Powell To Talk Up Inflation At Jackson Hole Boondoggle…

August 25, 2020

* The dollar bugs were back in control yesterday

* We have Powell talking up inflation and Gold can’t find a bid? 

Good day… And a Tom Terrific Tuesday to you! I received a surprise yesterday afternoon, while I was out back cooking some chicken breasts on my Big Green Egg….  My good friend, Duane stopped by to say hi… I hadn’t seen him since he dropped off that pastrami sandwich to me a couple of weeks ago… I sat out back to watch the Cardinals game, as I have for the last week, but this game was  VS the Royals last night. I will go to my grave never forgiving Don Denkinger for his, I still don’t know how he saw it the way he called it, massively bad call in Game 6 of the 1985 World Series between the Cardinals and the Royals… Instead of wining the series in Game 6, they lost the series in Game 7, which everybody and their brother knew they would lose, going into the game….   So, whenever the Royals play the Cardinals I’m always reminded of that totally blown call at first base by Denkinger… . Simon and Garfunkel greet me this morning with their song: America, which was also featured in the Almost Famous movie and soundtrack….

Another day, and another day when the overnight and early morning rallies for the currencies and metals fizzle out and end up going the wrong way…. And the end of the day yesterday, the euro was barely holding onto the 1.18 handle, and Gold had given back its early $9 gain to lose $13 on the day and close at $1,928.60…. There was nothing in the data cupboard that would want the dollar bugs to go so heavy into the buying dollars…. There also was no headway made on another currency printing stimulus package…. 

Yesterday, I told you about the 1.1 Million more Jobless Claims that were filed the week before… You may recall me telling when this whole economic shutdown began that people were going to find that their jobs weren’t waiting for them to return, and that many companies would not longer be in business…  Well, the Unemployment numbers keep rising, and so too do the number of Corporate bankruptcies… 

I read yesterday, that another large petrol company here in the U.S. has filed for bankruptcy… That’s makes 3 so far this year… That can’t be good for the economy, for it’s not just the Oil Company, it’s all the suppliers that supply them the rigs, and so on that will be affected…. I’m just saying… 

Longtime friend, and publishing guru, and author, Bill Bonner, quoted The Washington Post wit this ditty, that should be scaring the bejeebers out of the dollar bugs….. So, here we go!

“If the unemployment rate stays around 10 percent and no new stimulus is delivered, said Zach Parolin, a researcher at Columbia University, “we can expect poverty rates to rise and climb higher than those observed in the Great Recession.” The poverty threshold for a family of four is $26,200, according to the U.S. Department of Health and Human Services.

Data collected by the Census Bureau capture the financial pain. For the week that ended July 21, the most recent numbers available, roughly 29 million U.S. adults – about 12.1 percent – said their household sometimes or often didn’t have enough to eat the preceding seven days, according to the Center on Budget and Policy Priorities. Nearly 15 million renters said they were behind on rent during the same period.” – from Bill Bonner’s Diary…

OK… back to me….  I can’t understand why traders are so influenced by the PPT, who last week got this whole dollar buying debacle started.  Yes, they can cause harm one day, but so far they haven’t gone as far as coming in on back-tp-back, belly-to-belly, days….  It was a zombie jamboree,…. And they sang, Back to back, belly to belly, I don’t give a damn cause I’m cold stone already….

Pretty soon we’ll be having zombie Corporations having a jamboree, in hopes to stir up more support for their failing company that, is only still here today because of the Fed, buying their over leveraged bonds, and ETF’s….   Ah, yes, it’s all done under the guise of: “The pandemic caused our problems”, and the Fed took that bait, hook, line and sinker!   Of course these Corporations were wearing zombie clothes long before the Plandemic came along!  Yes, I call it the plandemic, for my own person reasons that I won’t get into here….

But a corporation collapse won’t cause the Robinhood crowd from buying the collapsing Corporation’s stocks….  Recall the Hertz ordeal? ….  I’m just saying!

The overnight and early morning markets haven’t provided any help to the battered asset classes of currencies and metals today.  I can see their thinking that why should they go long these two asset classes only to have their gains wiped out by the U.S market….  but this is no time to surrender, Dorothy! Come on…. you can do it! Don’t let the big bad bully U.S. traders push you around, steal your lunch, and give you a wedgie!  

Well, guess what’s going on in Jackson Hole, Wyoming?  Yes, it’s the Fed’s annual boondoggle where finance ministers and economist meet to discuss the economies of the world. Of course we really only care about what the Fed has to say about our economy, and for that, I direct your attention to the FWIW  article today…. 

Speaking of the Jackson Hole boondoggle…  It is here that QE2 was announced by St. Louis Fed President, James Bullard, years ago… So, there are times that actual work is done here…. But most of the time, I can see the fin mins hobnobbing with each other and the economists being like yapping little dogs biting at the ankles of the fin mins for them to stop and listen to what they have to say… 

As I told you yesterday, the U.S. Data Cupboard builds to a crescendo this week, so on Monday there was just The Chicago regional index, which dropped, just like the other regionals, but since they don’t give us any indication of what the National report will show, I’m boycotting these regionals from here on out! 

Today’s Data Cupboard, has the Case/Shiller Home Price Index, and we’ll see the stupid Consumer Confidence….  There’s more than 30 Million people out of jobs, and I’ll betcha a shiny quarter that the Confidence will have risen for this report….   I would bet that the people putting together this index didn’t contact any of those 30 Million unemployed consumers!  I also know that they have never contacted me to ask me if I’m confident…. 

