Is A 1980’s Plaza Accord Possible?

May 19, 2022

* currencies rally for 3rd consecutive day… 

* Powell talks tough…  

Good Day… And a Tub Thumpin’ Thursday to one and all! Longtime readers know that my two oldest children, (Dawn, & Andrew) are both teachers, Dawn teaches kindergarten, and Andrew deals with high schoolers… Their last full day of school is today, and if I recall correctly, they’ll be smiling like Cheshire Cats at noon tomorrow… The Pond Scum (80’s name) have taken 2 of 3 so far from my beloved Cardinals… And a rain storm came through yesterday, and cooled down the temps for a few days… The Great Leon Russell greets me this morning with his song: Back To The Island…

Well, ever since Monday this week the dollar has been slipping, yesterday the BBDXY game up 2 index points, and overnight was even worse. More on that in a minute. I’m still not convinced that this brief dollar selloff is a long lasting trend, instead,  just a “correction”… But stocks are really getting sold these day, and a lot of those stock holdings were by foreigners, who then would sell the dollars that they just received for the sale of their stock, and convert them to their home base currency… I don’t know how much of this scenario has happened, but it’s difficult for me to believe that it hasn’t happened by the truck load…

Gold tried like the dickens to get back to flat on the day yesterday, but ended up short by $2.70, and ended the day at $1.822.20. Silver did get back to flat and more gaining 4-cents on the day, and ended the day at $21.74… The Price of Oil slipped again from its high on Tuesday of $115… And bonds continue to wallow around in the muck… I for the life of me can’t come up with a reason for an individual to buy U.S. Treasuries when the Fed/ Cabal/ Cartel is hell bent and whiskey bound to hike rates further…

Buying bonds now would be like a poker player calling another player’s bluff… Buyers now are going with the thought that the Fed/ Cabal/ Cartel can’t hike rates much further without getting the economy in a deep dive… That’s their story and they are sticking to it! Me, on the other hand, still won’t touch Treasuries with your ten-foot pole!

In the overnight markets last night… The dollar got sold more, and this is becoming quite interesting… The BBDXY lost 7 index points in all yesterday and last night… The euro is above 1.05, and the Russian ruble continues to rack up the gains VS the dollar. Gold is up early this morning, along with Silver, so we have that going for us today! I just talked about Treasuries, and then I look at the early morning level for the 10-year, and see that it has rallied to 2.83%… I don’t get it… but then I’m just a humble old country boy…

When I left you on Tuesday, I told you that the Fed/ Cabal/ Cartel Chairman, Jerome Powell, who has been confirmed to his second term now, was being interviewed… Well, let’s listen in on some of his interview;” Federal Reserve Chair Jerome Powell emphasized his resolve to get inflation down, saying Tuesday he will back interest rate increases until prices start falling back toward a healthy level.

“If that involves moving past broadly understood levels of neutral we won’t hesitate to do that,” the central bank leader told The Wall Street Journal in a live-streamed interview. “We will go until we feel we’re at a place where we can say financial conditions are in an appropriate place, we see inflation coming down.”

“We’ll go to that point. There won’t be any hesitation about that,” he added”

Chuck again… So, like I said above, the Fed/ Cabal/ Cartel is hell bent and whiskey bound to hike rates… And well, I think they will soon find that their rate hike didn’t stop inflation from rising… And why’s that? Well, I told you on our Tom Terrific Tuesday… The over $4 Trillion in new money supply in the past couple of years has already been issued, spent and son on… You can’t call it back now…

I will say this though, Seniors have to be thrilled that their CD’s will be getting increased rates when they rollover… This group of people have been the hardest hit by the ZIRP (zero interest rate policy), and then they had to take another arrow when inflation began rising! I’m now considered a “senior”, and I know first hand what kind of damage my investment portfolio has taken with ZIRP, and now inflation…

I want to spend some time talking about Gold (& Silver) this morning… Sure Gold has taken on water in the month of May, but… it’s still the commodity I want to own during a war overseas, rising inflation at home, and an overbought dollar.. I saw this quote by one of my fave founding fathers, Thomas Jefferson, so here it is: “Specie (gold and silver coin) is the most perfect medium because it will preserve its own level, because having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.” – Thomas Jefferson

What a smart man Thomas Jefferson was… Many of the things he’s known to have said, are still relevant today… I’m just saying…

Like I said above, Gold has been taking on water in May… That makes it cheaper for people that has shuffled their feet, hemmed and hawed, and had to be dragged to the watering hole! That’s why it’s so darn cheap these days… Because a very small percentage of individuals actually own Gold… If they were buying physical Gold like they do stocks or Bitcoin, they’re buying power would keep the price manipulators at sea… But when your stock broker, talks you out of buying Gold, what are you going to do? Listen to your broker? Or… go rouge, and open an account with a Gold dealer, someone trustworthy, like my metals guru, Tim Smith at 1-800-926-4922…

Here’s a good fact for you… Gold doesn’t really go up in price, it goes up only because the dollar goes down, or the pound sterling goes down, etc. Oh! Did you hear about the guy in the U.K. that has decided to pay his employees in Gold instead of sterling? Here’s a quote from the Employer…

““With the cost-of-living crisis going from bad to worse,” says TallyMoney CEO Cameron Parry, “it didn’t make sense to continue offering pay hikes in pounds when its value is being eroded further with every passing day. It was like putting a Band-Aid over an open wound,” he tells local paper City A.M.

Wow! Thinking back to the early 2000’s If I had demanded that I get paid in Gold…. I’d would be singing: We’re in the money, we’re in the money,… Of course my wife would say to me: Show me the money!

The U.S. Data Cupboard will only have the usual Tub Thumpin’ Thursday fare of: Weekly Initial Jobless Claims for last week… And then some housing data that doesn’t make me tingle all over… We will see the Leading Indicators for April, with a reminder that the previous month’s print was flat as a pancake! (Head East)

To recap… The dollar is showing signs of weakness… Chuck isn’t sold on it being anything more than a correction of the dollar’s extremely overbought position…Gold lost ground yesterday, while Silver eked out a 4-cent gain. The over night markets saw the dollar get sold some more… I have an interesting article for you in the FWIW section today, so you won’t want to miss that!

For What It’s Worth….i was talking about the Plaza Accord a few Pfennigs ago, and look what the cat dragged in… An article about a potential new Plaza Accord! And that article can be found here: Surging Dollar Stirs Markets Buzz of a 1980s-Style Plaza Accord (yahoo.com)

Or, here’s your snippet:” The dollar’s skyrocketing rise has some contemplating a rare, if not unthinkable, action: major nations agreeing to manipulate the U.S. currency until it falls.

It has happened before — most notably with 1985’s Plaza Accord — which took place against a backdrop of soaring inflation, an aggressive Federal Reserve rate-hike campaign and surging dollar. In other words, a scene that looks a lot like today — a parallel that won’t be lost on Group-of-Seven finance ministers and central bank governors as they meet this week.

Demand for the greenback has been relentless this year, the result of interest rates rising quicker in the U.S. than other developed economies and the war in Ukraine prodding a stampede to the ultimate haven. The dollar’s 6.3% surge since the start of the year has clobbered the yen to a two-decade low and put the euro almost back to 1-to-1 parity with the U.S. currency for the first time since 2002. Investors are lasering on the yen tumbling to 150 per dollar and the euro falling below 90 cents as a potential line in the sand.

For Stephen Miller, a four-decade market veteran and former head of fixed income at BlackRock Inc. in Sydney, the situation now is reminiscent of his time as a young buck in Australia’s Treasury Department, where he had a front-row seat watching the Plaza Accord unfold.

Through that agreement which France, Japan, the U.K., U.S. and West Germany agreed to weaken the dollar — a stance taken out of a belief that the dollar’s huge move higher was damaging the global economy.

“One of the options down the track could be some sort of coordinated intervention,” said Miller, now an investment consultant at GSFM, a unit of Canada’s CI Financial Corp. which oversees about $289 billion in assets.”

Chuck again… While that would be a welcome sight to non-dollar holders, I just don’t see it happening, but it sure is an interesting thought, eh?

Market Prices 5/19,/ 2022: American Style: A$ .6998, kiwi .6351, C$ .7801,
euro 1.0524, sterling 1.2417, Swiss $1.0239, European Style: rand 15.9693, krone 9.7979, SEK 9.9861, forint 366.54, zloty 4.4085, koruna 23.4682,
RUB 62.26, yen 129.80, sing 1.3846, HKD 7.8480, INR 77.48, China 6.7738, peso 19.99, BRL 5.1348, BBDXY 1,147.37, Dollar Index 103.30, Oil $107.94,
10-year 2.83%, Silver $21.63, Platinum $956.00, Palladium $2,008.00,
Copper $4.23, and Gold… $1,826.89

That’s it for today and this week, of course… I’m looking forward to the weekend, as I’ll be attending a wedding… the little girl that grew up next door to us, Jordan Yanker, will be walking down the aisle and saying “I do” on Saturday… Jordan and Alex are about the same age, and they used to play together all the time, but then they grew apart as the grew up… Congrats to the parents, Kevin and Lisa… I remember when Dawn got married, I was so proud to walk her down the aisle… Geez Louise, that was 19 years ago now! Where does the time go? The Cardinals and the pond scum at noon today… A good day to sit outside and watch them! Chicago takes us to the finish line with their uber hit, that was the make out song of the 70’s… Color My World… (I used to be able to play that on the piano, but not anymore! UGH!) I hope you have a Tub Thumpin’ Thursday today and please remember to Be Good To Yourself!

Chuck Butler

The Dollar Rally Gets Stopped In The Overnight Markets…

May 17, 2022

* Powell backs off his claim of being able to deliever a “soft landing”

* Gold & Silver start the week on a good foot… 

Good Day… And a Tom Terrific Tuesday to you! How dare Mother Nature rain out the mighty NY Mets last night… Doesn’t Mother Nature know that the Mets have a king’s ransom for payroll? OK, I’m having some fun here… The Cardinals and Mets were rained out last night, and they’ll play a double header today… As the great Ernie Banks used to say, “hey, let’s play two!” Our Blues start the second round of the Stanley Cup Playoffs tonight in Denver…. Let’s Go Blues! The Cornelious Brothers & Sister Rose greet me this morning with their song: Too Late To Turn Back Now…

Well… I think I upset the hornet’s nest yesterday, when I talked about the POTUS signing a document that we are at war with Russia… I know that it takes a vote of congress to commit the country to a war with bullets and bombs… But, I think what this document was referring to is that the U.S. is at war with Russia, and therefore will continue all sanctions, financial and otherwise going forward… And to the person that wrote me and told me to keep politics out of the Pfennig, I want to say, I do keep politics out of the Pfennig… I didn’t see the statement yesterday as political, period!

Ok… well, the dollar paused for the cause yesterday, and didn’t gain for once! We’ve really only had a couple of days in the past two months, where the dollar didn’t gain on the day… We began yesterday with the BBDXY at 1,257, and we ended the day with the index at 1,256…. The euro moved higher in the 104 handle, and Gold found a way to gain $11.70 yesterday to close the day at $1,824.90, and Silver gained 48-cents to close at $21.70… So, a good day for the metals…

I read two articles from different sources this past weekend that claimed that Gold was on the launching pad, and would soon be moving higher once again… Well, we can all hope so, eh? The price of oil gained $5 yesterday, and trades this morning with a $114 handle… And Bonds are stuck in the mud… and there’s no reason for anyone to get al mucky, wallowing around in the mud with bonds!

In the overnight markets last night… The dollar rally was halted! The BBDXY lost 3 index points, and the euro rose above 1.05… I won’t put too much stock into this brief sell off of the dollar, but it did come after Jerome Powell’s NPR interview yesterday. I have something on that in a bit, so hold your horses! Gold and Silver are trading up this morning, with Gold up $12, and Silver up 12-cents. The price of Oil rose another buck to trade with a $115 handle this morning, and bonds continue to be stuck in the mud.

