December 23, 2020
* The dollar rallies on Tuesday…
* But the rally sure smells like yesterday’s fish…
Good day… And a Wonderful Wednesday to you! I realized it this morning as I typed the date, that I’m usually already on vacation and I don’t recall the last time I wrote on December 23rd! So, you’ll have to help me through today, for this is unchartered waters for me! HA! Another new book arrived yesterday, it’s titled: Slanted, by Sharyl Attkisson, it’s about how the media became so slanted / biased and worthless in my opinion… I’ll save that one for the plane ride next week… Beegie Adair plays her piano and her trio does their version of the song: What Are You Doing New Year’s Eve? to greet me this morning…
Just what the heck was going on in the markets yesterday caught me by surprise, and I spend most of the afternoon looking for reasons why the dollar rebounded, Gold got sold, and Consumer Confidence was actually down? Now that’s a strange combination if you ask me! Why on earth would traders, investors, hedge funds, etc. pile into dollars, when Consumer Confidence weakened this month? Well, I think that might have a little to do with how the euro rose on the data print outcome, but then soon fell when the European Central Bank (ECB) announce new stimulus plans without lowering deposit rates further into negative territory. Traders were thinking that the ECB was due to go more negative with rates, and they were disappointed when the ECB didn’t.
Ok, upon further review… That makes no sense to me either! If I were a trader, and I saw that the ECB didn’t lower rates further into negative territory, I would say, “Bully for the ECB, and buy euros”, especially knowing that in the U.S. they saw existing housing sales decline last month, and Consumer Confidence weaken this month… But NOOOOOOO! That’s not what happened! I wanted to go outside and throws my hands to the sky, and yell, SERENITY NOW! But, it was a bit chilly out, so I just pretended to do that at my desk here in the basement…
Come to think of it, I don’t know if I ever told you this or not, so sorry if I did, but it was at this writing desk, in my basement, is where I started the groundwork for the old EverTrade Direct Brokerage Co. And had it ready to go to the NASD in Kansas City, for review and approval to open… So, besides the Pfennig which has been written here many times through the years, first when I was retired the first time in 1998… And now that I am officially retired since 2018…. Here’s my career in a nutshell… 5 years at Stifel Nicolaus, 1-year at RG Dickenson (Des Moines), 2 years at First National Bank of St.Louis, 14-years at Mark Twain Bank (where the Pfennig began), 2-years at Mercantile Bank (who bought Mark Twain Bank) and finally, 19 years at EverBank… with about 6 months of retirement in 1998… Before starting the brokerage company in my basement that year!
Ok, I know you didn’t open the letter today to read about my career stops! But I started down the rabbit hole of talking about my basement, and voila! I let my fat fingers take the conn!
So, traders, investors, hedge funds, and money takers, why on earth, when the U.S. dollar sports zero interest rates, and real negative rates when you figure in inflation, a printing press of dollars that’s running 24/7 these days, and no less problems with the COVID-19 virus than the rest of the world, would you step to the plate, and buy dollars yesterday? Or, maybe it wasn’t you that did the buying, maybe, just maybe, cause we’ll never know, it was the Plunge Protection Team (PPT) doing the buying once again…
So, the euro started the day up at 1.2242, jumped to 1.2252 on the Consumer Confidence news, and then fell to 1.2162 like in a New York Minute! And for this reason, I’m saying it was the PPT that came in and threw down the spikes in the road so the euro would get a flat tire running over them. For investors, traders, hedge funds, and money takers, don’t all trade at once during a day… Get my point here? And then with further proof of PPT buying, by the end of the day, the euro was back to moving higher and closed the day at 1.2192… Go figure, right?
But the overnight markets took the euro back down to 1.2160, and Gold is up a couple of bucks along with Silver who has gained 30-cents early this morning… I’m not getting any vibes from this overnight market as how today will go… I’m sure the boat load of data that’s coming out this morning will have something to do with how today goes!
