the markets…. I can tell you everything that was in the Fed’s meeting minutes wasn’t what spooked the markets, for they had nothing but gloom to say about the economy… They did mention that further monetary stimulus might be needed, and that could have been what queued the boys in the band to strike up a chord… But, The Fed Heads, said that their staff had lowered the previous economic outlook….  Did you read that? The Fed has lowered their previous economic outlook…. And traders bought dollars because of that?  What did someone put a pistol to their heads and demand they buy dollars? Well, we all know that didn’t happen, but metaphorically it could have very well happened….  I’m just saying…

Ed Steer, in his letter this morning, thinks that, as he calls them, ‘da boyz, bought dollars to rally the Dollar Index, and then that just carried over to their selling of Gold & Silver…  you can check out Ed Steer’s letter by clicking here: www.edsteergoldsilver.com 

In the overnight markets and early this morning, traders are selling dollars again… I know, I know, it makes no sense to me either!  But that’s what’s happening, right now, and Gold has gained $18 and Silver has gained back $48 cents in the early trading… So, it’s a one day event for the price manipulators, eh? 

OK, my rant is over…. What else is there in their quiver to use to kill rallies?  Or will they simply continue to go back and use the same arrow? You know the one where the PPT comes in buys dollars, spooks traders, and they end up following along….   The Fed Heads said what I thought they would say, and that is that the “economy is vulnerable”….  They didn’t report seeing any “green shoots”, and they basically sounded pretty dejected….  Oh, poor, poor Fed Heads, all the Kings men and and all the King’s horses couldn’t put the economy together again…

Sooner or later, it’ll all collapse under the weight of debt, and currency printing, but for now, we have to live with these weekly engineered takedowns of the currencies and metals….  

Well, did you hear that the Bank of Nova Scotia has agreed to pay a fine of $127 Million  after it was found that they had lied to regulators a couple of years ago….  Spoofing Gold & Silver futures was their crime…. I’m reminded of a Led Zeppelin song, that goes like this: Lyin’ cheatin’ hurtin that’s all you seem to do…. And then the chorus is: Your Time is Going To Come….   Oh how apropos for this bullion bank that decided a couple of months ago to get out the bullion business….  

But…. Think about this for a minute because this rings true with every one of these “fines” that these casino banks receive for doing something unlawful…..  I’m sure that the Bank of Novia Scotia booked 5 to 10 times that amount of profit through the years, and this fine was “just a cost of doing business”….  That’s their mantra, folks…. Do it until you get caught, then lie, through your teeth, until proof is provided, and then agree to a fine….  And, I’ll say this once more…. Until one of these dudes goes to jail, this will continue….  Move onto the next casino bank, because if you really want to you could find them with their hands in the cookie jar too… and so on…

For A Tub Thumpin’ Thursday, I’m sure fired up today, eh?  First I see the markets getting spooked, and then I read about another casino bank receiving a fine, instead of going to jail….  I throw my hand in the air, and scream, Serenity Now!

So, why don’t we follow the guidelines in the Constitution any longer? Because we’ve grown into an Empire…. The world’s strongest military, the reserve currency, and the ability to print said currency until the cows come home….

For you history buffs… Don’t these things remind you of the Roman Empire? …. I’m just saying…

The Difference is that the Romans didn’t have currency to print… Instead they kept reducing the amount of Silver in their coins…. Same concept…. Debase their currency…. And do it, and at first, it seems to work, so you debase it a little more, and little more, and pretty soon, no one wants it for they have no confidence in its worth…  We’ll find this out sooner or later….

OK…  So, how many know or aware of the Libertarian Tom Woods? I read his stuff all the time, and listen to his podcasts…. Yesterday he had a podcast with Rep. Robert Massie, who I found is no fan of the Fauci/ Birx tandem, and for a special treat today, I have the link to that podcast right here in my pocket….  Click here: https://tomwoods.com/ep-1711-rep-thomas-massie-against-the-fact-free-covid-19-hysterics/

So, now you know…. I listen to podcasts from Grant Williams, Tom Woods, and Candance Owens, and Dennis Prager….  And that’s it….

U.S. Corporate Debt, which 5 months ago was teetering on the cliff, and was soon to do their best imitation of Wiley Coyote…. Couldn’t have known that the pandemic was going to be their savior…. But is was, and now they can go back to issuing more debt, because the Fed will just buy it if the sheeple don’t…. 

At the end of the first Quarter… Corporate debt issuance was up 9%, but those same corporations showed that Corporate pre tax profits were down 8.5%…  And going into the 2^nd QTR they upped the ante, and now have issued more debt than at any time in the past. And… The gap between corporate debt and profit growth grows even wider ….

 But do our friendly neighborhood Fed Head give this two thoughts? I doubt it…  They’ve ruined the price discovery in the markets, and all they’ve done is kick the can down the road with these Corporations and their debt…. They, the Fed and Corporations, have gone “all in” on their thoughts the economy is going to comeback strong… 

 Well, I don’t think that’s ever going to happen as long as we have so much debt as a country…  I went through the debt and its relation to the economy the other day, so I won’t go through that again…. But this is a big risky bet, folks… And the Fed just keeps the Corporate bond window open… They should have a sign: “you issue them, we buy and hold them”…. 

 And in an attempt to keep you up to date regarding the plan to have us go to a cashless society…  It was reported yesterday, that 4 Australian Banks have removed their ATMs….  And closed branches….  Man I have to tell you that I really feel for my Aussie mates….  When the bank down the street closed, the one that I had used as my personal ATM for years, I had to find a new ATM….  What a pain in the shoulder!  Ha! You thought I was going to say something else, didn’t you?

 Might as well just put a sign where the ATMs were that says, “ No cash to distribute, digital currency is on the way!”

Well, it’s a Tub Thumpin’ Thursday, which means it’s the day the Weekly Jobless Claims print for the previous week… It’ll be interesting if we start to see the numbers climb again with all the re-closings….  We’ll also see the regional report from the Philly Index, which should have backed off the previous month’s number…. And the Leading Indicators…. And that’s it!

 To recap….  The Fed released their meeting minutes yesterday, and something spooked the markets…. Chuck believes it was the PPT buying dollars, and that spooked traders into thinking that that’s what they should be doing too… So, both currencies and metals lost a lot of ground yesterday afternoon, after the minutes were seen by everyone…. Chuck doesn’t see anything in them that would give you a warm a fuzzy about owning dollars, but that never stops a price manipulator like the PPT….

 Before we head to the Big Finish today, I wanted to spread some chuckles…. Good friend, Dennis Miller sent me a picture of NY Gov. Andrew Cuomo and the caption reads: U-Haul’s Number 1 Salesman….  4 years in a row!   Now that’s funny…. Not for the folks in the state of NY…

 For What It’s Worth…  While I was reading Ed Steer’s letter this morning I came across a FWIW article that he had highlighted… It’s an article about what supposedly spooked the markets yesterday, and it can be found here:https://www.zerohedge.com/markets/key-takeaways-fomc-minutes-market-spooked-lack-fed-commitment-more-qe-twist-or-curve

Or, here’s your snippet: “As we noted earlier, treasuries erased gains and fell to session lows after minutes of the FOMC’s July 29 meeting for several reasons: first, the Fed’s assessment of the economy was more downbeat than many had expected; second, the fact that the Fed appeared to cool substantially on any imminent (or even medium-term) implementation of yield curve control; third, the FOMC was silent on the prospect of changes to the size or composition of the central bank’s purchases of Treasury securities. As Bank of America’s Marc Cabana pointed out, “Notable that the minutes had no discussion of extending the duration of asset purchases, i.e. “twist”. This narrative had built considerably via media & Dudley speech leading into the meeting.“

Cabana is referring to the fact that in news conference that followed the July 29 meeting, Fed Chair Powell said the Fed’s asset purchases – running at an $80 billion a month pace in Treasuries – can be adjusted to increase support for the economy, leading to speculation that an increase in size or duration was discussed.

Tom Roth, head of rates trading at SMBC Nikko Securities echoed Cabana’s reservations, saying that market reaction to the minutes is to “what is not there,” adding that the minutes also revealed widespread reservations among officials about the use of yield caps and targets.

