Why Can’t The Powers That Be Allow Markets To Be Markets?

A Pfennig For Your Thoughts

August 27, 2019

* Currencies, Gold, bonds all are none events on Monday
* Japan’s Fin Min is worried about the yens latest move….

Good Day… And a Tom Terrific Tuesday to you… Back to regular programming today… I drove through what felt and looked like a Tropical Storm yesterday on my way to the doc’s office. I know what I’m talking about because about 8 years ago, I did just that in Florida on my way to the Ft. Lauderdale Airport… Cars were pulled off on the side of the highway, and I’ve got to say, at least the water didn’t build up on the highway like it did on the streets yesterday… And, by the time I got to the doc’s office, it had stopped raining, and by the time I came back out, the sun was shining! Crazy weather! I hope none of that’s in store for this coming Labor Day Holiday Weekend… The Doobie Brothers greet me this morning with a song from their great Captain and Me album…. Natural Thing…

Well, the Plunge Protection Team must have been out in force yesterday, as the stock bounced back, along with the dollar… Hmmm… One day it’s armegeddon and the next day, it’s all sunshine, lollipops and rainbows and everything… Oh, well, their day will come… (as opposed to Our Day Will Come) And they’ll get their rears handed to them! But that’s for another day… As they say!

But for all of you keeping score at home… Let me paint this picture so you get my drift here… Yesterday morning stock futures were down big, which is a strong indication that stocks will open up in the red… But then almost magically, they didn’t… How’d that happen? Ahhh grasshopper, the Plunge Protection Team (PPT) had to have been there with arms full of contracts to buy, otherwise things would have looked differently yesterday… Another case of market manipulation..

So… the world is talking about the Trade War… The markets all over the world are screaming for help, along with their respective economies.. And we sit here, with a Fed that has its hands tied… I don’t blame Powell, for having the Fed backed into a corner… I blame all the years that Big Ben Bernanke and Janet Yellen left rates at zero… That’s who I blame! One side is trying everything they can to make things look bad come reelection time, and the other side is lying through their collective teeth on how good things are… It’s crazy out there, and you, me and the guy down the street that cuts his grass with his shirt off, all know it!

The currencies were all back to where the started on Friday morning, having given back their mini-gains… That really ticks me off, because why can’t we let markets be markets, and not fiddle with them all the time? So, did you get to read the piece yesterday, from the late Bart Chilton, who on his deathbed, basically said, “yes, JPMorgan was too big, and they exceeded their positions limits, and yes, we saw price manipulation, but we didn’t do anything about it”… Thanks Bart Chilton, for coming clean, but… You left out why, the CFTC didn’t go after JPMorgan… OK, this is where I get out tin foil hat and talk conspiracy…

But I do have those Wilileaks memos from back in the 70’s to stand behind me when I say this… The CFTC didn’t go after JPMorgan because, JPMorgan had a Get Out of Jail Free Card, from the U.S. Gov’t… The Gov’t needed to keep the price of Gold down so that people wouldn’t shun the dollar, and so they can’t be found in the markets, but they can give the wink and nod to JPM to do their bidding… And so, that’s the reason, as far as I’m concerned why the CFTC never slapped JPM’s hands, never issued a cease and desist order on them. And so on…

So, the currencies gave back their mini-gains, and Gold remained in the previous day’s clothes on the day, nothing to write home about… And the Bond yields didn’t really move, with the 10-year remaining at 1.53%… But Stocks rallied…

You know I mentioned this yesterday, and I thought it was a big deal, but apparently the only article I could find on it was the one I used yesterday. And in that one they talked about how the Bank of England (BOE) Gov. Mark Carney called for a global currency to replace the dollar… Did you hear what I just said? Isn’t that crazy, that an ally as staunch as the U.K. has always been (well since the 1800’s) would not chastise their Central Bank Gov. for making a statement like that…

OK, so I’m sure you’ve been noticing that the Japanese yen, which rallied a couple of months ago, then weakened , is back on the rally tracks, and this latest move into the 105 handle has the Japanese leaders worried… Japanese Finance Minister Taro Aso said on Tuesday that he was observing the currency moves “with a sense of urgency” after this latest move to the 105 handle in yen. This phrase Aso used is usually reserved for currencies getting far out of whack with what the leaders want to see… Stability is the word most often used…

So, here’s where I’m going with this… President Trump has repeatedly called for a weaker dollar, and now the Japanese leaders are concerned with yen’s strength… Sounds like a case of combined intervention to me, could be in works… More market manipulation!

I read where the U.S. and China might be getting together again to talk about the Trade War… I was laughing hysterically, when the media was all bent out of shape when the President said that China had called him twice about meetings, and then China denied making any calls… Come on Media, this is the Big Leagues! These statements are used to get countries to get moving… My goodness, go find something else to write about!

Things are quiet in the Eurozone… Not a peep out the leaders there with what’s going on in Italy… Hmmm… No news is good news, right? I wonder if the European Central Bank (ECB) would be interested in getting in on the combined intervention that I talked about being a possibility between Japan and the U.S.? Maybe a smidgen, but then when the euro rose in value, outgoing ECB President, Draghi, would get to throw it under a bus one last time before he departs! That would be funny if it weren’t true!

Quite frankly, the euro doesn’t deserve to be stronger right now… The economic data from the region just doesn’t warrant a much stronger currency… But remember what I’ve always told you… If the dollar went into a weak trend, it wouldn’t matter what the Eurozone fundamentals were doing the euro would rally… Because…. here we go with a statement that I’ve made a thousand times through the years, The euro is the offset currency to the dollar!

And what the heck are the Chinese doing with the renminbi… Recently we saw them devalue the renminbi and now they’ve been allowing it to weaken the max amount almost daily… 7.14 is the level this morning… I don’t know what it is, but I’m sure some propeller heads there have figured out how cheap the renminbi needs to get to offset the tariffs… I would think a lot cheaper… I’m just saying…

The Petrol Currencies led by the Russian ruble, just can’t buy a bid these days… The ruble and the Canadian dollar/ loonie seem to be stuck in the mud, and the Norwegian krone and Brazilian real have been getting cut off at the knees… And that leads me to talk about the real… It was just a couple of months ago that I mentioned that the new government in Brazil was responsible for the recent rally, but that we should be careful there, because, as we found out with the Modi rally in India a few years ago, those political rallies are short lived… And well, the real’s slide down the slippery slope pretty much seals that idea!

The U.S. Data cupboard has the Case/Shiller Home Price Index (HPI) for June today… Home prices have been slipping in the preceding months, I see no reason to believe they didn’t continue doing that in June… We’ll also see the stupid Consumer Confidence Index, which last month took a big fall in the index number, but it had the same effect as removing a bucket of sand from a beach!

To recap… The PPT must have come to rescue, for the stock futures yesterday were down big, but the stock market rallied on the day… the currencies, Gold, bonds, all were none events on the day… Japan’s leaders are concerned with the yen’s recent rally… And President Trump is always saying that he wants a weaker dollar, seems like a match made on one of those dating sites!

For What It’s Worth… So, I’ve talked about this for two days now, and when I saw this on Reuters I just had to circle it for the FWIW section today… It’s about the BOE’s Mark Carney and his call to replace the dollar and it can be found here: https://www.reuters.com/article/us-usa-fed-jacksonhole-carney/world-needs-to-end-risky-reliance-on-u-s-dollar-boes-carney-idUSKCN1VD28C

Or, here’s your snippet: “Bank of England Governor Mark Carney took aim at the U.S. dollar’s “destabilizing” role in the world economy on Friday and said central banks might need to join together to create their own replacement reserve currency.

The dollar’s dominance of the global financial system increased the risks of a liquidity trap of ultra-low interest rates and weak growth, Carney told central bankers from around the world gathered in Jackson Hole, Wyoming, in the United States.

“While the world economy is being reordered, the U.S. dollar remains as important as when Bretton Woods collapsed,” Carney said, referring to the end of the dollar’s peg to gold in the early 1970s.

Carney – who was considered a candidate to be the next head of the International Monetary Fund but failed to secure backing from Europe’s governments – said the problems in financial system were encouraging protectionist and populist policies. ”

Chuck again… Again I say,,, why on earth is our staunchest ally having one of their leaders talk about replacing the dollar? There’s something here that I’m not seeing right now, but I will, and when I do… You’ll know!

Currencies today 8/27/19 American Style: A$.6763, kiwi .6375, C$ .7558, euro 1.1108, sterling 1.2268, Swiss $.9801, European Style: rand 15.2726, krone 8.9926, SEK 9.6322, forint 295.90, zloty 3.9293, koruna 23.2277, RUB 66.06 yen 105.73, sing 1.3880, HKD 7.8447, INR 71.54, China 7.1427, peso 19.95, BRL 4.1327, Dollar Index 97.91, Oil $54.31, 10-year 1.50%, Silver $17.82, Platinum $862.64, Palladium $1,485.43, and Gold… $1.529.89

That’s it for today… Another win last night for my beloved Cardinals, who suddenly look like a team on a mission… Gotta keep the pedal to the metal boys! Well, maybe the rain has stopped, even though it still looks like rain any minute outside… My visit to the oncologist was good… She loves me, and thinks I’m Superman… I told her, that chemo was my kryptonite! HA! I added three pictures to my wall that faces me at my writing desk… One of my darling daughter Dawn from about 20 years ago (she looks the same!) One of Son Andrew handing his brother Alex, his high school diploma on stage, and the last one is my fave picture of all time… It’s Kathy’s senior year picture… (but don’t tell her I talked about her!) Donnie Iris takes us to the finish line today with his song: Ah! Leah! (a one hit wonder!) 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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