To borrow a line from Styx, in the song Too Much Time On My Hands… it goes like this:
Is it any wonder I’ve got too much time on my hands
It’s ticking away with my sanity
I’ve got too much time on my hands
It’s hard to believe such a calamity
I’ve got too much time on my hands
And it’s ticking away, ticking away from me
With the dollar moving higher it affected the price of Gold… And Gold lost $17 on the day, with a price movement that looked a lot like the euro’s. at about 10:30 am Gold dropped from $1,870 to $1,860, in less then 30 minutes… One shot downward, and then Gold leveled out the rest of the day to close at $1,860.00… So, there was some fishy stuff going on here too…
So, the price of Oil took a hit too yesterday losing about 1.50%, and the $47 handle… It was just last week that the price of Oil had reached a $48 handle, but the news of a new strain of the Covid virus in the U.K. has really knocked the snot our of the price of Oil… You know, yesterday, I said what if there’s a new strain of the Covid virus that the vaccine doesn’t work against? I really wasn’t wishing that to happen folks, I was just throwing the thought out there… And then later in the day, I hear that Dr. Fauci, he who has been wrong on everything so far, said that a new strain from the U.K. may already by on our shores… So, let’s hope he’s as wrong on that as he has been on everything else…
Speaking of Fauci and Dr. Birx… Did you hear that Dr. Birx, is going to step down from her Covid team position because… Now get this… She made a big deal out of not having big Thanksgiving dinners with guests… And then she went and had one of her own! She’s been fielding so much flak on that so she’s stepping down… I guess she got the idea from Calif. Gov. Newsome, who mandated that people stay home and then went to a huge dinner party at a restaurant, no less, and partied without masks!
Ok, back to the markets… I’m really on edge right now… It’s a good thing I start my winter vacation tomorrow! So, Silver didn’t fare very well yesterday either losing $1.03 to close at $25.22, and had the same trading pattern as Gold, and euros… With the euro losing ground, that meant the other currencies would lose ground on the day too.. The Aussie dollar (A$) fell to .7517, from the .7562 it held in the morning… And the Petrol Currencies got waylaid once again because of the drop in the price of Oil…
Someone asked me in the Pfennig Replies box that if everyone is using their credit cards for purchases now, why would going to digital currencies be bad? And then I read a report that says the younger crowd, never, really carry cash….
So, I’ve been through this before, but here are the top three reasons that going digital would be bad for you, me, and the guy down the street with his house lit up like the guy on the Geico commercial!
1.The last of your civil liberties would be taken away from you… No longer would you be able to pay cash for something that you didn’t need for anyone to know about… I know my wife tells me that that would be no big deal to her, because she does nothing wrong… but that’s not the point dear… your freedom is being stripped away from you bit by bit by bit, and it all started with the Patriot Act back in 2001…
2. Banks would have a new way to generate income… Banking fees… Fee income is important to a bank when loan profits go down, and they’ve been down for some time now, As I told you above I’ve worked in banks for a very long time, so, I know this to be a fact… When loan profits fade, the higher ups call all the fee income departments and tell them to ramp up fee income…
3. And when the bank sends you a notice that they are going to begin to charging you “X” for having to change over to digital banking, and you get hot under the collar, and decide you want to change your bank, but then find out that all the banks are doing the same (nocollusion here folks, just walk away) and it won’t help you to move your balance to a different bank, then the light bulb above your head will come on, and you’ll say, I wonder when the next banking fee letter will come with a new fee…
So, I’ve got a pocket full of things that make digital banking bad folks, so don’t get me started again on that!
So, today is the day that the U.S. Data Cupboard goes all in on us with data prints… We’ll see, in this order.. the weekly Initial Jobless Claims, which last week were 885,000… the forecast for this week is 875,000, but I doubt that’s going to be correct. Then we’ll see Durable Good and Capital Goods Orders for November, followed by person Income and Spending for Nov. and to finish it up we’ll see Core Inflation for Nov. New House Sales will also print… I would think they went down due to the price increases going on in housing…
To recap…. It was one of those days when Chuck yells SERENITY NOW! As the dollar got bought by the boat load, in a very short period of time… PPT trading? Thatt’s how it appears to Chuck… Gold also was sold on Wednesday down $17 on the day, with Silver down $1.03… The craziness of the manipulated markets seems to go on forever doesn’t it? And I’m not just talking about Gold & Silver, I’m talking about all markets being manipulated… You can’t tell me that stocks with a P/E ration that’s beyond reasonable aren’t being manipulated by the cartel, I mean the Fed! You can’t tell me that bond yields at their all-time lowest aren’t being manipulated by the cartel, I mean the Fed… And so on…
For What it’s Worth… Well here’s another excellent article by Pam and Russ Martens of www.wallstreetonparade.com. You will recall them pointing out that the slush fund called the Exchange Stabilization Fund (ESF) got a boat load of funds in the last Stimulus Bill, and according to these great investigative writers, the ESF was a big beneficiary again! This article can be found in its entirety here: The Language Toomey Inserted into the Stimulus Bill Enshrines a $681 Billion Trading Slush Fund for Mnuchin with the NY Fed (wallstreetonparade.com)
Or, here’s your snippet: “The language that Republican Senator Pat Toomey inserted into the final stimulus bill (Consolidated Appropriations Act, 2021) appears below. It not only restricts the Federal Reserve’s ability to extend some of its current emergency lending programs that help small and medium size businesses and state and local governments beyond December 31 of this year (while leaving Wall Street bailout programs alive for at least another 90 days) but it also enshrines the autonomy of the U.S. Treasury Secretary to operate a massive slush fund – the Exchange Stabilization Fund (ESF).