Following the disappointment from the lack of commitment to more QE, YCC or Twist, yields across the curve reached session highs, led by the long end, steepening the curve; 10-year yield erased what remained of an earlier decline of as much as 2.4bp and climbed as much as 1.8bp on the day to reach 0.687% before stabilizing.

The disappointment also propped up the dollar, which extended gains as the minutes revealed that the FOMC saw only a modest benefit from yield caps and plans to keep securities purchases at their current rate.”

Chuck Again… yeah, yeah, yeah, excuses, excuses… The old football coach used to say, “Excuses never won a ball game for anybody”…   Have the markets become so addicted to stimulus?  SERENITY NOW!

Market  prices 8/20/20: American Style: A$ .7168,  kiwi .6532, C$ .7607, euro 1.1847, sterling 1.3145, Swiss $1.0984, European Style: rand 17.1875, krone 8.9337, SEK 8.7344,  forint 295.21,  zloty 3.7020,   koruna 21.9722, RUB 73.20, yen 105.88, sing 1.3685, HKD 7.7500, INR 74.94, China 6.9148, peso 22.17, BRL 5.4896,   Dollar Index 92.92,  Oil $45.50,  10-year .65%, Silver $27.19, Platinum $922.00, Palladium $2,032.00, and Gold… $1,947.80

That’s it for today, except…. A GREAT BIG HAPPY BIRTHDAY to my darling daughter, Dawn…  I won’t say how old she is, but… she sure makes me feel old when she celebrates a birthday!  Dawn is a kindergarten teacher, and probably is the best at doing that there is!  Last Friday, when I saw my former assist. Christine, she reminded me that her oldest son was born on Dawn’s birthday, so happy birthday to him too! Well, the beautiful weather pattern we are currently in, looks like it will hold through the weekend. So I’ve got that going for me!  The late great, Leon Russell takes us to the finish line today with his version of the song: This Masquerade….  I always did enjoy the work of Leon Russell….  Just saying…  I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow, and Please Be Good To Yourself!

Chuck Butler

August 19, 2020 

* Currencies & Metals both rally VS the dollar on Tuesday

* Warren Buffett dips his toe in the Gold Market… 

Good day… And a Wonderful Wednesday to you!  Another beautiful day here in the Midwest yesterday, and today is supposed to be even better! So I’ve got that going for me today, eh?  I start today with a loss of thoughts, words, and whatever it takes to write a daily letter… It’s all just a big blank screen for me this morning… So, I hope I have think of something quickly, before you dear reader decide to hit “delete”….  Steely Dan greets me this morning with their song; Deacon Blues… I love this song, and pretty much anything Donald Fagin and the late Walter Becker did….  

Well, the currencies and metals rallied VS the dollar another day on Tuesday. This marks two consecutive days of gains for Gold, that brought it back over the $2,000 figure…  On Monday this week I wrote, about taking One step forward, and two steps back, and so it is with Gold that I await the boys in the band to come play their instruments once again, for it’s time for a step back. Wouldn’t it be nice we could wake up when the morning is new, and not have to worry about price manipulators?  This way when fundamentals said Gold should be sold, that would be when we would see it drop in price, but at least we would have fair warning!  

There was an event that took place late last week that I’ve been remiss in not mentioning, not that I haven’t wanted to, but other things go in the way… The event I’m talking about was the fact that Warren Buffett, who has referred to Gold, and a barbaric relic, bought a large load of Gold futures….  

Now, this is the first time Buffett’s Berkshire group have dipped their toes into the metals market…. Oh, about 30 years ago, they bought a HUGE position in Silver….   But sold it after not holding it very long….  I just thought that it was significant that the “Oracle of Omaha” that has dissed the idea of diversification, and owning Gold, has tried to under the cover of darkness, dip his toe into the the Gold market…. 

Doesn’t that just take the cake?  And doesn’t it just tell you in so many words that diversification of an investment portfolio, using currencies and metals makes abundant sense?  I’m just saying….

I had a few dear readers send me notes yesterday, and question my call that a new weak dollar trend began in July….  I can assure I didn’t nilly willy make that call yesterday…. The sentiment toward the U.S. dollar with all the currency printing going on has made currency traders double think about owning dollars… Is inflation around the corner?  That’s what usually follows all this currency printing, and let me remind you that rising inflation is the Fed Head’s collective wish, which is one of the reasons they keep interests rates on the verge of going negative…. 

The other reason and it’s one that outweighs all other reasons for interest rates being near zero, and that is that for every piece of currency that’s printed, that’s one more dollar of debt, and with all debt it has to be financed with the sales of Treasuries….  A few years ago, I used to follow the TIC data which gave us the numbers on how much foreigner’s bought of the Treasuries that were issued the previous month. But then the TIC data went away, and it’s very difficult to find these days, and there’s no wonder why, because China has basically not shown up at the Treasury auctions….  That means the primary casino banks have to step up and buy what’s not sold in the auction…. But these days, those rules have changed, and instead of the primary casino banks buying up what’s not sold, the Fed steps in a buys….  The Fed will not admit to this, but basically, they are monetizing the debt…. 

And I think that is a big fly in the ointment of the currency traders that want to own dollars….

And all the while Gold & Silver are bought as alternatives to owning dollars, for Gold & its cheaper brother, Silver, have never gone to zero folks…. Therefore as I’ve always said, Gold is a store of wealth….  In my daily journey through Twitter & Parler, I found a quote on Gold that I think says it all so with no further beating around the bush…  This is from Grant Williams of Things That Make You Go Hmmm…. Fame, so let’s listen to what Grant has to say….

“Gold has stood the test of time, provide a stable store of wealth to mankind for millennia. And as we look to an increasingly uncertain future, with fiat currencies across the globe under siege from rising debt levels, it remains the only money guaranteed to survive.” – Grant Williams

Nothing new here for you dear reader, but just like I found with kids through the years, you can preach to them every day about something, but when some other adult says it, the light goes on and the kid gets it….  So, I thought for those of you not on board with owning physical Gold, that hearing it from Grant Williams might do the trick!

I know that I’ve said this many times in the past, but just to regurgitate it once more…. While Gold gets all the headlines, Silver silently outperforms its big brother percentage wise….  In the last bull market for the metals, Silver outperformed Gold on a percentage basis 7 of the 10 years….   So, if $2,000 Gold seems a bit pricey for you…. There’s always $28 Silver…. 

Well, in the foreign Data Cupboards today, we have some CPI data that’ll print in both the Eurozone and Canada…  But there’s nothing there that’s going to stick out like a man with a hatchet in his forehead, so we’ll just move along for these are not the droids we’re looking for!

So, basically, if the Dollar Index would suddenly rise today for no apparent reason, we’ll know the Plunge Protection Team is behind the wheel of the truck that carries a load of long dollar buys to the market…  The drivers of this truck will run right over you, if you are in their way, so always beware that we could see 1-day “corrections”…. wink, wink… 

In the U.S. Data Cupboard, it’s about a dry as the Sahara…. But we will see the Fed’s meeting minutes from their last meeting this afternoon… And therefore I don’t believe we’ll see any major moves in both the currencies & metals today, until we get what the Fed Heads had to say behind closed doors 6 weeks ago…  If anything I would expect that the Fed Heads will have discussed allowing inflation to run a bit….  And that could be the springboard to more dollar selling…

To recap… The currencies and metals both had good days rallying VS the dollar on Tuesday. One wonders what we’ll see today, given what we know about the powers that be and their bag-0-tricks….  The euro has climbed above the 1.19 figure, and all other currencies fall in behind the offset currency to the dollar.  Other than that news, Chuck was at a loss as to what to talk about today… 

For What It’s Worth….  In my never ending attempt to show you dear readers that the U.S. economy is in shambles and not coming back soon I have today’s FWIW article that came to me via longtime reader Bob. It’s about the amount of auto loans that U.S. consumers now hold…. And it can be found here: https://www.blacklistednews.com/article/77745/subprime-auto-nation-american-households-now-carry-134-trillion-in-auto-loans-on-an-asset-that.html

Or, here’s your snippet: “America is literally driving itself into debt. US households now carry a stunning $1.34 trillion in automotive debt. What is troubling about this is the amount of driving taking place has plunged courtesy of Covid-19 and much of our economy is built around driving. People take the morning and evening commute, and this was seen as simply normal – but now with many working from home, that may not be the case. Also, the notion of buying cars (a depreciating asset) every few years is just a bad financial move. The buying would not be so bad but the level of debt being taken on to finance a car purchase is. Not too long ago a three- or four-year term on an auto loan was standard. Now we have loans of six to seven years! You also have billions of dollars going to subprime borrowers and in this climate, a large number of Americans are financially on the edge. Where do we go from here when it comes to auto debt?

