Powell Says, “Inflation Is Still Too High”…

August 28, 2023

* dollar gets bought after Powell speech

* Saudi Arabia joins the BRICS… Soon there will be changes… 

Good Day… And a Marvelous Monday to you!  What an awful weekend for St. Louis teams fans… The Cardinals continued to lose, and our StL City team lost in Orlando… Road games in the MLS are difficut to navigate, and that was proved Saturday night… The hot weather finally broke this weekend, and the cooler weather, while still warm, felt good to get outside again… Little Evie stayed with us Saturday night… She insists that she’s a “big girl” now, and she’s only 3… YIKES! I told her dad, Andrew, that he’s got a lot of “fun” days ahead of him…   And I finally turned the corner on my being sick… But guess what? I Get to start my new Chemo now… So much for being on top of the world, eh?   Oh well, it is, what it is… Little Feat greet me this morning with their song: Fat Man In A Bathtub… 
Well, Friday, was all about what did Jerome Powell say… WDJPS… The markets were waiting with bated breath for his words, and announcement of what the Fed Might be doing going forward…  This from CNBC: “Federal Reserve Chair Jerome Powell on Friday called for more vigilance in the fight against inflation, warning that additional interest rate increases could be yet to come.

While acknowledging that progress has been made and saying the Fed will be careful in where it goes from here, the central bank leader said inflation is still above where policymakers feel comfortable. He noted that the Fed will remain flexible as it contemplates further moves but gave little indication that it’s ready to start easing anytime soon.”

OK, does that sound like the Fed Heads are ready to stop hiking rates and pivot to rate cuts? Not to me, but… Apparently to the stock jockeys that continue to not believe what Powell has to say… Stocks rallied after Powell’s speech… The dollar rallied strongly, and Gold got sold… But hold on there Chuck, Gold was getting sold like funnel cakes at a State Fair, until it wasn’t getting sold any longer, and it rallied back to being down only $1.60 on the day, to end the week at $1,915.80. Silver had the same trading pattern, and ended the day up 11-cents to end the week at $24.32…   
I actually read an article on Kitco where the writer said that he thought the Fed gave little guidance on future rate movements… And I thought to myself… I guess he doesn’t know Fed-speak… I’m just saying… 
The BBDXY gained 5 index points on the day, to end the week at $1,242.38… I get it, the Fed/ Cabal/ Cartel’s el jefe says that inflation is still too high, and that interest rates will most likely be going higher.. And that’s good for the dollar, but… there’s a whammy in there… he says “inflation is still too high”…  That means that whatever good the interest rates going higher give the dollar, inflation should be taking it away…  The euro lost the 1.08 handle, and is once again looking weak… The fist week of this month, the euro was looking like it was ready to go on a run VS the dollar, and now, not so much… And the rest of the currencies all fall in line with the euro, which remains the offset currency to the dollar, the main trading currency with the dollar, the Big Dog… 
The European Central Bank (ECB) President, LaGarde, said last week that inflation is still too high, and that the data would guide the ECB if higher rates are needed…  That sounded way to wishy-washy for the markets, and they started selling euros…  Memo to LaGarde… if you want to sound hawkish, then sound hawkish, don’t mail it in, or sound like you’re not sure…   
Ok, enough of the lesson giving to Christine LaGarde… Time to move on… 
The Petrol Currencies are hanging tough, especially the Mexican Peso, and Brazilian real… The gains they have booked VS the dollar have been held, and at times are added to … The Canadian dollar/ loonie, British sterling, Russian ruble, Norwegian krone, try desperately to move higher, but the dollar strength is too great right now… 
Speaking of Petrol… The price of Oil gained a buck on Friday and got back to $80…  No news in recent days about supply issues, or demand… So, this asset just drifts along to the whims of the traders… 
In the overnight markets last night… There was lttle to no movement in the dollar, the BBDXY is up 1 index point, but is fading as  I write. Gold is down just 20-cents to start the day and week, while Silver is down 15-cents. There wasn’t much movement in the currencies overnight, the Japanese yen lost another figure and is making all those that said a month or two ago that they were buying the yen on Bank of Japan comments about hiking rates… I said then that the BOJ had disappointed the markets for so long now that it would be difficult for me to take them at their word… I guess those yen buyers are finding out that now… 
The price of Oil slipped a bit overnight, and trades this morning with a $79 handle, while bonds are just biding their time awaiting on the next supply of bonds to hit the streets… 
Well, we’ve been talking about the de-dollarization that’s supposedly going on around the world… But according to SWIFT, that’s all malarky… Swift reported last week that “The figures show greenback-related trades rose to a record 46% in July, compared with slightly more than one-third a decade ago. The dollar was the top currency as measured by transaction count, followed by the euro, pound, yen, and yuan.” 
Hmmm… of course, the Russian ruble was ousted from SWIFT, and they have been beating the drum, along with China, to stop using dollars in the terms of transactions, to demand to use their own sovereign currencies… Apparently that effort is going to take some time to really affect trade in the world… 
The one thing to think about here is something I warned my audiences of many years ago… And that is, when the Saudi’s decide they no longer need to trade their oil in dollars, that will be like kryptonite for the dollar…  And then last week the BRICS made an announcement that should be a large nail in the dollar’s coffin: “With Iran, Saudi Arabia and the United Arab Emirates joining BRICS, the multilateral mechanism now includes major global oil producers and importers. Analysts said that a wider adoption of local currencies for trade among BRICS countries, rather than using the US dollar, seems more natural.

Six candidates – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates – will be admitted as BRICS members on January 1, 2024, South African president announced on Thursday at the BRICS summit.

Currently, BRICS members include Brazil, Russia, India, China and South Africa.”

But did we see this news on the cable news? or the national news? NO… we didn’t, because it doesn’t spread the BS that the administration is trying to spread, about how all of this won’t mean a hill of beans… 
Circling back to the Jerome Powell Speech last Friday…  I can’t understand why the stock jockeys won’t listen to his words, and trade accordingly, they always take the contra side of his words… I read last week that tons of cash is moving out of stocks and into money markets accounts… Well, even that news is taken with a grain of salt by the stock jockeys… And that’s all I can say about this… 
OK… The U.S. Data Cupboard late last week had the July Durable Goods Orders, which I had warned you would probably be negative, and they were a negative -5.25%… I don’t think that illustrates a strong economy do you?  The other piece of data that came through was the U. of Michigan Consumer Confidence report which lost ground in July going from 71.2 to 69.5…  This week’s data cupboard doesn’t have too much for us to see that is if you are looking for anything early in the week… Late in the week we’ll see the color of Personal Income and Spending, the ADP Employment Report and on Friday, the Jobs Jamboree…  
To recap… Powell’s words on Friday at the Jackson Hole Boondoggle, sent the dollar soaring higher… And for a while on Friday, it appeared that Gold would be getting sold down the river, but then it wasn’t and it ended the day down only $1.60… Stocks rallied, and has Chuck scratching his bald head wonder what the stock jockeys didn’t get from Powell’s words…  The Brics had their meeting last week and announced 6 new members, of which the Saudi’s are one, and one that I think will bring huge changes to Oil contracts going forward… 
For What It’s Worth… Remember Jan Nieuwenhuijs? He used to go by an alias… But he’s been a Gold researcher for a number of years, and has been with several different firms… He wrote an excellent piece last week, about how the West is losing control of the Gold price: And it can be found here: “The West Is Losing Control Over the Gold Price (gainesvillecoins.com)
Or, here’s your Snippet; “The most logical explanation for gold’s recent behavior is a combination of surreptitious buying by central banks from emerging markets, and strong private demand in Turkey and China. It’s possible the WGC’s estimates of covert central bank buying are too low, given these estimates were falling during the price spike at the end of 2022 and the beginning of 2023.

As some of you might have noticed the US dollar gold price has been declining in the last months of the period of our investigation, and London was still a net exporter. Perhaps the West will regain control over the price again. I don’t expect the gold price to fall to levels previously suggested by the rates model though.
Central bank buying is likely to stay strong. “We still believe that the official sector will remain a sizeable bullion buyer for the foreseeable future …, as factors that encouraged reserve managers to add gold reserves in recent years are expected to persist,” Metals Focus wrote this August.

We will have to wait and see if the East is able to further push up the price of gold and weaken the West’s control over the price. If so, gold will become less of a dollar derivative, and take more center stage in the international monetary system”

Chuck again… Jan goes through all sorts of reasons why he come to the conclusion, so if you have the time go to the link and read it all… But the snippet gives you the gist of his report… 
Market Prices 8/28/2023: American Style: A$.6417, kiwi .5910, C$ .7350, euro 1.0808, sterling 1.2587, Swiss $1.1305, European Style: rand 18.6664, krone 10.7084, SEK 11.0122, forint 354.17, zloty 4.1407, koruna 22.3363, RUB 96.68, yen 146.52, sing 1.3566, HKD 7.8450, INR 82.62, China 7.2933, peso 16.71, BRL 4.8778, BBDXY 1,243.17, Dollar Index 104.11, Oil $79.91, 10-year 4.22%, Silver $24.23, Platinum $950.00, Palladium $1,2761.00, Copper $3.77, and Gold… $1,915.60
That’s it for today… How was your weekend?   Mine started out good with a trip to my local watering hole on Friday, but then that turned out to be the top of the weekend… Of course, having little Evie here was a highlight… All the kids were here for a brief time on Saturday, to help clean up our mess in the basement, from the flood… The insurance has been sorted out, the builder has been selected, now we wait for the builder to show up to work… Until then I sit in the “ruins” of the basement to watch my games on TV… We have just 4 rooms upstairs that we can use… and only my TV room downstairs… My writing desk was saved, but has water damage so I’ll be getting a new writing desk in the future…  Fun stuff! NOT!  Jr. Walker and the All-Stars take us to the finish line with their song; What Does It Take?   I hope you have a Marvelous Monday today, and Please Be Good To Yourself!
Chuck Butler

Finally!! Someone Goes To Jail!

