The Currencies & Gold Team Up On The Dollar!

April 14, 2020

* Gold has taken off for the stars…. 

* The Dollar Index drops from 102 to 99…. 

Good Day… And a Tom Terrific Tuesday to you! Well, my Zoom meeting with my heart doc. didn’t take place yesterday as planned… I guess no one showed up in his office to work! Sign of the times, I guess, they’ll call to reschedule at some point… I’ve been on my new chemo for 5 doses and I’m already wanting to sleep all the time…. UGH! I have a mea culpa today, some more thoughts on where all this is going, and more, so stay tuned! But first…. Alice In Chains greets me this morning with their “unplugged” version of their song: Down In A Hole….

Which is exactly where a lot of citizens of the U.S. are these days…. I got to thinking about those stimulus checks…. Like I told Dennis Miller’s ( readers in an interview we recently did, “what are the citizen’s going to do with the money? Maybe pay some bills but that doesn’t really help the economy right now, they need to spend it, but who’s open?” Well, add to that my latest gloomy, put you in a bad mood, thought…. Citizens will get up to $1,200 each, so a household could see $2,400 (see that math I just did in my head? Amazing!), and that’s all well and good, but…. Think about the Corporations getting bailed out for their years of loading up on debt, and buying back their respective stocks, instead of putting the money into the corporation (CAPEX)…. And then the icing on my “gloomy, put you in a bad mood, thought” is the very idea that Wall Street Casino Banks are getting BILLIONS of dollars! That’s Billions with a Capital B!

Ok, how was that to start the day? Get your blood flowing, heart rate and pulse up, and now you’re ready to take on the world? I sure hope so, because mine is, just from thinking about that and typing it! Now, you’re wanting something good to read about, to balance this out, right?

Well, how about Gold turning the $7 downside in the early morning trading into a $18 gain on the day, which makes the total turnaround $25! Yes, Gold pushed past the short Gold paper trades yesterday, and traded through the $1,700 figure, to close the day at $1,717!!!!!! Onward and upward as my good friend, and new grandpa, Frank Trotter, would always tell me when I would enter his office in a foul mood, with something on my mind, only to leave forgetting what I had gone in there mad about! We called these Jedi Mind Tricks…. I could use some of those Jedi Mind Tricks right now with all this stuff going on….

Think about that for a minute before we go on…. Since March started, and came in like a lamb…. We had the Saudis and Russians bring their dispute on production cuts to a standstill, which caused a HUGE chunk of the Oil Price to slip away…. Then we had the beginnings of shut downs, Spring Training, then restaurants, bars, churches, the beach, and then pools, and any other place you can think where people gather, shut down…. Shoot, they even shut down tennis courts…. Now that’s a sport that practices social distancing, right? Didn’t matter, shut down! In the 70’s the band April Wine had a song where they would say… Shot…. down…. That’s what all this feels like… the economy is… Shot… Down!

The dollar was busy losing ground to Gold yesterday, and the currencies traded flat pretty much for the day, with the Aussie dollar (A$) getting in some body shots to the dollar bugs…. I was thinking about the A$’s move yesterday, and wondered what was behind this move, given that the Aussies have opened up their printing press too…. Well, again this goes back to the “look” that the U.S. has now and their pledge to shepherd the reserve currency of the world with care…. It’s not looking like they’re holding up their end of the bargain, for getting the ability to print at will, get commodities cheaper, have Oil priced in dollars, and so on….

In the overnight markets, the dollar was sold lower. It looks like a tag team wrestling match…. yesterday, it was Gold’s turn to blister the dollar, and then they tagged the currencies and overnight it was the currencies to blister the dollar…  This could very well turn out to yet another false dawn with regards to a sustained selling of the dollar, but, what if it isn’t? The Dollar Index which about 10 days ago was 102 and change, and this morning it’s barely hanging on to 99….  

