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Where’s The Mousetrap?

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A Pfennig For Your Thoughts January 16, 2020 * Currencies continue to inch upward on Wednesday…* Chuck & Dennis talk… that’s not a good thing for the Fed! Good day… And a Tub Thumpin’ Thursday to you! It’s been awhile, with the holidays and vacations, since I wished you a Tub Thumpin’ Thursday! But here I am… I’m ready to rock you like a hurricane! I could get in trouble down here saying that “h” word… They’re very sensitive about that here on the east coast! Well, I made my way to the barber yesterday for a head and face shave… It was not what I expected the experience to be, but I got what I came for, so no problemos! I had never had a barber shave my face before… I like it and will return on a regular basis! The band Montrose greets me this morning with their song: Rock Candy… The

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A Pfennig For Your Thoughts

January 16, 2020

* Currencies continue to inch upward on Wednesday…
* Chuck & Dennis talk… that’s not a good thing for the Fed!

Good day… And a Tub Thumpin’ Thursday to you! It’s been awhile, with the holidays and vacations, since I wished you a Tub Thumpin’ Thursday! But here I am… I’m ready to rock you like a hurricane! I could get in trouble down here saying that “h” word… They’re very sensitive about that here on the east coast! Well, I made my way to the barber yesterday for a head and face shave… It was not what I expected the experience to be, but I got what I came for, so no problemos! I had never had a barber shave my face before… I like it and will return on a regular basis! The band Montrose greets me this morning with their song: Rock Candy…

The currencies continued to inch higher during the day yesterday, taking Gold & Silver along for the ride that featured selling of dollars. Not by a huge amount, but the rally in the currencies was something that hadn’t been seen in over a week… The euro pushed past 1.1150, and the Aussie dollar (A$) found itself ahead of the 69-cent handle…

Gold’s rally yesterday stopped the bleeding that was caused by a removal of the threat of a WWIII. I was really thinking that Gold could give back all the gains it made while geopolitical tensions were raised by all the saber rattling. But it didn’t stopping $20 short of giving them all back, so bully for Gold! Besides, the U.S. and China can sign a trade treaty, the saber rattling my die down, but is the need for a safe haven no longer in vogue? I don’t think so folks… Before I get into a discussion about the state of banking here in the U.S. I want to set down a challenge… Go out and buy some physical Gold (or Silver) and then demand immediate delivery of your metals… This would go a long way toward shutting down the paper trading operations…

Palladium continues to move higher and higher. Palladium is in rarefied air at this point trading this morning at $2,380! WOW! Every day, I look at Palladium with wonder, and think… “That should be Gold making those moves”… I’m just saying…

I had a long conversation with good friend, Dennis Miller, yesterday… For those of you wondering how he’s faring with his cancer treatments, he’ doing just fine! Dennis and I were trading stories on JP Morgan… Yes, the same firm that’s already had 3 felony charges go against them, and a RICO investigation ongoing! So, with that kind of history, they sure seem to be an easy target, right? Well, I’ve always had a thing against them for being at the head of the table of price manipulators in Silver and Gold… They weren’t always the biggest price manipulator on the street, but back about 16 years ago, Bear Stearns held that title… But when Bear Stearns went under, JP Morgan/ Chase bought their trade books, and a monster was created…

And the problems go much deeper folks… this from Wall Street on Parade (www.wallstreetonparade.com) “For starters, JPMorgan Chase is one of the largest shareholders in the New York Fed. Yes, each regional bank of the Federal Reserve is privately owned by their member banks, the same banks being “supervised” by that regional bank. If that sounds like an insurmountable conflict of interest, it is.”

And then this is the biggest incestuous thing I’ve ever heard of… Sit down for this one folks… “While the public outrage was playing out, William (Bill) Dudley was the President of the New York Fed. Wall Street On Parade broke the story that Dudley’s wife, Ann Darby, was receiving approximately $190,000 per year in deferred compensation from JPMorgan Chase, an amount she was scheduled to receive each year until 2021.”

Chuck again… I just shake my head in total disgust folks… Longtime readers may recall me going bananas about how blame was being thrown about by the different parties, but in my opinion, it was the lack of supervision of the banks that the NY Fed is responsible for that allowed things to get so far out of whack that we had to go through the Financial Meltdown, in which Trillions of dollars were funneled from the Fed to the Banks, secretly I must add….

I bet at this point, you’re wondering, what on earth is stopping Congress from stripping the Fed of this ability to print dollars and bail out whom they choose to bail out? I don’t know the answer to that question, as it remains a very BIG unknown in our lives, that’s for sure! I think I know, but will let that sink in and massage my brain for a few days, and see if it comes to me…

OK. I’ve got to stop there! I could feel my blood pressure rising, and I can’t have that before I head to the doctor! So, let’s take a look at the U.S. Data Cupboard, eh? The Producer Price Index (PPI) (wholesale inflation) for December printed yesterday, and it was as ridiculous as the CPI was the day before… PPI for December only grew 0.1%…. So, that tells us there’s no inflation coming in the form of price increases… And that may be technically, but if you really inspect the package of what it is you’re buying you will notice that the size has decreased… You may be paying the same price for the item, but you’re receiving less… and less…. And less all the time…

Today’s Data Cupboard will finally have something for us, as December Retail Sales will print… I think I began the week by telling you that the BHI (Butler Household Index) would indicate that the December print will be better than the average bear… So, the markets have that going for them today, but in reality, shouldn’t December Retail Sales be strong?