August 23, 2023

* currencies get sold in the overnight markets

* All this debt… What will it bring us?

Good Day… And a Wonderful Wednesday to you!  My oh my, what an awful year for my beloved Cardinals… They lost another game last night, in another rout to the Pirates… The game got so bad that late in the game I turned if off and turned on the Toronto/ Baltimore game… There, real baseball was being played!  I’ve been having a lot of problems with my prosthetic eye… I guess I’ll have to go back to the ocuist and get it polished, and adjusted, I just dont’ know when I’ll have time to do that… I guess I’ll make time, eh?!  One of my all-time faorite songs is playing for me this morning as Earth Wind & Fire greet me this morning with ther song: September… That song will get you dancing in your seat in a NY minute… 
Well, I said yesterday that it appeared that the markets were already getting into their “lets wait to hear what Jerome Powell has to say on Friday”… The dollar saw some buying early, but when the dust on the day settled, the BBDXY was unchanged at 1,238…  So, my fears of this already happening, a wait-n-see attitude for the markets, appear to be in place… Oh, Goody, where can I find some more of this no movement in the markets?  The price of Gold started the day up $6, and as the morning started the short paper traders appeared once again, and took Gold down to negative territory… But Gold fought back and ended the day up $2.70 to end the day at $1,898.20, while Silver traded steady on the day closing up 9-cents to $23.45
The price of Oil seems to be stuck in the mud, at $80…  And whenever that happens, I always say, hey! That’s better than losing ground!  And the 10-year’s yield ended the day at 4.30%… I read yesterday, that the spread between the 10-year and the 30-year (the long bond) just keeps widening…   So that means there are less buyers of the long bond, than there are of the 10-year bond… 
In the overnight markets last night… Someone went off the schedule, and started buying dollars… And the buying of dollars didn’t end, so we start today with the BBDXY up 4 index points, the euro falling through the 1.08 handle, quickly, and all the other currencies, sans pesos, taking it on the chin this morning… What gives with this sudden burst of dollar buying, when it had appeared that everyone was on the sidelines for the next couple of days? I couldn’t find rhyme or reason for the buying, and so… you know what that always leads me to believe, right? Oh, you don’t?  Ok… whenever we see these big runs in one session by the dollar, the PPT’s fingerprints are always left at the scene… So, there’s that to think about… 
The price of Gold is up $6 in the early trading this morning, and Silver is up 38-cents. I read a short piece of Bloomberg.com this morning that said that in a poll of investors they have decided to hold onto Gold as the Fed’s rate hike cycle is almost over… Of course, if they had asked me, I would have said, I’m holding onto my Gold because it’s part of my net worth! And I’m not selling!  
The price of Oil has slipped below $80 again overnight, and trades this morning with a $78 handle…  Back and forth, back and forth… I have nothing else to say about this…  And the yield on the 10-year slipped to 4.28%, but that’s just a temporary adjustment in my opinion, and when I say temporary, I sure don’t mean the temporary that Richard Nixon used when he took Gold from the backing of the dollar…  This is a good story that would make a good movie, because his plan was to really be just temporary, and there were efforts to bring Gold back, but they were half-hearted attempts, and they failed of course, and 52 “temporary years” later… The damage has been done to our future… I’m just saying… 
Well, remember two weeks ago, when Fitch lowered the U.S. Credit Rating, and I told you that this was not the end of the downgrades? Yesterday, it was reported that S&P had downgraded several banks… Moodys had already done that previously… So, everyone’s balance sheet looks awful… What it going to take to get them to shore up the books? Well, in a roundabout way… The debt spending needs to stop, and a plan for reducing the debt needs to be brought on board… That way the issuance of Treasuries would slacken, and that would go a long way toward helping the banks that are forced to own the Treasury bonds… 
The thing that scares the bejeebers out of me is when we begin to see more bank fail… We could see the remaining banks do a Bail In…. We all know that our credit balances in the bank isn’t really our money, right? it’s a loan that we make to the bank and they pay us interest (well, some of them do)  So, what’s to stop them from going down the list of depositors and checking off all clients with more than the FDIC amount of $250,000 per SSN, and then just moving the amount of excess out of the account and into their reserves… And Voila’ the bank’s balance sheet problems are a thing of the past… 
Now, I don’t know any more than you do about if this is going to happen, if it’s even being discussed by bankers, or anything more… I’m just saying that this scenario is available to the banks, and they could very well institutionalize it…. 
Now, that’s scary, isn’t it?   Because, to me, this sets a very bad precdence, an if they get away with it on the Big Balance Accounts, what would stop them from going after any amount?   Ok, I’m going to stop now, because… 
This news was music to my ears… From Bloomberg.com “The former head of JPMorgan Chase & Co.’s precious-metals desk and his top trader today were sentenced to prison for spoofing, fraud, and attempted market manipulation.

Michael Nowak, who ran gold and silver trading at the bank, and trader Gregg Smith were sentenced in Chicago by U.S. District Judge Edmond Chang. Nowak received a term of one year and one day while Smith was given two years, the stiffest sentence yet in a recent government crackdown on questionable trading practices.”

Chuck again: Someone finally had the intestinal fortitude to send one of these thieves to jail… Maybe, just maybe, any traders still taking part in manipulating the markets this way, will stop, being in fear of jail time… 
I mentioned above about how the debt in this country is completely out of hand, and will be north of $44 Trillion in four short years…. So, if you think the Treasury is finding it difficult to place the Tsunami of bonds that’s being issued now, imagine in 4 years, we’ll have $12 Trillion more to have to finance… 
But, I’m questioning whether or not we actually get to 4 years out, before the whole shootin’ match collapses! Debt Cycles that turn into debt bubbles, like this one, have historically collapsed under the weight of the debt, causing runaway inflation, an implosion of assets…  All I know that is that this will happen… What I don’t know is when… That’s why I always ask the question: Got Gold?
And the jaded side of me is coming out again now, so if you don’t want to subject yourself to my shade of jade, then skip ahead… OK… everyone with me that wants to be here?  So, have you heard about this new variant of the COVID virus?   I believe the name of it is: Eris….  and it’s becoming widespread in the U.S.  and wouldn’t you know it the new updated virus shots will hit the streets next week!  And to top it all off TSA officials have admitted that they were told that everyone would be back to wearing surgical masks again by next year…  Do, you mean to tell me that the people of the U.S. will bow to these jackwads again and shut down?   I just don’t see us complying this time, do you? 
Ok, you can come back now, As the Good Witch Glinda said, “it’s safe to come out now”…  
The U.S. Data Cupboard is still lacking any real economic data today, but it show us the color of the latest New Housing for July… And the S&P flash PMI’s will print… These are just a flash report, they won’t move the markets any at all… 
To recap… Chuck’s fears of us going into a wait-n-see attitude in the markets played out yesterday, with no movement in the BBDXY or Oil, and Gold was up barely…But someone went off script last night and the dollar rallied…  Chuck really gets into some scary things this morning, he just have gotten up on the wrong side of the bed! And he showed his jaded sided once again… 
For What It’s Worth… I sure hope every reads this FWIW article today… This is from Ron Paul’s newsletter, that was posted by Lew Rockwell,  and it’s about the debt, and our future with both parties playing into the more debt picture… This article can be found here: Growing US Debt Menaces Liberty and Prosperity – LewRockwell    spoiler alert… this snippet is a long one… 
Or, here’s your snippet: “Congress’ top priority this fall will be passing legislation funding the government and avoiding a “shutdown.” As of this writing, it appears unlikely that the Republican-controlled House will be able to make a deal with President Biden and the Senate Democrats on a long-term spending bill. Instead, they will likely pass a short-term funding bill to give themselves more time to reach agreement on a longer-term bill.

Any bipartisan agreement is unlikely to reduce government spending or begin to pay down, or stop the growth of, the over $32 trillion national debt, which the Congressional Budget Office projects will grow by at least $115 trillion over the next thirty years. Instead, Congress and the administration will continue to pretend they are addressing the spending problem by “reducing in the projected rate of spending growth,” and other gimmicks.
The sad fact is both parties, along with a majority of the American people, are addicted to welfare-warfare spending. What little resistance there is to big government within the Republican party is likely to be further weakened by the rise of a new form of “conservatism” that advocates the use of government power—including deficit spending and increasing the federal debt — to advance conservative political and social goals.
The failure to take seriously the threat to the American economy caused by reckless federal spending is illustrated by the reactions to the credit rating agency Fitch’s downgrade of the US government’s credit rating. Instead of treating it as a wake-up call, government officials like current Treasury Secretary (and former Federal Reserve Chair) Janet Yellen dismissed the downgrade as “arbitrary and based on outdated data.”

One reason Yellen and others may be so blasé about the federal debt is that they believe the Federal Reserve will bail the government out by holding interest rate low enough to keep the federal government’s interest payments to manageable levels This is why, even though the Fed has been raising interest rates, the rates remain well below what they would likely be in a free market. However, the Fed knows it cannot go back to keeping rates at or below zero without causing price inflation.”

