Sunday , July 5 2020
Home / Daily Pfennig /Oops! Did I Say That Out Loud?

Oops! Did I Say That Out Loud?

Summary:
A Pfennig For Your Thoughts June 25, 2020 * Only dollars & Treasuries survive yesterday…  * Fears of Pandemic 2.0 roils the markets…  Good Day… And a Tub Thumpin’ Thursday to you! Another beautiful day here yesterday… Our house is usually pretty chilly, especially in the basement, where I spend most of my time. And I usually have to put on a jacket, or hoodie to watch TV, or sit at my writing desk… Last night I thought, Hey! I’m going to go outside to watch TV for it’s gotta be warmer outside! But by the time the sun set, I was in search for my pullover jacket… A beautiful evening, just not as warm as I thought it would be. The lightening bugs are out! I love watching the lightening bugs in the summer time… I made “pig-cluckers” for dinner last night… A “pig-clucker” is a bacon

Topics:
Daily Pfennig considers the following as important: , , ,

This could be interesting, too:

Charles Hugh Smith writes How We Got Here: the Global Economy’s 75-Year Stumble to the Precipice

Mike Maloney writes Gold Vs The World – The Race To Debase National Currencies

Frank Holmes writes American Exceptionalism Is Real

Alasdair Macleod writes Prices are going to rise — and fast!

