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Have Traders Already Gone Into a “Wait For Fed” Funk?

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A Pfennig For Your Thoughts September 15, 2020 * The euro inched higher on Monday… * Have Gold & Silver found their mojo again?  Good Day… And a Tom Terrific Tuesday to you! I said a prayer last night and asked that Mother Nature give the gulf coast a break… Please be safe if you’re in that region! When I went to bed last night, Hurricane Sally was packing 100 mph winds…. And heading to the gulf…. My beloved Cardinals left their bats in St. Louis, and surely didn’t take them to Milwaukee, where they were made to look the fool at the plate by some pitchers I had never heard of…. UGH! But it’s baseball, I find that I’m more tolerant of bad play this year, because, we almost didn’t have a “this year”… I just hope that all this “no fans in the stands” is over by the time spring training

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A Pfennig For Your Thoughts

September 15, 2020

* The euro inched higher on Monday… 
* Have Gold & Silver found their mojo again? 

Good Day… And a Tom Terrific Tuesday to you! I said a prayer last night and asked that Mother Nature give the gulf coast a break… Please be safe if you’re in that region! When I went to bed last night, Hurricane Sally was packing 100 mph winds…. And heading to the gulf…. My beloved Cardinals left their bats in St. Louis, and surely didn’t take them to Milwaukee, where they were made to look the fool at the plate by some pitchers I had never heard of…. UGH! But it’s baseball, I find that I’m more tolerant of bad play this year, because, we almost didn’t have a “this year”… I just hope that all this “no fans in the stands” is over by the time spring training starts next Feb. I know that 6 months away, but…. Did you expect when they shut down spring training this year on March 13th that we would still be dealing with this pandemic? I sure didn’t! And I was wrong to think that the warmer weather would burn up the virus… But all in all, I still say the economy should NOT have been shut down….  I think when all is said and done, the numbers will prove that the death rates were about the same whether you shut down or didn’t…. So, why put the economy in such a bind?  Oh well… it is what it is… Joe Cocker greets me this morning with his great song: You Can Leave Your Hat On…. from the soundtrack of the movie 9 ½ weeks…. 

Well, what happened yesterday in the currencies and metals, I hear you asking? The currencies, led by the euro, inched higher on the day, but any real moves were nascent at best…. Gold on the other hand gained $15.60 to end the day at $1,955.60…. (but was $9 higher during the day!) Silver followed along for the ride, closing at $27.10, up 39-cents on the day….

I’m afraid to say this, but…. It appears that the markets have gone into a “wait-n-see” what the Fed has to say tomorrow….  I don’t get it…. I’m sitting here at my writing desk, in my basement, thousands of miles away from D.C. and yet, I think I now what the Fed is going to say…. That interest rates will remain near zero until inflation reaches a level that the Fed feels comfortable, and that they think they can halt the rise of inflation at that level…. I think they’re full of you know what, and I would tell them to their collective faces if I ever had the opportunity to do so! 

My publishers, Mary Anne, and Pamela Aden (aka The Aden Sisters) recently wrote the following about inflation; “Our late dear friend Richard Russell warned about this for many years. He often pointed out all of the reasons why the Fed and the government were in a position where they literally had to inflate or die.

The main reason why was because the Fed was printing excessive amounts of money to pay for the governments ever growing expenses and deficits. They simply didn’t have enough money to pay for all these expenses on their own, so the Fed had to step in to pick up the slack.

As you know, too much money creation is the direct cause of inflation. And as Richard foresaw so many years ago, the end result of all this money creation was going to end up in an inflationary bubble.” – Aden Forecast 

So… it is that we are stuck with a Fed that doesn’t care about senior savers, or people on fixed income, or just regular people that will find rising inflation to be a real burden on them….

And then everyone will see a double whammy when the dollar goes into a weak trend, because as your purchasing power is taken away by inflation, it will be doubled up with a weaker dollar…. 

But that doesn’t bother the folks on Wall Street, the Casino Banks, the Robinhood traders, and the Zombie corporations… So, the last time I discussed Zombie Corporations, I had a few dear readers send me a note and ask me to explain…. OK, so here goes…. A Zombie Corp. is on that pays more interest on its debt than they take in, in revenue…. And Therefore need government bailouts to continue to exist….  That list of Zombie Corporations is growing like a weed, folks, I read yesterday that Zombie Corporations are now at 20% in the U.S. and that the total Corporate debt issuance in 2020 is already at $1 Trillion….   

This problem with Zombie Corporations is not going to go away easily folks…. When you have the Fed Reserve keeping rates low for a long time, it keeps more unproductive firms alive, which ultimately lowers the long-run growth rate of the economy. As I said in 2008, when everyone got bailouts, that we should have let them fail…. If we had done that in 2008, and not began this racking up of national debt, we would have at least been better off when the pandemic hit in 2020….  The U.S. Debt Clock tells me that our national debt is up to $26.7 Trillion, and will reach $27 Trillion soon, and that the Unfunded Liabilities of the country are up to $154.3 Trillion, which is equal to $467, 549 per citizen…

I recall one of my first times on stage at the Agora Wealth Symposium in Vancouver, B.C. I showed the crowed that their share of the debt was $45,000… That’s come a long way since then, eh? I also recall me having a funny slide of Presidents Bush and Obama, wearing different shades of lipstick…  I don’t think I have to go into a long explanation of that one!