Chuck again… I’ve always admired Ron Paul, and thought he got the stiffed by the powers that be, when he ran for President… No way, a person with his credentials could be our President! That would make too much sense!
Market Prices 8/ 23/2023: American Style: A$ .6417, kiwi .5930, C$ .7367, euro 1.0808, sterling 1.2620, Swiss $1.1348, European Style: rand 18.7098, krone 10.7098, SEK 11.0122, forint 354.61, zloty 4.1413, koruna 22.2171, RUB 94.26, yen 145.54, sing 1.3583, HKD 7.8403, INR 82.69, China 7.2908, peso 16.89, BRL 4.9319, BBDXY 1,243.27, Dollar Index 103.96, Oil $78.38, 10-year 4.28%, Silver $23.86, Platinum $939.00, Palladium $1,317.00, Copper $3.77, and Gold… $1,904.50
That’s it for today… The sun finally made an appearance yesterday, burning off the strange air that was in our atmosphere for 2 days… I told Kathy, that it could be the wild fire Canadian air causing the ugly days, they did tell us that they, (the wild fires)  would begin to mess with our air soon…  Well, it was a hot one, like 7 inches from the midday sun… And I love it!  I went out side to water my wife’s flowers, and my eyeglasses fogged all up… I had to take them off so I could see what I was doing!  Two days ago, it got to 102 and I sat outside to read, telling Kathy, that I was going out to see what 102 felft like… I’m just glad that I’m not 18 and building in-ground swimming pools in Oklahoma any longer!  The poor folks that HAVE to work out in the heat… They have it rough… for sure!  Well, The Searchers take us to the finish line today with their great 60’s song: Love Potion Number 9….   This is another of my all-time fave songs!  I hope you have a Wonderful Wednesday today, and please oh please, with sugar on top, Be Good To Yourself!
Chuck Butler

Are We Already In A Wait Mode?

August 22, 2023

* currencies & metals gain on Monday & overnight

* The BRICS meeting begins today… 

Good Day… And a Tom Terrific Tuesday to you! Boy was I on the wrong side of the road yesterday, when I wrote that my beloved Cardinals had been swept by the Mets, when the Cardinals had averted a sweep with a win in the final game of the 4-game series… It sure felt as though they had been swept… I was correct about how the StL City team had won on Sunday, I was on top of that one because I watched it on TV!  And being a Cardinals fan, I’m well aware that the team used to go to Pittsburgh for batting practice, but that’s all in the past… They lost to the Pirates last night… UGH!  It was a strange atmosphere day here in my little river town… Strange day, indeed, so peculiar momma!  (John Lennon)  10CC greets me this morning with their song: The Things We Do For Love
Well, the day started yesterday with the dollar being bought, and gaining back all that was lost in the previous overnight session… But as the day went on, the dollar longs seemed to fade, and we finished the day with the BBDXY trading in the same clothes as it began the day at 1,239…   No data, no dollar movement… 
Gold found a way to gain $5 on the day, while Silver outshone its kissin cousin, gaining 54-cents and ending the day at $23.40, while Gold ended the day at $1,895.50…  The Big mover of the day was the 10-year’s yield, which gained on the day to close the day at 4.34%… I’ve told you over and over again, that this dance is gonna be a drag, no wait, no time for the Dave Clark 5 here… But what I have told you, is that the Tsunami of bonds getting issued is just too much to deal with right now, and there is little attraction to the yields being offered, so, bond dealers have to increase the yields to make them more attractive… Where it stops, no one knows… Only the supply and demand will dictate where the yield goes… But if I were backed into a corner for an answer, I would say that the yields have only just begun to rise… 
The price of Oil stumbled yesterday, and dropped $2 on the day to finish the day with an $80 handle… There seems to be a faction that is doing its best to keep the price of Oil from taking off to higher ground… And then there seems to be a faction that is bound and determained to keep the price rising… Back and forth we go… But for the most part Oil has range traded… 
In the overnight markets last night…  Well, there was some additional dollar selling overnight, with the BBDXY dropping 1 more index point. If this is a rebound of the dollar selling from early in the month, it sure is starting out slow and steady… I’m just saying…   Gold is up $6 to start the day today, climbing back above $1,900… And Silver is up 9-cents to start the day.   I think everyone is not making any major moves in the markets until they hear what Jerome Powell has to say at the Jackson Hole boondoggle on Friday… That’s a long time to wait, in markets’ time, that is… But in this case, with little to no data to look at this week, there’s nothing else on the docket, so we wait until Friday…  
The price of Oil held onto its $80 handle overnight… The 10-year’s yield is bouncing around, but remaining in an upward direction… 
I was watching tv yesterday waiting for the baseball game to start and a commercial came on telling people: call to see if you qualify for “Government Money “…. And I said to myself… the government doesn’t have money that they didn’t steal from citizens “. Instead the business should see if they qualify for tax payer money! 

Ok, news from down south, and I mean real down south, like in Brazil!  This from Blacklistednews.com “It’s official: the Brazilian Central Bank has announced the introduction of its CBDC (Central Bank Digital Currency). It’s called DREX, the acronym for Digital Real Electronic X (real is Brazil’s currency).

“DREX is coming to facilitate the life of Brazilians. With a new face, our Central Bank Digital Currency project – created and operated by the Brazilian Central Bank – has its own name. Previously called Real Digital, it will provide a safe and regulated environment for new businesses and more democratic access to the benefits of digitalizing the economy for citizens and entrepreneurs.”

All-in-all, it’s just another brick in the wall… 
I mentioned the Russian ruble yesterday, and how it had recovered from its near death early last week… I then read an article on Bloomberg.com that talked about how the Russian elite are arguing about the fate of the ruble… Well, right now, inflation in Russia is manageable but allow a cheap ruble to enter the trade, and the country will import inflation from other countries… So, in all their debating, I sure hope that they remember that… 
Things in China aren’t going so well, economy wise… The country is in a recession, and their Central Bank has been slow to react to it… Most observers, including me, thought that the Peoples Bank of China (PBOC) would be dipping into their treasure chest of reserves and stimulating the economy… And they may still do just that, it’s just that they haven’t so far, and gives everyone the chills that they won’t do it at all!  

While things here in the U.S. aren’t exactly whistling Dixie!  This from Rueters yesterday: “The U.S. government looks “more likely than not” to shut down later this year due to political differences on spending that could temporarily hit economic growth, Goldman Sachs analysts said in a research note.

The Goldman economics analysts said prior shutdowns – which occur if Congress fails to pass annual spending bills – have stemmed either from disagreement on the level or distribution of spending, or a dispute over other issues that one party wants to address in spending legislation.

“At the moment, both types of risks are in play,” Goldman said in the note.”

Chuck again… I always find it interesting when Lola (Goldman) writes about something… Because we all know… That whatever Lola wants, Lola gets!  
There’s just so much to read about regarding the U.S. economy, etc. All I know is that the data tells me that the economy is NOT strong and vibrant as Treasury Sec. Janet Yellen says it to be… I think that Fed/ Cabal / Cartel chairman, Jerome Powell, has done a fair job to trying to get the message across to the markets, but the markets just don’t want to listen to him… Powell’s speech this Friday at the Fed’s Jackson Hole boondoggle, will be his latest attempt to get his message of slow growth, higher interest rates for longer, and overall gloominess of the market across to the markets… You have to wonder when the markets will get the memo?   

Maybe this news will help them to come around to thinking correctly… “Mortgage rates jumped Monday, following a rise in bond yields driven by investors’ concerns that high interest rates and inflation will linger longer than expected.

The average rate on the popular 30-year fixed mortgage hit 7.48%, the highest level since November 2000, according to Mortgage News Daily. It has risen 29 basis points in just the past week.”  
I’m forever thinking that eventually, the housing market has to be affected by these higher mortgage rates… 
The U.S. Data Cupboard remains barren today, with only one Fed speaker on the circuit… I doubt he’ll say anything that would ruffle the feathers of his boss, Jerome Powell… 
To recap… The dollar began the day and week yesterday getting bought, but that buying didn’t last too long, and as the day went on, all the early morning gains were gone, and the dollar ended up flat on the day… Gold gained $5, and Silver gained 54-cents on the day, while bonds continue to see their yields get marked higher… 
For What It’s Worth… Well, I told you about the BRICS meeting that would take place in August last month… It was thought, at that time, that the leaders of the BRICS would announce a euro-wannabe currency… There’s been some questions about that since, so tomorrow, the meeting begins, and this is a prepper for that and it can be found here: The Earthquake Starts Tomorrow – The Daily Reckoning

Or, here’s your snippet: “The BRICS Leaders’ Summit is scheduled to begin tomorrow, August 22 in South Africa, which will run through the 24th.