A Pfennig For Your Thoughts
June 25, 2020
* Only dollars & Treasuries survive yesterday… 
* Fears of Pandemic 2.0 roils the markets… 
Good Day… And a Tub Thumpin’ Thursday to you! Another beautiful day here yesterday… Our house is usually pretty chilly, especially in the basement, where I spend most of my time. And I usually have to put on a jacket, or hoodie to watch TV, or sit at my writing desk… Last night I thought, Hey! I’m going to go outside to watch TV for it’s gotta be warmer outside! But by the time the sun set, I was in search for my pullover jacket… A beautiful evening, just not as warm as I thought it would be. The lightening bugs are out! I love watching the lightening bugs in the summer time… I made “pig-cluckers” for dinner last night… A “pig-clucker” is a bacon wrapped boneless chicken thigh… but the hit of the night was the cut up strawberries I had prepared for dessert! Oh! And the Arkansas tomatoes are in season, and boy was all that yummy! Cat Stevens greets me this morning with his song: If You Want To Sing Out… There were a few years during the early 70’s when Cat Stevens put out hit record after hit record… And this was one of those hit records!
No beating around the bush this morning, folks… Everything got sold yesterday… Stocks, metals, energy, and the only things to survive the melee were the dollar and Treasuries… Can you say, hello to the Plunge Protection Team (PPT)? I knew you could! The euro lost nearly a full cent on the day, and Gold gave back $8 on the day to close at $1,761… I told you we could still see the price manipulators make a run at Gold’s price, but that isn’t going to stop Gold now, in the past, or in the future! Once a Bull market begins in Gold, ain’t no stoppin’ it now! I saw a chart yesterday that showed the previous bull markets for Gold, and even though Gold has outperformed most asset classes this last year, it’s nowhere near the heights it will see as the bull market trend plays out…
In the overnight markets, the euro got sold even lower and now trades with a 1.11 handle this morning. Gold is basically flat in the morning trading, but the selling of the dollar has ended with a thud once again, what the heck is going on here? The beginning of the last 2 weeks saw the dollar get treated like a rental, and then recover to end the week… 
I’ll tell you something here that you should keep in mind… In my years of trading first bonds, then currencies, and writing about them, I’ve seen a few trends begin and end, and each new trend began with starts and fits. In other words, the asset, like the currencies, would begin to take off, only to see its progress halted for a day or two, but that wouldn’t stop the rally, and soon it would pick up again, and then lather, rinse and repeat… Until one day, and you’re suddenly down the road a bit, and realize that the trend is in place! 
There was an “Oops did I say that out loud?” event with the U.S.’s Trade guy, Peter Navarro, not to be confused with the lead guitar player Dave Navarro of Jane’s Addiction (the band). Peter Navarro told Fox News in an interview that the China Trade Deal was “over”… 
That news sent the stock jockeys running for the cover, but then the comment was quickly changed and everyone was told it was just a wording faux pas, and that everything is still in tact with China… And the stock jockeys were told to come out now, it’s safe… 
I don’t believe that people make wording faux pas when speaking in an interview, for they have been sent the questions ahead of time, and they can then prepare the answers to be given. I personally think the trade deal with China is “over”… Remember, that China added wording to the pact the day before the signing that allowed them to skip out of the deal in the event of a pandemic… 
Knowing that bit of information has had me yelling and screaming about China’s little bit of trickery… Why did they need that wording in the pact? Did they know about the Pandemic but weren’t telling anyone? You bet your sweet bippie they did… I’m just saying… 
The fears of a return of the virus has got the markets really shaken, not stirred. So, one has to wonder what’s next for the markets, right? I feel as though, if in fact there is a 2.0 of the pandemic, then I’m certain that that’s where we’ll see the Fed go negative with rates… But before we see 2.0 of the pandemic, Baseball is back! YAHOO! And this year it will be a sprint to the finish line with an only 60 game schedule on the docket…. I can’t wait for the first game, July 23…
I really don’t see the U.S. shutting down the economy again, if the 2.0 pandemic does hit…. I think we as a country have learned out to deal with this virus…. I went to fill up my car with gas, still getting 3 weeks to a gallon, and had my hand sanitizer in the car to clean my hands after touching the gas pump…. I wore my StL Cardinals mask to the grocery store, and so on…. I was sent on a wild goose chase by doctors yesterday, and that’s all I’ll say about that!
Speaking of the economy, Yesterday, I told you that the IMF was going to print their latest outlook for the Global economy, and that they would be full of gloom and doom… They did not disappoint me! Here’s what the IMF had to say. I took this from Marketwatch’s website: www.marketwatch.com : “The International Monetary Fund again cut its global economic forecast for 2020 on Wednesday, saying that the coronavirus pandemic has caused an unprecedented decline in global activity.
The IMF sees a global economic contraction of 4.9%, almost two percentage points lower than three months ago.
If realized, that would be the worst downturn since the Great Depression of the 1930s, far worse than the financial crisis of 2008-2010. In January, before COVID-19 had spread, the IMF had projected 3.3% global economic growth this year.
“We are definitely not out of the woods. We have not escaped the great lockdown,” said Gita Gopinath, the IMF’s chief economist, at a press briefing.
“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated and the recovery is projected to be more gradual than previously forecast,” the IMF said.”
Worse than the Great Depression the IMF says! I told you they wouldn’t try to make you feel good with sunshine, lollipops and rainbows, like the U.S. economists do… “ – MarketWatch