Did you see the latest in wholesale inflation, aka pipeline inflation? Well, for April it was up 11%… That tells us that consumer inflation, while dropping a ibt in April, isn’t going to drop any more… And on top of that, well, I’ll let Bill Bonner tell you what’s on his mind regarding inflation: “Food, shelter, transportation – those are the ones that drain the family checking account. As for food, actual price increases are far above the BLS’s index. Beef is up 14%, chicken 15%, wheat flour 33%, orange juice 17%, coffee 70%.

Shelter, too, is much more pricey than the BLS says. Zillow computes the average rent people actually pay. It’s up 17% over a year ago, it says. The average price paid to buy a house is also 16% higher than a year ago.

And fuel? A gallon a gas averaged $3.11 last May. Now, it’s up 40%”

Chuck again… people that live on the margin… they calling Houston right now to report a problem! And wouldn’t you know it, the first summer in the last 3 that people can get in their cars and go on vacation, and the cost of gas is going through the roof… Ed Steer, had a cartoon in his letter the other day, of a man sitting at a bank, and the banker tells him he can get a home, auto, personal, loan, and what kind of loan was he looking for, and the man replied “ I need a loan to fill my gas tank”…

Every time Kathy goes to Costco, I ask her if she saw the loan officer giving out loans near the meat counter? All joking aside, the thing that really gets me is that most people believe that by hiking rates 50 Basis Points at a time, is going to squelch inflation… You see, this time inflation was caused by money supply, and sure the distribution chain problems added to the inflation that was caused by over $4 Trillion in new money supply since 2020… And so like the old saying that someone let the cat out of the bag, or the cows out of the barn, money supply allowed inflation out of the box it had been held in for a very long time…

And now, like water under the bridge, or spilled milk, the money has been printed and sent out, it’s out there, and you can’t call it back! Therefore I believe we’ll see the Fed/ Cabal/ Cartel attempt to hike rates at successive meetings, and all they’re going to do is cause a very deep recession, that could last over a year! Shoot Rudy, Elon Musk said that he saw the recession lasting 18 months! Now, I don’t know what kind of economics training Elon has had in his past, so I say we should take his 18 months with a grain of salt…

The Fed/ Cabal/ Cartel had an open window for a very short time to be proactive in combating inflation, and instead used that time to deny inflation existed! They should all be fired, and star anew! Did you know that Jerome Powell still hasn’t been confirmed for his second term? So, in reality his the Chairman pro-tempor, or something like that! So now, we not only have this group of Fed lifers, making the decisions about our economy without ever having lived and worked in it, but we also have their spokesperson not confirmed for his next term!

And remember when the Fed/ Cabal/ Cartel finally began to admit that there was inflation in the economy, and chairman Powell, said that the Fed would deliver a “soft landing”? And I immediately called him out on that, because of the fed’s history… Well… yesterday, Powell was being interviewed on NPR radio, and he has changed his tune about delivering a soft landing… Let’s listen in to some of the talk: “But in an interview on NPR’s “Marketplace,” Powell conceded that that balancing act — which many economists have said they doubt the Fed can achieve — could be undercut by economic slowdowns in Europe and China.

“The question whether we can execute a soft landing or not — it may actually depend on factors that we don’t control,” the Fed chair said. “There are huge events, geopolitical events going on around the world, that are going to play a very important role in the economy in the next year or so.”

Chuck again… Oh boy, here we go again, always blaming your problems that you created on someone else… First it was the distribution chain problems, then it was China, and now it’s the slowdowns in Europe and China that will prevent him from delivering on his call of a “soft landing”… Tsk, tsk, tsk… and in my best Gomer Pyle voice, Shame, Shame, Shame….

Ok, let’s talk about something other than the dolts at the Eccles Bldg. and the inflation they caused… And just to remind you, that… inflation is everywhere… The good folks at GATA sent me this note yesterday regarding the Bank of England (BOE), “The governor of the Bank of England has claimed that policy makers have been left helpless in the face of surging inflation.

Appearing in front of MPs today, Andrew Bailey admitted he had felt helpless to control soaring prices amid an energy market shock and the war in Ukraine, adding: “It’s a very, very difficult place for us to be in.”

Yes, the BOE is in the same corner as their cousin in the U.S. and once again their inflation was caused by money supply, and too much debt, that prevented the BOE was acting proactively with rate hikes… You know, remember about year ago, when pound sterling was performing like the best currency? And I said that, “the U.K. has too much debt, and it will come home to roost for them soon enough, I would be careful jumping on the pound sterling bandwagon”…

And while we’re in Europe… Remember when the EU announced that no country in the Union would be buying Russian Oil, since they had to use rubles or Gold to buy it? Check out this headline: European Sanctions Blown To Bits: Draghi Says “Most Gas Importers” Have Opened Ruble Accounts With Gazprom”

Hehehehehe… Sanctions, Smanktions… When you need Oil, you need Oil, or like me going down to Columbia, Mo over this past weekend, I needed to fill up my gas tank… and paid $4.80 a gallon… I needed gas, and I paid for it…

No wonder highway 70 that cuts through Mo. Has 100’s of trucks, big rigs, traveling, had the gas stops packed with trucks… I’m sure these guys drove until they were on fumes and then had to pull in for fuel, and then paid over $5 for diesel fuel…

And the truckers’ rising costs to travel, soon become the grocers and other retailers rising cost, and that becomes the consumer’s rising cost! Oh, come on Chuck, that’s elementary! Yes, I agree it is, but… sometimes you have to start anew to refresh memories!

Yesterday, I told you that the today’s Data Cupboard would be chock-full-o-data today, and so it will! April Retail Sales, Industrial Production and Capacity Utilization will all print this morning… And then later today, Jerome Powell will be interviewed by the WSJ… I wonder what lies he’ll tell them?

To recap… The dollar took a pause for the cause yesterday, and actually dropped 1 index point on the day! Gold & Silver gained on the day, Oil pushed higher by $5 and bonds were stuck in the mud. Chuck talks a lot about inflation today, and not just in the U.S…. And in the overnight markets… The dollar rally was stopped, and Gold & Silver are both trading up this morning, Chuck won’t put too much into the dollar rally being stopped, as we all will have to wait-n-see where it goes from here. 

For What It’s Worth… Well there were many candidates for this space this morning, but when it came to the cheese that binds, I thought that this one was best as it describes the fall in manufacturing in the NY region, and it can be found here: Empire Fed Manufacturing Survey Unexpectedly Crashes To Post-COVID Lows | ZeroHedge

Or, here’s your snippet: “Empire Fed Manufacturing Survey Unexpectedly Crashes to Post-COVID Lows

As Goldman lowers its U.S. growth forecasts for 2022 and 2023, the N.Y. Fed’s survey of manufacturers surprised with a drastic plunge into contraction in May, for the second time in 3 months. general business conditions index dropped over 36 points to -11.6 (against expectation of a +15 print)…Click to enlarge.

That -11.6 print is lower than the lowest forecast from analysts (-10) – an 8 sigma miss from expectations…

Under the hood, new orders dropped nearly 34 points in May to -8.8, and the shipments measure fell at the fastest pace since early in the pandemic, sinking about 50 points.

As in April, firms expressed less optimism about the six-month outlook than they did earlier this year. The index for future business conditions was little changed at 18.0. Increases in prices and employment are expected to continue in the months ahead.
The capital expenditures index fell to its lowest level in several months.

This is the first of several regional Fed manufacturing numbers set for release over the coming weeks. Is this the start of ‘weakness’ that offers Powell his ‘out’ from uber-hawkishness?

Or is this yet more signals that stagflation is becoming embedded… the central bankers’ nemesis.”

Chuck again… I’ve explained this before, but here we go again… I stopped reporting the regional manufacturing reports because they never, and I mean never had any indication of what the National ISM manufacturing index would show… But this one kind of made me sit up and notice it…

Market Prices 5/17/2022: American Style: A$.7035, kiwi .6370, C$ .7800,
euro 1.0541, sterling 1.2823, Swiss $1.0077, European Style: rand 15.9966, krone 9.6556, SEK 9.8888, forint 366.67, zloty 4.4065, koruna 23.4383,
RUB 65.12, yen 129.31, sing 1.3838, HKD 7.8495, INR 77.31, China 6.7259,
peso 19.96, BRL 5.0604, BBDXY 1,253.22, Dollar Index 103.30, Oil $115.51,
10-year 2.91%, Silver $21.84, Platinum $956.00, Palladium $2, 036.00,
Copper $4.24, and Gold… $1,835.42

That’s it for today… A Chamber of Commerce Day here yesterday! I sat outside to read for too long, as my allergies were acting up last night. Pollen is so thick around here, especially since my property is surrounded with trees! Our rose bushes really busted out all over these past few days… Spring has finally arrived! The days are warm, and nights are cool… April and the first two weeks of May had to be the coldest and rainiest start to spring I can ever remember! I’m so glad that’s over! OK, it’s the 2nd round of the playoff, Blues… Go to work, gotta skate, and gotta check! Paul Revere and the Raiders take us to the finish line today with their 60’s song: Kicks… . This song has lyrics that are so appropriate for now… “Kicks just keep getting harder to find”… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

Dollar Dominance Continues…

May 16, 2022

* Currencies & metals continue to get sold… 

* The ruble is the best performing currency this year! 

Good day… and a Marvelous Monday to you! I apologize up front and center this morning, for the short week of letters last week… I was really under the weather for most of the week, and just couldn’t sit down long enough and concentrate, so I passed on writing… On Saturday, we attended the graduation ceremony for one, Grace Ann Hambrechen, (sp) at the University of Missouri School of Law… Gracie, as I call her, is a part of our family, whether she wants to be or not! And we’re all so proud of her! Now it’s into the real world, Gracie… Good Luck! Dion and the Belmonts greet me this morning with their song: The Wanderer…

Well, what can I say today that will calm the fears of everyone that pays attention to what’s going in the world? Not to worry? No reason to be concerned? I can tell you that that I’ve never been one to try and smooth the feathers, and talk sunshine and rainbows about stuff that doesn’t deserve it… I mean did you hear that we are now officially “at war” with Russia? Now, there’s nothing I can say that will smooth those feathers… Not that I wanted to put the fear of God into you this Monday morning… But, I doubt everyone out there heard that news, and so, I thought it best to get it out front and center, this morning…

OK… The dollar dominance continues, and there’s nothing out there to stop it, right now… I mean that there are plenty of things to stop the dollar dominance but, they haven’t yet, so the dominance continues unabated… Shoot Rudy, the euro, is trading with a 1.03 handle and it never got that low back in the time when the Greek Debts were exposed! 1.05 had its low during those turbulent times, so 103 is a scary level for euro holders… The BBDXY gained another 1.10 index points on Friday to close the week at 1,258.63…

You know the thing that really catches my attention these days is the selling of commodities… And the Commodity Currencies… It’s as if the markets have decided that there’s no reason to fear inflation any longer… What a bunch of bunk! But really, that’s what the markets are telling us, with Copper dropping like a rock, and the Aussie dollar (A$ also dropping quickly… Countries around the world are faced with rising inflation, and they are hiking their internal rates, if not appropriately, at least they are hiking them . And that tells me inflation isn’t going anywhere but up…

Remember what I ‘ve told you about Producer Prices, right? Well, the lastest reading on Producer Prices showed no backing off of wholesale inflation, with an 11% gains in prices… Back in the 70’s we saw the same thing occur, with a surge in inflation, and then a backing off of inflation, giving everyone a false sense of security, thinking that they had defeated inflation, only to see it surge again and this time it was a HUGE surge… So, do you want to bet against another surge in inflation? That’s what the markets are telling us to do right now, and I just shake my head in disgust at this market reaction…

In the markets on Friday, I already told you the dollar continued to gain, and that the euro is looking weaker by the day… Gold Lost $9.30 Ans closed the week at $1,813.20, but Silver had a great day gaining 46-cents to close the week at $21.24… The price of oil slipped a buck to end the week trading with a $109 handle… Bonds continue to get bought, since the Fed/Cabal/ Cartel announced they would start their Quantitative Tighening, in June, an the 10-year’s yield finished the week @2.89%….

In the overnight markets last night… there was more dollar buying, and selling of Gold… Gold has fallen below the $1,800 figure this morning as it has started the day/ week, down $12… Here’s a quick question for you… Do you know what currency is the best performing currency this year? Well, if you said, the Russian ruble you win a Gold Star sticker! Wear it proudly! There’s not a lot of data this week other than tomorrow’s onslaught of data, so it could end up being a very ugly week for the non-dollar assets… I’m just saying…

Well I hate to be the bearer of bad news, but wwe all knew in our heart of hearts, that all the financial bubbles were bound to find a pin at some point…Well, I believe that a pin has been found, but for now, it’s a slow leak….

Here’s Alastair MacCleod on this idea…”those who have protected their wealth by investing in financial assets no longer have the following breeze of falling interest rates. Financial bubbles are now bursting. Understanding the causes and therefore being able to assess the likely losses involved is becoming urgent for anyone committed to financial markets …”

Chuck again… Yes, what he’s telling you is that the stock market bubble, the bitcoin bubble, the NFT’s bubble, etc., no longer have zero interest rates to aid and abet their ability to inflate their bubbles…

OK, there are other things I want to talk about today… Longtime reader, Bob, sent me an article the other day that talked about righing inflation and how Americans will adjust their behavior to deal with surprise inflation, to which I say, I’m from Missouri, they’ll have to show me that they will be able to adjust their behavior… And I’ll add this… If inflation gets as bad and lasts as long as I fear… The American citizen will be ready to storm the gates….

Americans will HAVE change their spending habits, but that’s different than them just adjusting to their loss of purchasing power from inflation… And the Americans I know and love, will not be happy about having to change their spending habits, because of a loss of purchasing power, and disposable income.

Last week I told you that there were several events that happened in the 70’s, and that I would go through these at some point in the future…. And that future is now! Aren’t you the lucky ones! Ok… Well, first thing that happened in the 70’s was a war going on in another part of the world, that didn’t, on the surface, seem to be leading us to WW111…..The next thing was a decision by the Saudi’s to embargo oil to countries not friendly to them. Then there was a period of time in the 70’s where inflation had begun to rise, and the Fed/Cabal/Cartel sat on their hands and refused to address it. And that will do it for today… there are more, so stayed tuned!

Remember WIN Buttons? Whip Inflation Now! The brain output of one Gerald Ford… As if pining a button on your jacket lapel was going to stop the rise of inflation….

The U.S. Data Cupboard doesn’t have any real economic data for us today, but tomorrow’s cupboard is chock-full-o-data…. Tomorrow we’ll see the color of April’s Retail Sales… I expect to see Retail Sales recover a bit in April, mainly because of the Easter shopping…Industrial Production and Capacity Utilization will also be on the docket tomorrow….

To recap…. The dollar dominance continues to wreak havoc. Gold continues its downward slide, the price of Oil remains very high, bonds have rallied ever since they found out that they won’t be subjected to Quantitative Tightening until June….Chuck points out some similarities of what’s happening now and what took place in the 70’s. And not to scare you to death, but did you know that the POTUS signed a document that said we are now at war with Russia?

For What It’s Worth…. Well, since I mentioned citizens storming the gates above, this article talks about a country that has seen just that because of rising food prices, and that story is told in the article that can be found here: https://www.zerohedge.com/markets/food-riots-sri-lanka-turn-deadly-protesters-beat-police-burn-down-politicians-houses

Or, here’s your snippet: “Two months ago, we noted the first Arab Spring 2.0 incident when, as a result of soaring food, energy (and everything else) prices, thousands of angry Iraqis took to the street to protest. Needless to say, their complaints did not get much traction, and in the meantime food prices have only exploded to fresh record highs, far surpassing the levels hit in 2011 when riots against, you guessed it, food prices toppled most MENA political regimes (not without some CIA backing).

And as food prices keep rising, the protests across poor nations keep escalating, and on Thursday protests broke out in Iran leading to at least 22 arrests, after the government cut subsidies for food, sending prices through the roof as authorities braced for more unrest in the following weeks…

and not just about Iran (and Iraq), but also Sri Lanka, where protesters angry at the soaring prices of everyday commodities including food, have burned down homes belonging to 38 politicians as the crisis-hit country plunged further into chaos, with the government ordering troops to “shoot on sight.”

Police in the island nation said Tuesday that in addition to the destroyed homes, 75 others have been damaged as angry Sri Lankans continue to defy a nationwide curfew to protest against what they say is the government’s mishandling of the country’s worst economic crisis since 1948.

The Ministry of Defense on Tuesday ordered troops to shoot anyone found damaging state property or assaulting officials, after violence left at least nine people dead since Monday, according to CNN; it is unclear if all of the deaths were directly related to the protests. More than 200 people have been injured.

The nation of 22 million is grappling with a devastating economic crisis, with prices of everyday goods soaring, and there have been widespread electricity shortages for weeks. Since March, thousands of anti-government protesters “have taken to the streets, demanding that the government resign.”

Chuck again… Yes, inflation is not just a U.S. problem, but when other countries see this they will most likely follow the lead of Sri Lanka… I’m just saying

Market Prices 5/16/2022: American Style: A$ .6922, kiwi .6280, C$ .7736,
euro 1.0420, sterling 1.2257, Swiss $1.0050, European Style: rand 16.2505, krone 9.8074, SEK 10.0844, forint 370.26, zloty 4.4775, koruna 23.7125,
RUB 64.24, yen 129.57, sing 1.3943, HKD 7.8497, INR 77.66, China 6.7917, peso 20.08, BRL 5.0604, BBDXY 1,257.61, Dollar Index 104.47, Oil $109.60,
10-year 2.92%, Silver $21.11, Platinum $935.00, Palladium $1,931.00,
Copper $4.10, and Gold… $1,799.75

That’s it for today… Well, I’ve been to two games and have seen huge offensive outputs by my beloved Cardinals, including last night. The problem is the rest of their games have no offensive output… UGH! But I saw two winners! Now, if the Cardinals want to take me to every home game I’m available! HA! I have another doctor appt on Wednesday this week, and so no Pfennig on Wednesday, but I’ll be back for Thursday! So far, so good on all my medical appts… Weight is back down, still more to lose though, blood work was all good… But not seeing my oncologist for 3 months, had her worried… I told her, there’s nothing to worry about, I was in Florida soaking up vitamin D, and was stress free! Cat Stevens takes us to the finish line today with his 70’s song: Moonshadow… I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself!

Chuck Butler

A Pause In Dollar Dominance, For The Cause…

May 10, 2022

* The U.S. Empire is in decline… 

* Silver, yes, Silver is actually up this morning!

Good Day… And a Tom Terrific Tuesday to you! No baseball for me last night, so I had to find something else to do… So, I went to Amazon and bought 3 new books, one of them for my granddaughter, Evie… Speaking of Evie, that’s exactly what she’s doing these days,  saying all Kinds of things, most of which I can understand, and some, well, she’s still jabbering a bit. She’s just so darn cute, and loves to try an steal my seat, when I get up…Three Dog Night greet me this morning with their big 70’s song: Mama told Me Not To Come

Well, if you came here this morning to see if the dollar had begun its burn out, like a failing star, then you came to the wrong place,as the dollar’s dominance continued yesterday, especially against the metals… Gold lost $29 on the day, and Silver lost 58- cents….Speaking od Silver… last Sayurday, in Ed Steer’s Saturday letter, he posted a graph, as he always does on Saturday, that shows the number of days of production it would take to equal the ounces of metals sold short… The number of days of Silver production that it would take to equal thr ounces of Silver that’s sold short is…. 162 days! Gold’s number is 88 days!

I find these numbers to be shameful for a nation that boasts about its free markets…. There should be a law the prohibits shorting more metal than they have in position available for sale…But as I’ve maintained all these years is that this whole idea of shorting the metals like this originated in the U.S. government to keep people from losing faith in the dollar… Henry Kissinger ans a senator that I can’t recall his name right now, discussed how they would need to defend the dollar after President Nixon, removed the Gold from backing the dollar…

Their initial fears were confirmed, as the dollar went into a 7 year down trend, that had traders scrambling for answers… and it took Volker’s’ 20% interest rates as the decade ended to entice foreign investors to but U.S. Investments to stop the decline of the dollar…

So, Gold closed at $1,855.10, while Silver closed at $21.86 yesterday. The price of Oil lost $5, and seeing that the Fed/ Cabal/ Cartel isn’t going to begin their Quantitative Tightening ( stopping their bond buying), bonds rallied and the yield on the 10_year dropped below 3%….. Oh! And the BBDXY closed yesterday at 1,253.05

In the overnight markets last night…. The dollar was steady Eddie, with little movement. A pause for the cause if you will… Gold ID up $8 early this morning, and Silver is up, yes I said up, 14-cents… The price of Oil staid in the $102 handle during the night and bonds didn’t move off their 2.96% rate… So, little movement in anything, as we start today…

I was reading Bill Bonner’s daily letter yesterday and he wrote something that I think everyone should read… So, here’s Bill: “But America is no longer getting richer… it’s going the other direction. 

Disposable personal incomes are dropping – down 20% from March’21 to March ’22. Of course, the steep drop is the result of winding down the feds’ Covid gimmie/stimmie programs. But ignoring the ‘transfer payments,’ still shows falling incomes. While wage increases are running at about 5%, consumer prices are rising at nearly 9%.

GDP is falling at a 1.4% annual rate.

The trade deficit just hit a new record high – at $109 for the month of April.

Productivity is in retreat – down at a 7.5% annual rate… the worst since 1947.

Consumer prices are rising at the fastest pace in 40 years…

Rents in Miami are up 40% year-to-year… 22% in Orlando… 17% in Las Vegas…

…the stock market just had the worst first quarter since 1939…

…and investors are realizing that many of the most promising breakthroughs were just fads.  NFT sales are down 92% from the peak. An NFT of Jack Dorsey’s first tweet sold for $2.9 million a year ago; now it’s on sale… top bid so far: $14,000.”

Chuck again… Remember when I had a cow about what the heck were NFT’s? Well, maybe that chicken will come home to roost.

Well what came to your mind last week when the stock market lost nearly 1,000 points, only to see it gain those lost points the next day? And the closed the week down nearly another 1,000 points, and so on? Given the fact that there are no free of manipulation markets anymore… I immediately thought of the PPT… The Plunge Protection Team, was created in 1987 after the October crash of the stock market… Their initial charge was to make the stock market operate smoothly… But in recent years they’ve added to their job, and a protection of sell offs became their charge de affairs….

And thinking of that, Russ and Pam Martens of: www.wallstreetonparade.com talked about this yesterday, let’s listen in: “Wall Street On Parade has been witnessing a new pattern in the stock market for several months now where the market plunges at the open and then shortly thereafter, on no major news, turns on a dime and spikes higher.

This suggests one of two things to us: 1) either the New York Fed is manipulating stock trading out of its second office close to the futures markets in Chicago; or 2) big money at Wall Street trading houses and/or hedge funds is doing it. Either way, the Securities and Exchange Commission and the Justice Department have not nipped this activity in the bud. …

Chuck again, again… I would put my money on manipulation…

The U.S. Data Cupboard doesn’t have anything for us today, well make that for us to be interested in…All this talk today regarding manipulated markets, it’s not just the markets that get manipulated, think about last Friday’s Jobs report from the BLS, where they added 330,000 jobs to the surveys from employers. I can tell you that the reason the BLS gets away with these shenanigans is that nnot everyone knows how to look under the hood, and see their actual numbers…

To recap… dollar dominance continued yesterday and it especially showed up in the pricing of Gold & Silver qwhich both took on significant losses on Monday. Chuck goes through manipulation today in several things… Stocks, bonds, commodities, currencies, and even data prints, get the manipulation treatment… there are no more free trading markets…

For What It’s Worth….Here’s an article that I feel is very important in the future of our economy, and it can be found here: https://www.zerohedge.com/economics/shocking-consumer-credit-numbers-everyone-maxing-out-their-credit-card-ahead-recession

Or, here’s your snippet:”While it is traditionally viewed as a B-grade indicator, the March consumer credit report from the Federal Reserve was an absolute shocked and confirmed what we have been saying for month: any excess savings accumulated by the US middle class are long gone, and in their place Americans have unleashed a credit-card fueled spending spree.