As I’ve been warning, this meeting is the most significant development in international finance in the last 50 years.
It has the potential to displace the U.S. dollar as the leading payment currency and reserve currency from a standing start in just a few years.
This latest monetary change will be delivered by the BRICS, and the world is unprepared for this geopolitical shock to the global financial system. Of course, BRICS is an acronym for Brazil, Russia, India, China and South Africa.
Among the leaders attending the summit are President Xi Jinping of China, President Lula da Silva of Brazil and Prime Minister Modi of India. President Vladimir Putin of Russia cannot attend in person because there’s an outstanding warrant for his arrest on war crimes charges issued by the corrupt International Criminal Court (ICC) in The Hague.
South Africa is a member of the ICC and might have been required to arrest Putin on arrival. The in-person delegate for Russia will be Sergey Lavrov, Russia’s foreign minister.
Even at this late date, the official agenda is shrouded in mystery. That’s not unusual considering that the members themselves, especially Russia and China, are accustomed to decision-making behind closed doors.
It’s also not an unusual feature where top leaders are involved. Negotiations tend to go down to the wire; indeed, key decisions will not even be made until the leaders actually get together in one room.
The first big issue involves new membership. The BRICS may be a five-member group, but over 67 countries have been invited to attend. Among those 67 countries, more than 20 have expressed interest in joining the BRICS, and seven have formally applied for membership.”
Chuck again… this meeting is important folks, as these countries have felt that they have been forced to use dollars in trade for so long, that a festering of hate toward the U.S. has occurred… Now, we’ll find out just how much they hate the U.S. and what they are going to do about it… 
Market Prices 8/23/2023: American Style: A$ .6452, kiwi .5961, C$ .7397, euro 1.0887, sterling 1.2766. Swiss $1.1383, European Style: rand 18.7289, krone 10.5801, SEK 10.8942, forint 350.42, zloty 4.0967, koruna 22.0451, RUB 94.14, yen 145.77, sing 1.3550, HKD 7.8375, INR 82.93, China 7.2919, peso 16.92, BRL 4.9484, BBDXY 1,238.33, Dollar Index 103.23, Oil $80.32, 10-year 4.31%, Silver $23.48, Platinum $938.00, Palladium $1,312.00, Copper $3.77, and Gold… $1,901.40
That’s it for today… I’m not sure that tomorrow’s Pfennig and the one Thursday, will be much different than today’s issue, given what I feel is a wait-n-see attitude in the markets, as we wait for Jerome Powell’s speech on Friday… Bad defense, which hasn’t been a problem for my beloved Cardinals since the Mike Matheny years… (he decided in spring training that the team didn’t need to work on fundamentals, UGH)  made the game more difficult than it should have been for the young pitcher starting his first game last night… I wanted to scream at the walls! But then I remembered that to error is human…   Sort like all the typos I had in the Pfennig yesterday… I put the blame for that on my fat fingers!  HA!  Looks like the atmosphere here is going to be strange again today… No sunshine… Bill Withers needs to be singing!   Eddie Money takes us to the finish line today with his song: Two  Tickets To Paradise…  I hope you have a Tom Terrific Tuesday today, and will continue to Be Good To Yourself!
Chuck Butler

Oh Boy! It’s A Jackson Hole Week! NOT!

* currencies & metals get bought in the overnight markets

* The Rich Men North Of Richmond… 

Good Day… And a Marvelous Monday to you! What an awful weekend for my beloved Cardinals, who got swept at home by the Mets! UGH! This has really been a  year that will test the true Cardinals fan… We had been experiencing non-August-like weather here in the St. Louis area, until yesterday, when the temps reached 100 and real August weather returned…  I know some places in the U.S. have been really hot this summer, but not here, that is until this week… But I think I talked about this before, but when I was a young boy, I remember a week in August where the temps were over 100 every day for a week… Now… That’s real August heat! And why they call them the Dog Days of Summer… Yesterday, was my darling daugher Dawn’s Birthday… I remember when she was born, I walked out of the hospital in a haze, wondering what was I going to do with a girl? Well, according to her, I dressed her up as a boy, all the time! I doubt that I did that, but it doesn’t matter, because she grew up to be a beautiful young lady, that I was very proud of…  This summer it was 20 years that she has been married… Where did the time go?  Todd Rundgren greets me this morning with his great song: Hello, It’s me… 
Well, there was no data in the cupboard on Friday, so the currencies were on their own… That is they would have been on their own if not for the short paper traders…  Oh well, another day, another day of their interferences… The dollar gained 2 index points in the BBDXY on Friday, and ended the week at 1.241… There was not rhyme or reason that the dollar gained on Friday, but be that as it may, the currencies are not even close to the levels they were at the beginning of the month, when it looked as if the dollar was getting ready for ride on the slippery slope, long term… 
Gold, with all the interference in its trading that it could stand, found a way to carve out a 50-cent gain on Friday… It ended the week at $1,890.50… Gold has reached $1,907 during the day on Friday, until it was wiped out by short paper trades…  Silver saw the same interference and gained just 9=cents on Friday, to end the week at $22.86… Silver had reached $22.96 on Friday, before the interference came… 
The price of Oil gained $1 on Friday and ended the week trading with an $81 handle… Bonds actually saw some love on Friday, and the 10-year’s yield dropped from 4.28% to 4.25%…  In my eye, I see this as a temporary moment in the sell off of bonds… 
In the overnight markets last night…Well, we’ve seen this two overnight sessions in a row… And that is the dollar getting sold… It’s not a major selloff, just normal selling that took 2 index points away from the BBDXY Index. The euro has climbed back above 1.09 this morning… And just a week ago, I was giving the ruble its eulogy, only to see the body bounce!  There’s little on the data cupboard this week, until we get to the Opening remarks of the Jackson Hole boondoggle… So, we’ll just trade on fundamentals, eh?  AS IF!   We’ve not traded the currencies on fundamentals in a quite a few years no, I would think that there are a good number fo young traders that have never traded on fundamentals… Even the technical gurus have taken a back set to Trader Sentiment that drives this bus now… 
To start the day and the week, Gold is flat as a pancake (Head East), and Silver is up 4-cents… Let’s see where Trader Sentiment takes these two today and this week, eh ? 
The price of Oil has bumped higher by another buck overnight, and trades this morning with an $82, handle.. That brief dip below $80 last week, sure didn’t last long, now, did it?   That’s because demand is high, it is the summer driving season, and supplies are dwindling… So, any attempt to bring the price of Oil back will be met with strong resistance, at least that’s how I see it from my view in the cheap seats… 
Bonds have become a BIG story these days, and the story is all about the Tsunami of bonds that have been issued to finance our every rising debt, and have been met with tepid response… That means the yields need to go higher to attract investors… And higher they’ve gone… The 10-year trades with a 4.29% yield this morning… In the not to distant past, this bond’s yield was down to .5625%… That’s nearly 400 Basis Points of loss for those that bought the bond at that yield, and there were many banks, and institutions that “had to buy at that level”  I feel sorry for them… but not for too long! 
Well, this week will bring us news from the Jackson Hole, Wyoming Fed Boondoggle… This is an annual event, and in the past has brought us news of more Quantitative Easing, and additional rate cuts, and other things that if the markets were left alone to set rates, would mean nothing!   Fed Chairman Jerome Powell, will be the featured speaker at the boondoggle, and the markets will be on the edges of their collective seats, listening to every word he mutters… It’s all a  S*&^ show in my mind…   and I’m not afraid to say that either!
So, look for some wild swings in the markets sentiment this week, as different speakers will say things that move markets one way or the other… 
I know you don’t read this letter to listen to me rant and rant about this and that… But I heard this song last week, and thought, I’m no fan of country music, but this guy: Oliver Anthony really nailed the lyrics! here’s a brief snippet of his lyrics to the song: The Rich Men North of Richmond…
“Livin’ in the new world

With an old soul
These rich men north of Richmond
Lord knows they all just wanna have total control
Wanna know what you think, wanna know what you do
And they don’t think you know, but I know that you do
‘Cause your dollar ain’t shit and it’s taxed to no end

‘Cause of rich men north of Richmond”

And in a case of: What? They didn’t ask you, either?  Reuters reported that; “The United States has approved sending F-16 fighter jets to Ukraine from Denmark and the Netherlands as soon as pilot training is completed” Just another item of debt that we amassed that will go down in flames, trust me on that one… We just keep shoving money down the drain… 
And then we have the U.S. consumers spending their savings… When is this all going to come to a crash? This from Bloomberg.com: “Over the past two years, consumers have drawn down the more than $2 trillion in extra savings they accumulated during the pandemic in order to keep spending in the face of sky-high inflation.”
Chuck again… The report goes on to say that consumers’ savings are dwindling…  Uh-oh! 
in a head count of those Central Banks that are still hiking rates, is starting to show some wear and tear… The European Central Bank, the Swiss National Bank, and the Bank of England all seem to be on board for more rate hikes, while the Reserve banks of Australia and New Zealand have backed away from the rate hike window, for now that is, The Bank of Canada is so wishy washy, you never know what will come from that bunch of knuckleheads… The Russian Central Bank probably made a one and done 350 Basis Points rate hike last week, and the Bank of Brazil is still hiking rates at last check… The world is waiting for the Bank of Japan to get off their rear ends and do something, like get their interest rate structure out of negative territory… The world has been waiting for over 20 years now… And they’ll have to keep waiting in my opinion… The BOJ has a long history of disappointing the markets… 
The U.S. Data Cupboard is basically empty until we get to Thursday this week… There’s some housing data that won’t have any surprises in them to print today and tomorrow… On our Tub Thumpin’ Thursday this week, the Jackson Hole boondoggle will kick off, with Jerome Powell’s speach coming on Friday this week… 
Well, this was the news headline on MarketWatch last Thursday: Leading index for U.S. economy falls for the 16th month in a row — but still no recession. Leading economic indicator declines 0.4% in July… But did that shake the confidence of the short paper traders, who still continued to take their pound of flesh from Gold…
To recap… The dollar ended the week getting bought, but then got sold in the overnight markets last night… That marks two consecutive night sesssions where the dollar got sold… The U.S. builds it up, the overseas markets knock it down… The Big Event this week is the Jackson Hole Boondoggle… Chuck doesn’t think much of this boondoggle, but that doesn’t mean the markets won’t be sitting on the edges of their collective seats hanging on each and every word from Jerome Powell… UGH! 
For What It’s Worth… Well, I’ve been waiting patiently, yeah right, ask anyone that knows me , and they’ll tell you I’m not a patient person!   Ok, I’ve been waiting for this decision for some time… I’m talking about the decision to put the price manipulators in jail or not… This article can be found here; JPMorgan Spoofer Sentencings Delayed as Judge Reviews Mitigation (yahoo.com)
Or, here’s your snippet: “A federal judge delayed until next week the sentencing of two former JPMorgan Chase & Co. gold traders convicted last year of spoofing, fraud and attempted market manipulation, so he can review issues raised by defense lawyers hoping to keep their clients out of prison

Prosecutors had sought a sentence of five years behind bars for Michael Nowak, who ran JPMorgan’s precious-metals trading desk, and six years for Gregg Smith, the bank’s top gold trader.
But during a nearly three-hour hearing Thursday in Chicago federal court, attorneys argued over how to measure, in dollars, the harm to victims of deceptive trading by Nowak and Smith.
US District Judge Edmond Chang, who presided at their trial in August 2022, said he needed at least until next week to review the arguments and the law.
New sentencing dates weren’t set, but the judge said the soonest would be next Wednesday.

