Memo To Traders… Please Pick A Lane!

Rocktober 1, 2020

*Currencies move higher yesterday and overnight!

* Gold loses $12 yesterday, but is up $13 this morning…. 

Good Day… And a Tub Thumpin’ Thursday to you!  And welcome to Rocktober! I almost didn’t answer the bell this morning, as yesterday I didn’t get my afternoon nap, and last night, I fell asleep in my chair for the first 5 hours, then I climbed the stairs at 3 in morning to go to bed, and when the alarm went off… I said, “to hell with it,” and turned it off… But within a few minutes, my conscience got to me, and so here I am….  But not bright-eyed and bushy-tailed, for sure! In fact, I’m cranky! I have to think of something that will cheer me up… Oh! That’s right! My beloved Cardinals won Game 1 of their best of 3 series with the Padres yesterday!  Now, I’m in the mood to talk! Neil Young greets me this morning with his song from the great Harvest album: Out On The Weekend….  “think I’ll pack it in and buy a pickup, head on down to L.A.”…. 

Up one session, down the next…. This back and forth is about to give me a rash folks…. Like when I’m driving behind a guy on the highway, and he keeps weaving over into my lane. I say, “Come on bud, pick a lane, any lane, there are 4 of them to choose from”  I’m saying to the currency and metals traders, come on pick a direction, and stick with it….   I know in my heart of hearts that most currencies traders want to sell dollars right now, but then there’s the wolf (PPT) that’s always at the door, and traders are a fickle group of people… So, even though they know they should be selling dollars, they aren’t because of the PPT hanging over them like the Sword of Damocles….

So, yesterday, the currencies recovered the ground they lost in the overnight markets, but Gold never recovered its early morning loss of $12 and closed at $1,885.00 and Silver lost another 52-cents to go with the 46-cents it had lost in the early trading to close down 98-cents at $23.30….  The ADP Employment report showed that 790,000 jobs were added in September… One would think that hearing that kind of news would have pushed the dollar higher on the day, but it didn’t… except VS Gold & Silver…

And in the overnight and early trading markets, the dollar has continued to be sold… The currencies added to their gains yesterday, and Gold & silver have erased those losses from yesterday! Gold is up $13.50 this morning, and is once again within spittin’ distance of $1,900, and silver is up 50-cents this morning…  

And the fallout from the Presidential debate Tuesday night, sure didn’t give dollar holders any warm and fuzzy feelings… Recall I told you that I didn’t watch it, live… Watched some of it yesterday afternoon, and all I can say is that we learned one thing… The contempt that these two men have for each other”….  OMG… Did they have to display it to everyone, even the country’s creditors?

So… that’s done, and we await the 2nd debate, which by all accounts has to be better than the first one….  My suggestion to the group of guys that came over to watch the baseball game with me outside yesterday, was simply to give a “mute button to the Host”, and if a debater tries to interrupt his counterpart, he gets muted”  now that would stop all those interruptions wouldn’t it?

Not that I want to turn the Pfennig into a letter on Politics, but this was so bad…. That I had to talk about it! HA!

OK… So, the dollar bugs are running away once again… What gives?  Yesterday they were puffing out their collective chests, and today they are cowering behind the wall boards they came from…  One day sure makes a difference, eh? But it’s these one day moves, and then backward the next day that are really giving me a rash… 

Well, it appears that the Bank of England (BOE) is definitely going to go negative with their rates very soon… Recall I told you a couple of weeks ago that they were thought to be leaning in that direction? Well, from what I read the BOE has sent signals to the markets that negative rates are on the docket for their next meeting.  

And you’d have to be a longtime reader to recall this, but… as I used to say long ago, that whatever happens in the U.K. seems to come to our shores about 6 months later, which would mean the U.S. economy will have dived deeper into the depression, and the Cartel, I mean the Fed will have no other choice but to go negative with rates… What’s the diff? The “real interest rates” are negative already, might as well go the rest of the way… 

These are not my thoughts, folks… I’m just telling you what the cartel, I mean the Fed, will be thinking… Oh, and by the way for those of you new to class, “real interest rates” are the current rate minus inflation…  Well, now that I’ve ruined your day, because you didn’t know that we were already in negative rates, I’ll try to do something to cheer you up! 

I’ve been treating myself to a lot of music lately from Leon Russell, and JJ Cale… Great stuff, but as I was looking for more, I came across some stuff that JJ Cale and Eric Clapton did together…. It’s been a long times since I bought a CD, but I just had to have this recording titled: The Road To Escondido, by JJ Cale and Eric Clapton…. It arrived sometime yesterday ( I was preoccupied with baseball) and so I can’t wait to get it in the CD player this morning! 

