The Dollar Bugs Dance In The Streets Once Again…

February 10, 2020

* Currencies give back their gains after jobs report… 

* Jerome Powell to testify to Congress twice this week! 

Good Day… And a Marvelous Monday to you! A nice warm weekend down here in the south, but with lots of wind, making it difficult to be at the beach… I know, I know, these are not 3rd World problems! Our Blues lost again Saturday night after leading 2-0… UGH! They’ve gotten into a real rut, and need to pull themselves out of it soon! My beloved Missouri Tigers beat Arkansas in basketball on Saturday, while the St. Louis Univ. Billikens lost to Dayton… We celebrated the Super Moon rising up over the ocean last night with some condo friends… A fun time was had by all! I have to go north again this morning (every Monday and Thursday for the next month), so this should be shorter than usual… But I can’t promise!

Well, I didn’t hear a knock on my door, or receive any threatening emails or calls from the Gov’t to stop my attack on JPMorgan… But just to be sure, I don’t, I’ll not talk about them today, instead I’m going to take a shot at the Fed… The Fed’s repo market operations saw the bidding on the money the Fed was offering over subscribed , twice last week… And not by a buck or two either… I’m talking Billions of dollars that the banks said they needed… On Tuesday, the Fed offered $30 Billion and the banks wanted $59 Billion and change, and the same thing happened on Thursday… This is getting way out of hand folks… Something’s got to give, and to me I would think it’s the dollar, but then I’m just a country bumpkin, and not some Ivy league, slick backed hair, hot shot economist… Besides, I don’t have any hair!

The Fed Chairman, Jerome Powell, is going to speak to speak to the Senate Banking Committee on Feb. 12 (Wednesday) this week to answer a list of questions the committee sent to him regarding the repo operations… I’ll betcha one shiny quarter right here, right now, that no one on the banking committee demands to know who is receiving all this cash…. So… he’ll go there, and dance around with his answers, that he’s now had a few days to rehearse!

Well, all these shenanigans with the Fed and the Casino Banks, hasn’t hurt the dollar yet… And on Friday last week, the dollar rallied and took back the lost ground from the previous day. On Wednesday when I last talked to you, the euro was 1.1023, and the A$ was .6759… And by the close on Friday the euro was back to 1.0965, and the A$ .6690… Friday was the Jobs Jamboree blow the expectations out of the water, and added 225,000 jobs according to the BLS… wink, wink… The Jan. Unemployment Rate rose to 3.6% from 3.5% in December.

That news sent the dollar bugs dancing in the streets… A little later in the morning on Friday, Consumer Credit (read debt) for December printed, and showed an increase to $22 Billion from $12 Billion in Nov. Now that used to be the kind of news that would have rocked the dollar to the core, but not any longer… We’ve all become Comfortably Numb, with debt figures, now haven’t we? Well, maybe not you and me, but traders sure have… You know, when I began my career, in the brokerage business I used to talk to the bond traders all the time… Those guys had the intestinal fortitude to say when things didn’t look right, and would show you with trades to reflect their feelings… Not any longer… Every market is manipulated… What you don’t think the stock market is manipulated? Oh, Please! What do you think the Fed’s Repo system is doing? What do you think the Fed’s rate cuts are doing? And tax cuts are doing? They all have their hands in the cookie jar of stock manipulation, folks…

Gold, on Friday gained a whopping $3 and some change… But this was after gaining $9 on Thursday, so at least some of the ground Gold lost last week when it got it’s price engineered downward. I wonder how many people got their dander’s up over the article I gave you to read on Wednesday last week from Pam and Russ Martens of Woll Street On Parade? I know I did! OK, seriously, who uses the term “gets one’s dander up” any longer? I guess an old fogey like me, that’s who! HA!

The U.S. Data Cupboard is lacking data prints for the most part this week, and we won’t see real economic data until Friday, when January Retail Sales and Industrial Production and Capacity Utilization print… In the old days, the dollar would get punished for weeks of no real data like this, but in today’s world of opposites… Well… you know…

To Recap… The dollar rallied strongly on Friday after it was announced that the U.S. created 225,000 jobs in January… Smoke and mirrors folks… I’m just saying… The currencies gave up most of the ground they had gained last week, on Friday. Gold, however, gained $3 and change, that could be added to Thursday’s gain of $9… Chuck is surprised that he’s not received a letter from the Gov’t telling him to back off JP Morgan… So, he went for the Fed’s rapidly reducing credibility today!