The state of auto loan financing

It is astonishing how much debt is used to finance car purchases. When you look at companies like Tesla, a large portion of purchases come with financing. And you also have this for every other traditional car maker like Ford, Chevy, Honda, Toyota, and many other makers. At the end of the day, many Americans are only able to purchase a car by going into significant debt.

The numbers are clear:

There is $1.34 trillion in auto loans outstanding and part of this is now in subprime auto loans. If we go back to 2011 we had $710 billion in auto loans. In nine years auto debt has grown by 88%. That is astonishing given that household incomes have been largely stagnant over that period.

And if you look at some of the ads, you can see how easy it is to finance a purchase:

$0 down payment, $0 security deposit, $0 first month’s payment. And this is for a lease! So you don’t even get to keep the car after the lease is over. People are now fully conditioned to think that it is normal to go into deep debt to purchase a car. They are also programmed to think that you should be buying or leasing a new car every three to five years. Why? Cars can last a lot longer with basic maintenance but our debt-based system has conditioned people to always be buying and thinking utilizing heavy debt to purchase a depreciating asset is totally fine.”

Chuck again….   7, 8 year loans on autos that won’t be worth a dime when that time comes around, just doesn’t seem to be a smart financial move to me… But then…. I think differently about finances than most people… I use logic!

You know… I get it…. Cars have ALWAYS been the sort of status symbol for Americans…  But in this day of economic shutdown, 30 Million people looking for jobs, New York City basically becoming a ghost town,  and a lack of savings by Americans, does it really makes sense to have a bright shiny new Beemer sitting inside your garage, as you work from home?  

Now… if it were a goat…. (A GTO) of yesteryear, that would be a different story… Nah… just kidding… .But that was always my dream car…  a few years ago, I attended a classic car show in Jupiter, Fla. and there was a GTO, you have no idea how difficult it was for me not to walk up to the guy and say, “I’ll buy this from you, how much will it cost?”  

Market   prices 8/19/20: American Style: A$ .7263, kiwi .6641, C$ .7605, euro 1.1933, sterling 1.3120, Swiss $1.1034, European Style: rand 17.1888, krone 8.8359, SEK 8.6395, forint 292.97,   zloty 3.6817,   koruna 21.8775, RUB 73.27, yen 105.33, sing 1.3639, HKD 7.7498, INR 74.73, China 6.9232, peso 22.10, BRL 5.4883,  Dollar Index 92.33,  Oil $42.56,   10-year .64%, Silver $27.44, Platinum $978.00, Palladium $2,225.00, and Gold… $2,006.00

That’s it for today…  And I have nothing going on tomorrow, so I’ll be back tomorrow for our Tub Thumpin’ Thursday!  I’ve told you all before about the pictures that I have on the board that faces me at my writing desk. One picture always makes me smile…  Many years ago, the local journal newspaper sent out a photographer on a snow day… And they captured a picture of me playing in the snow with Dawn 7, and Andrew 5, and then put in the paper!  I was pretty thin back in those days, and had hair!  I think of how life was back in those days… We barely had two nickels to rub together, but we had lots of fun… OK, now back to 2020, the year we would all like to see end tomorrow…  My good friend Rick will get a kick out this song…. Crowded House takes us to the finish line today with their song: Don’t Dream It’s Over….   I guess they’re telling me to not dream 2020 is over just yet! HAHAHAHA!  I hope you have a Wonderful Wednesday, and please Be Good To Yourself! 

Chuck Butler

 

August 18, 2020 

* Currencies & Metals both rally VS the dollar on Monday

* Chuck takes us back to 2002…. 

Good day… And a Tom Terrific Tuesday to you!  Another beautiful day yesterday was spoiled around dinner time with a rain shower…. Oh well, at least the day was great! My darling granddaughter, Delaney Grace celebrated her 13^th birthday (which was last week) with some of her friends in our pool…  She made sure she sought me out when it was over, to come inside and give me a great big hug, ask me how I’m feeling, and tell me she loves me…  Ever since the day about 7 years ago, I sat her down and explained cancer and what it does to people to her, she has always made sure she stops to give me a hug, and ask me how I’m feeling….  I just love her to pieces! The Cards and Cubs split their doubleheader yesterday, with the Cardinals giving away the 2^nd game late….   Our Blues  won 3-1 and evened their playoff series at 2-2…  Paul Carrac and the Squeeze greet me this morning with their 80’s song: Tempted….

The day in the markets yesterday was a good one for non-dollar holders, as both the metals and currencies took liberal swings at the dollar bugs all day long!  Gold ended up $38 on the day, but was up to a $44 gain at one point in the day… And the Dollar Index dropped a chunk on the day of its value, which means the euro continued to rise through the 1.18 handle, and the A$ traded over 72-cents, while the Swiss franc continued to defy the Swiss National Bank (SNB) and moved higher once again… 

In the overnight markets, the euro has been lifted to the 1.19 handle, and the Dollar Index fell further….  While I’ve been crushed by so many false dawns in the past couple of years, I’m hesitant to call this the beginning of a weak dollar trend. We saw last week that the Plunge Protection Team (PPT) can be formidable foe, and squash many a rally. So that has to remain in the back of my mind, but the euro passed 1.16 a while ago…. Which was supposedly a psychological level, and even with the Aussies closing down their opened economy again, and issuing a warning that anyone caught not adhering to the protocols, will be fined, the A$ still moved higher on the day….

We will know for sure that it’s the beginning of a weak dollar trend, when we keep hearing stories like the one from Australia yesterday, but still see the respective currency rally….  Like we saw yesterday, but… as I always used to say, one swallow doesn’t make a summer,  and one bad apple won’t spoil the whole bunch, so we’ll have to see more of these types of stories, that will etch in stone that it’s a new weak dollar trend…  If I were a betting man, I would put money on the call that it IS a new weak dollar trend….  I’m just saying…

So… how many of you recall the beginnings of the last weak dollar trend that began in February 2002? It too, had humble beginnings, and there were questions of whether or not it was real…. But since I had written a white paper at the end of 2001, titled: The Decline of the Dollar…  I was on board early with the call that this was the new weak dollar trend…  But that was 2002, and this is 2020… A year that I think everyone would just as well forget about, but…. I do believe that we’ll look back and see that the weak dollar trend began in July 2020, which means 202o will have something other than a pandemic to be talked about! 

OK…  So the U.S. economy was shut down for a couple of months, after it was originally supposed to be 2 weeks, that were extended to 2 more weeks, and so on…  A lot of jobs that were there when the economy shut down didn’t come back… And now people of all sorts of training and jobs, are looking for work to support their families, or maybe just themselves…  The $600 per week in unemployment benefits was nice while it lasted…. 

On a sidebar here, what mental genius (NOT!) thought up the idea to pay people more in unemployment than they made in their regular jobs?   Hey! Don’t look at me!

I still chuckle when I think of the Gov’t sending out stimulus checks to dead people….  What a bunch of dolts in the government, eh?   Ok, back to the point I was about to make before I got sidetracked….  It’s going to take some time before we get back to where we were before the shutdown, and even that wasn’t great!  But 2.1% economic growth is better than a sharp stick in the eye, right?  Especially now that our GDP in the 2^nd QTR was negative! 

I was talking to some of my family a while back, and we were talking about McMansions, and I said, “aren’t you kids glad that I didn’t go for a McMansion back in the day, and instead saved my money so we could have this nice beach place in Florida?”  Save for a rainy day…. OR when you want to buy something, make sure you’ve saved the money to do so…. Those are a couple of lessons I learned many years ago from my dad….  And while I don’t believe I’ll make many friends, by telling them they don’t need that latest iPhone, or 80-inch Smart TV, if they have to borrow to buy them…. So, I write in the Pfennig, and hope that they get the message!