Overseas this morning the European Central Bank (ECB) is meeting, but I doubt any thing of significance comes from that meeting… So at this time I’m just going to put a black magic marker line through it on the calendar and move along…

Hey! before we head to the Big Finish, I have this to throw against the wall and see how it lands… OK, the markets are all euphoric over the Trade deal getting signed this week, right? Well, already there are some questions about a major piece of the deal… China is supposed to be buying $95 Billion of stuff from the U.S. But… there was no mousetrap built to monitor the shipments! There’s no way of telling if China toes the line of the trade deal! And knowing what we know about China, that sounds like a way out for them doesn’t it?

I guess we’ll just have to wait-n-see if the trade deal is as big of an impact to the economy that it’s billed to be… UGH!

To recap… The currencies continued inching higher VS the dollar yesterday, and took Gold & Silver along for the ride on dollar selling… The U.S. Data Cupboard hasn’t helped the markets with any real economic reports to direct them one way or the other this week, but all that changes tomorrow with December Retail Sales… Gold broke the downward spiral it had been in since the saber rattling stopped last week, but has held onto $20 of those gains made then, and so it starts its next move at a higher price than it did the last time it began a rally… think about that one for a minute folks…January 16, 2020

For What It’s Worth… Ok… Here’s our lesson for today, Temporary is not temporary… It’s permanent! I take us back to 1971 when Nixon closed the Gold window, he was quoted then as saying this was “Only temporary”… Guess he was wrong, eh? Why did I bring this up today? Because the Fed told us at year end that the large year-end injection of liquidity was supposed to a “one time-year end thing”… But the folks at zerohedge.com have different thoughts on that! And that can be found here: https://www.zerohedge.com/markets/fed-injects-82bn-liquidity-term-repo-most-oversubscribed-one-month

Or, here’s your snippet: ‘t was supposed to be a one-time, year-end “liquidity event.” Instead, it has transformed into the latest liquidity addiction within the financial community.

Just days after we reported that yet another disturbance appears to be brewing below the calm surface of the repo market again, we got another indication just how strong the market’s addition to the Fed’s easy repo money has become, when moments ago the Fed announced that its latest 2-week term repo operation was also the most oversubscribed since December 16, as $34.3BN in securities ($27.65BN in TSYs, $15.5BN in MBS) were submitted for today’s $35 billion operation, as dealers continue to scramble to the Fed for liquidity which they are no longer using for “regulatory” year-end purposes (since it is no longer year-end obviously), but are instead using it to pump markets directly.
And just in case there was any doubt that the liquidity shortage isn’t getting better, moments later the Fed announced that in its daily Overnight repo operation, it also accepted $47BN in securities ($22.5BN TSYs, $24.5BN in MBS) for a total liquidity injection of $82 billion.

The latest repo operations also confirmed what we discussed overnight in “Top Repo Expert Warns Fed Is Now Trapped: “It Will Take Pain To Wean The Repo Market Off Easy Cash”” in which we noted that according to Curvature Securities’ repo expert Scott Skyrm, something appears amiss as recently the total overnight and term Fed RP operations were greater than on year end! On year-end, the Fed had pumped a total of $255.95 billion into the market verses $258.9 billion last week.. “

Chuck again… here’s the thing I don’t see being discussed much anywhere, and that is just how addicted the investment houses / banks are getting at the easy credit injections…. What would happen if they were told to go “cold turkey”? I think you know…

Currencies today 1/16/20 American Style: A$.6926, kiwi .6615, C$ .7653, euro 1.1160, sterling 1.3686, Swiss $1.0486, European Style: rand 14.3586, krone 8.8730, SEK 9.4722, forint 299.02, zloty 3.7920, koruna 22.1522, RUB 61.43, yen 109.97, sing 1.3457, HKD 7.7735, INR 70.83, China 6.8895, peso 18.78, BRL 4.1498, Dollar Index 97.15, Oil $57.62, 10-year 1.78%, Silver $18.00, Platinum $1,035.18, Palladium $2,380.39, and Gold… $1,555.58

That’s it for today, tomorrow and Monday… Talk to you again next Tuesday. Our Blues were going for an all-time win record at home last night, but lost the game in overtime. UGH! They were going for their 10 th consecutive win at home. But hey! they got a point for the tie in regulation, and that puts them ahead of all other teams in points so far this year! WOW! I sure hope they aren’t peaking too early… A Chamber of Commerce day here yesterday, and I was enjoying it immensely! From the looks of it out my sliding door it’s going to be another day just like yesterday, and that, has me smiling like the Cheshire Cat, folks! Pink Floyd takes us to the finish line today with their song: Time…. I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself!

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

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