Let Them Party Now, For The Hangover Is Going To Be A….

September 17, 2020

* the dollar bugs are back in control… 

* Chuck says these are really Things that make you go hmmm…. 

Good Day… And a Tub Thumpin’ Thursday to you!  Well, once again the old pro, Adam Wainwright, went the distance and the Cardinals won the 1st game of the doubleheader last night…. I’m in awe of the fact that in 2006, Adam Wainwright was the closer for the Cardinals as a rookie… Remember him striking out Carlos Beltran in the 9th inning to close out the 2006 NCLS, and sent the Cardinals to the World Series, where the beat the Tigers in 6 games, with Adam closing out that clinching game, and now 14 years later, he’s our “stopper”….  The great pitchers find a way to stay in the game for many years…   Sat outside with neighbor Paul for the first game, but the second game I had to go inside in the 4th inning, as it got too chilly!   Looking Glass greets me this morning with their song: Brandy  That’s a catchy tune, for sure!

Well, during the U.S. trading hours yesterday, the currencies were sold again, and Gold couldn’t hold its early morning gains, once again, and ended up with only $5 of the $20 it had early in the morning….  I don’t get it… The Fed said, “Fed said it decided to keep its policy interest rate at near zero and expects this will be appropriate until two things happen: labor market conditions return to the “maximum employment” and inflation has risen to 2% and “is on track to moderately exceed 2% for some time.” They went on to say that they see the near zero rates lasting to 2023….  

Chuck says, BS! Between you, me, and the guy down the street, near zero rates are going to be with us for longer than that!  Because the economy can’t grow, with all this debt hanging over it like the Sword of Damocles….  What would it harm for the Fed Chairman, Powell, to actually say something like that? That way they could deflect their inabilities to spur the economy, on Congress for running up the debt… In this day and age of: Blaming someone else for your inadequate actions, the Fed is missing their chance to wash their hands of this slower than a sloth economy….  I’m just saying…

The dollar rallied on this collection of lies, and braggadocio….  So… let them party, for the hangover from the party is going to be a real B….   And I think Traders see that…   and  they want to take the dollar lower, but they have the PPT looking over their collective shoulders…  It has to be the PPT, because who else wants to own a currency that is going to have near zero interest rates for the next 5 years, and a Central Bank that’s inviting greater than 2% inflation into their house?   There, now doesn’t that make sense? 

I found that the dollar buying and euro selling came on a strange day for it to happen….  The German ZEW think tank, showed that sentiment had increased in August, and the Eurozone area economic sentiment reading also beat expectations this month…. So, it’s not all gloom and doom here, but the euro can’t seem to find enough bids to get it past the 1.19 handle…  Of all days for that to happen should have been yesterday… We had the sentiment indexes strengthening, and the U.S. Fed Reserve painting a very gloom and doom picture for the markets to see, and….  Instead of rallying, the euro got sold…Hmmmm….  Now that is something that makes you go Hmmmm….  (thanks to Grant Williams for that phrase!)

The Aussie dollar (A$) actually got sold on a weak fundamental…. Here, the Central Bank said that they didn’t see a recovery for the Aussie economy for 2 more years….  And that honesty, got the A$ on the selling shelf…  That’s two shots at the A$’s armor, just this week…  It’s going to take a full blown weak dollar trend to get the A$ off the canvas now….

And I read this morning that the Bank of England (BOE) is thinking about negative rates…  Remember when I used to tell you that what happens in England shows up on our shores about 6 months later?  While negative rates is a bad thing, the things that could come after negative rates is what scares the bejeebers out of me! 

And Gold should have been soaring! But it wasn’t… And it was kept in check and brought down by the dollar strength…. 

In the overnight markets…. There’s been more dollar buying, folks… I’m lost in Space!  And the computer keeps repeating, “That does not compute, that does not compute”….   Gold & Silver are getting sold early this morning, with Gold down $15, and Silver down 32-cents… with Silver dropping below $27 for the first time in a while… 

The price of Oil has clawed its way back to the $40 handle this morning, I find this trading in Oil to be very interesting… Many years ago, at Mark Twain Bank I had a young man that worked for me that later became an Oil contracts trader… He told me it took a lot of training…  As there are lots of inputs and things that one normally wouldn’t think of that affect the price of Oil…  To me, it’s just a supply & demand commodity… So, you see even a 47 year student of the markets could learn something new!  

I started this week with the great news that Barron’s had reprinted a part of the Sept. 9, Pfennig…. I’m still smiling like a Cheshire Cat about that news…. But it’s not going to change the way I write…. One would think that I would seek out ways to get back into Barron’s…  But that’s not who I am…. If I say something they like, then so be it!  I’m here for you, dear reader, and nobody else….