Wanna know what I’m really bummed about these days?  We had to cancel the Butler Annual Labor Day BBQ, this year….  We’ve been hosting this BBQ since 2001….  Even in the year of my cancer surgeries of 2007….  I’m still going to put the Big Green Egg to work that weekend, but it will be cooking for my family mostly, and not the 50-60 people that are usually here! UGH!

Well, in La-La Land, where….  Stop Chuck, you don’t want to say that!   Ok, in California, they have come up with an idea to impose a Wealth Tax on the Ultra rich….  I hear some of you saying, “it’s about time!” but wait…. Once California does this, other states will follow, and when those states find that taxing the Ultra rich isn’t as lucrative as they thought it to be, guess who’ll they’ll come after next?  Yes, the good old Middle Class, and what’s left of it, will be called on to do their patriotic duty and buck up…. 

Back in 2011, when the debts of Greece were discovered, I kept harping on the fact that Greece’s economy was about the size of Kentucky’s and that California, being the 8^th largest economy in the world, had bigger debt problems, and wondered why no one was looking at California, New York, or Illinois, for they all have debt problems up to their eyeballs, and no way other than increasing taxes to help them from defaulting….  Remember when I broke the news to you that it had been Goldman Sachs, aka Lola, that had shown the Greeks how to hide their debts, and got them to issue even more bonds ….   But did Lola get called to the carpet for that? No….  

And thus we began the cycle of these casino banks getting into hot water, and the tax payers bailing them out….  And the regulators looking the other way, and no one goes to jail…. 

The U.S. Data Cupboard is still in a “wanting” mode, for real economic data, but until we get there later this week, we can see other lower tiered prints, like yesterday’s Empire Index, which is the NY region’s manufacturing index, and remember last month when it reversed the rot on the vine that was seen in the index during April and May, and came in with a 17 .2 print?  The markets and the dollar bugs rejoiced that the economy was reversing its downward course….  Well, I hate to be the one to buts their balloons or step on their seashells, but…. The July print was only 3.7…. A Big drop, and what do we hear from these same rejoicers now? Crickets….. 

So, when I began to write this morning, I said, “There’s no way the letter will as long as yesterday’s was” And so with that, we’ll head to the Big Finish from here… 

To Recap…. The day for the dollar bugs yesterday was one they would like to forget, as bot the currencies and metals took some pent up frustrations out on the dollar bugs. And both have continued their rallies in the overnight markets so we start today with the dollar reeling, stumbling, fumbling and about to fall on its face. Chuck thinks that this will be looked back on as the beginning of the new weak dollar trend…. A bold statement from someone that has been wrong about this a few times already, eh? 

For What It’s Worth….  So, I began to talk about how badly the economy is doing since the shutdown earlier this morning, and I went off on another tangent. So, I’m picking it up here with this article on Zerohedge.com about Mortgage delinquencies and it can be found here: https://www.zerohedge.com/markets/fha-mortgage-delinquencies-soar-record-60-q2-hit-all-time-high-157

Or, here’s your snippet: “Last month we quoted from Wolf Richter to remind readers of something we discussed several months ago when we went over the details of the forbearance process and why so many banks have chosen to use it instead of rushing to admit their balance sheets are hammered with a record surge in delinquencies and defaults. As a reminder, “mortgages that are in forbearance and have not missed a payment before going into forbearance don’t count as delinquent. They’re reported as “current.” And 8.2% of all mortgages in the US, some 4.1 million loans, are currently in forbearance according to the Mortgage Bankers Association. But if they did not miss a payment before entering forbearance, they don’t count in the suddenly spiking delinquency data.”

Everything changed in April when there was a sudden onslaught of delinquencies according to CoreLogic, which came after 27 months in a row of declining delinquency rates. These delinquency rates move in stages – and the early stages are now getting hit, with the Transition from “Current” to 30-days past due suddenly soaring.

To wit, in April, the share of all mortgages that were past due, but less than 30 days, soared to 3.4% of all mortgages, the highest in the data going back to 1999. This was up from 0.7% in April last year. During the Housing Bust, this rate peaked in November 2008 at 2% (chart via CoreLogic):

Fast forward to today, when the dam of pent up mortgage delinquencies cracked some more, with the Federal Housing Administration reporting that its mortgages which represent the affordable path to homeownership for many first-time buyers, minorities and low-income Americans, now have the highest delinquency rate in at least four decades.

The share of delinquent FHA loans rose to 15.7% in the second quarter, up a whopping 60% from about 9.7% in the previous three months and the highest level in records dating back to 1979, the Mortgage Bankers Association said Monday. The delinquency rate for conventional loans, by comparison, was 6.7%.”

Chuck again… Yes, folks… the bank are in trouble… for they carry most of these delinquent loans…  I just don’t get the beating around the bush and the cover up of these numbers…. Call an elephant and elephant and go on with your day! 

Market  Prices 8/18/20: American Style: A$ .7235, kiwi .6561, C$ .7598, euro 1.1902, sterling 1.3161, Swiss $1.1050, European Style: rand 17.3993, krone 8.8248, SEK 8.6760, forint 293.78,  zloty 3.6876,    koruna 21.9543, RUB 73.31, yen 105.82, sing 1.3652, HKD 7.7500, INR 74.52, China 6.9365, peso 22.05, BRL 5.4511, Dollar Index 92.55,   Oil $42.60,   10-year .67%, Silver $28.23, Platinum $963.00, Palladium $2,161.00, and Gold… $1,982.00

That’s it for today…  Well on Friday night things looked bad for our Blues, as they were down 0-2 in games in their playoff series. But fast forward to today, and they are back in the hunt at 2-2!  They finally played “Blues hockey” last night, and so we can hope that they continue that play that was so crucial to their Stanley Cup Win last year… Looks like another chamber of commerce day outside this morning… I can’t wait to get out there! I just finished reading Book 4 of the C.B. Strike series. Book 5 will be coming to me next month… These are 350 page books, and it takes me a week or so to get through them! I have two books that I’ve also started: Thomas Jefferson, and Kurt Vonnegut’s Slaughter House 5… So, I’ll flip a coin as to which one I continue reading!  So, apparently, I didn’t tick off too many of you yesterday, so that’s a good thing!  Blackfoot takes us to the finish line today with their song: Highway Song….  A good song to have playing when you’re on a long drive!  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

 

August 17, 2020

* Gold & Silver get sold again on Friday! 

* But Currency traders are selling dollars hand over fist! 

Good Day… And a Marvelous Monday to you! Man… did the weather here change for the better in the past few days, and from what I see it should remain that way for the rest of this week!  It was such a beautiful Sunday morning yesterday, as I sat out back listening to my symphonic music station… I began to sing this song… Blue skies… following me, nothing but Blue Skies, do I see… Blue Bird singing a song, nothing but Blue Skies from now on…  I bet I had a few of you singing along, eh?  That reminds me of my last visit to Vancouver for the Agora Symposium. I got nearly everyone in the audience to sing along with me: Trini Lopez’s Lemon Tree…. If you were there that day, send me a note, and let me know what you thought…. For it was the first time anyone at the then famous Agora Symposium, had the nerve to not only sing on stage, but also get everyone in the audience to sing along! Our Marketing guru, Suzanne Lee, recorded the event on her phone…  Which was a good thing… Because, Frank Trotter, the big boss, didn’t believe what he had heard I had done! I used to have a fair singing voice, with a wide vocal range, but 13 years of chemo has left my voice to have no range, and sound very low…. Elvis greets me this morning with his song: Are You Lonesome Tonight… Don’t laugh, I grew up with Elvis playing on the record player….

Well, the markets on Friday were interesting in that the dollar bugs won out for the week with regards to Gold & Silver, and they lost out for the week regarding the currencies…  The boys in the band had their way with Gold & Silver on Friday, after the two metals had rallied strongly on Thursday… But the overall week for the two metals was not one to write home about… Corrections, short sales, profit taking, they all played a part in the ups and down of the two metals this past week.  I had just told you last week before the big selloff, that Gold & Silver needed to go back an fill the gaps they jumped over on their way higher, and once that was done, then we could move forward… I had no idea that the selloff was going to be more than $100…. I would say that all the “gaps” have been sufficiently filled at this point, but I won’t say that the boys in the band have gone home…. They are like the proverbial wolf at the door for Gold & Silver…. 