Here are the shocking numbers: in March, one month after the February print already came in more than double the $18 billion expected, consumer credit exploded to an absolutely blowout $52.435 billion, again more than double the expected $25 billion print, and the highest on record!

And while non-revolving credit (student and car loans) rose by a relatively pedestrian 21.1 billion (which was still the 6th highest on record)…

… the real stunner was revolving, or credit card debt, which more than doubled from the already elevated February print of $14.2 billion to a stunning $31.4 billion, the highest print on record… just in time for those credit card APR to starting moving higher, first slowly and then very fast.

While this unprecedented rush to buy everything on credit at a time when there were no notable Hallmark holidays should not come as much of a surprise, after all we have repeatedly shown that for the middle class any “excess savings” are now gone, long gone…

… the fact is that most economists – such as those at Goldman Sachs – had previously anticipated that continued spending of savings by consumers (who they fail to realize are now tapped out) is what will keep the US economy levitating in 2022. Unfortunately, as today’s consumer credit numbers clearly demonstrate, any savings that US middle class households may have stored away courtesy of stimmies, are long gone.”

Chuck again… this article tells the same story that Bill Bonner wrote about, and that is… the free money is all gone…

Market Prices 5/10/2022:American Style: A$ .6976,  kiwi .6327, C$ .7708,euro 1.0566, sterling 1.2336, Swiss 1.0085,  European Style: rand 16.0727, krone 9.6835, SEK 10.0367,  forint 358.79, zloty 4.4226,  koruna 23.6437, RUB 69.57, yen 130.03, sing 1.3885, HKD 7.8497, INR 77.01, China 6.7221, peso 20.28, BRL 5.1187, BBDXY 1,253.17, Dollar Index  103.60, Oil $102.24, 10-year 2.96%, Silver $21.94, Platinum $986.00, Palladium $2,068.00, Copper $4.20, and Gold $1,862.58

That’s it for today..A simply beautiful day here yesterday,as it didn’t get as hot as the weather app said it would… I sat outside for a few hours yesterday, soaking up some vitamin D… I find that the sun always makes me feel better…Speaking of feeling better, remember two weeks ago when  I had an appt with my oncologist, but had to cancel it because of the head cold I had? Well, it got rescheduled for this Thursday… So, once again a short week for the Pfennig. I have my fair share of doctors… therefore I have my fare sure of doctor appointments! In 2020, I thought that going to see the doctor was like going out! The great Carlos Santana takes us to the finish line today with his rollicking version of the song: She’s Not There… I hope you have a Tom Terrific day today, and please Be Good To Yourself!

Chuck Butler

Dollar Dominance Rules…

May 9, 2022

* Powell still believes he can deliver a soft landing… 

* Gold & Silver remain on the selling blocks… 

 

Good Day… And a Marvelous Monday to you! I hope all the wonderful mothers out there had a marvelous day yesterday… I tried to get out Happy Mother’s Day texts to most of the moms that I could think of… My brain was still a little fuzzy, from a few days of being very sick… The stomach bug that I said that our little Evie had passed onto to Kathy, was passed onto me, and well, with my immune system nonexistent, that stomach bug took it out of me for 3 days! Not a fun end of the week for me! I was so bad I had to cancel my dentist appt, and instead sat in my recliner all 3 days, covered up with a blanket, and hoping the next day would be good… And, I was home alone to top it off! So, enough about me… I hope everyone had a wonderful weekend! Al Wilson greets me today with his song: Show And Tell…

Well, a few things have happened since I last wrote to you… The Fed/ Cabal/ Cartel’s FOMC did hike rates 50 Basis Points, and Chairman Powell, had a lot to say, so I’ll let the folks at the Washington Post tell you about what he had to say: ““Inflation is much too high,” Fed Chair Jerome H. Powell said at a Wednesday news conference. “We understand the hardship it is causing, and we are moving expeditiously to bring it back down. We have both the tools we need and the resolve that it will take to restore price stability on behalf of American families and businesses.”

The rate increase is the sharpest since 2000 and the second of seven hikes forecast for this year. Powell added that additional interest rate hikes as high as 0.5 percentage points are “on the table” in the coming months but said policymakers had not seriously discussed even sharper hikes. Major financial markets edged higher during his remarks, as investors signaled relief that the Fed wouldn’t move more aggressively.

Faced with soaring prices and a hot job market with record numbers of job openings, the Fed is betting that a steady series of hikes will slash inflation, cool the economy and get the coronavirus recovery on more even path.”

Don’t you just love it? First, inflation was non-existent, and then we weren’t suppose to fear it, for it was only transitory, and it would be gone soon, then the folks at the Eccles Bldg, had an “aha” moment, and decided that inflation was a problem, and now they admit that inflation is “much too high”… So, no, you know what, Sherlock!

We didn’t need to have an Ivy leaguer tell us that inflation is “much too high”, now did we? Does anyone else get the feeling that we’re experiencing déjà vu? I mean all that’s going on here now, has been gone through before, unfortunately, for all you youngsters, it was the 70’s… Stuff you’ve only heard rumors about…

OK, I plan to spend a lot of time on the comparison to today with the 70’s, at a future date, but first, we need to review the markets late last week after the FOMC hike rates 50 Basis Points, which still has out internal rate below 1%… I might add…

After the announcement, the markets reacted like I thought they might. Remember last week when I said that the dollar’s trading looked like a sign that it was a buy the rumor sell the fact? Well, immediately on Wednesday afternoon, the dollar got sold, and Gold got bought…

But you, me, and the guy down the street, knew that the price manipulators weren’t going to allow this trading pattern to continue… And so on Thursday, the dollar got bought, and Gold got Sold… The price of Oil rose above $110, and bonds got sold…

On Friday, the dollar continued to get bought, but so did Gold… The BBDXY ended the week at 1,252.54, up for the week, and Gold gained $6.20 to close at $1,884.10, while Silver got sold again at 13-cents to end the week at $22.44.. the Price manipulators just won’t loosen their jaws around the throat of Silver, and I find that to be downright shameful…

In the overnight markets last night… There was little dollar buying, with the BBDXY hanging in at 1,252, but Gold & Silver are getting sold again… In the early trading today Gold is down $16 and Silver is down 47-cents, bringing Silver below $22.. The 10-year Treasury’s yield is above 3% at 3.15% this morning, and doesn’t appear to be settling in… that means that the yield should be heading even higher… And the price of Oil has slipped to a $107 handle in trading this morning… I read where the price of Oil fell from Thursday’s $110 handle is that Oil traders fear of the European Union haggling with Russia over whether they will or will not ban Oil from Russia.

I guess it’s turning to spring in the Eurozone, and they’re feeling their oats, about not needing heating Oil any longer.. OK, whatever… Memo to the EU… You needed the Oil before, so what makes you so sure you won’t still need it?

In a case of showing everyong that fundamentals mean diiddly squat these days, after the Reserve Bank of Australia hike rates last week, the A$ has lost over a cent in value… This whole business of moving currencies on Trader Sentiment is just wrong… And the dollar dominance right now is something to behold.. write it down in you journals that Chuck thinks the dollar dominance is akin to a failing star, for the star burns the brightest right before it flames out…

I am one person that truly believes that the U.S. economy is headed for a recession, the likes we’ve never seen before… But we’ll have to wait-n-see when that happens, eh?

The U.S. Data Cupboard last week had the April Jobs Jamboree and the BLS conjured up 428,000 jobs created in April…. With the word “created” the operative word here, as the BLS added 340,000 jobs to the surveys they received… So, when the surveys came in, there were less than 100,000 jobs created, and they had their marching orders from the Gov’t that they have to created this vision of a strong employment situation, to take people’s minds off of the fact that they sinking deeper and deeper in this inflation spiral, and so they added 340,000 jobs out of thin air to the surveys, and voila! Strong employment!

Today’s Data Cupboard is basically emply with some Consumer forecasts of future inflation on the docket… They won’t ask “real people” about inflation, so this data is worthless…

To recap… Last week saw the FOMC hike rates 50 Basis Points, which puts the U.S. internal rate at .75 to 1.00%… I still don’t get how that’s going to combat inflation , but so be it… the dollar is showing dominance over the currencies, and Gold / Silver… Chuck is convinced that the dollar dominance is akin to a failing star… And the BLS totally stuffed the Job report last week with made up jobs…

For What It’s Worth… I spent some time above on Jerome Powell, but there’s always more that can be talked about, and this article does just that pointing out how wrong Powell, will be shown to be and it can be found here: Powell Confident in “Softish Landing” for the Economy, But We May Keep Inflation. Markets Can Figure Out their Own Landing | Wolf Street

Or, here’s you snippet: “Nowhere in the statement does the Fed explain that the raging inflation followed $4.6 trillion in money-printing in two years that unleashed all kinds of craziness, including in the markets. But that party is over.

“Soft or softish landing” for the economy. Markets on their own.
Tightening might be “unpleasant,” Fed Chair Jerome Powell said, but labor markets are very strong, and the balance sheets of consumers and businesses are solid, and they can handle higher rates, and “we have a good chance to have a soft or softish landing,” he said. “The economy is strong and is well-positioned to handle tighter monetary policy,” he said.

He was speaking of the economy – employment, GDP, etc. – and not the financial markets, which are on their own and can figure out their own landing amid higher rates and QT.

QT starts on June 1. The whole thing is going to take place in a “predictable manner” by letting maturing securities roll off the balance sheet, subject to “caps.”

During the phase-in period in June, July, and August, the Fed’s securities holdings will drop by $47.5 billion per month: $30 billion in Treasuries and $17.5 billion in MBS. Reductions will come from maturing securities being redeemed, and from pass-through principal payments for MBS.”

Chuck again… Hey, wait a minute here! I thought QT was supposed to start May 1st? Why the change of date, Jerome? Why not explain what the delay is? Nah, he can’t do that, that would mean the Fed/ Cabal/ Cartel was transparent! How can we ever believe anything that comes out of his mouth again? Softish Landing, my word!

Market Prices 5/9/2022: American Style: A$ .7024, kiwi .6373, C$ .7741,
euro 1.0570, sterling 1.2398, Swiss $1.0105, European Style: rand 16.1908, krone 9.5131, SEK 9.9970, forint 361.85, zloty 4.4310, koruna 23.6295,
RUB 69.96, yen 130.60, sing 1.3881, HKD 7.8498, INR 77.21, China 6.7122,
peso 20.24, BRL 5.1259, BBDXY 1,252.58, Dollar Index 103.54, Oil $107.20,
10-year 3.15%, Silver $21.89, Platinum $945.00, Palladium $2,047.00,
Copper $4.42, and Gold… $1,867.45

That’s it for today… I’m a little wound tight this morning, I’m sure you can tell… I’ve just about had it with the price manipulators, the Fed/ Cabal/ Cartel, the Treasury, the Gov’t… they all make me sick to my stomach, and I do know something about that! Our Blues evened their series with the Wild at 2 games apiece yesterday, boy did they need that game, and they got it! My beloved Cardinals split their 4 game series in San Francisco with the Giants… They come home to play the Orioles, and I’m going to the game Wednesday with my sons, Andrews and Alex, and then going to the day game on Thursday with good friend Duane… for those of you who don’t know, The Orioles used to be the St. Louis Browns… The Righteous Brothers take us to the finish line today with their song: Unchained Melody. I hope have a Marvelous Monday today, and please remember to Be Good To Yourself!

