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James Bullard: “We’re Not Out Of The Woods!”

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A Pfennig For Your Thoughts June 22, 2020 * Currencies give back their gains VS the dollar* Gold heads to ,750, will it be met with resistance? Good day… And a Marvelous Monday to you! What a day Father’s Day was for me yesterday, as my kids came over and did everything as far as preparing our meal, cleaning up, picking up all the paraphernalia that goes with young kids and a swimming pool, and then we gathered for a two pictures, one of me and my 4 grandkids, and one with me and my 3 kids… Darling daughter, Dawn, had wanted a single picture of the kids and grandkids together, but the best laid plans of mice and men took over… And it turned out to be a beautiful day with no rain during the day, as was forecast by the weather people! Our trip to Columbia on Saturday, turned out to be

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A Pfennig For Your Thoughts

June 22, 2020

* Currencies give back their gains VS the dollar
* Gold heads to $1,750, will it be met with resistance?

Good day… And a Marvelous Monday to you! What a day Father’s Day was for me yesterday, as my kids came over and did everything as far as preparing our meal, cleaning up, picking up all the paraphernalia that goes with young kids and a swimming pool, and then we gathered for a two pictures, one of me and my 4 grandkids, and one with me and my 3 kids… Darling daughter, Dawn, had wanted a single picture of the kids and grandkids together, but the best laid plans of mice and men took over… And it turned out to be a beautiful day with no rain during the day, as was forecast by the weather people! Our trip to Columbia on Saturday, turned out to be great! We did all the things we wanted, ate the food we wanted, and had many laughs… Thanks to sons Andrew & Alex for putting that together, and thanks to Grace, aka Boss Taco, for driving us! Van, the man, Morrison greets me this morning with his classic rock song: Brown Eyed Girl…

Well, what appeared to be a mini-rally that could potentially turn to a multi year selling of the dollar to begin last week, ended the week in the shambles as once again, another false dawn was upon us, and the dollar bugs are back in control… You know something… I used to be able to tell when things were going to change for a long trend, just by the fundamentals, but traders don’t use fundamentals any longer, and they certainly don’t use the charts either! Instead, as I’ve said many times in the past couple of years, it’s all about sentiment… Trader sentiment is all that matters any longer, when it comes to deciding when a long term trend will begin or end. And since I’m not a mind reader, per se, I’m as worthless as a pay toilet in a diarrhea ward, these days… And that’s another reason why I believe the currencies are dead men walking…

Gold on the other hand is a bird of a different feather, and here fundamentals still play a big part in determining which direction Gold goes… That and the whims of the price manipulators.. Gold gained $20.90 on Friday, to close the week at $1,743.80… There are so many fears out there right now that we’re about to slide right back into another wave of the pandemic, and that has Gold pushing the envelope to cross the $1,750 level that I believe and I could be wrong, but I believe that is the level in which Gold will start to move higher again, after crossing $1,750 and holding that figure.

We’ve seen Gold climb toward the figure of $1,750 a few times in recent trading sessions, only to be knocked back down by the price manipulators, who, must see what I’m seeing with the $1,750 level… Gold is going to test the waters of $1,750 today, as it’s up $3.50 in the early trading… Which means that at this moment Gold is within $3 bucks of passing $1,750… Will the price manipulators knock it back down once again, or will this be move we’ve all been waiting for?

Well, I did a lot of reading on Friday… And one thing that I kept seeing was that U.S. citizens are falling way behind on their house payments, rents, student loans, auto loans, etc. May’s percentage of non-payers of house payments was larger than April’s! Of course, there’s no worry that these people will be foreclosed on… I’m sure the Gov’t will come up with some sort of plan to allow them to keep missing payments until the pandemic is over, which if all the fears come true, and we are bound to see a second wave of the pandemic, could mean that it would be quite a few months that the lenders don’t receive their payments… That’s a scary thing to think about folks… Because if the lenders don’t receive payments, then the mortgage bonds these loans were rolled into, will begin to default…. Uh ,Oh… spaghetti O’s

And guess who owns a bulk of those mortgage bonds? Pensions… As if Pensions needed another hickey to go with the ones they already have!

You know what I didn’t read about on Friday? All those economists that said that the recession the U.S. economy is in, would be V-shaped… I doubt that they’ve all given up the ship on that thought, but the stragglers have to feel as though they would be opening mouth and inserting foot!

Another thing that I find interesting is that the Fed seems to be pulling in the reins on their alphabet soup listing of programs to buy troubled assets… The Fed’s Balance Sheet for the week ending June 17th, had actually shrunk by $74 Billion… So, what does this information mean for the stock jockeys, and Corporations? Well, one week doesn’t make a trend, but the overall feeling here is that the Fed IS pulling in the reins and that would be a bad thing for the stock jockeys and Corporations… I’m just saying…

Do you think that Fed heads see the writing on the wall, and they don’t want to be stuck holding worthless paper? Ok, we’re giving the Fed Heads more credit than they deserve! I told you before about a cartoon, that makes me laugh out loud… It’s of the three blind mice with shades on, and walking canes, and on their shirts it reads Fed Reserve… I don’t know of anyone or anything that best describes the Fed heads than that!

Speaking of holding worthless paper… I was reading my fave letter last night, Things That Make You Go Hmmm… by Grant Williams, and Grant did a big write up on just how ridiculous all this buying of a stock of a company that’s filed bankruptcy… But the stock jockeys keep piling in on the stock, that the company itself says in their fine print, that the stock could end up was worthless paper… Talk about stranger than fiction!