The JPMorgan case was part of a crackdown by federal prosecutors on illegal spoofing, where traders place bogus orders to move prices up or down and then quickly cancel them before they can be executed. Smith and Nowak used the technique to manipulate gold and silver prices from 2008 to 2016.”

Chuck Again… Ok, really jaded Chuck speaking now… Yeah the judge probably needed a week to entertain all the payoffs he might received if he doesn’t rule that these guys have to go to jail…  I’m just saying… 
Market prices 8/21/2023: American Style; A$ 6410, kiwi .5920, C$ .7396, euro 1.0906, sterling 1.2757, Swiss $1.1366, European Style: rand 18.9935, krone 10.5770, SEK 10.9278, forint 350.10, zloty 4.1075, koruna 22.0221, RUB 94.88, yen 145.87, sing 1.3567, HKD 7.8389, INR 83.11, China 7.2951, peso 17.04, BRL 4.9678, BBDXY 1,239.60, Dollar Index 103.23, Oil $82.19, 10-year 4.29%, Silver $22.90, Platinum $906.00, Palladium $1,256.00, Copper $3.70, and Gold… $1,889.30
That’s it for today… This will be a long, slow, hot week for yours truly… Well, my beloved Cardinals finally bit the bullet and brough up thier #1 prospect this past weekend… He hasn’t lit up the scoreboard with his bat yet, but he started out slow at AAA too, so give him some time… There’s a song that goes: You’ve got to take some time to let love grow….   To; Kevin, Duane, Rick, Mike & Mike, Denny, no cheating with Google, I’ll buy a beer for whoever can tell me who sang that song?   Our StL City team played last night and played well after a 3-week hiatus and won the game 6-3… I had to sell my tickets to the game, as I’m still not ready for prime time…  Besides the game didn’t start until 8:45 last night, and it was a “school Night”!  Los Bravos take us to the finish line today with their 60’s song: Black Is Black… I hope you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler

The Selling Of Bonds Continues…

August 17, 2023

* currencies & metals get sold on Wednesday

* But rally in the overnight session… 

Good Day… And a Tub Thumpin’ Thursday to one and all! While I AM a bit better this week, I’m going to have to beg off celebrating a Tub Thumpin’ Thursday today, as I’m stil not ready for prime time!  But having said that… why wallow in the mud, and complain? I’ll just take my lumps and move on, as that’s what I’ve done for over 16 years now…  Speaking of the last 16 years, I had my 50th scan yesterday… This time without the contrasting dye, that caused my anaphylaxis shock last December… So, it was in-and-out in a NY minute yesterday morning… So I had that going for me, eh? MY beloved Cardinals couldn’t seal the deal of a sweep last night, and lost to the A’s, but winning 2 of 3, and now the pond scum come to St. Louis… I kind when I say that, as in the 80’s the Cardinals and Mets were in the same division and had a heated rivalry… So, I’m not being mean with that statement, it’s just a throwback to the 80’s…  Jackson  Browne greets me this morning with his song; Doctor My Eyes… 
The Fed Heads threw a Cat among the pigeons yesterday, when their meeting minutes printed, and stated that the Fed Hea saw significant inflation risk, that merits more hikes… Boy did that light up the day for dollar traders, who then went about marking up dollars, and seeing them bought like funnel cakes at a State Fair… The BBDXY gained 5 index point on the day, and the euro lost another cent, and now trades with a 1.08 handle… Yes, it wasn’t that long ago that the BBDXY was trading at 1,220, and the ruo was at 1.10 heading higher… And then it wasn’t…  
Gold took one to the chin yesterday, and got knocked out! Gold lost $10 on the day to close below $1,900, closing at $1,892… Silver lost 14-cents, so the damage there was not as strong… I love it when Ed Steers calls the short paper trading as “slicing the salami”… They take a little off the roll of salami… a little bit at a time, but they keep coming back and taking more… i already sent all those responsible for the slicing of the salami, to the woodshed earlier this week, so apparently, they didn’t learn anything from their trip there!  
The price of Oil has slipped again by $2 yesterday, and ended the day ttrading with a $79 handle… Inventories are low, but when the powers that be want to take down an asset, there’s no stopping them … And Bonds just keep getting sold folks… The 10-year’s yield ended yesterday at 4.28%… Like i said yesterday, you can’t say I didn’t warn you about this selloff, just based on all the new bonds coming to the market, and no one to buy them… 
In the overnight markets last night… some saneness has returned to traders as they sold dollars overnight. The BBDXY starts today down 3 index points from yesterday’s close.. The euro remains below $1,900, but just barely… The surprise currency rally this week has been the Russian ruble. After hiking rates 350 Basis Points earlier this week, the ruble has responded in a good way, and trades this morning with a 93 handle, after going over 100 late last week… Gold is up $7 in the early trading today, and Silver has added 38-cents… The question for the day is whether the salami slicers decide to take Gold’s gains and slice them up, or will they sit on the sidelines today, and watch Gold gain some ground?   Make your bets…  All ready? Then roll the dice!  
The price of Oil has steadied with an $80 handle this morning… And there was no movement in bonds overnight, so the 10-year is still trading with a 4.28% yield this morning… Where is the yield on the 10-year going to stop rising? I have a thought on that, that I’ll share with you next week… See, if I learned one thing in the show business it is to “leave the crowd wanting”…   HA!   
Well, some of you longtime readers will recall me making a big deal out of the start up of the Shanghai Gold Exchange, because they would not allow short paper trades… I thought, that this would allow Gold to reach its true price level without interference… But that didn’t happen… I often wonder why, but it is what it is… 

But now we have a situation where the Gold spot price in China is $40 higher than it is in London… Here’s Bloomberg.com with the report: “China’s gold price is rising against levels in London, a trend that local traders say is due to government curbs on imports of the precious metal.

The Shanghai spot price was more than $40 an ounce higher than that in London on Aug. 14, according to Bloomberg calculations based on exchange data. That’s the biggest premium in more than five months, with the gap steadily widening from late June even as consumer demand in China remained sluggish.

Authorities moving to limit gold imports appears to be a major driver behind the growing gap, according to traders and importers.”

 
Chuck again… I doubt this is the breakout that I expected years ago in China, but more of a short-term phenomenon… 
 
News from down under the other day, the Reserve Bank of New Zealand (RBNZ) left their Official Cash Rate at 5.5% Tuesday… They want to see the effects of their climb in interest rates have had on the economy, before undertaking any additional moves… Kiwi didn’t move on the news, which is a good sign…  As the recent downward move in kiwi had come from traders who speculated that the RBNZ would pivot at this meeting…  The question now, is whether these same traders double down, or leave with their collective tails between their legs?  
 
I can’t save this for the Data Cupboard roundup… The NY Empire Manufacturing Index printed for this month yesterday, and it came in at -19… That’s a negative 19! For those of you new to class… The Empire Manufacturing Index rates the relative level of general business conditions in New York state. A level above 0.0 indicates improving conditions, and below indicates worsening conditions. The reading is compiled from a survey of about 200 manufacturers in New York state… So, if any number below 0 is bad, then negative 19 is real bad!  I would think that this regional report will lead the rest of the regionals down the same path… I’m just saying… 
 
But the dollar shrugged off the Empire data, and went with the Fed’s Meeting Minutes, comment about the need for additional rate hikes… That’s just crazy folks… yes interest rates may be going higher, but from the raging economy? No, more like raging inflation… no matter what the stupid CPI says… We all know in our heart of hearts that inflation is running higher than what the stupid CPI says… 
 
Shadowstats.com has inflation running at 12% when compared to 1980’s formulas that were done before all the hedonic adjustments that are allowed now in computing inflation… So… do the math folks… we still have negative interest rates in the U.S. And… Treasuries are also paying negative yields…  So, put that in your pipe and smoke it Janet Yellen!  And dollar traders that keep buying the lie that the U.S. economy is strong and vibrant… 
 

The U.S. Data Cupboard yesterday, had the July Retail Sales, and they, like the BHI indicated were strong… Thus showing that the U.S. consumer still has room on their credit cards to keep spending… I pulled this from CNBC.com: “July’s numbers were boosted by a 1.9% jump in spending at online retailers, while sporting goods and related stores increased 1.5% and food service and drinking places rose 1.4%.