Chuck Butler

 

It’s A FOMC Day!

May 4, 2022

* RBA hikes rates! 

* Traders wait for the FOMC announcement… 

Good day… And a Wonderful Wednesday to you! It’s also Star Wars Day, so May the 4th Be With You! A quick reminder that there will be no Pfennig tomorrow…. My Cardinals bats were missing again last night, and they lost a game to their interstate rivals, The Royals…this lack of hitting is getting to be a real problem for my Redbirds… UGH! Pitching and Defense can go a long way, butter has to be some hitting at some point! Supertramp greets me this morning with their song, which is also my fave Supertramp song: Hide In Your Shell

After getting sold in the overnight markets the night before, the dollar rallied back during the U.S. Session on Tuesday. The BBDXY gained 2 index points to close the day at 1,2446.29. The trading in the dollar, the last two days leads me to wonder if this will be a case of “buy the rumor, sell the fact”?  With the rumor being that the FOMC will hike rates by 50 Basis Points this afternoon… For there’s been a ton of dollar buying leading up to today…

Gold found a way to gain $4.60 yesterday, while Silver made it 11 consecutive days of getting sold… Silver lost 6-cents, to close the day at $22.63, and Gold closed the day at $1,869.00. I hope you all had the opportunity to read the FWIW snippet yesterday. and took my opinion on holding Gold to heart!… The price of Oil slipped a buck yesterday, and bonds were stuck in the mud.

Speaking of bonds…. There was an article somewhere that I read the other day that talked about how the largest buyer of Treasuries has been unloading them… I told you all that this would happen…. I have something for you regarding a problem with Treasuries in the FWIW section today… So make sure you stick around for that…

In the overnight markets last night…. There’s been little movement of all the asset classes that I follow… Everything is stuck in the mud this morning, with all traders waiting on the FOMC…

Well, today is The DAY isn’t it? The long awaited, and much talked about, 50 Basis Points (1/2%) rate hike will come to be this afternoon. I’m more interested in what the chairman, Jerome Powell, has to say about future rate hikes, because…. Even if there aren’t any real financial journalists to hold his feet to the fire, when he backs off. I’ll be here to call him out…you can bet your bottom dollar on that!

Another $33 Billion is being earmarked for Ukraine…. The Fed/ Cabal/ Cartel has been making overtures about fighting inflation, and the White House keeps racking up the deficit spending, which will require more dollars to be printed… And dollars getting printed is how we got into this inflation mess!  The Reserve Bank of Australia (RBA) hiked their internal rate 25 Basis Points last night, their first rate hike in a decade! The RBA must be taking a page from the Fed’s book on how to combat inflation… This rate hike brings their internal rate to .35%….

The U.S. Data Cupboard had some interesting prints yesterday… 11.5 million job openings in March, and the Great Resignation continues with 4.5 Million job quits in March… Factory Orders were up 2.2% in March but that makes no sense given the negative 1.4% GDP print for the first QTR…. Today’s Data Cupboard has the ADP Employment Report for April…

To recap… The dollar rallied yesterday after getting sol the night before. And last night’s trading was all stymied as traders fear the FOMC this afternoon… Gold & Silver are flat this morning… And we found another $33 Billion laying around that we don’t need! The Reserve Bank of Ausralia hiked rates 25 Basis Points last night…

For What It’s Worth…. Well, this is the aforementioned article about the problem with treasuries, and it can be found here: 12ft | Stress emerges again in Treasuries market | Financial Times

Or, here’s your snippet: “At the beginning of this month, major financial market participants trading in the US Treasury bond market had difficulty meeting the demands for collateral made by their counterparties.

The alarm bell was reported in the Federal Reserve Bank of New York’s Primary Dealer Statistics, in the weekly report for “fails” for US Treasury securities. A “fail” occurs when a market participant breaks a promise to receive or deliver securities when they are obliged to do so.

In the week ended April 6, there were a total of $507bn in fails reported by the primary dealers, a sharp rise from $358bn in the previous week ended March 30. The level fell back down again to $275bn in the subsequent week and was far below the $5.3tn peak of fails seen in one October week in the 2008 financial crisis. But the jump this month was notable — the highest level of fails since March 2020.

During that March, you will recall, financial markets very publicly ground to a halt due to Covid-19 lockdowns. This time, though, there was no particular, visible trigger event.

Even in the normal course of business, some securities transactions will fail. As the New York Fed has noted: “Fails occur for a variety of reasons. One source of fails is miscommunication. Despite their best efforts to agree on terms, a buyer and seller may not identify to their respective operations departments the same details for a given transaction.”

Or, as the New York Fed says, there can be “operational problems”, such as those arising after the September 11 2001 terrorist attacks. “Less extreme operational problems can also precipitate settlement fails, and are not uncommon,” it says.

But the fails reported this April go beyond a burnt out piece of equipment or a mumbled order or two. There are a number of disincentives for controlling the size and number of fails. After the massive settlement problems of the financial crisis, a charge on fails was introduced in May 2009 of up to 3 per cent of the trade value. The charge was extended from Treasuries to US agency debt and agency mortgage-backed securities in February 2012. That adds up when you are looking at tens or hundreds of billions of dollars.

Part of the dealers’ problem in early April was a recent significant cutback in the US Treasury’s issuance of short-term bills, particularly the four-week bills that are the most liquid form of collateral for other transactions. Those would include margin posts required by clearing houses for commodities or foreign exchange trades.

As the Treasury has been borrowing less to cover stimulus payments and extra pandemic-related costs, its debt managers have been rebalancing the profile of its securities issuance by selling fewer short-term bills. This is in line with “good practice”: the Treasury’s advisory committee has agreed that only 15 to 20 per cent of total issuance should be in the form of bills.

This prudent debt management, however, does not take into account the greater utility of Treasury bills as collateral because their prices are the least vulnerable in a rate-rising period.

Primary dealers can take advantage of their direct participation in Treasury auctions to obtain lots of bills. Then lesser market players, such as highly levered private equity funds, or the giant commodities trading houses, can rent the bills for a fee to be posted as margin with clearing houses against volatile energy, interest rate or foreign exchange contracts.

The primary dealers demand other collateral in return for lending the Treasury bills, most frequently in the form of lower-rated or less liquid securities such as corporate bonds. This process is known as “collateral transformation”, a way to turn chicken droppings into chicken salad, so to speak.

Unfortunately, sometime in the days leading up to April 6, a very large amount of the lower-rated collateral was apparently devalued, according to my market contacts. When that shock was combined with the tightness in the bill supply, you had a collateral squeeze.

As a 2017 New York Fed paper puts it: “Large and protracted settlement fails are believed to undermine the liquidity and well-functioning of the securities market.” As one bond market expert tells me, “This is not yet at the level of October 2008, when there were $5tn in fails. But something is broken.”

Chuck again… Problems, problems problems, all because of too much debt…  I’ve been harping about too much debt since 2003…  Shoot Rudy, I’d be happy with the debt levels of 2003 now! 

Market Prices 5/4/2022: American Style: A$ .7101,  kiwi .6442,  C$ .7990, euro 1.0536, sterling 1.2517, Swiss $1.0221, European Style: rand 15.8114, krone 9.3890, SEK 9.8507,  forint 361.54,  zloty 4.4508,  koruna 23.3981, RUB 67.28, yen 130.04, sing 1.3822, HKD 7.8486, INR 76.24, China 6.6085, peso 20.24, BRL 4.9620, BBDXY 1,246.26, Dollar Index 103.40, Oil $106.30,  10-year 2.93%, Silver $22.54, Platinum $979.00, Palladium $2,266.00, Copper $4.42, and Gold…. $1,867.90

That’s it for today… Man, I’ve been sleeping a lot this past week, while the head cold settled in… I mean a lot!  I’ve always maintained that your body lets you know when you need to sleep… So, apparently, I needed to sleep! There’s nothing going on in the afternoons anyway! Well, all the weight that I said I had gained while in Florida, I’ve lost again… Whew! Now, to get to losing more! Our Blues are back on the ice tonight in Game 2 of their series with the Wild… The Blues played great in game 1, let’s hope they continue that tonight! Let’s Go Blues!  The Searchers take us to the finish line today with their great 60’s song: Love Potion No. 9…   I hope you have a Wonderful Wednesday to day, May the 4th Be With You, and please remember to Be Good To Yourself! 

Chuck Butler

The Dollar Gets Sold Overnight…

May 3, 2022

* Gold & Silver continue to be sold… 

* The Russian ruble extends its gains VS the dollar… 

Good Day… And a Tom Terrific Tuesday to you! Monday was not a fun day for Gold…More on that in a moment. I ask this question every year… If April Showers bring May flowers what do May flowers bring?…. Drum roll please…. ( where’s Gene Krupa when you need him?) the answer…. Pilgrims! Hardy har-Har right?…. Neil Young greets me this morning with his song: out On A Weekend…

Well just when you might have thought that the price manipulators had taken enough of Gold and Silver’s value… they hit the metals again on Monday with both barrels blazin’…..Gold lost $33 on the day, but that was far better than the $46 it was down during the day…

Gold closed the day at $1,8640.30, and Silver was down for the 10th consecutive day by.16-cents to close at $22.69…. The dollar remained a mix bag o nuts, on the day but did manage to gain a bit… The BBDXY closed at 1,247… I had a dear reader send me a note asking me “why on earth do I believe the dollar should be not in favor”… Fair enough…. If you look across the landscape of yhe world, you see all the major countries, sans Russia, and you find countries with debt up to their respective eyeballs. You see them all having the same inflation problems… now here’s where we begin to see a difference… countries like New Zealand, Brazil, and Russia have begun to hike rates long before the U.S. Decided to hike rates 6 weeks ago.

I’m speaking from a fundamentals view point, so this may all sound like I’m old and out of touch… but so be it! If not for interventions and manipulators the counties around the world that sport higher interest rates than the U.S. Should be on the rally tracks. India, Russia, Brazil, New Zealand are a few that spot higher rates than the U.S. With inflation soaring around the world, commodities are in favor with astute investors and the counties that produce commodities should be seeing their currencies rally VS the dollar…

So, in my humble opinion…. The dollar isn’t the only game in town… but I’m just an old country boy looking at this logically….

In the overnight markets last night…. The dollar was getting sold… no a
Wait! Is that right? Yes it is! The BBDXY has given back almost 5 index points overnight…. Gold is getting sold again, along with Silver… Oil is up overnight and bond are getting sold early this morning ….Did the dollar bulls get ahead of the markets, with the FOMC meeting tomorrow? It appears that is the case this morning…

The FOMC will meet tomorrow and the markets all agree that the FOMC will hike rates 50 Basis Points, and then set the stage for additional rate hikes at the future meetings…. This is what has the dollar bulls so ramped up….But as I’ve. Explained previously, I don’t believe that they will get to the rate level that is needed to combat inflation, before reversing their actions….

The Russian ruble sure is on the rally tracks these days, and is performing better than any other currency VS the dollar…  I guess this is what happens when you talk about linking your currency to Gold…  

Well I know this doesn’t provide any solace for the damage to the price of Gold…. But, this is interesting for sure! “investment demand for gold in Q1 returned to levels that were last seen during the early months of the pandemic in 2020, fueled by similar drivers: namely, safe haven flows and high/rising gold prices. Heightened geopolitical risk, caused by the invasion of Ukraine, encouraged investment flows, which fed through to a sharp rise in the gold price. Inflation concerns – already supportive for gold investment – were accelerated by the conflict, with data prints showing prices across the globe rising at a multi-decade, record pace.”

I pulled that from Ed Steer’s Saturday letter….