In the early trading this morning, Gold is down another $16 to 1,944…  One step forward, two steps backward, is what this feels like to me… Thursday, Gold was up, and Friday and today its down….  UGH!…. Oh well, we all know that in the end, the boys in the band will get what they deserve, but why do we have to wait so long for that to happen?  Life…  patience is a virtue, and good things come to those who wait, and all that… 

So, we know that Gold & Silver have still booked some heady gains so far this year, ever since March I should say… And since I started today’s letter off talking about Gold & Silver, I thought that this would be a good place for this quote I found on Grant Williams’ Things That Make You Go Hmmmm…. Letter yesterday…. Check this out: “”Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.”– David Ricardo

And then there’s also this from TTMYGH….. “”It’s important to highlight that both periods of extremely depressed commodities prices (1970 & 2000), were accompanied by overvalued equity markets and related investment bubbles – a situation that exists once again today.”– Leigh Goehring & Adam Rozencwajg

WOW….  Those things really hit the nail on the head as far as I’m concerned…  Just think of the currency printing that just keeps getting larger and larger by the day…. And then think about what a debasement for a country’s currency that all that currency printing will do….  The currency traders see it, and they have begun to unwind their long dollar positions…  And like I said last week, this couldn’t come at a worst time for the countries with currencies that are rallying…. These countries don’t need strong currencies interfering with their respective attempts to bring back their lost economies….  But guess what? Currency traders don’t care….  And if a foreign country’s currency rises because Currency traders are selling dollars, then so be it….

So, what we’ll end up seeing is these foreign countries attempting to squash the rise of their currencies VS the dollar, with intervention… First they’ll attempt jawboning their currencies lower, but when the doesn’t work, they’ll resort to intervention…  In the old days, I would say that Central Banks that can print as much currency as they want had bigger pockets than the markets… But these days, I have to wonder, for these Central Banks of foreign countries have used a lot of the arrows in their respective quivers….  At some point, and this includes the U.S., the markets will begin to choke on the amount of currency they are being dealt with…. And when that happens, we’ll find out that the markets have deeper pockets than the Central Banks…

We saw the euro climb back above the 1.18 figure last week, and remain there as the books all closed on Friday…  I know there’s been a lot of gyrations with the currencies, and just when it appears the dollar is about to fall off a cliff, something happens to revive the dollar… But then a few days later,  we’re looking at the dollar the same way as we did previously, and Chuck will say, “we could be seeing a weak dollar trend beginning”  only to have egg on his face once again…. But one of these days, Alice…. To the Moon!

It wasn’t that long ago that we as a country passed $26 Trillion in current Debt….  Last night I checked the Debt Clock and found that we’re well on our way to $27 Trillion in current Debt…  (%26.648 Trillion) We’ve moved into the 130% of GDP (not using the Covid-19 GDP numbers) And the Bank for International Settlements (BIS) told us many years ago that “When government debt exceeds 85% of GDP, economic growth slows.” Which is something I’ve said for many years now, and that is when the debt level grows too large, the economy has to slow down…. And for the last 10 years we’ve only averaged 2.1% GDP….  And as the debt grows, and it will grow, trust me on that one folks….  First of all our current President has shown he’s no match for the spending habits of our Congress, and if the new guy gets in, I can’t even imagine how quickly the debt will grow….  I’m just saying…. 

So, it’s no surprise to me that currency traders are taking their shots at the dollar bugs…. We saw last week that the PPT (Plunge Protection Team) can be formidable foes…. But is this a game that they want to keep playing? Because currency traders have been known to stay until the end of the game, no matter the score of the game….

And al this does is move up on the calendar all the chaos I told you about that was going to happen, for if these countries have a soaring currency that’s going to just add to all their woes, and will probably bring about their collective announcements of debt default….   I’m just saying…

The Fed? They’re playing with fire folks, and you know what they’ve said about people who play with fire, they end up getting burned….   The Fed as I told you last week, is hell bent and whiskey bound to see inflation rise, and they, the Fed heads, believe that they know when to pull away the punch bowl that’s feeding the inflation….  Well, I’m from Missouri, and the Fed Heads are going to have to show me that they have chutzpah to pull away the punch bowl, once they’ve given everyone a heaping cup full of inflation….  

I’m not a betting man…. Oh, I’ll bet a shiny quarter but other than that, I worked long hours for the currency I have, I don’t want to lose it in a betting game!  I used to play nickel, dime poker, but even then, if I had a losing night, I was devastated….  But I said all that to say this…. I doubt seriously that the Fed Heads can perform in the batter’s box, when Bob Gibson, or Nolan Ryan, or Sandy Koufax is about to come home with their best pitch….

So, how are you doing with Covid-19?  You know I’ve been around my family off and on since this began, and so far so good… I even have driveway happy hours with distancing and no masks, as we’re outside, with my neighbors and friends….   I’m not saying this virus isn’t real, but I’ll go to my grave with the thought that we should have done this differently… We should have identified those of us at risk, and quarantined us, and allowed everyone else to go to work….  Sure there would have been large numbers of positive cases, but….  Then the herd immunity would happen….  

Longtime Congressman and author of a few books, Ron Paul, of whom I’ve always admired as someone who didn’t allow himself to get tainted with the deficit spending paint that every other congressman allows themselves to be painted with….   So, when Ron Paul speaks about something I listen….  And here’s his take on the pandemic….  (I know a lot of you won’t agree with this, but please listen to what he has to say)

“But what’s happening in America right now is being taken advantage of by those who want to profit politically from the panic.

To them, it’s a perfect chance to steal more of our constitutional freedoms and set America up for a socialist future.

If that sounds too extreme, just consider:

•   The Department of Justice recently asked Congress for the ability to detain Americans—without trial—during “emergencies” like this…

• Others have proposed we “eliminate all political borders”…
• And according to a recent story in Politico, the White House Coronavirus Task Force is considering creating a national surveillance system to track Americans’ health information – essentially a healthcare Patriot Act!

Chuck again….  Yes, just like the Patriot Act that got shoved down our throats under the guise of “We need this to protect us against terrorists”….  The powers that be will use this pandemic as an opportunity to take more of your civil liberties and freedoms away from you….  

That’s my 2-cents worth, and everyone that doesn’t agree me and Ron Paul, please don’t unsubscribe, for I’m sure that I’ll say something that you agree with soon…

OK…. The U.S. Data Cupboard last week, ended the week with some real economic data prints…. July prints of Retail Sales, Industrial Production and Capacity Utilization…. So, let’s go through them, eh? 

July Retail Sales showed only a 1.2% gain, when 2.0% was expected, and June’s print was 8.4%…. Oh, if had a nickel for all those that said last month that the 8.4% increase was proof that the economy was rebounding, I would be able to play poker again!  Industrial Production also disappointed, showing only a 3% gain in July VS the 5.7% gain in June…. Once again more nickels for Chuck’s poker game!  The one piece of data that was surprisingly strong was Capacity Utilization… which rose from 68.5% in June to 70.6% in July…  I would venture to say that all the re-closings that have been going on, will bring that number back down in August… We shall see, eh?

One print that was also interesting was the Initial Jobless Claims on Thursday last week, that showed for the first time in 21 weeks, that the Claims for the week didn’t total more than 1 Million…. Instead it was 963,000….  Not exactly a strong number for a recovery, but still not 1 Million or more!  The Continuing claims also fell to 28.3 Million…. So, some people either falling off the rosters of those receiving checks each wee, or a smattering of people going back to work… Which is tenuous at best, right?

To recap…. Gold & Silver were up on Thursday, down on Friday, and down for the week… The currencies were up for the week even with a midweek selloff, VS the dollar…. Chuck talks about all the currency printing going on around the world, and at home, and points out that the Fed can’t print Gold & Silver….  He also prints some quotes he found on TTMYGH…. And then he goes nuclear on the moves that the powers that be are attempting to get approved that takes away more of our civil liberties and freedoms….  You may not like him much after that, but it had to be said….