Chuck again…. I thought for sure yesterday, I would receive some emails about by scenario of how data prints get printed…. But none, thank goodness…
Today’s U.S. Data Cupboard will the usual Tub Thumpin’ Thursday fare, of Weekly Jobless Claims, Durable and Capital Goods Orders will also print today… Then we’ll receive the final revision of the GDP from Q1… You may recall that the last revision of -5.0%…. That’s negative 5.0% in case you missed that…. They say the whole quarter’s GDP was negative 5%, when only 2 weeks of the final month of the quarter (March) saw the economy shut down…
So, obviously the first two months of the quarter were hurtin’ for certain, but we kept getting told by the Fed Heads that the economy was “robust”… I would really love for someone on the finance committee to ask Fed Head Chairman, Jerome Powell, what he meant by “robust”, when it’s quite obvious that the economy wasn’t robust! I’m getting a little wound up right now, so I had better take a chill pill and talk about something else…
Ok, I don’t know how this is going to end up being any better at chilling me down, but earlier this week I talked about how stupid it was that all these statues are being taken down… I said then that It’s our history, to learn from mistakes…. I then sent a video of George Will talking about the same idiotic notions going on these days, to my friend Rick S. and he sent me this back….
“History isn’t there for you to like or dislike. It is there for you to learn, and if you dislike it all the better because then you will be less likely to repeat it. It is not yours to erase. It belongs to all of us.”
Ok, I did get through that without getting my dander up…
To recap… Everything but dollars and Treasuries, got sold on Wednesday…. The PPT must have been out doing whatever they could help the dollar which has looked like it was ready to take a ride on the slippery slope…. I know, the PPT usually steps in to save stocks, but with the Fed doing the heavy lifting there, the PPT probably chose to focus on the dollar. Gold got taken off its highs of $1,776, and the euro lost nearly 1 full cent… Oh, well, the Price Manipulators have to have their day in the sun too, right? NOT, I wish they would go to jail, do not collect $200, and stay there!
For What It’s Worth… Well, did you hear the news that Canada’s rating was dropped from AAA? Yes, the ratings agency decided that their debt levels were too high.. Hmmm…. OK, so here’s the article that explains what the ratings agency was seeing, and if can be found here: https://www.zerohedge.com/markets/canada-loses-its-aaa-rating
Or, here’s your snippet: “Fitch Ratings has downgraded Canada’s Long-Term Foreign Currency Issuer Default Rating (IDR) to ‘AA+’ from ‘AAA’ (outlook stable) citing the deterioration of Canada’s public finances resulting from the pandemic.
“The nation is expected to run a bigger general govt deficit this year and emerge from recession with “much higher public debt ratios”
“The higher deficit is largely driven by public spending to counteract a sharp fall in output as parts of the economy were shuttered to contain the spread of the coronavirus”  
The rating downgrade reflects the deterioration of Canada’s public finances in 2020 resulting from the coronavirus pandemic. Canada will run a much expanded general government deficit in 2020 and emerge from recession with much higher public debt ratios. The higher deficit is largely driven by public spending to counteract a sharp fall in output as parts of the economy were shuttered to contain the spread of the coronavirus. Although this will support recovery, the economy’s investment and growth prospects face challenges.
Fitch expects the coronavirus response to raise Canada’s consolidated gross general government debt to 115.1% of GDP in 2020, up from 88.3% of GDP in 2019.
Pandemic lock-down measures and depressed global oil demand will cause a severe recession of the Canadian economy with 7.1% GDP contraction in 2020.
Canada’s net external debt/GDP, 44.9%, is elevated and its current account deficit/GDP, 2.0%, is wide relative to the current ‘AA’ medians, a 18.6% net creditor position and a 2.3% surplus, respectively for 2019.
Canadian household indebtedness remains elevated, above 175% of disposable income since 2016, with debt service averaging 14.7% of disposable income in 1Q20.”
Chuck again… OK, This is how I think this all unfolded… The ratings agency, in this case, Fitch, has watched the countries around the world ramp up their debt, and wanted to hit someone, and that someone was Canada, because, Fitch felt that Canada wouldn’t fight back… If they had downgraded the U.S. for its debt, they would never hear the end of it from the Government… And probably end up going out of business… for some strange reason… wink, wink… 
Market prices 6/25/20: American Style: A$.6857, kiwi $.6407, C$ .7330, euro 1.1195, sterling 1.2418, Swiss $1.0525, European Style: rand 17.4520, krone 9.7172, SEK 9.3627, forint 316.60, zloty 3.9901, koruna 23.9796, RUB 69.09, yen 107.35, sing 1.3831, HKD 7.7502, INR 75.37, China 7.0711, peso 22.93, BRL 5.2215, Dollar Index 97.49, Oil $37.44, 10-year .67%, Silver $17.54, Platinum $805.98, Palladium $1,870.81, and Gold… $1,760.24
That’s it for today… And of course this week… It’s been a very strange week for me and the markets for sure! When we come back on Monday we’ll be finishing up June, and headed for July, and next Friday will the holiday since the 4th is on a Saturday this year… So, a nice 3-day weekend is on the docket for next week… I head to the wound center again this morning after sending the letter out. I’m really growing tired of this weekly visit… But it’s all my own fault, and I realize that… So I carry on.. I sure wish we could start 2020 all over again, knowing what we know today… And that brings us to the great Reverend Al Green, who takes us to the finish line today with his song: Let’s Stay Together… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and will continue to Be Good To Yourself!
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

Leave a Reply

Your email address will not be published. Required fields are marked *