There did that make you feel better? I sure hope so… Because I’ve got nothing else, but complaints, whining and gloom and doom up my sleeve, ala Bullwinkle! 

The U.S. Data Cupboard yesterday had the ADP Employment Report for September, and they showed that 749,000 jobs were added, which I’m thinking that those won’t last too long… OK, because I see the economy dragging its feet… 

And today’s Data Cupboard is chock-full-o-data! The Initial Jobless Claims for last week will print, along with the Continuing Claims, which to me is more interesting… In addition, we’ll see the color of the Personal Income and Spending reports for Sept. These are important economic prints folks… And finally, the ISM Manufacturing Index for September will also print, and is also an important economic report… So, we’ll see 4 real economic reports in one day!  

To recap…  The currencies turned the tables on the dollar bugs yesterday, and then continued throughout the night to move higher VS the dollar. Gold gave back $12 yesterday, but is up $13 this morning… Chuck is growing tired of the back and forth, and just wants traders to pick a lane, I mean direction and stick with it! 

For What It’s Worth….  It’s been some time since I last was allowed to view articles on, but last night in my perusal of Twitter, I clicked on a Tweet about major U.S. companies laying off Thousands of workers in one day, and it then took me to Bloomberg, where you’ll find this article that really spells out the problems for the economy, and it can be found here:

Or, here’s your snippet: “Tens of thousands of job cuts announced by blue-chip companies in a 24-hour period are a warning sign for the world’s recovery and emerge just ahead of two key reports forecast to show limited progress in the U.S. labor market.

In one of the biggest layoff announcements since the pandemic caused widespread economic shutdowns, Walt Disney Co. said late Tuesday that it’s slashing 28,000 workers in its slumping U.S. resort business. In the hours that followed, the pace of job cuts at some of the world’s biggest companies — across in a range of industries from energy to finance — quickened.

On Wednesday, Allstate Corp., the fourth-largest car insurer in the U.S., said it will cut 3,800 jobs, roughly 8% of its workforce. And Bloomberg reported that Goldman Sachs Group Inc. plans to cut roughly 400 jobs after temporarily suspending job reductions at the beginning of the crisis.

Announcements like these point to further challenges in a rebound that’s already slowed after an initial bounce back in May and June. Weekly figures due Thursday are estimated to show filings for U.S. unemployment benefits remain far above pre-virus levels, while Friday’s jobs report — the last before the November presidential election — is expected to reveal that employers added a half-million fewer workers in September than in August.

“Job losses were at first concentrated in service-sector jobs, but in any economic downturn you’re bound to get some more pruning as corporations are trying to protect profit margins,” said Brett Ryan, senior U.S. economist at Deutsche Bank Securities Inc. “You’ll see larger companies that may have been on a certain revenue trajectory before the downturn start to reevaluate.””

Chuck Again…. Yes, we’ll see the latest Weekly Initial Jobless Claims in just a few minutes this morning, so hold tight….

Market  prices 10/1/20: American Style: A$ .7203, kiwi .6652,  C$ .7526, euro 1.1753, sterling 1.2957, Swiss $1.0898, European Style: rand 16.6200, krone 9.2796, SEK 8.9200,  forint 306.08,  zloty 3.8226,   koruna 22.9013, RUB 78.24, yen 105.50, sing 1.3620, HKD 7.7500, INR 73.03, China 6.8012, peso 21.84,  BRL 5.6274,  Dollar Index 93.54,  Oil $39.47,  10-year .70%, Silver $23.80, Platinum $906.00, Palladium $2,372.00, and Gold… $1,899.70

That’s it for today and this week… I’ll have my thoughts on tomorrow’s Jobs Jamboree for you on Monday, you can be sure of that!  So, I’m sure most of you know my reason for calling this month Rocktober, and some of you are wondering what the heck is Rocktober all about?  Well, it’s Pfennig Tradition… I’ve writing the Pfennig now for 28 years, and when it was young, I decided to call this month, Rocktober, and that’s that! That first inning of the Cards/ Padres game yesterday, was quite the surprise, as the Cardinals brought their bats that haven’t had much use, to San Diego, and put up 4 runs and then added a few more to win the game…  Now, if they can do the same today….   I sure hope their not like the currency and metals traders!  The Cardinals will send the wily old Veteran, Adam Wainwright to the hill today, in hopes that he can conger up more magic….   The Beatles takes us to the finish line today with one of my fave songs by them: Norwegian Wood….   OK, short-n-sweet for you today, and with that I hope you have a Tub Thumpin’ Thursday and a Fantastico Friday tomorrow…. And Please Be Good To Yourself!

Chuck Butler