I’ve been waiting for the strong dollar trend to end for good, for the last couple of years, and to wet my whistle, the currencies would go on these mini-rallies, VS the dollar, only to get everyone on board that the strong dollar trend was over, and then, poof! The rally was over, and the dollar bugs were back on top of the hill doing a dance to rub it in….  

I read this morning that our friends (NOT!) at OPEC plus, came to an agreement on production cuts for Oil, but does it really matter when there’s little to no demand right now worldwide? The Russians get it, they see there’s no demand, so why cut the production to hopefully raise the price when it doesn’t matter right now… They tried to make the Saudi’s see it their way, but that didn’t happen, and they finally gave in…  So the OPEC+ group of nations will cut oil production by 9.7 Million barrels a day…. The “plus” countries include: Russia, and Mexico, who by the way had been the last fly in the production cut plan’s ointment…. Mexico? Really? Oh well…. We carry on…

Speaking of Oil…. I was reading my weekly edition of Things That Make You Go Hmmmm…. From Grant Williams yesterday (it arrived Sunday night), You have to pay for a subscription, but to me, it makes sense…. And in the group of letters he had in there was an article titled: CORONAVIRUS MAY KILL OUR FRACKING FEVER DREAM: BETHANY MCLEAN

Got your attention? Well, she goes into how the Shale Producing Companies were so badly in debt before the COVID-19 virus came along, and now they don’t have any production to help…. I read some things here that I always “felt were true” but now I know that they are! Our dream of being energy independent is floating out to see folks… Sort of like those Viking funerals where they set the boat on fire and send it out to sea… I’m just telling you these things to back up what I’ve told you about the how the Rig counts were falling, and the Shale Oil production was falling too, weren’t just me spouting off about something I had no business spouting off about!

Why does everything in this country have to have a Political slant to it? When the first stimulus bill, that was supposed to get money in the hands of people who had lost their jobs due to the economic shutdown of the economy, as the pandemic spread, we had Political fighting back and forth, name calling and finger pointing. The bill finally went through, but was packed with all kinds of Pork it’s crazy!  And now the thoughts that they didn’t do enough for the people with the first bill, they’ll have some political wrangling and wrestle with each other over it, before it comes out looking nothing like it was supposed to…. 

I’m going to harp on this thought over and over until the cows come home folks, but I just don’t see why Corporations get to be bailed out by taxpayers, after years of neglect to their own respective balance sheets…  Reminds me of the Aesop fable about the ant and the grasshopper…  the Ant is the taxpayer, saving and stretching their earnings, and the grasshopper is the Corporations, spending their earnings and then borrowing some more to buy back their stocks, and when the fit hits the shan, they come back with their tails between their respective legs, and beg for a bail out….  It’s downright shameful that 1. they do this, and 2. that we let them! 

I’ve said this for years, well since 2009, and I’ll say it again until they colonize Mars, and that is…. IF…. we had not meddled in the economy in 2008, with bailouts, but with support so that the financial system didn’t fail, that the years 2010, and 11 might have been pretty ugly, but, then all the excesses of the years that the Fed didn’t allow the economy to get rid of them, would be gone, and we would have been building an economy that was stronger, and without all the added debt…  

Then IF real smart people would have figured out that we needed to reintroduce the Glass Stegal Act and not allow the Large Brokerage Houses to buy Banks, and become Casino Banks, many would things be different today…. And the Covid-19 virus, shutdown wouldn’t look like it could damage the economy for years to come, like it does now….    I’m just saying…. 

As I told you yesterday, the U.S. Data Cupboard won’t have anything for us to really look to until tomorrow….  So, we can simply move along here for these aren’t the droids we’re looking for….. 

Well…. One of my first bosses in the banking business, Ed Bonawitz, sent me a note yesterday, with a link to the fact check organization that debunked the claim by David Stockman that the House gave themselves a $25 million raise in the stimulus bill…. So, now I’m at a loss as to whom I should believe, David Stockman, the former budget director for President Reagan, or the fact check folks? I guess the fact check folks don’t have a book to sell like Stockman does, so I’ll say sorry to the House folks for saying that they took a raise, but I won’t say I’m sorry for all the other things I said about them! 