On the downside, furniture sales slumped 1.8% and electronics and appliance stores reported a 1.3% drop.”

 
Chuck again… Well, here we go again… with traders taking the viewpoint that this report proves that the U.S. consumer will be able to withstand a recession… I say, balderdash!  We’ll just see how far all these conumers with less than $5,300 in savings comes out… I think it will be in tears… but we’ll just have to wait-n-see, eh? 
 
To recap… The dollar got bought hand over fist yesterday, after the FOMC Meeting Minutes from their last meeting where they hiked rates 25 Basis Points, said that they are seeing “significant inflation signs” and my merit more rate hikes… That got the dollar bugs are fired up… of course Chuck tells us that they really don’t have anything to be lathered up about, but don’t tell them when they’re on a roll that is over… It wasn’t over when the Germans bombed Pearl Harbor was it?   (ok that’s from Animal House , and its a shame that I have to explain that for in the past, I’ve had people write me and tell me how wrong I was that it was the Japanese that bombed Pearl Harbor!
 
For What It’s Worth… I’ve been to the cinema to watch 1 movie in the last 10 years, and that movie was: The Big Short… I loved the movie because it was about Michael Burry that shorted the housing market, and made out like a bandit when the housing market collapsed. I loved it because I was on top of that whole collapse, having warned of a Housing Bubble in 2003, 4 years before it collapsed. So, this article is about how Michael Burry is now shorting the stock market…  Warning signals are going off all over the world, on this news, so take it with as many grains of salt that you wish…  And it can be found here; Infamous “Big Short” Burry – Places $1.6b Bet US Market about to Tank | Ainslie Bullion

Or, here’s your snippet: “ Chances are, we’re all familiar with “The Big Short,” whether through the film or the book.

Similarly, most of us are likely familiar with Michael Burry, the finance genius who made a bold move by betting against the US housing market by persuading investment banks to provide him with credit default swaps linked to risky subprime mortgages.
Now, he’s back in the spotlight, this time targeting the US equity market.
According to recent documents filed with the SEC (Securities and Exchange Commission), Burry has actively taken on put options involving two ETFs that mirror the performance of the S&P 500 and the Nasdaq 100. The combined value of these options adds up to an impressive $1.6 billion.
The question of whether Burry’s actions are a “BIG SHORT” or a “BIG HEDGE” is up for interpretation. However, the central theme remains the same: he’s placing a bet against the current state of the market.
Burry is known as a value investor, someone who excels at spotting overpriced stocks and sectors and then making short trades to capitalize on their decline.
Interestingly, Burry’s talent for short-selling actually precedes his well-known bet against the subprime market in the US.
As author Michael Lewis recounts in “The Big Short”:
“Back in 2001, while the S&P 500 dropped by 11.88%, Scion, under Burry’s guidance, surged by 55%. The following year, as the S&P 500 fell again, this time by 22.1%, Scion once more outperformed with a 16% increase. In 2003, despite the stock market’s recovery with a 28.69% rise, Burry still managed a remarkable 50% return. By the end of 2004, his assets under management had reached a hefty $600 million, and he was even forced to turn down additional investments.”
Then came his most impressive achievement – Burry’s calculated bet against the US housing market resulted in a personal profit of around $100 million and hefty returns of $700 million for his investors.
However, perfection wasn’t always on his side. While the exact timing of his short positions being exercised remains uncertain, he boldly announced in 2022 that he had taken substantial short positions in anticipation of an impending drop in earnings. As history has shown, that thesis has not quite panned out yet.
As disclosed in a 13F filing with the U.S. Securities and Exchange Commission, Burry acquired put options worth $890 million for SPDR S&P 500 ETF and $740 million for INVESCO QQQ ETF.
Twitter reacted with amazement, labeling this move a $1.6 billion short.
Irrespective of the specifics, Burry’s evident concern about the market is palpable, and his actions echo that sentiment. If his foresight proves accurate once again, we might find ourselves witnessing another debilitating economic crisis.”
Chuck again… While I’m no stock jockey, don’t play one on TV, or stayed at a Holiday Inn last night, I think it would behoove all to at least make sure your “stop losses” are up to date…  And that’s all I can say about stocks, otherwise, the gestapo will take me away in a paddy wagon… 
Market Prices 8/16, 2023: American Style: A$.6433, kiwi .5953, C$ .7405, euro 1.0895, sterling 1.2763, Swiss $1.1397, European Style: rand 19.0439, krone 10.5337, SEK 10.8969, forint 353.40, zloty 4.1053, koruna 22.0988, RUB 93.06, yen 145.83, sing 1.3579, HKD 7.8273, INR 83.15, China 7.2832, peso 17.07, BRL 4.9676, BBDXY 1,239.15, Dollar Index 103.25, Oil $80.10, 10-year 4.28%, Silver $22.82, Platinum $912.00, Palladium $1,237.00, Copper $3.72, and Gold… $1,899.97
That’s it for today, and this week of course!  My scan results didn’t show any new cancer, only the lesion that remains in my jaw… And that my sinuses are inflamed!  Well, the old man, Adam Wainwright take the hill tonight against the Mets… Maybe he can get out of the 1st inning tonight, without putting his team back a half dozen runs! I get it, he’s a longtime Cardinal and has been the ACE of staff for years… But father time caught up with him… I’ve been really tired lately, and needing to take an afternoon nap… Fatigue is an effect of chemo… And i’ve fought it for 16 years now…   The NFL pre-season games are under way, and fantasy leagues are drafting their teams. i used to play fantasy football, but then I went through that stage where I didn’t watch the NFL, they ticked me off and I turned them off… But now, I watch what games I think are worth watching… But still don’t want to play fantasty football!  Mark Knopfler and his band Dire Straits take us to the finish line today with his song: Sultans of Swing… Some real good guitar work in this song by Mark…  I hope you have a Tub Thumpin’ Thursday today, and Fantastico Friday tomorrow, and won’t forget to Be Good To Yourself!
Chuck Butler

More Credit Rating Cuts In The Cards?

August 15, 2023

* Gold & Silver get their daily beating… 

* Russian Central Banks hikes rates 350 Basis Points! 

Good Day… And a Tom Terrific Tuesday to you! Well, my beloved Cardinals played to the level of their competition last night having to come from behind to beat the A’s… A win is a win, right?  Never mind the blown save, and the need to come from behind… UGH!  I’ve been having major problems with the new chemo, and now my oncologist has taken me off of it, while she tweaks the dosage… I have to go have blood drawn this aftenoon, so I need to drink plenty of water this morning!  And don’t forget, no Pfennig tomorrow, as I will be getting scanned…   Alice in Chains greets me this morning with their unplugged song: Down In A Hole… 
Well, the buying of the dollar in the overnight markets (Sunday to Monday) ended yesterday, in the U.S. session, there was no more dollar buying, nor was there any dollar selling, and the BBDXY ended the day at 1,237… The short paper traders just won’t let go of thier choke hold on Gold & Silver… Hulk Hogan would be proud…  Or for the old timers out there like me, Gene O’Connel would be proud…   Ahhh, Saturday nights, and “Wrestling At The Chase” aired in the St. Louis region… That was a very long time ago!  
Gold, as I just mentioned was subjected to the short paper trades once again, and lost another $6.30 yesterday, while Silver lost 7-cents… Gold closed at $1,907.80, and Silver closed at $22.69…  The price of Oil lost another buck during the day yesterday, and ended the day trading with an $81 handle… Bonds are seeing mucho selling these days, with all the issuance of new bonds coming down the pike, the 10-year’s yield had risen to 4.20% to end yesterday… 
The price manipulators, or short paper traders have become so brazen with their attacks on the metals… Take yesterday for example… Gold was down early in the day, but rallied back by noon, an was even on the day, and that’s when the boys in the band showed up at the COMEX with arms full of short paper traders… They don’t even need an excuse to bring the metals down an longer, they just go our and get it done! 
Yesterday, I talked about how the Russian ruble had dropped like a rock off a cliff, and had gone past 100 in price VS the dollar… Well, the prompting by the Foreign Ministry guy who called out “loose monetary policy” on the Russian Central Bank, may have hit a nerve, because the Russian Central Bank called an “emergency meeting” yesterday, where they hiked rate 350 Basis Points to 12%! The Central Bank pointed to how the weak ruble was allowing inflaiton to rise in the Russian, and therefore they needed to hike rates… Inflation is running about 7% in Russia, so their positive interest rate is 5%… And the ruble responded appropriately… 
In the overnight markets last night…  There was little to no movement in the dollar overnight… The BBDXY is still trading in the same clothes as yesterday at 1,237…. Gold is getting sold again this morning, and is down $5 as I write, with Silver down 29-cents… More of the same-o, same-o, for the metals… When is this going to stop? I know, I know the dog days of summer are never kind to metals, but this is preposterous!  
The price of Oil remains in the $81 handle, after reaching $86 briefly last week, Oil has slid downward, but still, to me looks like it will want to move to $90… I’m just saying…   And the 10-year’s yield, has risen some more overnight to trade at 4.22% this morning… It’s not like I didn’t warn you about this rise in yields… The debt issuance has been unreal, causing yields to rise to attact buyers for all the issuances… 
Well, did you hear about the latest U.S. Bank to fail? Probably not, because, the media has a hush-hush on bad news in the economy… OK, I made that up, but it wouldn’t surprise me one bit if the media did have a hush-hush on bad news in the economy!  Seriously though, the latest bank of fail was the Heartland Tri-State Bank in Kansas… Remember when I told you that the end of the banking crisis was not nearly at an end?  This bank wasn’t on the list of Big Banks, but still it’s another one bites the dust… And the economy is moving along just fine, eh, Janet?  As if!
I really went all postal on the short traders and their scheme yesterday, eh? Well, they deserve it, every inch of it! And probably more!  I saw a line from a writer that quoted a hedge fund guy, who told him that the HUGE breakout for Gold & Silver is coming… Well… count me in on those that are waiting! 
Well, the folks, Russ & Pam Martens at www.wallstreetonparade.com had this to say yesterday, and I like the sound of it, here it is: “In the Federal Reserve’s most recent “Supervision and Regulation Report” on the big bank holding companies it “supervises,” the Fed continued its attempts to perpetuate the narrative that “The banking industry came into 2020 in a healthy financial position” and has simply unraveled as a result of the COVID-19 pandemic. That narrative is built on the same flimsy house of cards that the New York Times and Andrew Ross-Sorkin built the narrative that the mega banks on Wall Street were not responsible for the 2008 financial collapse.