OK… so in the overnight markets last night… the euro inched closer to 1.19, dragging most of the currencies along… And Gold has really found its mojo again, as it is up $15.50 in the early trading today and Silver is up 45-cents! So, the metals traders seem to know what’s in store at tomorrow’s Fed meeting, and press conference! More low rates, more emphasis on rising inflation, and other Fed shenanigans… 

I find it very interesting that Fed Chairman, Powell, and other Fed Heads have been begging congress for more stimulus… They don’t want to be seen as the only reason the ship sunk, they want to take congress down with them!  

The U.S. Data Cupboard was empty yesterday, but it has been restocked for today, and that will mean a showing of August Industrial Production and Capacity Utilization…. We’ll also see the final 2019 reports for Median Household Income, the Poverty Rate, and uninsured rate…. These are so old that they won’t carry much water from the well, but, it’s still interesting to see if there is any improvement in them from 2018…

There also a regional manufacturing index that will print, but since I’m boycotting them, I won’t even tell you which one will print today!

To recap…. The currencies inched higher yesterday, led by the euro…. And Gold gained $20 on the day to close at $1,460…. Gold is also up in the early morning trading today by $9… So, maybe Gold has regained its mojo, eh? Chuck goes into a long explanation of Zombie Corps, and what the means for the economy going forward…. And you won’t want to have missed his recollection of one of his trips to Vancouver….

On a side bar… The Aden Sisters mentioned the late great, Richard Russell…. I used to grab quotes from him all the time, and then one day the head of King World publishing called me and told me to stop what I was doing. I responded, but I give full credit and the IRL to you each time I quote him, and he said, he didn’t care, I was to stop…. So…. I stopped!  At Richard Russell’s memo rial in San Diego a year or so later, I tried to find that guy, to give him a piece of my mind, but never found him, if he was there that is….

For What It’s Worth…. OK… I don’t mean to be a smart Alec all the time, but when I do…. (sounds like a Dos Equis commercial!) I love to be a real smart Alec! This article this morning is about Treasury Sec. Steve Mnuchin and him making some very ridiculous statements, and it can be found here: https://www.cnbc.com/2020/09/14/steven-mnuchin-now-isnt-the-time-to-worry-about-the-deficit-fed-balance-sheet.html 

Or, here’s your snippet: “Treasury Secretary Steven Mnuchin told CNBC on Monday that lawmakers should not allow fears over the size of the nation’s deficit or the Federal Reserve’s balance sheet to delay additional Covid-19 relief.  

“Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet,” Mnuchin told CNBC’s “Squawk Box” from the White House. “There was a time when the Fed was shrinking the balance sheet and coming back to normal. The good news is that gave them a lot of room to increase the balance sheet, which they did.”  

“And I think both the monetary policy working with fiscal policy and what we were able to get done in an unprecedented way with Congress is the reason the economy is doing better,” he added.  

Mnuchin, who argues that more stimulus is needed to help the U.S. economy, said Monday that “we are rebounding in a very, very significant way.”

Chuck again… Ok, where do I start? I guess, first of all, we should check to see what he was smoking…. Then we need to check his temperature, because he could be delirious from having to work with the other knuckleheads on a stimulus package…. Mnuchin hasn’t been the same ever since he visited Fort Knox a couple of years ago, and stated that all the Gold is there that’s supposed to be there, or something like that… We should have had him committed at that time! 

Market prices 9/15/20: American Style: A$ .7330, kiwi $.6730, C$ .7607, euro 1.1895, sterling 1.2905, Swiss $1.1045, European Style: rand 16.4460, krone 8.9932, SEK 8.7500, forint 300.57,  zloty 3.7380,  koruna 22.5582, RUB 75.08, yen 105.45, sing 1.3589, HKD 7.7498, INR 73.54, China 6.8188, peso 20.97, BRL 5.3009, Dollar Index 92.81, Oil $37.70,  10-year .68%, Silver $27.10, Platinum $958.00, Palladium $2,185.00, and Gold… $1,970.50

That’s it for today…. shorter today… because I didn’t have 4 days to read and research! Well, my beloved Cardinals found a way to eke out a 3-2 win in extra innings to split the double header with the Brew Crew last night.. It was a late finish, and I had just gone to bed, when I thought I’ll check the score one more time, and it was then that I saw that they had finally won. A regular 9 inning game today, before they play another double header tomorrow…  Some people may say that they’re getting tired of all these games, but not me! I’m loving it! Man have the days cooled down. Last night I had a jacket and baseball cap on to watch the games outside… Loggins & Messina take us to the finish line today with their song: Your Momma Don’t Dance….  My darling daughter Dawn, used to sing, when she was a little girl, “My momma does dance, and my daddy does Rock-n-Roll”… So cute! And with that I hope you have a Tom Terrific Tuesday, and will be safe, and don’t forget to Be Good To Yourself!

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

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