Most Americans have never heard of the Treasury’s Exchange Stabilization Fund. It was created in 1934 to provide support to the U.S. dollar during the Great Depression. The ESF has grown from $94.3 billion in assets prior to Trump taking office to a balance of $681 billion as of October 31, 2020. As recently as March 31, 2007, the ESF had assets of just $45.9 billion.
But instead of turning over the full $454 billion to the Fed, Mnuchin turned over just $114 billion for the Fed’s emergency lending programs, as confirmed by the Congressional Research Service on December 17. Since what the Treasury Secretary does with the ESF “may not be reviewed by another officer or employee of the Government” according to its dodgy statute, the public has no idea as to what Mnuchin actually did with the balance of $340 billion in his slush fund from the CARES Act.
While there has been widespread media attention to Toomey’s effort to kneecap the Fed’s emergency lending programs by inserting language into the stimulus bill, there has been no mainstream media attention to Toomey’s effort to memorialize both Mnuchin’s and (potentially) future Treasury Secretaries’ ability to have a slush fund to intervene in markets. The Treasury Secretary has, effectively, become a Plunge Protection Team of one.”
Chuck again… It’s amazing that I’m not insane at this point folks… But here’s an early Christmas gift for you… If you need to read some market news while I’m on vacation, simply go to that website, I highlighted above and there’s a list of their articles there for you to read… Enjoy!
Market prices 12/23/20: American Style: A$.7550, kiwi .7071, C$ .7761, euro 1.2167, sterling 1.3417, Swiss $1.1228, European Style: rand 14.6260, krone 8.7278, SEK 8.3174, forint 298.07, zloty 3.7005, koruna 21.6700, RUB 75.32, yen 103.55, sing 1.3343, HKD 7.7526, INR 73.76, China 6.5447, peso 20.08, BRL 5.1361, Dollar Index 90.48, Oil $47.11, 10-year .92%, Silver $25.52, Platinum $1,010.00, Palladium $2,358.00, and Gold… $1,864.30
That’s it for today and until 12/31… but don’t forget to look for my annual Christmas Pfennig… when I made my appt. to get my teeth cleaned I wasn’t aware that my favorite dentist, Holly Ellis, was going to be on vacation! UGH! I told my wife, “but that’s why I go to the dentist to see Holly”… She said deadpan, “you can change your appt.”… Ah, the joys of knowing someone for nearly 50 years… Well, my beloved Mizzou Tigers couldn’t hit the side of barn with a basketball last night and but still won. I coached a 2n grade basketball team one year and they shot better than 21%!!!!! Notice I said “one year”… that was enough for me… Conference play begins in the new year… So good luck to SLU, and Mizzou… The college football playoffs have been announced, with Alabama playing Notre Dame, and Clemson playing Ohio State… And the winners of those games will play for the National Championship… pretty cool way they determine that nowadays… Remember the Old BCS? The grandkids are coming over today to bake Christmas cookies with their Mimi (Kathy)… That should be a riot, and I think I’ll take some videos of the action, while I’m here… Well, I’ve heard just about every smooth jazz Christmas song a few times this year, on the Pandora station… But that doesn’t stop me from listening to it all the time… The Stephen Kummer Trio takes us to the finish line today with ttheir version of: The Christmas Song… One of these days I’ll list my favorite Christmas songs… Songs like the Christmas Waltz, and so on… that’ll be fun… And fun and exciting times are what I hope you have this Christmas… And please be Good To Yourself… remember don’t forget about my annual Christmas Pfennig that will show up in your email box…
Chuck Butler