Oh, Oh! Please Pick Me! Please Pick Me!

June 30, 2020

* After a nothing day, dollars get bought overnight

* The Fed releases the names of Corporate bonds they bought… 

Good Day… and a Tom Terrific Tuesday to you! After days of marvelous weather here, we had a yucky day here with rain and clouds all day, but as I always say, we have to experience a little rain to thoroughly enjoy sunny days! Kathy’s vacation away from me, ends today… Sorry dear, all good things must come to an end! HA! Everything seems to be escalating these days, and everything is political too… I saw a scary video yesterday, as protesters began to walk down a street that the St. Louis Mayor lives on, they were met with two home owners with guns… That’s just the first step, folks, the next will be blood shed, and then the national Guard will have to be called in, and it will be like a civil war… I’m hoping that it all just goes away, quietly, before someone gets hurt badly… Since when does a national emergency (the Covid-19 virus) become so political? Now, longtime readers know that I don’t talk politics here, I’m just pointing out that everything is now political…. And while I won’t talk politics here, they are a welcome subject on the Butler Patio… The Kinks greet me this morning with their song Sunny Afternoon… The taxman’s taken all my dough, and left me in this stately home, and I’ll I’ve got is this sunny afternoon…

Well, as far as the market go…. It was another of those “nothing days” for the currencies and metals, the euro gave back a small amount, and the Aussie dollar (A$) is trading in the same clothes has yesterday morning. Gold didn’t budge on the day… Well that’s not exactly true, Gold did move up and back down, but ended the day at $1,771, the same price as it began the day, and was reported here in the Pfennig.

However, in the overnight markets someone decided that dollars needed to be bought, and the nothing day, turned into a dollar rout in the overnight markets…  The Dollar Index rose from 97.17 to 97.79, and the currencies look very weak this morning… Why dollars? I guess we would have to ask the currency trader in Asia what he was thinking to get this dollar buying started…  Because there’s nothing that has changed from yesterday, fundamentally that is…  And Gold is down $4 in the early trading this morning… What the hell is going on here? 

Stocks saw some buying (the PPT maybe?) and finished the day in the green…I just don’t see how this is going to last for stocks, but I guess the getting’ is good, while the getting’ is good!

It’s a good thing stocks are liquid…. And that’s all I have to say about that! The Fed released an initial listing of the Corporations from which the Fed bought bonds… In essence bailing them out for years of non-increasing production, no expansion, and Capital expenditures, but instead bought back their own company’s shares, so they could get a bigger bonus… But I digress here… the names that were listed were your usual run of Big Name Corporates. It just drives me up a wall and causes the neighbors to call 911 because I’m out there yelling at the top of my lungs, about the Fed buying Corporate bonds…. So, these Big Name Corporates, are probably getting a double dip of Fed help… The Fed is probably buying their ETF’s too… Oh, to be a Corporate Captain… They have the life of Reilly, They misappropriate their profits for years, go leveraged to the hilt, and when times get tough, The Fed comes along and saves their arsess… I’m just so fed up with the Fed… I can hardly speak of them without spitting while I talk!

The Fed would say, “Well, these Corporations were not at fault, they didn’t know there was going to be a pandemic that shut down the economy” And I would respond… “Well, what happened to saving for a rainy day? Wasn’t the pandemic the good example of needing to save for a rainy day?”

I bet moms and pops all over this great country are reintroducing themselves to the idea of “saving for a rainy day”…. Much like they did after the financial meltdown in 2007 & 08… But that didn’t last long, because, we as Americans love to work hard, and spend our cash! No, Chuck, wait a minute there, do you really think Americans love to work hard? Or do they love to hardly work? Ahhh grasshopper, that’s a good question… But either way, we still love to spend our cash! Oh, yes we do… So how much longer will the “save for a rainy day” scenario last this time?

When will they ever learn? When, will, they, ev-er, learn?

Last week I told you about the collapse of the company Wirecard, and this morning I hear that German regulators are going to make changes in reporting hierarchy to prevent this from happening again…  I guess they used the U.S.’s “Make no effort to clean things up approach” as their base for how not to do something…. 

In my daily perusal of Twitter, I found fave economist, David Rosenberg talking about the forecasts for this Thursday’s Jobs Jamboree. This is what he has to say on Twitter: “So let’s get this straight. The consensus that told us May payrolls would be -7.5m, with a range of -800k to -12m (headline +2.5m) expects +3m this Thursday (range +500k to +9m). And nobody has a minus sign for June. This tells me we’re set up for a big downside surprise!” – David Rosenberg

And this one was from someone I hadn’t heard of before, but… he caught my attention! I found this and thought it made so much sense that I just had to include it in today’s letter…

“Sven Henrich

Markets are not forward looking, they follow liquidity.

Too much artificial liquidity creates asset bubbles.
Asset bubbles eventually burst & hurt the economy & middle class.

Central banks drive artificial liquidity & asset bubbles.

They are not the savior but the danger.” Sven Henrich on Twitter 6/29/20

And that ends today’s run through Twitter….

I see this guy holds the Fed in as high of esteem that I do…  which is the bottom of the barrel esteem! 