For What It’s Worth….  A couple of times through these past couple of years, I laid out what I see happening in the future, with regards to the end of cash currency, and see it replaced with digits…. Well, I was glad to see my good friend Dennis Miller, write about this subject. So, his article can be found here: https://milleronthemoney.com/say-no-to-the-fedcoin-scheme-its-a-trap/ 

Or, here’s your snippet: “At the local convenience store, my wife Jo handed the clerk a $5 bill and waited for her change; finally asking for it. The clerk said, “We have a coin shortage. We have to round things to the nearest dollar.” Screw that! She dug in her purse, cobbled together the correct change and demanded the clerk give her a dollar back – while the line of “social distanced” customers behind her grew long.

The next day she bought a fountain Coke, normally $1.00 plus tax. The clerk said, “$1.00 please.” The merchant absorbed the tax. There are signs in the local stores saying they have a shortage and will buy rolled coins.

My BS meter went into full alert. A government capable of putting a man on the moon could solve a coin shortage in a matter of a few weeks. If there is a shortage, it’s because some politicos, or bankers want to create one.

Sure enough, Ron Paul’s article, Fedcoin: A New Scheme for Tyranny and Poverty, appeared.

“If some Congress members get their way, the Federal Reserve may soon be able to track many of your purchases in real time and share that information with government agencies. This is just one of the problems with the proposed “digital dollar” or “fedcoin.”

…. Some progressives have embraced fedcoin as a way to provide Americans with a “universal basic income.”

Both the Senate Banking Committee and the House Financial Services Committee held hearings on fedcoin in June.

…. Fedcoin would not be an actual coin. Instead, it would be a special account created and maintained for each American by the Federal Reserve. Each month, Fed employees could tap a few keys on a computer and – bingo – each American would have dollars added to his Federal Reserve account.”

Chuck again… Well, like I said above, I’ve talked about this several times now, the end of cash, and after my last tirade against this move, I even pointed out that the U.S. Gov’t was already looking into their own version of digital currency…. 

P.S. I don’t know if you’ve noticed this or not, but in the past week, I’ve stopped referring to the dollar and currencies as money, and instead calling them “currency”, because that’s what they are…. Real money is Gold & Silver, or a currency that’s backed by either of those two metals….

Market  prices 8/17/20: American Style: A$ .7186, kiwi .6526, C$ .7558, euro 1.1853, sterling 1.3085, Swiss $1.1013, European Style: rand 17.4310, krone 8.8710, SEK 8.6942, forint 293.57,   zloty 3.7058,    koruna 22.0363, RUB 72.84, yen 106.28, sing 1.3700, HKD 7.7500, INR 74.68, China 6.9491, peso 22.01, BRL 5.4215, Dollar Index 92.99,  Oil $41.92,  10-year .68%, Silver $28.40, Platinum $982.00, Palladium $2,179.25, and Gold… $1,944.00

That’s it for today…. Well, the weekend began with a driveway happy hour and I was giddy with surprise when a couple of my former colleagues showed up that I was not aware of their intention to come…. It was great to see Danielle, Christine, Aaron, Mike and Kristin….    Then the weather began to get nice on Saturday, and Sunday was just gorgeous! And I got to play with “my girl”. Little Evie was here, and we had a good day together! And…. The Cardinals got back on the diamond for the first time in 17 days, with a double header sweep of the Pale hose! Both games were played during the day, and longtime readers know I absolutely love day baseball games!  Sunday they took one on the chin, but still they were playing again, and I was so happy!  Now they have to play 5 games in 3 days VS the Cubs…. I doubt either team has enough pitching for that onslaught of games, so we’ll have to see who has more pitching depth, eh?  And very late last night, our Blues won in OT to stay alive in their defense of their Stanley Cup Championship last year…  The Beatles take us the finish line today with their song: When I’m 64….   Will you still need me, will you still feed me, when I’m 64?   I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

August 12, 2020 

* Gold & Silver are taken down by HUGE amounts… 

* The dollar bugs fight back! 

Good Day… And a Wonderful Wednesday to you!  Well, no reason what-so-ever to beat around a bush today… I’ve never, ever seen a one day move like I saw yesterday in Gold… It’s a real shame folks… For this move was downward, and at one point in the day it totaled $100!!!  One sale begot another one, and so on… But as Neil Young sang, I won’t let it bring me down, for it’s only castles burning….  There! I got that off my chest!  Now back to regular programming….  Day one of Chuck and Alex being on our own, went fabulously… A very damaging storm had come through the night before, and some people in Missouri were still without power… And our pool was covered with small twigs and leaves… I’m just beside myself today, still reeling from the onslaught of selling that Gold had to go through yesterday… In the meantime, Seals and Crofts greet me this morning with a song from my high school years: We May Never Pass This Way Again…

So… what on heaven and earth brought about the massive selling of Gold yesterday?  I told you in the morning that it was already down $48, and the sellers were pointing to the idea that the infection numbers for the COVID virus were coming down, and that Russia was reporting that they had a vaccine ready to administer. But come on!  I can tell you that some of Gold’s rise in price was generated by the second wave, or first wave that we never got through… But not all of it, and as I explained yesterday, all the reasons for Gold’s rise were still in place… zero to negative interest rates, negative yielding bonds, money printing out the yahoo, and an economy teetering on collapsing…

The Kitco.com website has an interesting chart each day, they show what the price of Gold that was affected by the dollar trading, and then they show the amount of movement that was affected by “sellers”…   Yesterday, the move in Gold that was caused by dollar strength, was $1.00…  That alone should tell you that the boys in the band backed up their truck full-o-short trades, and unloaded them…. 575,000 contracts were traded in Gold yesterday… That’s unbelievable to me… But then when the boys in the band want to take something down, they don’t mess around! 

The total damage done to Gold at the close of the day, was $117.90!!!! Leaving Gold at $1,910….  The good news is that maybe the boys in the band used up all their bullets yesterday, as Gold is up $25 in the early trading today… 

And Silver was treated as badly as Gold, but Silver’s loss of around $4.00 was a larger percentage downward move.  And Silver closed at $24.76, with around 350,000 total contracts traded… 

And during all this engineered takedown of both Gold & Silver, there was not a peep from the CFTC, or the COMEX,  or any other entity that should have been saying things like, “we’re going to investigate how this happened”…  So, as Ed Steer said in his letter today, “a pox on them all”… 

Silver, like Gold has bounced this morning and is up  a dollar to $25.92…. 

Well, Gold & Silver  weren’t the only investments to fall to the dollar bugs yesterday…. The currencies, which in the early morning were looking very perky, gave back their gains as the day went along…. This, to me, just looks like a PPT effort to keep the dollar from falling off the cliff…  The PPT for all of you new to class is the Plunge Protection Team, which was created in 1987, to prevent another October stock market crash….  But over the years, the PPT has expanded their protection to the dollar….  And since they have currency they can easily print and use to buy dollars, when moves as strong as the one yesterday occurs, I just have to believe that it’s the PPT once again….

Hey, how about some good news?  Did you see where the Gov. of S. Dakota, made a video telling people to move there to regain their freedoms, liberties, lives, and livelihoods?  School will open in S. Dakota on time, and even with the 4^th of July Mt. Rushmore fireworks gathering, the Covid-19 virus is under control….  So…. There! Good news!

I did want to talk about the currencies rising VS the dollar yesterday, but totally forgot what I was going to say, but not now! I’m loaded for bear!   In the past few weeks, while the dollar got sold, and the currencies got bought, I kept thinking that there was going to be “something” that stopped this trend, at least for the near term, because the countries with rising currencies, don’t need their currency getting too strong, while they attempt to bring back their lost economies….  It was going to be a pull and then be pulled by outside forces, and yesterday, I think it all came to a head….

Before I went on vacation, I threw an idea against the wall to see if it stuck, and it’s still be bandied about, so for all intent and purpose, the traders were rewarding the currencies of the countries that appeared to have the COVID-19 virus under control… Sweden, Australia, New Zealand, Norway, and a few others were joining the offset to the dollar, the euro, in gaining VS the dollar…  But, as fate would have it… the rewarding for controlling the virus went the dollar’s way, once again…. Who’d a thought that would happen?  Not me… that’s for sure!  If, we in the U.S. have this virus under control, I’ll gladly say I was wrong about how I didn’t see us forgetting about the virus until 2025! 