To recap….  Gold took off for the stars yesterday, crossing the $1,700 figure on the way, then tagged the currencies in the overnight markets, where they took their turn blistering the dollar. The A$ is really moving higher these days, and that has Chuck scratching his bald head, but then when you think of what the U.S. has done to mar the dollar, he sees the light….  Remember the ant and the grasshopper?  Well, believe it or don’t, but Chuck weaves that fable into the letter this morning…. 

For What It’s Worth… I was going through my email box this past weekend, and noticed an email that I must have missed reading. It was from longtime reader Bob, who sends me stuff all the time, and this one was well worth the read, as it was about a run on a credit union in Baltimore a week ago, and it can be found here:

Or, here’s your snippet: “The evolution of panic hoarding started with 3M N95 masks, then hand sanitizers, non-perishable foods, guns and ammo, and now cash?

A video surfaced on Instagram on Saturday, showing a possible bank run in Baltimore City at the MECU Credit Union, located at 2337 E Northern Pkwy.

The area is considered low/middle class working families (predominantly African American community). The video shows a large line of cars on Saturday afternoon and a line at the ATM. People weren’t cashing in their paychecks because many people were laid off, as we noted, more than 14 million people in the last several weeks have lost their jobs across the county, and what we could be looking at is the beginnings of a bank run.

As soon as the National Guard rolled into Baltimore City – many folks asked themselves – is this a revisit of the Freddy Gray unrest back in 2015,” said Teresa Davis, owner and operator of Teresa Davis Productions.

Davis said residents are going to the local banks because they fear banks are going to fail, and unrest could be nearing.
“They want their monies out,” Davis said, adding that some people in the community have been watching their 401ks crash, and others have been watching the news that a recession could be imminent.
Last month, the smart money in Mid-Town Manhattan and Hamptons were withdrawing as much cash as they could, with at least one bank running out of $100 bills.”

Chuck Again… Coming to a bank near you! As I said last week or sometime I don’t recall exactly when, “when the Fed cuts rates and they go negative, people will attempt to get their cash out of the bank rather than have it there for the bank to charge them for holding it…. This is just a precursor to what we will see soon…. Oh, and when that happens…. Pandora’s Box of digital currencies will be thrown at us…. More on that some other time….

Currencies today 4/14/20 American Style: A$.6405, kiwi .6095, C$ .7195, euro 1.0965, sterling 1.2565, Swiss $1.0395, European Style: rand 18.2478, krone 10.2878, SEK 9.5553, forint 319.45, zloty 4.1428,    koruna 24.4950, RUB 73.44, yen 107.30, sing 1.4155, HKD 7.7509, INR 75.67, China 7.0490, peso 23.55, BRL 5.1437, Dollar Index 99.07,   Oil $21.87,    10-year .75%, Silver $15.56, Platinum $775.76, Palladium $2,245.50, and Gold… $1,722.81

That’s it for today…. Lot’s of things to think about today, folks…. Things will never be the same, I’m afraid….  Your favorite restaurant? It might not come back… Your favorite Bar? It might not come back…  You don’t just shut down the biggest economy in the world, and then keep it shuttered too long, and expect it to come back to the way it was…. It just doesn’t happen like that… I’m just saying…  Game 7 of the 1982 World Series was on the TV last night…. I was at that game. One of my fave pictures on my wall at my writing desk is of me holding my son Andrew, at the World Series parade that took place the next day in 1982….  Great memories! OK…. it’s time to go, I’m late, I’m late! Cat Stevens takes to the finish line today with his song: Moonshadow….  I’m being followed by a moonshadow….   I hope you have a Tom Terrific Tuesday! And…. Please Be Good To Yourself! 

Chuck Butler