But you know what I’ve always maintained is that Gold id a store of wealth, and should be held that way… not a commodity that gets bought and sold on price fluctuations….. The East holds Gold as a store of wealth, here in the West we, for the most part, treat Gold as a commodity…. Until that mind set changes here in the West…. We will never see a stable Gold price that moves strictly on fundamentals…..

Good friend, Dennis Miller of vwww.milleronthemoney.com sent me a notr yesterday, I think just to get me yelling at the walls…. Here’s Dennis: “Read an article where Biden was quoted……and they anticipated it would hurt him as we get closer to the election. The quote, “I’m not concerned about a recession.” …. Yeah I said to myself,,, that’s because you’ll notvexperience a recession like I will!

Typical Government reaction, eh? In two years no one will remember he uttered those words… No one but me…..

Yesterday untold you that the ISM manufacturing index would print and show more slippage, and that’s what it did… The index dropped from 57.1 to 55.4, a significant drop and confirmation of a downward trend…

Today’s U.S. data Cupboard has Factory Orders for March… Doesn’t March seem like a long time ago? Oh well nice of the bean counters to get around to letting us know about this data, eh? we’ll also see the color of the number of Job Openings and as important, Job Quits….

To recap… the dollar was a mixed bag o nuts yesterday, but Gold got whacked good tonthe tune of $33! We learned about fundamentals and why Chuck doesn’t believe that the dollar is the end all… we also learned that the POTUS isn’t concerned about a recession… in the overnight markets… the dollar got sold!

For What it’s Worth….The good folks at GATA sent me this link yesterday to an article on USA GOLD’s site and makes a few god points about Gold that everyone should be aware of and it can be found here www.usagold.com

Or, here’s your snippet: ” Inflation, it has been said, comes as a thief in the night, and that it has. The famed British economist John Maynard Keynes warned of the dangers impressed upon an economy by inflation in his 1919 classic, The Economic Consequences of Peace. “Lenin was certainly right,” he wrote. “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” Now we are suddenly faced with what could very well go down in history as the great financial shock of 2022 – an inflation rate approaching double digits in just a few short months and a steady stream of headlines that serve as a constant reminder of why we own gold.

“The nature of inflation is widely misunderstood and misinterpreted,” writes former Wall Streeter Dave Kranzler in an analysis posted at Investing.com. “‘Inflation’ and ‘currency devaluation’ are tautological — they are two phrases that mean the same thing.…Dollar devaluation has been occurring since the early 1970s. The value of the dollar relative to gold (real money) has declined 98%. In 1971, $40,000 would buy a 4,000-square-foot home in a good suburb. Now it takes $700,000 on average to buy that same home. Price inflation is evidence of currency devaluation.”

Though the dollar has been in an uptrend against other currencies of late (recently hitting a twenty-year high and pushing the gold price sharply lower), its purchasing power in terms of goods and services is in sharp decline – and that, in the end, is the real reason why gold is now in such high demand. Kranzler says that the inflation wildfires are just getting started and to “hold onto gold and silver.” Similarly, veteran market analyst James Turk recently made some insightful comments during an Epoch Times interview on why gold has long served as a hedge against currency debasement.

“[Gold] does not suffer from entropy,” he said, “It cannot be destroyed. All the gold mined throughout history still exists in its aboveground stock, which if formed in a cube could slide under the arches of the Eiffel Tower.…A gram of gold buys essentially the same amount of crude oil as it did in 1950. This result occurs because the aboveground stock of gold grows by approximately the same rate as world population, causing the supply and demand for gold to remain in balance with the supply and demand of the goods and services humanity needs. Nature provides*

Chuck again… these are words that everyone should memorize and repeat daily…

Market prices 5/3/2022: American Style: A$ .7112, kiwi .6458, C$ .7964,
euro 1.0566, sterling 1.2557, Swiss 1.0279, European Style: Rand 15.8766, krone 9.3002, SEK 9.8356, forint 361.41, zloty 4.4431, koruna 23.3529,
RUB 67.85, yen 129.88, sing 1.3828, HKD 7.8471, INR 76.38, China 6.6085,
Peso 20.35, BRL 5.0359, BBDXY 1,244.74, Dollar Index 103.06, Oil $104.11,
10-year 2.95%, Silver $22.52, Platinum $962.00, Palladium $2,270.00,
Copper $4.42, and Gold $1,867.26

That’s it for today… Our Blues came out strong last night, killed penalties and scored 4 goals to win 4-0! A great start in the playoffs, but it’s only one game….My beloved Cardinals won their makeup game VS KC… they had moved the game start time up so they could get the game in before the rain… And that worked… The rain did come down last night in buckets! Well, this coming Sunday is Mother’s Day…. I know I always carry on about how I missed my mom, and how she was my best friend…so won’t go there again, just saying I miss you mom… Counting Crows take us to the finish line today with their song: Mr. Jones….gee I used to play that song on my guitar! I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

Welcome To May!

May 2, 2022

* The dollar is still being bought hand over fist… 

* Silver gets sold for 9 consecutive days! 

Good Day… And a Marvelous Monday to you! And Welcome to May! Yesterday was May Day, did you dance around the May Pole? May brought with it a simply beautiful day yesterday, Chamber of Commerce day for sure! Some late game hitting saved the Cardinals yesterday, after putting people to sleep for the first 7 innings… Our Blues start their Stanly Cup Playoffs series tonight with the Wild… These two teams are very much alike, an therefore I think the series will go 7 games… Jimmy Buffett greets me this morning with his song: A Pirate Looks at Forty…

Well, that was some performance by the dollar on Friday! The BBDXY saw an 8 point gain in the index! 8 Points! The BBDXY ended the week at an astronomical 1,249! This has gotten out of hand, folks… the good folks at GATA sent me this ditty that they pulled from Reuters on Saturday, regarding the dollar, so here goes: “The dollar’s race to two-decade highs is leaving a trail of destruction in its wake, exacerbating inflation in other countries and tightening financial conditions just as the world economy confronts the prospect of a slowdown in growth.

This year’s 8% gain by the dollar against a basket of currencies is driven partly by bets that the U.S. Federal Reserve will raise interest rates faster and further than other developed countries, and partly by its status as a safe haven in times of turbulence.”

Chuck Again… And I have to question the mental capacity of those dollar bulls that are just shrugging off the fact that the FOMC will be raising rates as soon as this week, and that the U.S. economy is already in negative growth, and what the rate hike will do to that… I’m just saying…

Gold found a way to gain $2.50 on Friday, but Silver was down again on Friday, this time to the tune of 38-cents, which Ed Steer pointed out in his Saturday letter, was the 9th consecutive down day for Silver…

The price of Oil rose late last week to close the week at $105, and Bonds got sold with the ten year Treasury’s yield at 2.93% to end the week…

In the overnight markets last night… It’s been a mixed bag of nuts, with the dollar losing some ground, and then coming back… Gold is off $21 in the early trading and it appears that Silver will make it 10 consecutive days of being down as it is down 15-cents in the early trading. UGH!  It’s a crying shame what the price manipulators are doing to Silver and Gold, especially now that inflation is soaring…  

The price of Oil has given back its gains from last week overnight, and is down $4 as I write, which puts it trading at $100… Bonds are bonds, and they go back and forth, trying to reach 3% in the 10-year, but get pushed back every time it appears there will be a breach of the 3% level… I do believe that we’ll get there, no need to rush,,,

If I were still working, and had income coming in, I would be backing up the truck for more Silver, right now… The physical demand is still strong, and the supplies are narrowing, I see that as a good fundamental reason to buy Silver at these prices below $23… Besides, my wife would begin looking up the phone number of the nut house, if I were to buy any more Silver! But for those of you, who haven’t bought enough Silver, this is your Blue Light Special… in my humble opinion that is!

Well, I guess next time the markets will pay attention to the GDP Now data that the Fed Atlanta puts out, for they told us months ago that the 1st QTR GDP was going to be negative! And a negative -1.4% is what it turned out to be… of course I have my suspicions about the number, being somewhat goosed so it didn’t look so bad, not that negative -1.4%, looks good!

And the Fed/ Cabal/ Cartel is going to hike rates 50 Basis Points (1/2%) on Wednesday this week, and talk tough about hiking it another 50 Basis Points in 6 weeks when they meet again… Fed. St. Louis President, James Bullard, says that he wants to see the Fed Funds Rate at 3.5% at year end… Counting this week’s meeting there are 6 more FOMC meeting this year… 50 Basis Points at each meeting would put rates well over 3.5%… So, is that what we’re going to see in the coming months?

I doubt it seriously, folks… By the time they get to the September meeting, I would bet a paycheck (I’m retired ha!) that the Fed balks at hiking rates 50 Basis Points, and will be talking about stimulating the recession that’s going on in the U.S.

And even IF, and that’s a BIG IF, the FOMC gets to 3.5%, they’ll still be behind the inflation 8-ball! We’ll still offer negative real rates on our bonds, so step right up the auction window and buy some negative yielding bonds, they’ll look real nice in your investment portfolio!

I took notice this morning of an article that talked about how the Covid Lockdowns in China are putting the weight of that on what they feel will be lack of demand in Oil…  Let’s see, it’s the summer driving season, and it’s the first time in 2 years, that families can get out without feeling the boogeyman (Covid) was chasing them. And they think that demand for Oil/ Gas will dampen?  I’m not buying it… 

I also noticed that it was the first asset to be weakened on the China Lockdowns… No mention in the article about all the foodstuffs and goods from China that will not make it out of the Port because of the lockdowns…  I know, I’m beginning to sound like a broken record, with my harping about how the lockdowns are going to cause shortages everywhere in everything… What I can’t believe is that no other economists, or analysts are talking about this…  Reminds me of 2001, when I wrote the white paper, the Decline of the Dollar, and I was the only person out there talking about how the dollar was getting ready to go into a long term downward trend… And then in Feb 2002, things turned for the dollar in the direction I said it would… 

The U.S. Data Cupboard doesn’t have anything as important as last week’s 1st QTR GDP, but it does have some real economic data for us, and it starts today with the ISM (manufacturing index), which has been slipping lately, still well above the 50 line but slipping nonetheless. We will end the week with the April Jobs Jamboree! That old cooked, massaged, wrangled until they get the number just right, BLS Jobs report… Right now the forecast is for a gain of 400,000 jobs created in April… It’s too early in the year for the Graduate hiring to begin, so I don’t know what’s up with the forecasters… 

I had a dear reader send me a note last week and I’ll just let him say his piece:
“Here is an idea. Electronic billboards along highways.
Two screens to display alternately every other day.
Day one, the US debt clock in real time.
Day two, the Pfennig with conclusions flashing in red.”

Now, that’s the first time I’ve had that idea sent to me… I’ve been nominated for Fed Chairman several hundred times, and President of the country a few dozen times, through the years, but never this… So, thank you!

To recap today… The dollar is still being bought hand over fist, and in the overnight markets last night it was mixed trading, so at least there was that…  Gold & Silver are both down big to start the day today, hopefully they can get back to even as the day goes along.  9 consecutive down days for Silver is pretty brazen don’t you agree? The price manipulators have really outdone themselves here….  

For What It’s Worth… Well, as I’ve been telling you, inflation is not just a U.S. only problem… And this article talks about how inflation is soaring in the Eurozone, and the ECB isn’t doing squat to combat it…  And the article can be found here: inflation latest: eurozone breaks another record in April 2022 (cnbc.com)

Or, here’s your snippet: “Inflation in the euro zone has hit a record high for the sixth consecutive month, sparking further questions over how the European Central Bank will react.

Headline inflation in the 19-member region reached 7.5% in April, according to preliminary estimates by Europe’s statistics office released Friday. In March, the figure came in at 7.4%.

European Central Bank Vice President Luis de Guindos tried to reassure lawmakers over rising prices on Thursday, saying the euro zone is close to reaching peak inflation. The central bank sees price pressures diminishing in the second half of this year, although energy costs are expected to keep inflation relatively high.

The latest inflation reading comes amid concerns over the ongoing war in Ukraine war and subsequent impact on Europe’s energy supply — and how this could affect the region’s economy.