Before we head to the Big Finish today…  WOW! Talk about putting a smile on my face! Saturday morning, my former colleague at Mark Twain Bank, Neil George, sent me a note giving me congrats on being picked up by Barrons… Barrons? WOW! Apparently they like what I said last week about the U.S. not making the grade with shepherding the reserve currency of the world… For those of you who missed class that day, and want to see what Barron’s printed, that was originally in my Pfennig, here you go: “By having the reserve currency of the world, the U.S. is supposed to be above all others at shepherding their economies and balance sheet to keep the currency strong…

“The report card on the U.S.’s efforts to shepherd their economy and balance sheet to keep the reserve currency strong, is not a good one, folks… The U.S. current debt stands at more than $23 Trillion, and the Unfunded Liabilities are $127 Trillion… Add those together… that’s how well the U.S. has done folks… If I were the teacher they would get a hard F! But that’s not all the debt we have in this country… Corporate debt is $15.5 Trillion, or 74% of GDP…. State and local debt is $1.6 Trillion, and Consumer debt is $13.86 Trillion… This is really bad folks… so go ahead and think the dollar is going to remain strong forever… One of these days, all this debt is going to come back and bite the dollar in the rear.”

Neil tells me it was in Wednesday’s Barron’s in the market section, page 11…   I was unaware that Barron’s read the Pfennig! WOW!

For What It’s Worth…  There are so many articles about the  repos, the debt, the presidential campaign, and so on today… So, I reached into my bag of tricks and came out with this little ditty…  I told you above that the Consumer Credit (read debt) had catapulted to $22 Billion in December, right? Well, this article tells the story about how the number got so high, and it can be found here:

Or, here’s your snippet: “Well, we were right again: the answer was revealed on Friday afternoon when the Fed reported the consumer credit change for the last month of 2019, and of the decade… and it was a doozy.
With analysts expecting a $15BN increase in consumer credit, the actual print was a whopping $22.1 billion, bringing total consumer credit outstanding to a new monthly all time high of $4.2 trillion.

However it was the composition of this number that sparked raised eyebrows across Wall Street, because while consumers added a rather subdued $9.4bn in non-revolving credit, i.e., auto and student loans, it was the $12.63 billion surge in revolving credit that explained not only November’s modest drop in credit card debt, but the record holiday spending in 2019, which – as we now know – was to a record extent thanks to credit card debt. In fact, as the chart below shows, it was the biggest one month increase in credit card debt since 1998! 

And so, for yet another month, Americans sank ever deeper in debt just so their obsession with purchasing things they don’t need nor cad afford – obviously – can be satisfied. Although in a world in which central banks and politicians now openly encourage excessive spending and living beyond one’s means, who can blame Americans for doing just as all monetary and fiscal officials demand of them…”

Chuck again… Same-o, Same-o, as far as I’m concerned, no one ever learns a lesson, and repeats the same mistakes over and over again, thinking that “this time it will be different”…  

Currencies today 2/10/20 American Style: A$ .6691, kiwi .6405, C$ .7521, euro 1.1050, sterling 1.2918, Swiss $1.0226, European Style: rand 15.0180, krone 9.2376, SEK 9.6548, forint 306.29, zloty 3.8929,   koruna 22.8417, RUB 63.78, yen 109.80, sing 1.3887, HKD 7.7653, INR 71.27, China 7.0000, peso 18.74, BRL 4.3186, Dollar Index 98.63, Oil $50.31, 10-year 1.57%,  Silver $17.79, Platinum $974.30, Palladium $2,368.26, and Gold… $1,571.89

That’s it for today…  In the famous words of Mike, moon man, Shannon, “it’s a beautiful full moon tonight, I hope it’s a full moon where you are”…  I hope you got a chance to see the Super Moon/ Snow Moon last night, it’ll be in the sky again tonight…  Cardinals Pitchers and Catchers report on Wednesday this week, full camp on Friday, and the first spring training game will be next Saturday, the 22nd…  It’s like the 22nd of December for me!  It’s so close I can almost taste it!    Let’s get those Blues back on a roll! The Eagles takes us to the finish line today with their early song: Ol’ 55…  “Well my time went so quickly, I went lickety splitly, out to my Ol’ 55” I hope you have a Marvelous Monday and please Be Good To Yourself!

Chuck Butler