You know, I could really go on and on this morning regarding the missing debt payments by Americans… The way I see it, is people are missing their loan payments and instead spending their money on buying stocks… But I’m going to pass on carrying on regarding this, because, I know it would just get me in a tizzy. I’ll save my thoughts on this for another day when I’m on a roll and don’t care about going into a tizzy!

Well Lola was back in the news on Friday last week… For all of you new to class Lola is what I call Goldman Sachs, because what Lola wants, Lola gets, it’s usually that say for Goldman Sachs… So… Did you hear that Lola raised their outlook on the price of Gold? Basically, because of their views of currency debasement and the problems for the economy due to the pandemic, they raised they raised their three, six and 12-month Gold price estimates to $1,800, $1,900 and $2,000 per ounce from $1,600, $1,650 and 1,800 per ounce, respectively.
I guess Lola believes in the $1,750 level being the launching pad for a higher Gold price, like me!

Last week ended with St. Louis Fed president, James Bullard, speaking… So I checked it out because Mr. Bullard can, at times, say things that make you go Hmmm… But on Friday, Mr. Bullard became our new “Mr. Obvious”, when he said, “I definitely don’t think we’re out of the woods,” said St. Louis Fed President James Bullard.
Really? you think? What gave it away, Mr. Bullard, please enlighten us! And then I thought, maybe, just maybe, cause you never know, James Bullard is a Pfennig reader? And he gets all his ideas about the economy from me? HAHAHAHAHAHAHA! As if!

The U.S. Data Cupboard is really lacking this week… I just don’t like weeks like this when you have search and scrounge for data prints… Today’s Cupboard has the Chicago region manufacturing index, and Existing Home Sales… So, noting that will move the markets, that is unless Traders change their minds on something!

To recap… The currency rally ended with a thud last week, but Gold continues to take steps toward the $1,750 level… Lola upped their forecasts for Gold to much higher levels… Americans are missing their loan payments, from everything like home loans, student loans, auto loans, and personal loans… Chuck points out something that most people wouldn’t think about as a consequence of all home loan payments not being made.

For What It’s Worth… I really get ticked about some things and some things I just don’t care because there’s nothing I can do about them. This is one of those cases where I really get ticked off reading stuff like this, and so to spread the joy, (sic) I thought it best to use it as the FWIW article today… This is the wonderful letter: Wall Street On Parade, and from their website. No hints to what this is about you’ll have to check it out! But you can find it here: https://wallstreetonparade.com/2020/06/as-goldman-sachs-and-jpmorgan-face-criminal-probes-barr-fires-top-prosecutor-tries-to-replace-him-with-banks-former-lawyer-jay-clayton/

Or, here’s your snippet: “Shortly after 9 p.m. last evening, the U.S. Attorney General, William Barr, stunned prosecutors in the Southern District of New York with the announcement that their boss, Geoffrey Berman, was stepping down as U.S. Attorney in that District and would be replaced with the sitting Chairman of the Securities and Exchange Commission, Jay Clayton, who lacks even a shred of criminal prosecution experience. What Clayton does have is a lot of experience representing Wall Street’s largest banks, like Goldman Sachs and JPMorgan Chase, both of whom are currently under intense criminal investigations by the Justice Department. Clayton was a former partner at Wall Street’s go-to law firm, Sullivan & Cromwell, which is currently representing Goldman in the criminal case and representing JPMorgan in various matters.

Geoffrey Berman, U.S. Attorney for the Southern District of New York
The breaking news last night went downhill from there. Several hours after Barr’s announcement, Berman announced that he had not resigned from his job and had no intention of leaving his post until his replacement had been confirmed by the U.S. Senate – which could take months. There is also no assurance that Clayton would actually be confirmed, since some Republicans and Democrats believe that Clayton has been a lapdog for Wall Street in his current post.

Even more problematic, Clayton’s family has ties to an opaque company called WMB Holdings, described by David Dayen in The Nation magazine like this:
“This company and its affiliated partners (Delaware Trust Co and CSC) are conduits for creating shell corporations and other sketchy vehicles used in tax evasion and money laundering. Public Citizen found apparent links between these companies and Mossack Fonseca, the notorious Panamanian law firm at the center of the Panama Papers scandal.”

Chuck Again… I personally think that all of government is infiltrated with ex-Goldman Sachs employees, and could be the reason we as a country run to help Wall Street every time Wall Street gets their tail caught under the rocking chair!

Market Prices 6/22/20 American Style: A$.6867, kiwi $.6448, C$ .7362, euro 1.1210, sterling 1.2392, Swiss $1.0522, European Style: rand 17.4165, krone 9.6529, SEK 9.4340, forint 309.11, zloty 3.9706, koruna 23.7958, RUB 69.39, yen 106.93, sing 1.3952, HKD 7.7498, INR 75.79, China 7.0713, peso 22.54, BRL 5.3117, Dollar Index 97.46, Oil $39.50, 10-year .69%, Silver $17.84, Platinum $821.04, Palladium $1,915.89, and Gold… $1,747.50

That’s it for today… Not as long as usual for a Monday, but I wasn’t sitting around reading articles all weekend! Well, I received some good news last Thursday. The wound center doctor proclaimed that my wound on my left leg was “healed”! Now I need to keep it from swelling and splitting open again, and I didn’t do a good job of keeping the swelling down this weekend, so I need to work on that starting now! Little Evie was the star of the day yesterday. She just makes me smile, and laugh… I love it when she’s here! Well, Usually I would be telling you that I had been left all alone again, as my wife is traveling. But… not this time! Alex is here, although he works during the day, but I least I have someone to talk to and cook dinner for! Ok… time to get my feet up! Deep Purple takes us to the finish line today with their song: Smoke On The Water… a classic rock song for sure! I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

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