Beating Up The Banks
By Chuck Butler
day... And a Happy Friday to one and all! Let's
see if we can make it a Fantastico Friday! Of
course last Friday will be a tough one to top
for a long time, given it was pay-day, a Friday,
the start of a 3-day weekend, and the
temperature went above freezing! But, today is a
Friday, so I'll do my best to make it a
Fantastico Friday! It will be difficult while
I'm writing today though, because, our Gov't
just keeps shooting themselves in the foot, and
it just ticks me off that they don't say, "hey,
I/we caused this, and we'll fix it", instead
opting to find someone to blame, or "deflect"
the problem... I'll explain as we go along
Well... Front and Center this morning, we saw
the Risk Aversion that had held a tight grip on
the currencies and commodities for about a week,
fade a bit as the day went on yesterday, and the
dollar selling has carried through the overnight
and morning sessions overseas... What caused
this "turn-around?" I hear you asking... Ahhh
grasshopper, come sit, and put away the sharp
You see, yesterday, after the Weekly Initial
Jobless Claims rose to near 500,000 once again
putting some chinks in the Risk Aversion's
armor... The President announced his "new plan"
to impose limits on banks and restrict the size
and activities of the U.S.'s largest biggest
banks. The White House wants commercial banks
that take deposits from customers to be barred
from investing on behalf of the bank
itself--what's known as proprietary trading...
Now let me get this straight for you... This
doesn't affect my bank, EverBank... This is for
the HUGE Banks like JP Morgan Chase, and
Goldman, (even though Goldman isn't really a
bank, remember they formed a bank holding
company in 2008, so they could get TARP)... But,
this affects everybody, folks... If these guys
aren't doing their Mega-deals, then there's no
trickle down for the rest of us... This program
will hurt, and let me repeat this for you...
This program will hurt U.S. assets, keeping
foreign investors from buying U.S. assets!
This is what the President is doing folks... On
one side, he sees the Republican victory in
Mass. And his ObamaCare going down in flames...
So, to deflect the bad stuff that would go along
with a President that hung his hat on this
health care... He says... "Hey, all you voters,
I know what's making you mad, it's those fat cat
bankers... So let me tell you what I'm going to
do to them"...
HEY! I learned how to do that in media training!
Somebody asks you something that you don't want
to answer, you "deflect" it to talk about what
you want to talk about!
So... In one week, the President has come up
with an idea to "tax the banks" that took TARP,
not everyone that took it, just the banks, and
now this plan... He's playing with fire,
folks... And I'm just talking about the damage
the financial markets will see, I haven't and
won't, talk about the damage to his political
I loved this the other day... Warren Buffett, is
not to pleased with the President these days,
for he sees the same things I'm seeing... But
Mr. Buffett had this to say about the
President's tax on the banks...
"I don’t see any reason why they should be
paying a special tax,” said Buffett, the
chairman and chief executive officer of
Berkshire Hathaway Inc., in an interview on
Bloomberg. Supporters of the plan to tax the
banks “are trying to punish people,” he said. “I
don’t see the rationale for it. Look at the
damage Fannie and Freddie caused, and they were
run by the Congress,” said Buffett. “Should they
have a special tax on congressmen because they
let this thing happen to Freddie and Fannie? I
don’t think so."
In a recent survey by Bloomberg, the President
is see as "Anti-Business" by 77% of U.S.
Investors, and 4 out of 5 question his ability
to manage a financial crisis... Hey! That's not
me making that stuff up, folks... This is
getting ugly, and the problem as I see it
resides in our/ us / the country's ability to
attract foreign investment...
So... The President deep sixed the Risk Aversion
campers, and risk takers came back out to play,
driving the euro back above the 1.41 handle...
And Japanese yen dipped below 90 again, only to
come back above it this morning in Europe.
The dollar index moved above its 200-day moving
average yesterday... So, in reality, the dollar
should be on the move... That just shows you how
powerful the markets can be when they smell
And here's a look at what one foreign entity
thinks about all this damage to the U.S.
assets... Kokusai Global Sovereign Open, the
world's 2nd largest actively run bond fund, is
going to shun U.S. Treasuries, and is betting
against the dollar in 2010... You may recall a
week or two ago, I told you how PIMCO, the
world's largest bond dealer, announced that they
were going to avoid U.S. Treasuries in 2010...
Opting for German bonds instead!
In the Eurozone this morning, we saw Eurozone
Industrial Orders for November, rise more than
economists forecast, on demand for goods such as
steel and car parts. Orders increased 1.6% in
November... So... Things aren't "that" bad in
the Eurozone, despite what some writers would
have you believe!
Well... I heard yesterday, that Big Ben
Bernanke's re-confirmation to Fed Chairman isn't
a slam dunk as it was once thought to be... I
belong to the "Audit the Fed Coalition" and they
sent me a note yesterday, asking me to question
by Senators and tell them to tell Harry Reid
that they would not vote on re-confirmation
until Bernanke allows the Fed to be audited...
Well, I think my senators are probably tired of
hearing from me on all sorts of things, so add
this one to the list!
I'm not a Bernanke fan... I wasn't a Greenspan
fan... I was a Volcker fan... But that takes us
all the way back to the 80's! you know, the
music that had electric drums! Not dissing on
80's music, Rick, just pointing out the time
period... HA! My good friend Rick, spent his
young adult life in the 80's, like our Chris
Gaffney, and that time period is the music they
know / like best... Me? I'll stick to the 60's
and 70's... Because everything that came after
those two decades of rock, was just variations
of the originals...
But I digress... And apologize for that!
So... Yesterday, as I said above, the Weekly
Jobless Claims jumped to 482,000, from 444,000
the previous week... This marks the 3rd straight
increase in the Weekly Claims figures, and the
5th increase in the last 6 weeks... Do you see a
Here are some ugly figures... 40,000 people had
their unemployment benefits drop last week,
while more than 650,000 received emergency
So... I was giving an economic talk to a group
yesterday, and I said that I truly see the U.S.
economy slog along with bumps up in GDP, and
then drops back down... Unemployment will remain
very high (right now 17%), and we could very
well see another drop of 10% in home prices...
Now, that's downright cheery isn't it? NOT!
Then there was this... Did you happen to catch
the news last Thursday regarding the CFTC's
commission that was researching position limits
in energy? Well, they went one step further, and
also talked about how they will look into the
precious metals, gold and silver in addition to
This is HUGE folks! And the media just swept it
under a rug! Shame on them! Could this be the
end of the price manipulations of Gold and
Silver? I truly believe that it very well
could... And that would be HUGE for precious
metals holders... For, the "true" market value
of the precious metals could be sought, without
manipulation to keep it weak..
If you are interested in the commission's
statements check them out here...
But, it's not helping Gold and Silver right now!
Gold has fallen below $1,100, which I believe is
an indicator to buy, but I could be wrong of
course!, And Silver has fallen below $18... UGH!
To recap... The Risk Aversion party was brought
to an abrupt halt, when the President announced,
yet another plan to punish Big Banks. I truly
believe this plan will hurt U.S. assets, thus
driving away foreign investors. The currencies
have rallied back overnight and through the
European morning session. But Gold and Silver
are still seeing profit taking, and selling...
Currencies today 1/22/10: American Style: A$
.9075, kiwi .7155, C$ .9555, euro 1.4150,
sterling 1.6240, Swiss .9625, European Style:
rand 7.54, krone 5.7860, SEK 7.1925, forint 192,
zloty 2.8840, koruna 18.4320, RUB 29.81, yen
90.30, sing 1.4010, HKD 7.7730, INR 46.13, China
6.8270, pesos 12.92, BRL 1.7945, dollar index
78.12, Oil $76.30, 10-yr 3.38%, Silver $17.45,
and Gold... $1,095.60
That's it for today... Well... Day one was a
breeze, we have move a little earlier this
morning though, as Alex has jazz band practice
at 6:30! I like that he has broadened his guitar
skills to more than just rock... Only 47 days
until I leave for spring training! The AFC and
NFC Championship Games are this weekend. I sure
hope we get more entertaining games than we got
last week! I'll be rooting for, the Saints, and
Colts, although that's a tough one, as ex-Mizzou
star, Brad Smith, plays for the J-E-T-S, Jets,
Jets, Jets! So, if he runs a kickoff back for a
touchdown, and the Colts win, then that would be
grand! Chris's son Brendan had his confirmation
last night, so congrats there... And little
Delaney Grace called last night, and said that
she missed "her Alex" and wanted to talk to
him... OK... I hear the shower going, which
means Alex is getting ready... Time to hit send,
and start making this a Fantastico Friday!