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 2nd 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