Rising energy prices contributed the most to April’s inflation rate, though they were slightly lower than the previous month. Energy prices were up 38% in April on an annual basis, compared to a 44.4% rise in March.

Chuck again… no wonder the currency experts are thinking that the euro could fall to parity with the dollar!  The ECB has gone soft, and they have no cajones to hike rates and stem the selling of the euro, and combat inflation… Where’s Wim Duisenberg, Hans Tietmeyer, and other hawk, ECB presidents of the past?  Long time passing… 

Market Prices 5/2/2022: American Style:  A$ .7057,  kiwi .6434,  C$ .7960, euro 1.0522, sterling 1.2886, Swiss $1.0263, European Style:  rand 15.8972, krone 9.4308, SEK 9.8820,  forint 359.58,  zloty 4.4495,  koruna 23.4539, RUB 71.15, yen 129.84, sing 1.3856, HKD 7.8467, INR 76.31, China 6.6085, peso 20.40, BRL 4.9960, BBDXY 1,246.38, Dollar Index 103.38, Oil$100.64, 10-year 2.91%, Silver $22.63, Platinum $933.00, Palladium $2,268.00, Copper $4.44, and Gold… $1,875.31

That’s it for today… kinda short-n-sweet today… I get to see my dentist this Thursday, so no Pfennig that morning, but other than that, I’m here all week, try the veal, and tip the waitresses! I’ve come down with a head cold, that’s driving me crazy! The dermatologist really hurt me again on Thursday last week, and my head has been pounding with pain since… She told me that everything was healing fine, and that I didn’t have to come back for 4 months!  My scalp looks like a road map, but I guess it had to be… Good Luck to our Blues! The Blues have been a good road team this year, so let’s hope that continues in the Playoffs! Cardinals and Royals at Busch today for a game day!  Maroon 5 take us to the finish line today with their song: Harder To Breathe…  I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

 

The U.S. Finds An Extra $1 Billion Laying Around…

April 26, 2022

* dollar buying pauses in the U.S. session on Monday

* Gold & Silver get whacked on Monday… 

Good Day… And a Tom Terrific Tuesday to you! What a awful ending to the game last night Cardinals / Mets… An error by the best 3rd baseman in the league, led to a 9th inning rally that pushed the Mets past the Cardinals… UGH! I was just saying to myself earlier in the game, “I don’t think I’ve ever seen Nolan Arenado make an error”… Oh well, game two of the 3 game set tonight… Walk it off! The St. Louisan, Max Scherzer, was fabulous for the Mets last night… He sure would look good with the birds on the bat, but that’s not to be… Loggins & Messina greet me this morning with their love version of a 10 minute song: Angry Eyes…

Well… throughout yesterday, the dollar held to its early and overnight gains, but didn’t build on any more, so the BBDXY ended the day at 1,229.33. You may recall that yesterday morning the dollar index represented by the BBDXY was trading at 1,229.31… So, just 2 index points added the rest of the day… Was it a pause for the cause? Or had the overbought position in the dollar gotten out of hand again?

Gold & Silver got whacked good again yesterday, but again, the same as the dollar, the metals lost most of their ground in the early and overnight trading the night before, and didn’t lose any additional ground throughout the day on Monday. Gold lost $33.90 on the day to close at $1,899.40, and Silver lost 62-cents to close the day at $23.71…

Pam & Russ Martens of www.wallstreetonparade.com wrote yesterday that the stock market sell off last week that started on Thursday losing over 300 points, and Friday nearly losing 1,000 points, was caused by Jerome Powell… Who said in a panel discussion on Thursday that the FOMC was looking to hike rates 50 Basis Points (1/2%) in May… You know, this got to me, because the Fed Heads have been talking about 50 Basis Points hikes at the next 3 meetings, but the stock jockeys ignored them, and the bond boys ignored them, and it wasn’t until last Thursday that the markets finally said, “he’s serious, isn’t he?”

Why they thought no one at the Fed/ Cabal/ Cartel would actually hike rates 50 Basis Points is that Jerome Powell, promised the markets months ago that he would deliver a soft landing while fighting inflation… I told you then, that you could be the farm that he wasn’t going to be able to deliver on that promise… The Fed’s history of guiding the economy out of the woods, has been horrible… It’s a good thing Little Red Riding Hood, has the Hunter to save her, because if she was looking for the Fed Heads to save her, she would have been the Big Bad Wolf’s lunch!

In The overnight markets last night… The price of Oil continues to drop, as people are finally starting to realize that the Chinese lockdowns are going to dampen the demand for Oil… Shortages equal price increases, which equal less disposable income to spread around a household…

Well, yesterday’s pause in dollar buying during the U.S. session, was over quickly, as the overnight sessions began. The dollar was getting bought left and right, and in between. The BBDXY gained another 2 index points to trade this morning at 1,231….  There’s just no stopping this runaway bus, that is the dollar these days, folks… It’s as if all these dollar bulls know in their heart of hearts that the future looks very dim for the U.S. economy, and they are getting theirs while the gettin’ is good… If you get my logic there… then you would be looking across the currency horizon and picking a commodity currency that suits your fancy…  I’m just saying.. 

In the early trading this morning, Gold is up $6 and is back above $1,900, while Silver lags with 3 -cent gain… Ed Steer agrees with me on yesterday’s price action in Gold & Silver, that the traders took no prisoners… All they left was death and destruction!  But Gold is not going to give up that easily, besides, how many times in the past have we seen the price manipulators go at Gold with both barrels blazin’, only to have Gold come back even stronger?  Hold your fire, folks… That’s the best thing I can tell you at this point… 

OK… Well, the dollar may be getting bought by the bushelful these days, there’s one currency that’s bucking the trend… A couple of months ago, you wouldn’t have believed it if I told you it was the Russian ruble, right? But fast forward to now, and the ruble is the best performing currency in the past month! Ever since Russian el hefe, Putin, said that to buy his gas, countries would need to either pay for it in Gold or rubles, the demand for rubles by countries has gotten very strong, thus the rally by the ruble…

The ruble is now trading at a 2-year high VS the dollar… The Aussie dollar (A$) which had everything going for it, two weeks ago, found itself caught up in all the U.S. dollar buying, and saw its trading figure drop from 76-cents to 71 cents yesterday morning… Fundamentals say the A$ should be soaring, with commodity prices still on the rise… but we all know that fundamentals no longer exist in currency trading, it’s all tied to “trader sentiment”…

Me, being a person that depended on knowing the fundamentals of the countries we traded currencies in, would be totally lost in today’s environment… Boy, sometimes I’m glad that TIAA showed me the door, and told me not to reenter it! Of course now that I’m talking about that, I personally would have liked to gone out on my own accord, not someone else’s… I’m just saying… Of course the bank called it my reitirement, and that’s fine with me after all this time…

The Chinese renminbi has really been on the down side of trading lately… For ever and a day it seemed the renminbi was trading around 6.36 to the dollar, but in recent rrading it has fallen to a 6.55 to the dollar… While the renminbi is still having its price range set by the PBOC (peoples bank of China), the markets are pushing the tradeable renminbi lower, and so, for the traditional renminbi it gets weaker too… This currency like no other currency become political… And it won’t be long before U.S. leaders begin to claim that China is allowing the renminbi to get weaker on purpose… I kind of get the felling that China is allowing the renminbi to get weaker, as a way of getting back at the U.S. for all the bad mouthing and tariffs, etc. that has been thrown at them in recent years…

Well, I was aghast at the headline in my local paper on Sunday… The headline read: “Biden announces $800M in new military assistance for Ukraine”, I thought… Hmmm. I guess we had an extra Billion laying around doing nothing, certainly not earning any interest, and we could afford to send $800 Million to a country in war… I don’t mean to sound like we shouldn’t help out Ukraine, but… it’s not like we have the extra Billion laying around, right?

Like I said in my Sunday Pfennig many years ago… “The U.S. needs to sop spending money on things they don’t have the money to spend. This would require austere measures by Congress, and while I doubt they can adhere to such measure, I also think it would behoove them to do so, immediately, if not sooner!”

OK… Can you guess how many dollars worth of Derivatives are out there right now? Well, there’s no one better to tell you this info than the folks at www.wallstreetonparade.com Take it away Pam and Russ Martens: “There is no better snapshot of the Fed’s failure as a banking supervisor than this one fact that is called out every quarter in the Office of the Comptroller of the Currency’s Report on Bank Trading and Derivative Activities. Table 14 of this report (see page 19) shows that the 25 largest bank holding companies in the U.S. are sitting on $234 trillion notional (face amount) in derivatives but just five bank holding companies are responsible for $200.18 trillion of that exposure or 86 percent of the total. Those mega bank holding companies are: JPMorgan Chase (ticker JPM), Citigroup (C), Goldman Sachs (GS), Morgan Stanley (MS) and Bank of America (BAC).

The table also clearly shows that the most dangerous form of these derivatives – the same credit derivatives that blew up Wall Street in 2008 – are also concentrated at those same five bank holding companies.”

$234 Trillion… can you imagine, no wait, don’t go there Chuck, because that’s scarier than what happened in 2007 & 2008… Is there any reason why these derivatives are that astronomically $235 Trillion?

I just see this all ending in tears folks… And that’s all I’ll say about that!

The U.S. Data Cupboard today has a couple of economic prints for us, in the March Durable & Capital Goods Orders, wich in Feb were both negative. We’ll also see the Fed print of the Case/Shiller Home Price Index, which at the last print was up 19% year on year… Feb was still before the Fed hiked rates, so I would think that the Fed print would be the last one to show home price gains, so we’ll see…

To recap: All the dollar buying, and currency selling, along with metals selling was over by mid morning yesterday, and the rest of the day these assets held steady Eddie… Gold has really gotten whacked in the last 3 trading sessions, and that makes no sense whatsoever to Chuck. Sure the Fed made certain that the markets know they will hike rates 50 Basis Points, but even after doing that, the Fed Funds Rate will still be below 1%… C’mon, give me a break!

For What It’s Worth… Yesterday, I told you about how Japan had asked the U.S. to intervene to help the yen, and the day before that I told you how Japan’s yen was at lows not seen in a month of Sundays, and today’s article tells you why Japan is in this mess…  Deficit spending…  And this article can be found here: Japan To Spend Billions To “Ease Inflationary Pain” Caused By Spending Billions | ZeroHedge

Or, here’s your snippet: “How stupid are today’s monetary and fiscal policies (and not just the bat-shit insanity that is Helicopter money, a/k/a MMT?) So stupid that in Japan, the government is about to spend billions to “ease inflation pain” that is the result of… spending billions.

According to the Nikkei, Japan plans to spend 6.2 trillion yen ($48.2 billion) on – get this – gasoline subsidies, low-interest loans and cash assistance “to alleviate the pain of consumers and small businesses facing rising prices”, which were caused by, well, massive government spending.

The government frames the economic package, to be compiled as early as Tuesday, as comprehensive relief measures. But critics – at least those who refuse or fail to see the real monetary elephant in the room – see them as a short-term remedy, especially as other countries tackle more fundamental changes on energy and other key economic factors in response to Russia’s invasion of Ukraine.

To pay for the package, the government will request 2.7 trillion yen under a supplementary fiscal 2022 budget to be drafted by the end of the current parliamentary session. It will secure another 1.5 trillion yen from its reserve funds. Together with private-sector contributions, the entire package is expected to total 13.2 trillion yen.”

Chuck again…. This all started in the mid 90’s, with their stimulus packages, and special budgets, and things like deficit spending spiraled from there, and here we are over 2 decades later, and Japan still hasn’t learned anything, and they’re still printing yen, and trying to stimulate the economy…  When will they every learn? When will they ever learn?