The Fed is desperate to promote this narrative to stop a new Congress next year from holding hearings on why the Fed, for the second time in 12 years, had to engage in trillions of dollars in Wall Street bank bailouts after reassuring Congress for years that the financial system was fine as the Fed loosened or rolled back reforms like the Volcker Rule. The Fed needs this narrative to prevail in order to cover up its own negligent supervision of the behemoth banks.

Depending on the composition of Congress next year, those hearings might bring about not only a restoration of the Glass-Steagall Act (which bans trading houses on Wall Street from combining with federally-insured, deposit-taking banks) but might also put an end to the Fed’s ability to negligently supervise the big banks with one hand, while bailing them out with the other hand, using money it creates out of thin air. (The Fed will report its latest balance sheet tally today at 4:30. It is expected to be close to $7 trillion from the $6.7 trillion it reported last week – which is $2.8 trillion more than it was exactly one year ago. The growth in the Fed’s balance sheet has come as a result of efforts to prop up Wall Street banks.)”

Chuck Again… wouldn’t that be nice if we could wake up, in the morning when the day is new, and find that Glass-Stegal has been reinstated, we could then party the whole day through! 
The Fed Heads have used that excuse of the Plandemic causing them problems for far too long… If you recall, in September of 2019, I was writing about all the repos the Fed Heads were doing for the Big Banks,  and pointed out that this can’t be a good thing going forward… 
The U.S. Data Cupboard has the July Retail Sales for us to see this morning… The BHI (Butler Household Index) indicates to me that July deliveries to our house were plenty, so that’s a good sign for Retail Sales, but then in July, we had the beginning of “Back To School” buying… And the lastest Consumer Credit (read debt) told us that credit card purchases were a plenty in July… So, it all comes together, eh? 
To recap… the dollar buying in the overnight session ended in the U.S. session yesterday, no dollar buying was done, and by the same token, no dollar selling went on either!   Gold & Silver got sold once again, by the short paper traders, And we have a big session in Congress coming up… 
For What It’s Worth… I mentioned Fitch and its credit rating downgrade and then I was just minding my own business and this article popped up about Fitch… And it’s about further rate cuts that could be coming from the ratings Agency and it can be found here; Fitch warns it may be forced to downgrade dozens of banks (cnbc.com)
Or, here’s your snippet:”A Fitch Ratings analyst warned that the U.S. banking industry has inched closer to another source of turbulence — the risk of sweeping rating downgrades on dozens of U.S. banks that could even include the likes of JPMorgan Chase

.
The ratings agency cut its assessment of the industry’s health in June, a move that analyst Chris Wolfe said went largely unnoticed because it didn’t trigger downgrades on banks.
But another one-notch downgrade of the industry’s score, to A+ from AA-, would force Fitch to reevaluate ratings on each of the more than 70 U.S. banks it covers, Wolfe told CNBC in an exclusive interview at the firm’s New York headquarters.
“If we were to move it to A+, then that would recalibrate all our financial measures and would probably translate into negative rating actions,” Wolfe said.
The credit rating firms relied upon by bond investors have roiled markets lately with their actions. Last week, Moody’s downgraded 10 small and midsized banks and warned that cuts could come for another 17 lenders, including larger institutions like Truist
 and U.S. Bank

. Earlier this month, Fitch downgraded the U.S. long-term credit rating because of political dysfunction and growing debt loads, a move that was derided by business leaders including JPMorgan CEO

Chuck again…. Well, you can certainly expect to hear more whining and crying from Janet Yellen about these credit rate cuts, because in her mind, one that looks through rose colored glasses, the U.S. economy, and banking system is just fine, and that these cuts are unwarranted… I think you all know what I think of Janet Yellen’s viewpoint, eh? 
Market Prices 8/15/2023: American Style: A$ .6474, kiwi .5971, C$ .7411, euro 1.0935. sterling 1.2707, Swiss $1.1402, European Style: rand 19.2033, krone 10.4789, SEK 10.8372, forint 354.48, zloty 4.1042, koruna 22.0647, RUB 98.77, yen 145.48, sing 1.3569, HKD 7.8257, INR 82.94, China 7.2865, peso 17.11, BRL 4.9635, BBDXY 1,237.92, Dollar Index 103.29, Oil $81.70, 10-year 4.22%, Silver $22.41, Platinum $893.00, Palladium $1,243.00, Copper $3.70, and Gold… $1,902.55
That’s it for today… well, this day August 15th will always be burned on my brain, for that was the day each year when we began summer football practice… Some years, we did 3-a-days and some 2-a-days… It was grueling, hot, and I loved every minute of it!  I’ve been stuck at home this week, as I’m afraid to go out in public with my stomach problems right now… UGH! Well, it’s not like you go many places anyway, Chuck! Ok, so I’m complaining, can you let me get away with that for once?  Ok, I’ve got a treat for my song to send us off today… The great Stan Getz, plays his 1964 hit of year, The Girl From Impanema… The girl that sang that song, died the other day… She was the wife of one of the musicians and was not a trained singer… There, a little trivia for you! I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!!
Chuck Butler

The Dog Days Of Summer Are Upon Us…

August 14, 2023

* currencies & metals get sold in the overnight markets

* Chuck unloads on the short paper trading scheme… 

Good Day… And a Marvelous Monday to you! A very rough weekend for me, as i battled with my stomach all weekend… I tried to get a life and go to my local watering hole on Friday, but only lasted about an hour, before the circus, rumbling and eruptions in my stomach had me heading back home… UGH!  I know that other cancer patients have a worse time with their chemo, so I won’t carry on like it’s the end of the world for me here, just pointing out, my difficulties dealing with my chemo…  My beloved Cardinals took 2 of 3 from the Tampa Bay Rays late last week, and then did their normal “play to the level of their competition” and got beat by the lowly K.C. Royals… Memo to Adam Wainright… “hang ’em up Adam”… it’s time…  Crosby, Stills & Nash greet me this morning with thier mega hit song; Suite: Judy Blue Eyes…  
Well, when I left you last Thursday, we were waiting on the Stupid CPI to print… I had made a point about how it appeared the markets had gotten a flyer on the print, because they were trading as if they knew what it was going to reveal… So, with no further ado, The Stupid CPI printed a +.2% gain for July, and YTD at 3.2%… So, here’s what I was talking about… The annualized inflation was 3.2%, and 3.3% was expected, so… the markets with all their geniuses, decided that inflation has softened, and they might lead the Fed Heads to not hike rates again…   These guys are just looking for excuses to run up stocks… 
I, of hardly ever Tweeting, Tweeted that I had made mention of the idea that a flyer was received by the markets, and then when the stupid CPI printed it made it clear to me that they had received one!  Now, don’t go getting all giddy about me tweeting, it’s the first one I’ve tweeted in a month of Sundays…  
So… On Thursday last week the dollar was soft… because of the stupid CPI…  Bonds got bought, because they thought that they were at yields that might not be seen again on the high side that is… Gold was a non-event on the day, and the price of Oil remained Steady Eddie in the $83 handle. 
On Friday, the markets got a shock when PPI (wholesale inflation) rose .3% in July… That put the thoughts of no more rate hikes on the back burner, because PPI feeds CPI, and therefore inflation isn’t dropping any time soon… And that means the Fed Heads’ promise of two more rate hikes, with one down, still have one to go… And that got the dollar bought on Friday, Gold again was a non-event (gained $1.30), bonds are confused, and the price of Oil remained trading with an $83 handle. 
So, what was thought on Thursday, was quickly dispelled on Friday… Stupid markets follow the stupid CPI, so they get what they deserve!   One other thought on the data front from Thursday… The Weekly Initial Jobless Claims rose to 248,000 the previous week, from 227,000 the previous week to last week… I had mentioned the other day that I didn’t know when all the layoffs that have been announced by Corps were going to begin showing up in this data, and voila! There it is! More to come, I would suspect… 
In the overnight markets last night… Well, the dollar buying went on a buying spree, with the euro losing almost a full cent, and the BBDXY gaining over 3 index points… Gold is down $4 in the early trading today, and Silver is flat as a pancake (Head East)… The Petrol Currencies can’t even find some love from the price of Oil, as it has slipped by $2 in the overnight trading… and trades this morning with an $81 handle… And Bonds… Well, the Tsunami of bond issuance is still going on, and with it bond yields are getting marked higher to attract buyers… The 10-year’s yield is 4.18% This morning… 
We’re starting the week on a real sour note for the non-dollar assets, and the anti-dollar assets… I sure hope the rest of the week doesn’t play out like the first part of Monday has! 
I’m going to go up on my soap box now and rant about something… if you’re in no mood for one of my rants, then just skip ahead… OK.. everyone that wants to be here is here, right? Last chance saloon, to skip ahead… All right, I’m just fed up to my ears with all these manipulated markets… Price discovery?, true Bids and Offers? Those are things that no longer exist in the markets… Central Banks are to blame for a lot of this with all their QE, bond buying, and manipulating yields downward… The Regulators are to blame for a lot of this will their looking the other way, while short paper traders just keep shorting assets over and over again… And the Congress, not paying attention to the ball, is the other culprit here… Well, then why would they? If stocks are heading higher, and they’re all-in on stocks, why would they question how that happened?   And the sort paper traders? Those greedy bas%(^&#s… I had better move on or else my blood pressure will be shooting for the moon!
Well, the markets barely flinched when Fitch announced their credit rating downgrade for U.S. debt… But the main idea here as Fitch said in their communique that the structure damage to the U.S. has been very bad…   But when will that begin to show in how the dollar is traded? That’s the $ 64 quesion folks… It’s coming… you can feel it coming like you can feel the rain is coming in your bad knee… Patience… That’s all I can say about that…
The Russian ruble is going through hell and won’t be coming back for some time, as the ruble fell to 100 VS the dollar… The Russian Finance Minister said that a period of loose monetary policy has been the problem with the rubles performance… Now, those are fightin’ words pal… Because Evira Nabiullina is the Central Bank Gov. and a Central Bank Gov. that I have a lot of respect for… I think her hands are tied, because the country is at war, and it’s not loose monetary policy, bud!  
And the New Zealand dollar/ kiwi, fell below 60 in the overnight trading last night… I don’t get it, why beat on kiwi, when they have the highest interest rate of the industrialized world? Their Central Bank is top notch, and whatever the reason the traders have taken a chunck of flesh from kiwi, it’s wrong… I’m just saying… 
The U.S. Data Cupboard last week was a doozy, with all the stupid prints and market reaction to them… This week we’ll see Retail Sales, and Industrial Production… But first we start today with nothing on the docket for today, and then nothing again on Friday this week… The data schedule maker probably doubles as the baseball scheduler… I’m just saying… 
To recap… The dog days of summer are upon us, and that means the markets are tired and lazy… No impetus to go long one way or the other… Just short paper traders dominating and all the sheeple following their leads…. I shake my head in disbelief that this is all happening, to what was once clean, bid/ ask price discovery markets… Now it’s just dominated by paper traders… The dollar got bought late last week, and the currencies are looking for some safety somewhere, that isn’t being found… Same for Gold… And Silver… And Bonds…   
For What It’s Worth… This is HUGE folks, so pay attention here:   This article is about how bank balances are dwindling as depositors are leaving low paying accounts for money market accounts, and how that is going to hurt the small banks and it can be found here: Money-Market Fund Assets Hit New Record High; Banks’ Usage Of Emergency Fed Funds Jumps | ZeroHedge
Or, here’s your snippet: “