But if we have it under control, why are states closing up businesses again…  I’m just asking a question that traders aren’t going to answer, because they know the answer!

Recall yesterday, I went through the exercise of explaining why I thought PPI (wholesale inflation) was going to rise…. And lo-and behold it did! I thought I saw a putty tat, I did, I did!  PPI was up 0.6% in July, which was a large increase from June’s negative -0.2%….  Today, we’ll see the color of the stupid CPI (consumer inflation)…. It’s too early for the increase in PPI to show up here, so who knows that the powers that be, will allow CPI to show…

This whole scenario has to be a real conundrum for the Fed heads… And just like a two handed economist…  The Fed Heads want inflation, but…. They can’t have it spiraling our of control right out of the starter’s gate, so you can expect that the CPI next month won’t begin to show the increase in Wholesale prices… I’m just saying… 

The U.S. Data Cupboard is still “wanting”…  We will see the stupid CPI for July print today, along with the July Federal Budget deficit…   The moronic negotiations to come up with another deficit spending stimulus bill are still going on…   Moronic meetings are run by….   fill in the blank, but I know what I would put down!  But just to keep it softer, I’ll say “dolts”…  So, if you have a moronic meeting, run by …..    you get moronic results!… Again… I’m just saying… 

To recap…. There was an engineered takedown of both Gold & Silver yesterday, the like that I’ve never seen before!  Chuck goes through the gyrations, and calls for a pox on the CFTC and COMEX…  The dollar bulls were backed by the PPT (in Chuck’s opinion) and the perky levels for the currencies yesterday morning were wiped out… it was an overall very ugly day for non-dollar investors! 

For What It’s Worth….  Well… as the days go by, I always try to remember to check out what Russ and Pam Martens are saying on their website: www.wallstreetonparade.com. And yesterday they had a perfect FWIW article that talks about how the “too big to fail banks” are rigging their stress tests, and it can be found here: https://wallstreetonparade.com/2020/08/bombshell-report-fed-is-aware-that-big-banks-are-rigging-their-stress-tests-and-letting-them-get-away-with-it/ 

Or, here’s your snippet: “On January 31 of this year, researchers for the Federal Reserve released a study that showed that the largest banks operating in the U.S. have been gaming their stress test results by intentionally dropping their exposure to over-the-counter derivatives in the fourth quarter. The fourth quarter data is the information used by the Federal Reserve to determine surcharges on capital for Global Systemically Important Banks, or G-SIBs.

The report, “How Do U.S. Global Systemically Important Banks Lower Their Capital Surcharges?,” was written by Jared Berry, Akber Khan, and Marcelo Rezende.

We decided to evaluate this claim for ourselves, using the quarterly derivative reports provided by the Office of the Comptroller of the Currency (OCC), the regulator of national banks. The data was appalling. The largest Wall Street banks not only dropped their level of derivatives by trillions of dollars in the fourth quarter, but they restored those derivatives by the end of the following first quarter. (See first OCC chart below which shows the largest of the top 25 banks by derivative exposure.)

In the case of JPMorgan Chase, it dropped its total derivatives from $55 trillion notional (face amount) in the third quarter to $46.9 trillion in the fourth quarter of 2019, a decline of $8 trillion in one quarter or 15 percent. But by the end of the first quarter of 2020, JPMorgan had pushed those derivatives back up to $59.6 trillion.

The Federal Reserve seems to be accepting this behavior from JPMorgan Chase as a legitimate means of reducing its capital requirements. Yesterday, the Federal Reserve announced the new capital requirements for the largest, Global Systemically Important Banks, or G-SIBs. We fully expected JPMorgan Chase to be slapped with the highest capital requirement since its Systemic Risk Report last year showed it to be the riskiest bank in the U.S. and, clearly, based on the above research that appears on the Fed’s own website, it’s aware of JPMorgan’s “window dressing,” the term used by its own researchers.

All of this is just further evidence that Congress needs to take away the supervisory powers over banks from the Federal Reserve; strip it of its ability to bail them out; and restrict the Fed to setting monetary policy. Those restrictions can’t arrive soon enough.”

Chuck again…  stress test, mess tests! What a crock! why give them the stress test if they are going to just rig it to make them look strong?  And why hasn’t someone at the Fed regulatory division looked into this and made suggestions as to how to stop it from happening?  Well, that’s a question that’s easy to answer… Because they are lazy!  And have no intention or interest in coming down on the banks they regulate….  Let that sink in… 

Market  Prices 8/12/20: American Style: A$ .7127,  kiwi .6540, C$ .7523, euro 1.1763, sterling 1.3016, Swiss $1.0939, European Style: rand 17.4260, krone 8.9722, SEK 8.7201, forint 293.41,   zloty 3.7457,    koruna 22.2177, RUB 73.10, yen 106.96, sing 1.3738, HKD 7.7507, INR 74.65, China 6.9467, peso 22.36, BRL 5.4416,  Dollar Index 93.59,  Oil $42.19,  10-year .67%, Silver $25.92, Platinum $934.00, Palladium $2,048.00, and Gold… $1,935.40

That’s it for today, and this week… my monthly oncologist appt. is tomorrow morning…  I made dinner last night, and then I couldn’t eat it, as my stomach turned on me…  I was treated to an old favorite sandwich yesterday for lunch… Good friend, Duane, stopped by and brought me a pastrami sandwich from Carl’s Deli… Talk about yummy! I used to go to my oncologist at St. Mary’s Hospital and Carl’s Deli was right across the street, so there were lots of times I would stop and get two Pastrami with pepper cheese sandwiches. One for me, one for Duane…  But now I go to the oncologist right around the corner from me… So, yesterday’s surprise was truly appreciated!  No birthdays this weekend that I know of…  And the second day of being alone during the day went just fine…  Jimmy Buffett takes us to the finish line today with his song: A Pirate Looks At Forty…  I always like the line in the song: “I made enough money to buy Miami, but I pissed it away too fast”  I always tried to make sure that didn’t happen to me!  Not that I made enough money to buy Miami! I hope you have a Wonderful Wednesday, and please Be Good To Yourself! 

Chuck Butler

 

 

August 11, 2020

* Gold gets whacked badly in early trading today… 

* Chuck poses as a CEO…. 

Good Day… And a Tom Terrific Tuesday to you! Well the first day back in the saddle left me with some riding marks…. HA!  It’s just me and Alex for the next few days here at the old ranch… Which used to mean that we would be wearing out the phone connection to Pizza Man Pizza! But Alex eats better these days, as he keeps his young Iron Man figure… By the time I was his age (25) I had lost all desire to maintain my Atlas shape, and had begun the slow march to where I am now… So, good for him!  I made us some Dijon pork chops last night… One of my specialties! I’m not good for the sides though… The Moody Blues greet me this morning with their song: The Other Side Of Life… 

Front and Center this morning, the short sellers of Gold are really taking out their frustrations on the rise of the Gold price in the early trading today… Gold is down $48 in the early trading today, and the only thing I can see that would relate to the drop in price is that the Covid-19 virus infection rate in the U.S. has dropped… Oh, and that Russia says that they have a vaccine ready to administer to people…   So, other than a few profit takers, and some skittish people regarding the virus being brought under control. The main sellers are of the short variety… 

So, let’s take some time to review the facts….  Has monetary stimulus by Central Banks, including our Fed Reserve, been pulled back?  No, in fact, there are plans for more stimulus, which is nothing but currency printing…  And have interest rates suddenly reversed their downward trend? No, in fact,  interest rates are remaining near zero, and will continue to remain there for some time!  And have Treasury yields risen to bring them out of negative territory?  No, in fact the 10-year Treasury’s yield is just .54%, but when you factor in inflation, the rate is negative… 

Take this drop in the price of Gold for what it is….  A buying opportunity… I’m just saying… 

Well, as I suspected yesterday, there is a major battle brewing in the White House VS Congress, after President Trump, signed an executive order to spend money…  I told you that this was an attempt to take the control over the purse strings in Congress away from those bickering elected officials…  I just want to point out something, that Bill Bonner pointed out yesterday in his letter…

“Of course, there is no mention of “executive orders” in either the Bible or the Constitution. As for the Lord… We’ll let Him speak for Himself. But the Constitution is clear…

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Chuck again… So now, we not only are being given fake money, but now its illegal money… But then the representatives that have allowed the printing of currency instead of the use of Gold & Silver as our money, should all be rounded up and taken to jail…. And just because this has been going on for a long time, doesn’t make it right… There comes a time when you have to stomp your foot down, and say “no mas”!  Hey, if a very proud boxer can bring himself to say “no mas”, then we should be able to say it to our representatives!