I’m really frustrated with what the price manipulators have been doing to Gold & Silver….  Just last week I had sent a note to good friend Rick, letting him know that Gold had returned to $2,000, but since then it’s been all one way… and that one way is downward….  I also have been following the trial involving the JPMorgan metals trader, for spoofing and other crimes…. There has been little to new news about the trial, and that leads me to believe that there’s some sort of plea deal being made, so that this doesn’t go to trial, and everyone finds out how JPMorgan manipulates metals prices….

Before we head to the Big Finish today, I wanted to mention that  I’ve been watching the Chinese renminbi rally for a month now, and nearly every day there’s a inching up of the value of the renminbi VS the dollar… I find this very interesting in that, what’s being talked about now is that we’ve entered into a cold war with China… I would think if that were truly the case, then the Chinese would be marking down their currency to spite the U.S.  There’s more to this story with the renminbi and intend to research it, that’s for sure, because this rally just doesn’t make sense to me, at this point of our history… 

To recap… The Currencies & Metals lost their early morning gains yesterday, and ended the day with losses…. Chuck just doesn’t get it that traders are so spooked by the PPT…. Come on boys & girls get some intestinal fortitude and stand up to the PPT! The Data Cupboard was basically empty yesterday with only a regional manufacturing report, that Chuck’s boycotting these days! 

For What It’s Worth…. Not as smart alecky as yesterday’s FWIW, but one that needs to be printed. This is an article about what to expect from the Fed’s Chairman Jerome Powell, as he speaks on Thursday this week, and it can be found here: https://www.cnbc.com/2020/08/24/powell-set-to-deliver-profoundly-consequential-speech-changing-how-the-fed-views-inflation.html 

Or, here’s your snippet: “History will remember Paul Volcker and Jerome Powell as standing on the opposite ends of the inflation canyon, with the former taking desperate actions to try to tamp it down and the latter expected this week to announce an unprecedented effort to crank it back up.

Volcker, the Federal Reserve chairman from 1979-87, ushered through a series of inflation-busting interest rate hikes that dragged the country into recession but won the fight against pricing pressures and spurred a powerful economic recovery. 


Powell, the central bank chief since 2018, is likely to detail a set of measures aimed at pushing inflation higher amid a coronavirus pandemic that has dragged the U.S. economy into one of its darkest hours.

While the average consumer might find it absurd to want to raise the cost of living, central bankers and economists see too little inflation also as a problem. It often reflects a slow-moving economy with a low standard of living. On top of that, the accompanying low interest rates give policymakers little wiggle room when crises happen and there’s a need to loosen policy.

That’s why Powell, who will speak Thursday during a virtual version of the Fed’s annual Jackson Hole, Wyoming, conference, will outline what could be the central bank’s most active efforts ever to spur inflation back to a healthy level. The speech is titled “Monetary Policy Framework Review” and wraps up a yearlong examination both among central banks officials and with the public, during a series of open events, on what policy should look like in the future. 

“The expectations are pretty high to get something meaningful on Thursday,” said Tom Graff, head of fixed income at Brown Advisory. “This is probably a historic speech.”

One phrase Powell is likely to use is “average inflation” targeting.

 Simply, it means that the Fed, which has pegged 2% as a healthy level, will let inflation run higher than that for a while if it has spent a considerable time beneath that level. The Fed’s preferred inflation gauge has stayed below that level for all but two years since the Great Recession ended in mid-2009.
It’s a mirror-image reversal to Volcker’s inflation-busting and sets the stage for a pivotal policy move.”


Chuck again…. See? haven’t I told you over and over again about Powell’s need for inflation?  And Gold can’t find a bid these days?  Now, that’s stranger than fiction folks…. stranger than fiction… 

Market  prices 8/25/20: American Style: A$ .7177, kiwi .6542, C$ .7576, euro 1.1830, sterling 1.3139, Swiss $1.003, European Style: rand 16.7825, krone 8.9292, SEK 8.7330,  forint 298.76,   zloty 3.7153,   koruna 22.0595, RUB 74.53, yen 106.45, sing 1.3684, HKD 7.7501, INR 74.12, China 6.9166, peso 21.90, BRL 5.6086,  Dollar Index 93.07,   Oil $46.76,   10-year .65%, Silver $26.58, Platinum $919.00, Palladium $2,209.00, and Gold… $1,929.19

That’s it for today….  A real thumpin’ put on the Royals last night, by my beloved Cardinals…. I forgot to mention yesterday that our Blues, bowed out of the Stanley Cup Playoffs in the first round this year, even with the delayed start of the playoffs, I think the Blues had a Stanley Cup hangover this year… I only saw them play one game in the series like they played last year on their way to the Stanley Cup Championship…. Probably very frustrating for the coaching staff….  Oh, well, time to get the golf clubs out! I also forgot to bring to your attention that there will only be 3 Pfennigs this week, as on my Tub Thumpin’ Thursday, I’ll be getting scanned once again….  I always ask for the first scan of the day, that way they can’t get behind….  But that means I have to be at the hospital at 6:30 AM, to drink my barium…. Oh boy! (That stuff always upsets my stomach!)  The late, great George Harrison takes us to the finish line today with his song: I Got My Mind Set On You….  I loved his solo stuff, and with the Traveling Wilburys, and we lost him way too soon….  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler