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PBOC Takes A Huge Chunk Of Renminbi!

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A Pfennig For Your Thoughts February 4, 2020 * Currencies for the most part drifted yesterday… * Chuck explains Gold Swaps/ leases… Good Day… And a Tom Terrific Tuesday to you! Another Chamber of Commerce Day here yesterday… I wasn’t feeling 100%, or even 75%, but I struggled to get outside, and the sun sure felt good and warm. Just how I like it! I believe that the chemo that I take daily, has gone bad on me… I’m continually fighting stomach problems, while the tumor in my mouth remains unchanged in size… I went to dinner last night with my good friend, “Martini Gus” and I had to have ½ of a “petit ribeye” wrapped to take home, because I almost became violently ill, but drank a lot of ice water, and got through it… My appetite is going to the wayside, I can’t put anything that has

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A Pfennig For Your Thoughts

February 4, 2020

* Currencies for the most part drifted yesterday…
* Chuck explains Gold Swaps/ leases…

Good Day… And a Tom Terrific Tuesday to you! Another Chamber of Commerce Day here yesterday… I wasn’t feeling 100%, or even 75%, but I struggled to get outside, and the sun sure felt good and warm. Just how I like it! I believe that the chemo that I take daily, has gone bad on me… I’m continually fighting stomach problems, while the tumor in my mouth remains unchanged in size… I went to dinner last night with my good friend, “Martini Gus” and I had to have ½ of a “petit ribeye” wrapped to take home, because I almost became violently ill, but drank a lot of ice water, and got through it… My appetite is going to the wayside, I can’t put anything that has carbonation or spice in my mouth. So, I sent off a note to my oncologist last night asking her if I can go off the chemo for a week or so to get my system straight… Knowing how much she loves me, (HA!) I’m sure she’ll give me the wink and nod… Three Dog Night greets me this morning with their song: Mamma told me not to come…

Well, I didn’t do much after my trip north yesterday, and neither did the currencies as there was no follow up to the overnight selling of currencies and buying of dollars… the euro is trading in the same clothes as yesterday, and the poor Petrol Currencies can’t seem to find a bid these days, especially with the price of Oil slip sliding away… This morning Oil is trading with a $50… One more day of selling of the black Gold, Texas Tea, and we’ll be below $50 and the shale folks will be closing down their rigs, as this seems to be the level that sends them home, as I’m sure the cost of getting the shale Oil our of the rocks is much more expensive than traditional ways. If I’m wrong about that, just chalk it up to me not knowing that much about the oil sector…

The key Petrol Currency is the Russian ruble… And I found this on the Russia Today site yesterday…. “There’s a lot going for the Russian economy as 2020 kicks into its second month. Russia’s government reshuffle is seen as removing austerity constraints and speeding up the financing of Putin’s ambitious national development programs. In his speech to the National Assembly, Putin signaled the end of austerity on social spending, Russia being the only country in the developed world, which is now seriously increasing social spending (among other things, increasing pensions double the rate of inflation and initiating massive child support programs) while everyone else is cutting.”

That’s all fine and dandy, but the ruble is a Petrol Currency, and as long as the price of Oil stays down, so too will the ruble, even if, the Russian economy turns the corner and starts running on all eight!

The biggest mover overnight was…. drumroll please…. The Chinese renminbi, and the move was not a good one! The Peoples Bank of China (PBOC) must be feeling the markets’ fears about the Coronavirus spreading even wider, because they took a huge chunk out of the renminbi in one fell swoop! The renminbi is trading back to 7 and change this morning, and now that the Trade negotiations are no longer a black cloud over China, and the U.S. has dropped the “currency manipulator” tag from China, the renminbi gets chopped! Typical Chinese reaction, if you ask me…

The other Big mover yesterday and again this morning is Gold… The shiny metal lost $12 yesterday, and is down another $7 this morning… One day a safe haven the next day not so much, eh? The high price for Gold yesterday was $1,598… But it closed at $1,576… As I said yesterday, either the exchange stabilization fund (ESF) or the Plunge Protection Team (PPT) was working overtime to make certain that the dollar remains strong…

Speaking of Gold… I read last night that Russia is probably going to be named the #1 producer of Gold for last year, taking the title away from China. Whether Russia gets the title or not, the point is that both Russia and China do NOT sell the Gold they produce, so therefore the numbers that are used to denote the total Gold each respective country has in reserves is undercooked by a large margin…

Which in my opinion, has the makings of a very difficult scene for the non-Russia & China countries when the current financial system collapses from the weight of debt and derivatives, and each country comes to the table to reorganize the new financial system, and shows their hand at how much Gold they have… That’s when it will occur to everyone that the old adage of: He who has the Gold, Makes the rules… will hit them like a V-8 forehead slap! I’m just saying…

There’s this thing called Gold swaps… or leases… The banks that hold Gold see it as a non-interest bearing possession, and so they look for a way to swap it for cash, that they can lend out at huge mark-ups. The problem with that is that the outfit that bought the Gold in the swap, no longer owns it they sold it in pieces to a thousand different customers… So the bank, let’s say the Fed Reserve, has an IOU for Gold in their vault, which I don’t think is going to carry much weight at the reorganization table…

Which is why I don’t understand why congress won’t pass the “audit the Fed” bill… No wait, I do understand, what I don’t understand is why Congress doesn’t have the intestinal fortitude to pass the bill…

Well, I was wrong (mark that down!) about the December ISM (manufacturing index) as it did recover back above the 50 mark, after two previous months of below 50 prints… I don’t know if this data is fidgeted, but it sure seems a bit strange to me that after last month’s print was even deeper below 50, that the trend was in, and it would continue to drop, but then out of left field comes a rebound! Just like that! Go figure, eh?

Today’s Data Cupboard has the December Factory Orders, which in November were negative, but given the recovery in the ISM, one would have to think that this data too, will recover…

We will end the week with the Jobs Jamboree for January… I just don’t see this being a good report folks… But then I really don’t care about the numbers any longer… They are cooked, massaged, recooked, and massaged again until the BLS gets the number they want… The FWIW section article I had for you yesterday proves what I’ve been saying for years now that it doesn’t matter how many jobs were created, what matters is whether or not they were high paying jobs, and not min. wage jobs, which from the article seems to be saying has been happening…

To recap… The currencies drifted on Monday, but the biggest mover overnight was the Chinese renminbi, which lost a large chunk of value in one fell swoop. The fear of the Coronavirus spreading even wider caused the mark down, along with some other items that Chuck discusses above. Gold also was a big mover yesterday losing $12 and is down another $7 this morning… Safe Haven one day, and not so much the next day, eh? Chuck feels is the work of either the ESF or PPT…

For What It’s Worth… I’ve been pretty reliant on news from Pam & Russ Martens who pen the great website: www.wallstreetonparade.com I’ve learned so much from them, and today’s letter from them sure hits home on something that I’ve alluded to in the recent past, regarding the Fed… So, you can find their article here: https://wallstreetonparade.com/2020/02/fed-chair-powell-has-gone-rogue-on-repo-loans-and-the-volcker-rule/

Or, here’s your snippet: “ The Chairman of the Federal Reserve, Jerome (Jay) Powell, regularly states at his press conferences that the Federal Reserve is there to serve the interests of the American people. But his actions regularly undermine the credibility of that statement in a manner not all that dissimilar to Alan Greenspan, whose Fed chairmanship oversaw the gutting of Wall Street banking regulations and ended just before the greatest Wall Street collapse since the Great Depression.

Powell goes out of his way to present himself at his press conferences as the quintessential public servant whose only mission is to perform the mandate set out by the elected representatives in Congress while his actions strongly suggest he is a wily rogue agent for Wall Street’s cartel of bank trading houses.

Congress set out its mandate for the Federal Reserve and its fellow regulators to follow when it comes to monitoring and disciplining Wall Street banks in the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act that was enacted on July 21, 2010. The legislation was meant to rein in the greed, corruption and illegal trading activities of Wall Street banks that had led to the financial crash and Great Recession — where 8.7 million Americans lost their jobs and 10 million American homes were lost to foreclosure from 2006 to 2014.

One of the key provisions of Dodd-Frank instructed the Federal Reserve that it would be on a short leash going forward in terms of secret, multi-trillion dollar bailouts of Wall Street’s trading houses. Without the approval or even awareness of Congress, the Federal Reserve, predominantly through the Federal Reserve Bank of New York, had showered $29 trillion in cumulative loans to bail out Wall Street’s trading houses from the end of 2007 through the middle of 2010. The Federal Reserve fought a court battle for years to keep that information secret from the American people. That was on Federal Reserve Chairman Ben Bernanke’s watch. But this is what has happened on Chairman Powell’s watch.”

Chuck again…. A great article about how crazy the Fed and Fed NY have gotten, and how they are disobeying the rules that congress set for them… I just shake my heard in disbelief, and disgust…

Currencies today 2/4/20 American Style: A$.6718, kiwi .6461, C$ .7532, euro 1.1050, sterling 1.3277, Swiss $1.0322, European Style: rand 14.7090, krone 9.2405, SEK 9.6240, forint 304.62, zloty 3.8715, koruna 22.7640, RUB 63.77, yen 109.05, sing 1.3708, HKD 7.7659, INR 71.20, China 7.0086, peso 18.71, BRL 4.2639, Dollar Index 97.89, Oil $50.76, 10-year 1.57%, Silver $17.73, Platinum $978.03, Palladium $2,399.60, and Gold… $1,569.62

That’s it for today… A beautiful sunrise this morning right outside my sliding door… Being here, I get to watch the sunrise over the ocean, and the moonrise over the ocean, sometimes the vision is amazing! I simply love it! Looks like another good day outside, so I’ll head out there as soon as I finish my crossword puzzles I do each morning after writing the Pfennig, except days I have to head to a doctor appt… Not much else going on to write about, except I would like everyone to say a prayer for my good friend Dennis Miller, who received some devastating cancer news this week… And while you’re at it, say a prayer for my friend, Ty Keough, who’s in ICU right now… And get this… The song that takes us to the finish line today is the Doobie Brothers singing: Jesus is Alright… I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

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

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