OK…. Yesterday, the currencies did nothing VS the dollar, but in the overnight markets, the dollar got sold…. The euro is back to 1.18, and the Aussie dollar (A$) is within spittin’ distance of 72-cents this morning! Gold lost $6 on the day, but Silver gained 81-cents!  Gold was bound to have to go back and fill in the gaps after it shot higher by large amounts each day the last 10 days… So…  like I just said, this would be considered a “dip”….  Use it to your advantage…. Because the next leg up for Gold will take it to $2,500… of course that’s my humble opinion, and I could be wrong…

So… were you aware that the Treasury will have over $2 Trillion in new borrowings between July and December?  The July to Sept period is expected to be $947 Billion, and the Oct. to Dec period is expected to be $1.216 Trillion…

Now those numbers are bad enough, folks, but think about the whole year… The April to June borrowings were $2.753 Trillion…  And the January to March borrowings were $515 Billion…. So add them all up, and we get $5.4 Trillion that will need to be financed with Treasury issuance, and that $5.4 Trillion will be added to our current debt… 

And those estimates for the coming months were done before the next stimulus bill gets passed, or the deficit spending the President signed over in a an executive order on Sunday…   I’ve heard that the Democrats won’t be satisfied with any amount below $2 Trillion….   So, you might as well add $2 Trillion into your computations for debt this year!  Aye, aye, aye….  I need serenity now!

The Fed is hell bound and whiskey bent to get inflation rising, as quickly as they can get it going, and money printing will go a long way toward them reaching their goal of higher inflation. But the velocity of the money being printed, is the key… if money gets stashed away, then the velocity of money doesn’t spiral higher, and trigger inflation… And with the position of most people’s pocketbooks / savings balances right now being so battered, I can’t see people rushing out to spend their new found currency… Do you? I would think at this point people have either learned a lesson about having savings the hard way, or they are licking their wounds, but grateful they had savings… And therefore a replenishing of those savings or even a start up of savings will be in order… Where’s the velocity coming now?

OK, enough talk on that, but basically I’m just trying to explain why investors are flocking to Gold & Silver right now…  Governmental tensions, Geopolitical tensions, negative yields, money printing out the yahoo, and a few other things really have Gold & Silver in the driver’s seat….  Yeah, driver’s seat…. Pick up your feet…. Got to move to the trick of the beat. There is no lead. Just take your place in the driver’s seat!  A little Sniff n’ the Tears for you this morning!

A few years ago, I mentioned the song Driver’s Seat in the Pfennig, and later that day I received an email from a guy who said he was the bass player for Sniff n’ the Tears…. How cool was that?  We actually ended up talking on the phone, as we had lots to talk about, with me being an old bass player myself!

Funny how I always have a “story” to tell about something related, eh? Well, when you have the life I’ve had, there are a ton of stories to tell!

As I told you yesterday, the U.S. Data Cupboard was taking a pause for the cause this week, with little to report until Friday’s reports.  But that doesn’t mean there isn’t anything in the Data Cupboard… For instance today we’ll see the color of July’s Producer Price Index (PPI), which is wholesale inflation, and which there shouldn’t be any… unless…  You know, if I was a business owner, and I had widgets to sell to the public, and suddenly those widgets aren’t selling, would I raise the price of the widgets so that if I sell 1/2 of them my net is the same, or would I reduce the price of the widgets to make them more attractive?  What would you do? 

Me…. I think I would raise the prices, in an attempt to recover my profits….   But, the thing I would do is downsize the widget, so that I’m giving the public less of a product at an increased price…  

Bet you didn’t think I would take that track, eh?  Our Chuck, a CEO that everyone despises? No way!  Well, think about it, Companies have already done the downsizing of their widgets, and kept the prices the same. The only thing left for them to do is increase the prices, which would send wholesale inflation higher, and that would feed the stupid CPI (consumer inflation) and the wheels on the bus go ’round and ’round…. 

Today’s Data Cupboard will also have the small business index for July… I can’t imagine in my wildest dreams that this survey of small businesses will be good… 

To Recap…  Well, the currencies & metals didn’t do much yesterday, but in the overnight markets, is where the action was… The dollar got sold VS the currencies overnight, but Gold is getting whacked in the early trading today, and was down $48 at last check…  Chuck gets help from Bill Bonner to explain what the Constitution says about who gets to spend the currency in these United States of America… 

For the FWIW article today, I have a real treat for you!  Instead of an article, I have a recent video interview with the GREAT Mogambo Guru!  Mike Maloney, whom many of you know of, does the interview, and when I watched it, I just kept going back in my mind the time TGMG (The Great Mogambo Guru, and I had lunch together while I was in St. Pete Florida…   So, here’s the link to the interview…  enjoy!  https://goldsilver.com/blog/gold-silver-truth-treason-mike-maloney-with-richard-daughty/

I also have this, which will tell you about the media… What I’ve always complained about them for, and more… Check this out… 

I had a dear reader send me this….  And I thought that it was worth repeating here in the Pfennig…

John Swinton was a NY Press guy….  Check out what he said oh, so long ago…

“One night, probably in 1880, John Swinton, then the preeminent New
York journalist, was the guest of honor at a banquet given him by the
leaders of his craft. Someone who knew neither the press nor Swinton
offered a toast to the independent press. Swinton outraged his
colleagues by replying:

“There is no such thing, at this date of the world’s history, in
America, as an independent press. You know it and I know it.
“There is not one of you who dares to write your honest opinions, and
if you did, you know beforehand that it would never appear in print. I
am paid weekly for keeping my honest opinion out of the paper I am
connected with. Others of you are paid similar salaries for similar
things, and any of you who would be so foolish as to write honest
opinions would be out on the streets looking for another job. If I
allowed my honest opinions to appear in one issue of my paper, before
twenty_four hours my occupation would be gone.
“The business of the journalists is to destroy the truth, to lie
outright, to pervert, to vilify, to fawn at the feet of mammon, and to
sell his country and his race for his daily bread. You know it and I
know it, and what folly is this toasting an independent press?
“We are the tools and vassals of rich men behind the scenes. We are
the jumping jacks, they pull the strings and we dance. Our talents,
our possibilities and our lives are all the property of other men. We
are intellectual prostitutes.”

Chuck again…. Just about tells it all, and oh, so many years ago too!

Market  prices  8/11/20: American Style: A$ .7186, kiwi .6610, C$ .7532, euro 1.1805, sterling 1.3276, Swiss $1.0973, European Style: rand 17.4845, krone 8.9450, SEK 8.7062, forint 292.19,  zloty 3.7297,   koruna 22.1497, RUB 73.52, yen 106.01, sing 1.3765, HKD 7.7499, INR 74.45, China 6.9644, peso 22.32, BRL 5.4358,  Dollar Index 93.22,   Oil $42.65,  10-year .54%, Silver $27.21, Platinum $956.00, Palladium $2,2026.00, and Gold… $1,980.45

That’s it for today… not as wordy as yesterday, which should be a good thing, ? Thanks for all that sent “welcome back” notes to me yesterday, they are truly appreciated!  Last week,  I was away for the 65th birthday for my best friend in the world. I’ve known Mike Karvas since 2nd grade. We’ve been through good times and bad times together.  So, happy belated Birthday, brother!  my poor beloved Cardinals sure have gone in the other direction, health wise, than the other 28 teams!  They can’t seem to shake the virus that has taken over the world…  I would think that even if they could begin to play games again, that it’s too late… The 2020 60-game schedule will have to go on without the National League’s winningest team…. UGH! in fact, double UGH!    Paul Young takes us to the finish line today with his big hit song: Every Time You Go Away…  And on that sad note (it’s a sad song) I hope you have a Tom Terrific Tuesday today, and will continue to Be Good To Yourself!

Chuck Butler