March 11, 2021
* Currencies and metals rally on Wednesday & overnight!
* Who’s going to buy our Treasuries?
Good Day… And a Tub Thumpin’ Thursday to you! Ahhh, the end of another week… Next week at this time I’ll be signing off for about 10 days as I start my traditional summer vacation… Another day of sunshine yesterday, and I almost finished the book I began reading on Monday! My beloved Cardinals lost another spring training game yesterday, good thing these are just exhibition games and they don’t count on your regular season record… In days passed, I would attend more spring training games, than I do now, traveling up and down the coast to see my Cardinals play… Port St. Lucie, to Ft. Lauderdale, and West Pam Beach… But I don’t feel the need to do that any longer… I’ll see 13 games at Roger Dean this spring, and that’s good with me! Here’s one for the old-timers like me… The Drifters greet me this morning with their song: Under The Boardwalk…
Well… The Currencies did push back the dollar bugs yesterday, but the pushing was more like nudging… The euro rose back above 1.19, The Aussie dollar (A$) rose back above 77-cents, and the Dollar Index fell to 91.85 on the day… Gold was bid up by $10.50, to close at $1,727.90, and Silver also was bid up 27-cents to close at $26.30…
Regarding Gold… I get so tired of listening and reading pundits talk about how Bitcoin has surpassed Gold as a safe haven… They point to Bitcoin’s ability to be used to buy things, and Gold is just a shiny rock… For 5,000 years, Kings and Pharaohs have hoarded Gold… For less than that time, investors have hoarded Gold as a store of wealth… There have been dozens of investment fads through the years that people say will overtake Gold as the store of wealth, and none of them even exist today… I reckon it’s akin to bands like The Bay City Rollers, The Knack, Oasis, who were all touted to be better than the Beatles… And where are they now?
So… Yesterday, the stupid CPI (Consumer Inflation) printed and it gained .4% in February, and the pundits out there were saying things like: “Inflation is till tame”…. Really? If you annualize CPI the annual inflation rate jumped in February to 1.7% from 1.4%… But as long as these so-called experts are using CPI to determine if inflation is growing or not, they’re going to be led down the wrong path… John Williams at Shadowstats.com says consumer inflation is more like 9.4%.. Which I would think would be nearer to your own experience… Remember I’ve always said that inflation is a personal thing, what one person experiences with inflation won’t be the same as the next person’s experience with inflation..
Maybe the story I told you about yesterday regarding the guy that bought a truck load of Copper (10,000 tons of Copper) and when it was received it was a shipment of copper painted landscaping bricks, that caused Copper to lose a couple shekels yesterday… Or maybe the pundits claiming that inflation is tame, caused some copper owners to back off the inflation fears meter… Me? I’m thinking that the slippage in Copper had more to do with the former…
In the overnight markets…. there’s been more dollar selling, and we start this morning with the Dollar Index having fallen to 91.55, from 92.11, where we started with it yesterday. Gold is up $7 in the early trading today, and Silver is up only 3-cents… The euro continues to climb back toward 1.20, and the Aussie dollar (A$) is looking quite perky once again. The aforementioned Copper, is up to 4.10 this morning, as all is forgiven, and the focus returns to rising inflation…
OK.. I know this has nothing to do with currencies, economies, and dolts… But it does have something to do with… Something that’s new! Do, do you know what an NFT is? Well, if you do you’re ahead of me, because I just found out last night! And NFT is a “non-fungible token”… And the reason I looked it up is I saw this headline: Rob Gronkowski will sell NFTs of his best Super Bowl moments…. OK, here’s the skinny on an NFT from Bloomberg.com: “Think of them as digital certificates of authenticity. A non-fungible token, or NFT, is a unique, irreplaceable identifier created by an algorithm: A distinct barcode for a digital piece of art or collectible. It’s a solution of sorts to a problem that’s long faced digital artists: how to create scarcity for an item that can be infinitely reproduced.”
So, when Gronk wants to sell his memorabilia he wants people to know it’s authentic… one of a kind, etc. and so it will have an NFT…. Makes sense? See? You learn something new nearly every day with me!
Now, back to regular programming… So, the dirty deed done dirt cheap was finally voted on and sent to the President for his signature… I’m talking about the Stimulus Bill… Sending money to people that we don’t have money to send, but will have to be printed up by the Fed, and we’ll all go our merry way… Longtime readers will recall me telling you back when the first stimmy checks went out, that it was setting a bad precedence, and that once people began to see that Gov’t could just print money and send them checks, they would demand more, and more… And now we’re on the second, “and more”…. Jeffrey Gundlach of Doubleline Fund had this to say about all this: “People Are Starting to Believe That Stimulus is Permanent”
Oh, the unintended consequences of what we as a country do… So, when do you think the masses of people will begin to demand another stimmy check? I would put my money on 6 months from now…
The U.S. Data Cupboard today just has the Weekly Initial Jobless Claims, which last week was a full week of claims… We already talked about the stupid CPI earlier today, and tomorrow’s Data Cupboard will have PPI (wholesale inflation), which last month jumped higher and should have been reflected in this month’s CPI, but, as I always say, CPI has all those hedonic adjustments that keep it from telling us what inflation is really doing…
To recap… The currencies & metals both rallied yesterday… Their moves were muted a bit, but they were gains nonetheless… In the overnight markets, there’s been more dollar selling, and all the currencies, sans yen, are rallying VS the dollar. Gold is up $7 in the early trading, and Copper has returned to the scene of the crime, (inflation)… Chuck talks about NFT’s, and inflation and other things this morning.
Before he head to the Big Finish today, I want to talk about something that really bothers me… And it’s neighbors snitching on neighbors… This whole “if you see something, say something” has gone way too far… Neighbors are supposed to support each other, when times are bad, and regale with each other when times are good…. Not call the police because you see several members of the family next door entering their house for a dinner! I find this behavior to be reprehensible… As Doug Casey recently said, “1984 was supposed to be a warning, not a manual on how to do things”….
Quick Question… have you read the book 1984? If you did and you remember the gist of the book, you’ll see the similarities of the great George Orwell book and now…. I’m just saying…
For What It’s Worth…. The good folks at GATA sent me this note, and the link to the story, so I thank them. The article is about how the Commercial Banks are now using their funds to buy Treasuries instead of making loans, and it can be found here: Fed Policy Is Smothering Private Lending – WSJ
Or, here’s your snippet: “he Federal Reserve’s seeming willingness to provide inexhaustible financing of U.S. government debt is raising concerns about future inflation. Record-breaking growth in the money supply from the Fed’s quantitative-easing bond purchases threatens price stability. But an even greater risk—one that goes to the heart of economic opportunity under democratic capitalism—is the effect of Fed decisions on private bank lending.
Banking institutions have traditionally provided the pipeline that routes loanable capital to businesses and households. Yet commercial banks are increasingly opting to reduce the share of total assets devoted to loans while expanding their holdings of Treasury debt and government-backed mortgage securities.
The 25 largest U.S. banks currently hold 45.7% of their assets in loans and leases, according to Fed data released Friday, down from 54.1% this time last year. Meantime, their year-over-year holdings of Treasury and agency securities increased 33.5%. This reflects more-stringent borrowing standards and diminished loan demand. But it also reveals a subtle yet persistent change in how banks operate.
Banks have pulled back from making risky loans in favor of engaging more directly with the Fed—avoiding the type of lending that spawned stricter regulatory standards after 2008 while readily accommodating the Fed’s expressed satisfaction with an “ample reserves” regime. Bank lending to small businesses has remained low throughout the postcrisis years, with the largest declines in small-business lending at large banks, as shown in a 2018 report commissioned by the Small Business Administration.”
Chuck again… Shame, shame, Shame, as I use my best Gomer Pyle voice! Previously it was banks using their funds to buy back their own stock… And now it’s funding the deficit spending lollapalooza that’s going on in this country… Shame, Shame, Shame…
But who else is going to buy the Treasuries that are issued to finance the ever rising debt? With yields so low, individuals are staying clear of owning Treasuries, and the pensions that have to have so much in Treasuries are probably maxed out… This is becoming a major problem for this country, folks… We keep racking up debt, because it doesn’t matter to the magic money tree folks, and it has to be financed, and no one is at the auction window to buy up Treasuries… Uh-oh…. So, banks will buy them until they are up to their eyeballs with Treasuries, and then it will be the Fed buying them to monetize them… (error admission here, the other day I used the word demonetize and I meant monetize) And when the rest of the world sees what the Fed is doing…. All hell will break loose, and the dollar will be sent permanently to the wood shed…
Market Prices 3/11.2021: American Style: A$ .7774, kiwi .7229, C$ .7952, euro 1.1965, sterling 1.3959, Swiss $1.0813, European Style: rand 14.9385, krone 8.4227, SEK 8.4485, forint 306.01, zloty 3.8282, koruna 21.9084, RUB 73.84, yen 108.50, sing 1.3396, HKD 7.7588, INR 72.58, China 6.5071, peso 20.73, BRL 5.7523, Dollar Index 91.56, Oil $65.21, 10-year 1.49%, Silver $26.33, Platinum $1,225.00, Palladium $2,400.00, Copper 4.10, and Gold… $1,734.90
That’s it for today… and this week of course since I no longer write on Fridays… Well, I heard from good friend Rick Baur, as he thanked me for calling out his birthday yesterday… I also received a note from the Great Mogambo Guru yesterday! He wished me a happy birthday… I told him I truly appreciated the birthday wishes, but my birthday isn’t until 3/22… He replied, “You’re welcome, but just hold onto it; it will get better with time! Hahaha! Ahhh, wise words from the Mogambo Guru! Who by the way is doing well, but very sad that he no longer gets to play his beloved banjo at gigs… I keep reminding him that I need for him to stay with us for a long time to come! I just wish he would write every now and then again… My Missouri Tigers play in the first round of the SEC tournament tonight, and it’s not on late, so I’ll be able to watch it! YAHOO! Tomorrow night will be the first night game at Roger Dean for the Cardinals in probably 10 years! It will different not having the sun beating down on you all game…. Which I love by the way!) Ok… Weezer takes us to the finish line today with their song: Island In The Sun… “On an island in the sun, We’ll be playin’ and havin’ fun, And it makes me feel so fine, I can’t control my brain” I hope you have a Tub Thumpin Thursday, and a mighty grand weekend, and I’ll talk to you on Monday morning, God willing… And please don’t forget to Be Good To Yourself!
Chuck Butler