Market Prices 4/26/2022: American Style: A$ .7200,  kiwi .6630,  C$ .7884, euro 1.0674, sterling 1.2684, Swiss $1.0438, European Style:  rand 15.7210, krone 9.1734, SEK 9.7403,  forint 350.89,  zloty 4.3551,  koruna 22.8556, RUB 74.36, yen 127.50, sing 1.3739, HKD 7.8447, INR 76.43, China 6.5428, peso 20.28, BRL 4.9182,  BBDXY 1,231.52,  Dollar Index 101.96,  Oil $99.81, 10-year 2.76%, Silver $23.65, Platinum $922.00, Palladium $2,285.00, Copper $4.50, and Gold… $1,904.09

That’s it for today… And this week, sorry about that… I didn’t realize I had those two doctor appointments back-to-back until this past weekend, when I looked at my calendar to see what was ahead… UGH! Well… the weather hee in the Midwest is not the end of April-like… It’s going to be quite chilly some days as we head into May… Crazy weather! I would be basking in the 80 degree sun, if I had stayed in S. Florida! A tough loss for my beloved Cardinals last night… Gotta lace ’em up and go at again tonight fellas! Our hitting, which started the year on fire, has gone cold… That’s not a good recipe for today’s game that requires multiple runs each game… I do believe I’m missing someone’s birthday, so if it’s you, I’m sorry… I used to have Jen Mclean sitting next to me and she was the gate keeper of birthdays, and she would tell me when one was coming… AC/DC take us to the finish line today with their song: Rock & Roll Ain’t Noise Pollution… I hope you have a Tom Terrific Tuesday today, and a super week ahead of you, and please Be Good To Yourself!

Chuck Butler

 

Steep Drops In Gold, Silver and Oil…

April 25, 2022

* The dollar has very strong rallies

* Japan asks for help… 

Good day… and a Marvelous Monday to you…We’ll my beloved Cardinals went for a sweep of the Reds yesterday but came up short but still won the series taking 2 of 3… The Mets come to town tonight with their King’s Ransom payroll…went to a party ( thanks Danielle) Friday night and saw some of my former colleagues a good time was had by all! Argent greets me this morning with their great 70’s song: Hold Your Head High…

Well there was a bloodletting in stocks last Friday as the Dow lost nearly 1,000 points.. Danielle Di Martino Booth said that in all her years, she had never seen a close like we had on Friday… With all that rot being exposed on the stock market’s vine, the dollar had one of its best days in a very long time… The BBDXY closed up 8 index points on Friday…

And Gold got taken to the woodshed, along with Silver. Last Monday Gold was working its way to $2,000, Silver was trading over $26. After Friday’s engineered takedown by the sort sellers, Gold ended the week at $1,933.30 , and Silver closed the week at $22.28… Early last week it appeared that these two metals were on their respective ways to higher ground… But then the trap door sprung, and they weren’t any longer…  I shake my head in disgust at these folks that keep pushing Gold & Silver down… They’ll get theirs one day… I can only hope!

The good folks at GATA sent me this note on Friday last week, regarding an interview that was shown on Bloomberg.com  here you go: “Gold is the metal with the lowest risk in possession and “the bargain of the century,” Swiss Asia Capital founding partner Juerg Kiener tells Bloomberg Television in Singapore in an interview today. But, Kiener adds, “We see a lot of paper market interventions” in gold.

Noting the London Metals Exchange’s recent default on its nickel futures contract, Kiener says metal inventories generally are small and their futures markets are in backwardation. He says there is “huge pressure” on the exchange.

Russian gold will not be coming into the market becayse Russia will be keeping it, Kiener says.”

Chuck again… We need more people to speak out against the short selling paper trades, and then maybe, just maybe someone would do something about it!

In The overnight markets last night… OMG! This has really gotten out of hand folks! Gold is down $34 this morning and has dropped below its support at $1,900.00.. And Silver is down 73-cents! Stock futures are down again, the price of Oil has dropped $4, and bonds are stuck in the mud… There’s nothing out there, other than the dollar,  that’s on the rally tracks this morning… The BBDXY has gained another 4 index points overnight, and the dollar is in an extreme overbought position again!  I think, I’ll just stop writing this morning and go back to bed! I don’t remember a day like this is starting out to be…  Better batten down the hatches because a storm is brewing folks…  

So, what to do now? My publishers, The Aden Sisters, issued a letter last week talking about how Gold had reached a C phase, and that it could go down to support levels of $1,900, and below, but most likely, Gold would continue its rise… Well, right after that issuance, the price manipulators went to work on making sure Gold didn’t rise…  I feel for Mary Anne and Pam, they work so hard, and then the price manipulators make all their work for naught… 

What to do about the dollar? After taking a two-day break last week, the dollar went wild on Friday, and now it is trading at levels we hadn’t seen in a long time…  Robert Rubin, would be proud of the dollar bulls, for if you recall back in the 90’s Robert Rubin was famous for saying, “ A strong dollar is in the best interests of the U.S.”…  And theoretically he was correct.. .A strong currency does benefit a country that issues it… But… he said those things back in the day where fundamentals ruled…  And U.S. rates were around 6%… and the euro was just getting started, so the strong dollar back in the late 90’s made sense… But not now…

Why, not now? Because the U.S. economy is teetering and on the brink of collapsing into a long recession…  The economic data, other than jobs, continues to be weak and disappointing… Shoot Rudy, even the vaunted, and well respected analyst, Martin Weiss, is saying the U.S. economy is heading for a recession…

On a sidebar, at EverBank, we used to attempt to get Martin Weiss to grade the bank higher, and he was steadfast in his rating, which affected a lot of our ability to raise deposits… Back in the day, I called the Weiss people one day, and tried to explain how the bank did their loans, but they wouldn’t listen, and so we never got anywhere with his group…

Oh! Did you hear about what Japan was asking for last week? OK, recall that I mentioned last week that the yen had dropped quickly, and appeared to be ready to drop some more… Well, the Bank of Japan (BOJ) called the U.S. Treasury Sec. Janet Yellen, and asked for some coordinated intervention to support their yen…  Sec. Yellen turned him down…

These coordinated interventions used to go on all the time… One country would call the country that had the currency that was so strong, and ask them to sell their currency and buy the weak currency…  This all started in 1985, at the Plaza Hotel in NYC, where finance ministers from the major countries met and expressed their views that the Current Account Deficit was too high…  (Imagine their horror if they saw today’s number?), and it was decided that the countries would intervene and sell dollars and buy whatever currency…

I used to be a part of the Sovereign Society, and one year, we decided that we would go on tour… We called it FX University, and a group of us traveled to 7 cities and gave presentations on what FX was and how they could invest In it…

The publisher at the Sov. Society, was Erika Nolan, and recently I asked her if any of those videos of me doing class still existed, and she sent me 3 of them!

These are huge files, and it’s only the audio, but you get to hear me explain the origins of currencies, and the history, along with why to invest in them and how to invest in them…  I’m working on how to get them into the letter, so  if you were not a part of the class as we went from city to city, you would be able to hear me teach class! So, hopefully that will happen…

My good friend, Dennis Miller, of www.milleronthemoney.com  called me last week with an idea for a letter, and I helped him with it… Not be on spoiler alert, but the gist of the letter goes back to what I said a couple of weeks ago… The Fed/ Cabal/ Cartel, employ 100’s of economists and at least one of them should have been more than a “yes man” and stood up and got on his toes to shout that the Fed Heads idea of inflation was wrong!   But they didn’t, so.. either they didn’t know inflation when it was staring them in the face, and therefore they should be fired, or… they knew, and they lied to us…

I’m still betting that free undercoat that they lied to us… There’s no way that 100’s of economists didn’t have at least one say, “Whoa, there partners, we’ve got an real inflation problem!”

And the other thing that I keep harping about, that no one else seems to think is going to be a Big Deal, and that is the lockdowns in China… Shanghai, the largest port for containers, has been shutdown since March 28th… What I believe that’s going to happen here is that shortages of things that can’t get out of China, will turn to price increases…  I’ve told you this before, but my dad always told me that “there’s no such thing as a shortage, it’s merely an item that is in need of a price adjustments”…  And that’s what we’re going to be seeing in the near future folks… higher prices still!

If I think that Fed/ Cabal/ Cartel is dragging their feet to go to war with Inflation, then I have to think that the U.K. and Eurozone are stuck in the mud… Inflation in their regions are soaring jus like here in the U.S. and still their respective Central Banks sit on their hands, and deny the inflation…

The U.S. Data Cupboard is empty today… no data prints to share with everyone… Tomorrow’s Cupboard has Durable & Capital Goods Orders, which if you recall in Feb they both printed negative… I don’t believe that March’s prints will show negative numbers again, but the numbers they do show will be remain very weak, and disappointing…

To recap… Stocks got the snot knocked out them on Friday last week, and the machines that are supposed to stop sell offs like we say, never kicked in… Hmm…  The dollar took no prisoners on Friday last week, and the BBDXY is soaring! This is exactly what the U.S. economy doesn’t need right now, a strong dollar… But, the strong dollar is helping in the fight against inflation… Japan asks the U.S. for some coordinated intervention. And the U.S. said, “no thank you”… And Gold and Silver have been taken to the woodshed and have lost major ground in the past two trading sessions! 

For What It’s Worth… I’ve made such a Big Deal out of the Chinese lockdowns, that when I saw this article I knew it had to be the FWIW article for today. Because that’s what it’s about, and it can be found here: China lockdowns: A nightmare for supply chains and inflation | Fortune

Or,  here’s your snippet: “China’s strict COVID-19 lockdowns will exacerbate global supply chain woes and add to inflation in the coming months, experts say.

President Xi Jinping’s zero-COVID policy is being tested as the country struggles to tame its worst virus outbreak yet. Frustration is rising over food shortages, people being locked down in their homes for weeks, and a policy of killing pet dogs suspected of being infected with COVID.

While China’s tech hub Shenzhen has emerged from its nearly month-long lockdown, China’s biggest city, Shanghai, home to the world’s largest container port, has remained shuttered since March 28.

Now, the economic effects are starting to show. Fuel demand in China is on track to drop 20% this month in the biggest decline since the first wave of COVID-19 lockdowns more than two years ago, sources told Bloomberg on Friday. And global supply chains are beginning to feel the crunch as well.

A supply chain nightmare

One in five container ships is now stuck at ports worldwide, with 30% of the backlog coming from China. And Lars Jensen, the CEO of the shipping container industry consulting firm Vespucci Maritime, told Fortune that the full impact of China’s policies will only begin to reveal itself over the coming weeks.”

Chuck again… the article is much longer, so if you have time, click on the link above and read it… You’ll see what I’ve been harping about for weeks now…

Market Prices 4/25/2022: American Style: A$ .7179,  kiwi .6619,  C$ .7840, euro 1.0753, sterling 1.2747, Swiss $1.0753, European Style: rand 15.6735, krone 9.0187, SEK 9.6266.  forint 347.85,  zloty 4.3144,  koruna 22.7028, RUB 75.30, yen 128.17, sing 1.3728, HKD 7.8469, INR 7.6430, China 6.5515, peso 20.35, BRL 4.8380,  BBDXY 1,228.31,  Dollar Index 101.40,  Oil $97.44, 10-year 2.83%, Silver $23.41, Platinum $917.00, Palladium $2,153.00, Copper $4.53, and Gold… $1,895.10

That’s it for today… Well, I have some not so good news to share with you today… Today, and tomorrow will be the only Pfennigs this week, due to me having doctor appointments both Wednesday and Thursday mornings. Wednesday is my oncologist, of whom I’ve not seen in 4 months, so this should be interesting… Our Blues have not allowed their trip to the West Coast slow them down. Last night in Anaheim they trailed 0-2 after 1 period… they the Blues went on to score the next 6 goals, to win the game!  Let’s Go Blues! There are only 2 more regular season games left, and then the Stanley Cup Playoffs begin… Don Mclean takes us to the finish line today with his song: Vincent… A sad song, eh?  I hope you have a Marvelous Monday today, and please remember to Be Good to Yourself!

Chuck Butler