Batten Down The Hatches & Look For Bargains!

February 17, 2020

* Dollar bugs take a cent of the euro’s value on  Friday! 

* Gold reaches a record high VS the euro! 

Good Day… And a Marvelous Monday to you… As usual, I’m getting this done very early this morning so I have time to get north for a doc appt. Well, we had been having a nice run of sunny, warm weather here, but a cold front moved through this weekend, and the temps have only climbed to the mid 70’s… HA! That’ll go back to sunny and 80 by week’s end… Second day of Spring Training and the Cardinals already have reported an injury to a pitcher… UGH! It seems that every spring this happens… The full squad reported yesterday, although the starting infield has been here working with the great instructor, Jose Oquendo… Brewer & Shipley greet me this morning with their iconic rock classic song: One Toke Over The Line…

Well, if you own euros, I sure hope you ducked for cover on Friday, as the offset currency to the dollar saw major selling, or it saw major dollar buying, you can look at it either way… But no matter how you look at it the euro dropped 1-cent in price and trades with a 1.08 handle this morning… There was no real news to cause this drop, or rise of the dollar… Retail Sales were OK, not great, just OK for January, Industrial Production for Jan. was negative and Capacity Utilization dropped, which in my book would constitute a selling of the dollar, but in this day of “opposites” that was not to be… 

I read this weekend that the euro is getting blasted for the Coronavirus… Wait! What? What the hell does the Eurozone have to do with the Coronavirus? Well, the thought here is that should the virus begin to spread world wide, that the Eurozone would get hit next… I would say that if I were doing the forecasting, I would be more worried about the virus spreading to India or Africa… Think about that for a minute and then come back….

Well, stocks throughout the world, sans China, continue to defy gravity, and remain lofty in their prices, with thoughts that they can go higher… This reminds me of the infamous Nero, who fiddled while Rome burned… The goings on in the world are burning, and the stock jockeys continue to play their fiddles… This past week, I was taken aback by the drop in the Baltic Dry Index (BDI)… The BDI has dropped 72% since early December, which was prior to the virus being announced… But given the fact that China’s economy has basically been shut down for over a month now, the shipment of goods from China is nonexistent, and this is quite evident in the BDI… Oh, by the way, the BDI is now at levels it hasn’t seen since 1986… That’s right! 1986…

Industrial Production here and in Europe have gone negative, Factory Orders too have gone negative, but Nero is still fiddling… Bond guys get it… They have marked down the yield on Treasuries in response to the economic data being so weak… But Nero still fiddles…

I get it, folks… I really do… the stock jockeys believe that the Fed has their backs, and so why wouldn’t they continue to mark up stocks?  One would have thought that Fed Chairman, Jerome Powell’s talks last week would have put some questions in their collective minds… I mean when he said something about how the Fed isn’t going to be able to come to the aid of the economy in a deep recession, because interest rates are already low, I would have gasped, taken a step back, and thought, “he’ s scared”…  But, not Nero… he continued fiddling! 

OK, the GATA folks sent me a note on Saturday, that brought up the question that I’ve been asking, and that is what about pensions? Or what about insurance Companies? OK, we’re playing jeopardy here, and the question is: Central Banks think that negative rates are a-OK, but what sectors don’t think that? Oh, and I forget one that’s near and dear to my heart, and that is Senior Citizens, that have savings and try to live off the income without touching the principal… That’s WHO! Can you imagine what’s going on in the finance offices of Pension funds and Insurance companies, who have forecast 7% yields? The note that the GATA folks sent me centered on the Swiss National Bank (SNB) who believes that negative interest rates are a must, and good for an economy… Shame, shame, shame on you SNB, and any other Central Bank that might agree with the SNB!

Speaking of negative interest rates, I read this past weekend that Denmark, which has the deepest negative rates along with Switzerland, is thinking along with Sweden’s Riksbank that it’s time to bring the interest rates out of negative territory… It seems that Swedes and now the Danes have taken a long time to figure out that negative interest rates are the cure-all for what ails an economy… And in fact develops bad habits among the Corporations and other borrowers…

I was going through all the comments on Twitter on Saturday, and came across this one that hits the nail on the head as far as I’m concerned… From Twitter: “Guggenheim’s Scott Minerd 2/13: Global CIO Outlook: “This will eventually end badly. I have never in my career seen anything as crazy as what’s going on right now. It was crazy in 2006 when I was pounding the table saying we were going to have a fin’l crisis of biblical proportions”

Yes, Scott, I too was pounding my fist on the desk saying it was going to be a real mess in Housing, and I was proved to be correct, even though, I was being quieted about this housing debacle by the mortgage company I worked for… A few years later, one of the main guys from the mortgage company said to me, “You were correct, I think I was just drinking the kool-aid.” 