Well for every analyst that finally sees the light that Gold & Silver’s respective prices are manipulated, there’s another one that thinks otherwise… I took this from the GATA note they sent me yesterday, “In an essay posted today at FX Empire, “Gold Market Manipulation and the Federal Reserve,” financial planner Kelsey Williams both admits and dismisses complaints of manipulation of the gold market.”

I just shake my head in disbelief after years of proving that the manipulation occurs that there are people that don’t believe what they’re being shown…  I’m from Missouri, so I have to be shown, and I was! 

The U.S. Data Cupboard today is still lacking real economic data, but today’s fare will be suffice… First up is the Case/ Shiller Home Price Index for April… That should be a real doozy! And then we’ll see the color of the Chicago PMI (manufacturing index) for June. So we’ll be able to check the pulse of manufacturing in the Chicago region… And then finally, the stupid Consumer Confidence report for June…  Get this, the forecasters are calling for a jump higher in the index…  Crazy, I know… but then that’s this stupid report, it’s always just about stocks.. 

There will be 3 Fed heads speaking today, and these are the Big 3… John Williams of the NY Fed is up first, then Lael Brainard bats second, and then in the all important 3rd spot in the order, Fed Chairman Powell, will be joined by the Sec. of the Treasury, Mnuchin, to testify on Capital Hill…  Oh, oh, oh! Choose me! Choose me! I want to be there to question these knuckleheads!  Oh, please let me be the guy that asks the questions! 

To recap… The currencies and metals traded in their same clothes all day yesterday, but in the overnight markets they got slammed! And Gold is down $4 in the early trading today… So, overnight someone thought it to be the thing to do, buy dollars, and the rest is in the books…  The Fed released the names of the Corporations that saw the Fed buy their debt/ Corp. Bonds… Chuck wishes he was the Captain of a Corporation, for they have the life of Reilly…  

For What It’s Worth…  Well, things in China and Hong Kong continue to be bad, as far as the U.S. is concerned, and that has brought about changes to the relationship between the U.S. and Hong Kong… This article was sent to me last night, and then I saw it in Ed Steer’s letter this morning, and I knew then that it was FWIW worthy!  This article talks about that relationship and it can be found here: https://www.zerohedge.com/geopolitical/wilbur-ross-says-us-revokes-hong-kongs-special-status

Or, here’s your snippet: “

While it was just a formality at this point, after the U.S. revealed several weeks ago that it would strip Hong Kong of its special trade now that China’s is set to impose its new security law as soon as tomorrow, moments ago U.S. Commerce Secretary Wilbur Ross, issued a statement advising China that Hong Kong’s special status is officially revoked.

“With the Chinese Communist Party’s imposition of new security measures on Hong Kong, the risk that sensitive U.S. technology will be diverted to the People’s Liberation Army or Ministry of State Security has increased, all while undermining the territory’s autonomy. Those are risks the U.S. refuses to accept and have resulted in the revocation of Hong Kong’s special status.”

As a result, the Commerce Department said that “regulations affording preferential treatment to Hong Kong over China, including the availability of export license exceptions, are suspended.” Ross also said that “further actions to eliminate differential treatment are also being evaluated” and urged Beijing to “immediately reverse course and fulfill the promises it has made to the people of Hong Kong and the world.”

Needless to say, and have said it many times in the past, China will not be happy, but so far both sides have shown a willingness to contain themselves to merely jawboning and verbal fireworks instead of escalating and jeopardizing the fragile economic truce between the two nations. That, however, may change in the coming months as the November elections approach.”

Chuck again…  Do you get the feeling that this whole shootin’ match with China is going to turn ugly? I do… And that’s all I have to say about that! For now that is! HA! 

Market Prices 6/30/20: American Style: A$ .6848, kiwi .6404, C$ .7307, euro 1.1196, sterling 1.2070, Swiss $ 1.0510, European Style: rand 17.3582, krone 9.7425, SEK 9.3725, forint 318.39,  zloty 3.9796,   koruna 23.8790, RUB 69.98, yen 107.75, sing 1.3973, HKD 7.7501, INR 76.32, China 7.0771, peso 23.16, BRL 5.4530, Dollar Index 97.74,    Oil $39.12,   10-year .62%, Silver $17.82, Platinum $812.94, Palladium $1,908.99, and Gold… $1,767.80

That’s it for today…  A little shorter today, there’s just not much going on overseas, other than the Germans making changes to prevent another Wirecard event….  So, a little shorter, today… I know most of you won’t mind… HA!  Well, it’s the last day of June! Where did the month go?  It’s seems to me that it was just last week I was singing June is busting out all over! Tomorrow’s Pfennig tradition on July 1st is a real treat, so be sure to come back for that!  So, do you have plans for this weekend, and the 4th of July? People around where I live sure have been having fun shooting off fireworks in their backyards… But those are nothing, compared to the Big Bangs of real fireworks shows…  I’ve told you this before, but there are so many new readers since I’ve last told it, so here goes… My dad, was a veteran of WWII, and a real patriot… He felt it was his right to shoot fireworks on the 4th of July, and every year, we would have out own fireworks display in the alley behind out house.  Sometimes the police would show up, and just sit there in their cars watching!  Ok, I’ve gone on too long this morning with this ending! Midnight Oil takes us to the finish line today with their song: Beds Are Burning…   I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler