August 26, 2021
* Currencies & Metals rally on Wednesday…
* Today looks like “one of those days” for Gold & Silver…
Good day… And a Tub Thumpin’ Thursday to you! Noot! Noot! Thee’s a new chant that goes on a Busch Stadium, when rookie Lars Nootbar gets a hit, or make a good defensive play… the fans chant, Noot! Noot! When I first heard it on TV, I thought the fans were booing, and then realized that they wouldn’t boo a Cardinals player that was hustling.. Well, there were lots of Noot! Chants yesterday, when he singled in the 10th inning to score the winning run… Our future Hall of Fame catcher, Yadi Molina, announced a one year extension, so next year will be his farewell tour around the league… As I told you yesterday, I’m heading out of town on Friday, and won’t be back to write on Monday, so the next Pfennig will be next Tuesday… The beautiful, and great voiced Dusty Springfield greets me this morning with her song: Son of a Preacher Man…
Well… the overnight markets on Tuesday night were leaning toward dollar buying, and as we began yesterday, the dollar was getting bought, the BBDXY, that started the day at 1,151.64, climbed to 1,153.00. but then a funny thing happened on the way to the forum… Durable Good Orders printed, and were negative -,1%, and the traders being traders looked at the number, and decided that they should sell dollars, and sell them they did! Soon the BBDXY was falling through the 1,151 figure, and ended the day at 1,149.56… With the Dollar Index adding its two cents, falling to 92.87…
The knee jerk reaction to sell dollars yesterday, finally gave way to dollar buying in the overnight markets, as it was revealed that the Durable Goods Orders negative print was dominated by lack of sales of planes… Take planes out of equation, and Durable Goods would have been positive…
Gold never could find a bid on Wednesday and fell $12.50, to close the day at $1,791.50, and Silver lost a whopping 1-cent on the day to close at $23.96… Don’t know why Gold was sold on the day, other than 1. Profit taking or 2. Price manipulators… I bet you don’t have to think too long about which one I would choose…
In the overnight markets last night… Well, as I just said, the dollar selling gave way to dollar buying in the overnight markets. The BBDXY, which closed yesterday at 1,149.58, is trading at 1,151.61 this morning. As I looked over the currencies, the only real slippage is saw in any of them was in the Japanese yen, so it must be a combination of little moves.
Gold is starting the day down $9.40, so it looks like it could be one “those days” I hope not, but it sure appears to be one, as the selling in the early markets is pretty strong. Silver is down 31-cents this morning, so it appears to me that the price manipulators are going after both today…
Sometimes these kinds of days just get me in real foul mood, but not today… I’m not going to let it happen that way, for I’m heading out of town tomorrow on a mini-vacation, and nothing is going to get in my way of thinking of having a good time!
That brings me to this …..”If you purchased $10,000 of stock evenly divided among America’s top five defense contractors on September 18, 2001 — the day President George W. Bush signed the Authorization for Use of Military Force in response to the 9/11 terrorist attacks — and faithfully reinvested all dividends, it would now be worth $97,295. This is a far greater return than was available in the overall stock market over the same period. $10,000 invested in an S&P 500 index fund on September 18, 2001, would now be worth $61,613. That is, defense stocks outperformed the stock market overall by 58 percent during the Afghanistan War. Moreover, given that the top five biggest defense contractors — Boeing, Raytheon, Lockheed Martin, Northrop Grumman, and General Dynamics — are of course part of the S&P 500, the remaining firms had lower returns than the overall S&P returns. These numbers suggest that it is incorrect to conclude that the Taliban’s immediate takeover of Afghanistan upon the U.S.’s departure means that the Afghanistan War was a failure. On the contrary, from the perspective of some of the most powerful people in the U.S., it may have been an extraordinary success. Notably, the boards of directors of all five defense contractors include retired top-level military officers. Several commentators address this dynamic in the 2005 documentary “Why We Fight.” Former CIA contractor and academic Chalmers Johnson states, “I guarantee you, when war becomes that profitable, you’re going to see more of it.”…
Chuck again, I took this from this website: https://theintercept.com/2021/08/16/afghanistan-war-defense-stocks/
And do you know why, in my humble opinion that is, why the U.S. left many military hardware in Afghanistan to be taken over by the Taliban? I figure, that way the defense contractors, can make more military hardware to charge the U.S. for… which means we get to pay for it folks, us taxpayers… Now doesn’t that just make you a little mad?
OK… onto other things on my mind this morning… As I was going through Twitter yesterday, I came across this from investment guru Pippa Malmgren… “Whatever your view on vaccines, how is it that we managed to come up with a COVID solution in 1 yr that usually takes 15 & why can’t we do that for other metaproblems like cancer, the pension crisis, energy scarcity, poverty etc. Focus = results, right? Or wrong?” – Pippa Malmgren on Twitter
Yes, I totally agree with her… And I’ve said it for 2 years now… As a cancer survivor, so far that is, this is near and dear to my heart, and that’s that!
So, don’t forget to check in on the markets tomorrow after Cartel Chairman Jerome Powell gives his keynote address virtually I might add, to the masses tuned in… The markets believe or fear that he will use this keynote address to layout the framework of Tapering… For the record, I don’t believe he will do that tomorrow, instead opting for the next Cartel meeting when he can have more emphasis on what he’s doing…
But should he surprise Chuck and give the framework tomorrow, you had better watch out, because I don’t know if you recall the first Taper Tantrum when Ben Bernanke mentioned tapering a few years ago, but if you do, you can pretty much believe that it will be that way once again… And then it will be up to the Cartel to decide when they begin to taper, and if the stock market gets jiggy on the downside, he could announce at a later date that Tapering would be moved back, or postponed…
It appears that bond traders are already pushing the yield of the 10-year Treasury note higher, as the yield has gone from 1.22% late last week to 1.37% today… The bond traders fear that Cartel Chairman Powell will be laying out the framework for Tapering, and the bond traders are just getting ready for the trading that will come from another Taper Tantrum!
The U.S. Data Cupboard yesterday, had the aforementioned Durable Goods Orders for July and they printed negative -.1%… Capital Goods Orders apparently wasn’t ready for Prime Time, and didn’t print…
Today’s Data Cupboard has the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims, which have been falling each week for a couple of months now… The unemployment benefits that put into place during the pandemic come to an end very soon now, and so it would behoove those that have been sitting on their couch in the AC eating chocolate bon-bons, to start looking for a job, because the Goose that lays the golden eggs, has stopped laying eggs…
Before we head to the Big Finish today, I wanted to talk about something that apparently got some readers very mad at me… Last week I wrote about the need for people to get vaccinated… and that what set the people off on me… But they failed to read what I also said, and that is I believe that each and every person has the right to decide what they put in their bodies… So… basically, if you are one of the people that don’t want to put the vaccine in your body, that’s your right… I never said for people to give up their rights and get vaccinated! So, before firing off mean letters to me, read everything first… please!
For What It’s Worth… Well here’s another report from Russ and Pam Martens from www.Wallstreetonparade.com When reading this, think about as the next few years go by, just how deep in debt the U.S. will be, and then think about where will the financing come from when the rest of the world is “no mas”? Anyway this article talks about the CBO’s Congressional Budget Office is talking about some very scary numbers for current debt in the U.S. and it can be found here: The Congressional Budget Office Is Forecasting U.S. Debt Levels Not Seen Since World War II as GDP Forecasts Dim (wallstreetonparade.com)
Or, here’s your snippet: “The most recent Congressional Budget Office (CBO) forecast is projecting government debt levels in the U.S. not seen since World War II. According to a CBO report released on July 21:
“After all the government’s borrowing needs are accounted for, debt held by the public rises from $21.0 trillion at the end of 2020 to $35.8 trillion at the end of 2031 in CBO’s baseline projections. As a percentage of GDP, debt at the end of 2031 stands at 106 percent, about 6 percentage points higher than it was at the end of 2020 and nearly two and a half times its average over the past 50 years.”
As for the federal budget deficit as a share of GDP, things aren’t looking good there either according to CBO forecasts:
“CBO projects a federal budget deficit of $3.0 trillion in 2021 as the economic disruption caused by the 2020–2021 coronavirus pandemic and the legislation enacted in response continue to boost the deficit (which was large by historical standards even before the pandemic). At 13.4 percent of gross domestic product (GDP), the deficit in 2021 would be the second largest since 1945, exceeded only by the 14.9 percent shortfall recorded last year.”
Growing levels of national debt and deficits are never good news but they are particularly troublesome when the rosy forecasts for GDP growth this year have started to dim as a result of the economic hit coming from the upsurge in the Delta variant of COVID-19.
On August 19, Goldman Sachs reduced their GDP estimate for the third quarter from a robust 9 percent to 5.5 percent. Goldman Sachs cited Delta’s impact on reduced consumer spending on “dining, travel, and some other services” as the reason for their sharp cut of 3.5 points from their earlier GDP forecast.
At the same time the U.S. is witnessing a downward trend in economic activity, there is a stark, rising trend in corporate debt levels in the U.S. According to Federal Reserve data, as of January 1, 2021 corporate debt (including debt securities and loans) stood at an historic high of $11.169 trillion. (This excludes debt held by financial institutions.)”
Chuck again… All I’m going to say here about this is, that a friend of mine that’s a doctor, told me once that whenever he asks his patients how much alcohol they consume, he takes whatever the patient tells him and doubles it…. Well, a similar thing can be said about the CBO debt projections, and that whatever they say, I usually about 25-40% more… Got Gold?
Market Prices 8/26/2010: American Style: A$ .7256, kiwi .6969, C$ .7926, euro 1.1761, sterling 1.3726, Swiss $ 1.0902, European Style: rand 14.9305, krone 8.8137, SEK 8.7083, forint 296.60, zloty 3.8911, koruna 21.7175, RUB 73.84, yen 110.16, sing 1.3531, HKD 7.7867, INR 75.04, China 6.4748, peso 20.32, BRL 5.2375, BBDXY 1,151.61, Dollar Index 92.98, Oil $67.47, 10-year 1.37%, Silver $23.65, Platinum $995.00, Palladium $2,462.00, Copper $4.22, and Gold… $1,782.10
That’s it for today, through to next Tuesday… Man next weekend is Labor Day Weekend! Where did the summer go? Kids here have been back to school since Monday, and the summer is coming to a close… Long time Readers will recall me talking about the Butler Annual Labor Day BBQ, and how much I cooked for it… Well, unfortunately, I had to cancel last year’s BBQ, and as it comes up on the calendar this year, I had to cancel this year’s BBQ too… For fear that I wouldn’t have the strength to deal with everything I do… I guess I’ll have to change the name of it to the Butler sometimes Annual Labor Day BBQ! Next year, maybe the Covid thing is in our rear view mirrors too… I’ll still be having the Big Green Egg working overtime that weekend, for any family or friends that want to stop by… I go to see my oncologist this afternoon… The hospital here did a heart check on me while I slept last night… the monitor that resides in my bedroom, contacts my pacemaker, and gets the stored information, and sends it to the cardiologist… I don’t have to go into the office for that! Pretty cool, eh? Ok, time to hit send… Credence Clearwater Revival takes us to the finish line today with their song: I Put A Spell On You… I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself!
Chuck Butler