Gold has decent days on both Thursday and Friday last week, and is opening up flat to down a buck or two this morning. Nothing that can’t be reversed easily…  Gold hit a record high VS the euro last week, and is up more than 7% VS euros this year, following its 22% gain VS the single unit in 2019!   In fact, against most of the currencies around the world, Gold has hit record highs in the last year…  Except one… The dollar…  And that day will come folks, you just have to be patient! 

Well, today is a holiday, and see? I’m working! I have to make up for all the days I’m missing for doctor appointments!  OK… well since today is a holiday, there’s no economic data to print today, and for the most part there’s little to sift through the rest of the week. Its’ one of those weeks, that is void of real economic data… On our Tub Thumpin’ Thursday Leading Indicators will print, and that’s it as for as real economic data this week… 

In recent times, that’s been a bad thing for the currencies, as there is no weak data to keep the dollar in check… So, I would warn you to batten down the hatches this week, and if anything, look for cheaper prices in which to buy the currencies you like… 

To recap… The dollar went on a rampage on Friday last week, and took down the euro by more than 1-cent!  OUCH! that’s going to leave a mark!  But Gold had a good two-day end of the week, and set a record high VS euros in the late week trading.  The Coronavirus is really getting some attention, as it should, I might add, but Chuck believes the fears are directed incorrectly, as we should really fear the spread of the virus should it get to India and Africa…  I’m just saying… 

For What It’s Worth… In my never ending attempt to shine the manipulator light on JPMorgan, I bring you this article this morning. I think the good folks at GATA for sending it along to me… This article can be found here:

Or, here’s your snippet: “The U.S. Department of Justice investigation of criminal activity in the precious metals markets has taken an interesting new turn.
According to Bloomberg, prosecutors are targeting the bank itself and not just the individual traders involved in rigging prices. If convicted, the bank as an institution could be held accountable for years of structured and pervasive cheating.

The DOJ investigation of JPMorgan’s metals trading desk began more than two years ago. It came on the heels of a guilty plea by Deutsche Bank.
Deutsche Bank copped to spoofing prices and agreed to turn state’s evidence. DB then handed over hundreds of thousands of pages of documents, along with chat logs and voice recordings which featured traders gleefully conspiring with one another to cheat clients and other market participants.

Officials used that trove of information and other evidence to charge six JPMorgan traders with crimes. Some already pleaded guilty and made their own agreements to cooperate with the larger investigation.
But last week’s revelations from Bloomberg are the first confirmation that the mega bank is itself in the crosshairs.

Bank of America followed Deutsche Bank’s lead and moved to settle charges. The company paid fines and promised internal reforms. Many expect the extraordinarily well-connected JPMorgan Chase & Co will be granted similar leniency.

There is one interesting distinction in the DOJ’s handling of the bank, however. Officials have charged JPMorgan traders using RICO laws.
The implication is that the bank itself is to be treated as a criminal enterprise. Perhaps this time company executives will not be able to convince investigators the bank is an honest institution with the simple misfortune of having rogue criminal traders among its ranks.
JPMorgan deserves to get more than a slap on the wrist.”

Chuck again… Yes, this is NO LONGER A CONSPIRACY THEORY! Did you read that? Ahem, to my former adversaries that made me stop writing about price manipulation in Gold & silver! Are you paying attention now? I guess I don’t look like I wear a tin foil hat any longer now do I?

Currencies today 2/17/20 American Style: A$.6720, kiwi .6430, C$ .7560, euro 1.0840, sterling 1.3030, Swiss $1.0185, European Style: rand 14.9097, krone 9.2566, SEK 9.7240, forint 308.44, zloty 3.9307,    koruna 22.8715, RUB 63.49, yen 109.90, sing 1.3888, HKD 7.7667, INR 71.21, China 6.9861, peso 18.56, BRL 4.2957, Dollar Index 97.14, Oil $52.06,   10-year 1.58%, Silver $17.80, Platinum $969.21, Palladium $2,461.99, and Gold… $1,581.45

That’s it for today…   A rainy day on Saturday, and yes, we do have rainy days in the land of sunny and 80! So I watched, our St. Louis U. Billikens win their basketball game, and my beloved Missouri Tigers also won their game, but the Blues lost… And then lost again last night to the same team! UGH!  They need the return of Tarasenko very badly, as they can’t put the puck in the net these days!  Well, I’m off to Port St. Lucie this morning, for another trip to the wound center there… I think I’m actually seeing some healing going on, which is a good thing in my book! I’ve had to deal with this for almost a year now!  A full squad reports to Spring Training today! And the first game is this coming Saturday! YAHOO!  Baseball is back! The late Great Dan Fogelberg takes us to the finish line today with his song: False Faces…   I hope you have a Marvelous Monday and please Be Good To Yourself!

Chuck Butler