The U.S. Data Cupboard today just has the Initial Jobless Claims for last week, and then Housing Starts for August, and a regional manufacturing index, of which I’m boycotting!  And tomorrow’s Data Cupboard has even less to report!  A speech by St. Louis Fed President, James Bullard, is the most exciting thing on tomorrow’s data docket…. I say that last line with sarcasm dripping from the keyboard…. 

Before we head to the Big Finish today, I have something on my mind, that I’m going to share with you… here goes… I kept thinking about something last night, as I watched a short blip on TV of another fire raging in a city….  Something we were taught in school….  “United We Stand, Divided We Fall”….  I don’t really think those young people in Oakland who were chanting “death to America” really knew what they were saying, or what that would entail….  I shake my head in total disgust of all this, but there’s nothing I can do to stop it….  But just repeating, United We Stand, Divided We Fall”…. 

To recap…. The currencies and metals didn’t make it through the day yesterday, with their gains intact… On a day when both should have been soaring, they were sold instead, or dollars were bought… either way….  Chuck presents a question, that he knows the answer to….  And The Fed said that near zero rates will remain until they reach maximum employment and inflation moves past 2%….  The analysts think that will be 2023… And Chuck says…. 20225….

For What It’s Worth….  Thanks to longtime reader Bob for sending me this link. The article is about how the wealth transfer has really taken a chunk out of the middle class and their ability to earn more, and this article can be found here: https://www.blacklistednews.com/article/78021/the-25-trillion-theft-rand-study-uncovers-massive-income-shift-to-the-top.html

Or, here’s your snippet: “Just how far has the working class been left behind by the winner-take-all economy? A new analysis by the RAND Corporation examines what rising inequality has cost Americans in lost income—and the results are stunning.

A full-time worker whose taxable income is at the median—with half the population making more and half making less—now pulls in about $50,000 a year. Yet had the fruits of the nation’s economic output been shared over the past 45 years as broadly as they were from the end of World War II until the early 1970s, that worker would instead be making $92,000 to $102,000. (The exact figures vary slightly depending on how inflation is calculated.)

The findings, which land amid a global pandemic, help to illuminate the paradoxes of an economy in which so-called essential workers are struggling to make ends meet while the rich keep getting richer.

“We were shocked by the numbers,” says Nick Hanauer, a venture capitalist who came up with the idea for the research along with David Rolf, founder of Local 775 of the Service Employees International Union and president of the Fair Work Center in Seattle. “It explains almost everything. It explains why people are so pissed off. It explains why they are so economically precarious.”

Notably, it isn’t just those in the middle who’ve been hit. RAND found that full-time, prime-age workers in the 25th percentile of the U.S. income distribution would be making $61,000 instead of $33,000 had everyone’s earnings from 1975 to 2018 expanded roughly in line with gross domestic product, as they did during the 1950s and ’60s.

Workers in the 75th percentile would be at $126,000 instead of $81,000. Remarkably, even those in the 90th percentile would be better off than they are now if economic growth had been shared as it was in the post-war era. They’d be making $168,000 rather than $133,000.

Tally it all up, according to RAND, and the bottom 90% of American workers would be bringing home an additional $2.5 trillion in total annual income if economic gains were as equitably divided as they’d been in the past—leading Rolf to dub the phenomenon “the $2.5 trillion theft.”

Chuck again…  I’m retired, but my kids aren’t…. And this really ticks me off! 

That’s it for today….  And tomorrow, of course!  Well, in case you haven’t heard the news, St. Louis was awarded with an expansion team in the Major League Soccer (MLS). Our team won’t play for two more years, but…. The team is already taking deposits for season tickets, and I immediately put down for 2… I don’t know many people that would want to go to a soccer game… But I would!  The team said they would time stamp the deposit, and put me in line for when they draw the tickets….  So, fingers crossed….  Good friend, Rick B. put a deposit in too, so maybe we can go to the games together!  It took nearly a year for the owners to name the team, of which I’m not a real fan of, but it’s our team!  A new stadium is being erected, and I can’t wait to walk into it!  Come on Cardinals, stay strong, and beat those Pirates this weekend!  The great Johnny Rivers takes us to the finish line today with his song: Summer Rain…  “All summer long we were dancing in the sand….Everybody just kept on playing “Sgt. Pepper’s Lonely Hearts Club Band”  With that… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday! And please, please, please, Be Good To Yourself!

Chuck Butler