U.S. Money Market funds saw a fourth straight week of inflows ($14 billion this past week) to a new record high of $5.53 trillion…

Retail money-market funds saw inflows for the 16th straight week (and institutional funds also saw a 3rd straight week of inflows)…

The decoupling between money-market fund inflows and bank deposits continues…

Usage of The Fed’s emergency bank bailout facility rose by $1.2BN to a new record high at $107BN…

Finally, U.S. equity markets continue to diverge significantly from bank reserves at The Fed…

We leave you with one thought – in 7 months and counting, America’s ‘smaller’ banks will need to find that $100-billion plus from somewhere as that is when the BTFP bailout program ends (theoretically). Will regional bank balance sheets be stabilized by then…or will the current bloodbath in bonds be the catalyst for another round of pain?”

Chuck again… These are the things that happen when Banks don’t run their balance sheets correctly and look for pennies in profits…  And they don’t service their clients the way a bank should… I’m just saying… 

Market Prices 8/14/ 2023: American Style: A$.6487, kiwi .5962, C$ .7430, euro 1.0903, sterling 1.2645, Swiss $1.1350, European Style; rand 19.0650, krone 10.5012, SEK 10.8698, forint 351.40, zloty 4.0738, koruna 22.0750, RUB 102.12, yen 145.30, sing 1.3560, HKD 7.8187, INR 82.94, China 7.2527, peso 17.05, BRL 4.9311, BBDXY 1,237.96, Dollar Index 103.24, Oil $81.90, 10-year 4.18%, Silver $22.76, Platinum $909.00, Palladium $1,313.00, Copper $3.73, and Gold… $1,910.80

That’s it for today… Well, someone at the scheduling office for baseball should be fired… The Cardinals had an “off day” on a Sunday! That’s blasphemous!  Sundays are for BBQ’ing, swimming, family time, friends visit, and baseball!  UGH!  The dog days of summer are upon us… When I was a young man, I always thought that these days would never end, long hot summer days… And when I was a teenager and building in-ground swimming pools in Oklahoma, I thought those hot summer days would never end…  And now that I’m an old man, I wish they would last longer!  Because summer gives way to fall, and chillier weather, and then the cold weather comes, and I’ve long said that I gotta go where it’s warm!  Van, the man, Morrison take us to the finish line today with his mega hit song: Moondance… I was always a fan of Van Morrison’s music… I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself!

Chuck Butler

Sidestepping Swift…

August 10, 2023

* Currencies & metals rally in the overnight markets

* Petrol Currencies perk up! 

Good Day… And a Tub Thumpin’ Thursday to one and all! I don’t feel much like Tub Thumpin’ today, so I’ll have to ask you all to step in for me… The end story here is that I’m not tolerating my new chemo… And the only way I can get myself to feel better each day, is to sleep the day away… Now, that’s not very productive is it? I tried to go to lunch yesterday, with good friend, Duane, but I barely touched my food, and barely made it home in time, to deal with my bad stomach. I aplogized to Dewey, and felt bad, that he had to not have a fun lunch…  I heard from a former colleague yesterday, one that I had worked with since she got out of college… It was great to hear from Jen McClain… Jet greets me this morning with their song: Are You Gonna Be My Girl?
Well, Monday, being Monday this week, with the dollar getting bought like funnel cakes at a State Fair, has been the outlier of the days so far this week… The dollar hasn’t been bought since Monday, but then it really hasn’t been sold too much either. Yesterday, the BBDXY was flat as a pancake (Head East), which meant the currencies were stuck in the mud. Gold however was NOT stuck in the mud, and lost more ground on the day, losing $11.60, to close at $1,914.40. Silver also lost ground yesterday, losing 11-cents to close at $22.74… I told you yesterday, that in past years, the summer months have not been kind to the metals… But I didn’t say that they’ve never been this unkind to the metals! And that’s why I’m convinced that the short paper traders are at work here… 
The price of Oil remained trading in the $84 handle all day yesterday… And the 10-year’s yield gained 1 bp… to yield at 4.01%… So, Wednesday for the currencies, Oil and bonds, was a borrrrrrriiiiinnnnggg day, while the metals continued to get sold. 
In the overnight markets last night…  The dollar got sold… This time it was more of a widespread selling of the dollar, with the BBDXY losing 3 index points. The euro has climbed back above 1.10, and the Petrol Currencies all have seen some gains, with the price of Oil moving higher. The Petrol Currencies include: the ruble, krone, real, peso, loonie, and others…  Did the overnight markes get a flyer on the Stupid CPI? Because it sure seems as though they did… Oh well, it is what it is… 
As I just said, the price of Oil has been moving higher, although last night it lost 50-cents… no biggie… And trades this morning with an $83 handle… Gold is up $7 in the early trading today, so maybe there is something to this flyer being released on the Stupid CPI… 
Bill Bonner had me in stiches yesterday, and I have a snippet of his letter that can be found at Bonner Private Research | Substack… here’s Bill: “This is ‘fiscal inflation.’ It helps delay a correction…for a while. But it gives us a Banana Republic deficit at 8% of GDP…national debt accumulating at $5 billion per day…rising bond yields…and an upcoming headache that is going to be one for the record books. All of this debt will eventually have to be rolled over at higher rates…and inflated away.” 
And to the question that was asked of why doesn’t Biden get credit for the economy? Bill said, “Why doesn’t he get credit? Why not give Harry Truman credit for the urban renewal program in Nagasaki after 1945? Why not give Chief Sitting Bull credit for reducing payroll costs in the 7th Cavalry?”
Chuck again…  All this debt, with plenty more to come, just keeps piling up, and will have to financed… And to finance our debt, we as a country, issue Treasury Bonds & Bills… Those bonds/ bills have a yield, or interest rate that HAS to be paid to the buyer of the bond… What have interest rates been doing for the last 1+ years? Going up at a very fast rate, right? So, new bonds being issued have the current higher rates that will have to be paid, and bonds that come due, will have to rolled over at a higher rate… You see where this all headed, right? And to me, that’s why the POTUS doesn’t get credit, for his $1.5 Trillion deficits each year, will only make matters worse for the U.S. And that’s all I have to say about that!
So, the question is… When will the Fed Heads realize that their war with inflation, is going to cause a war in this country? Civil Unrest, etc. …   When the free handouts that the Gov’t is so good at handing out, get cut, because the cost of servicing the bonds (paying interest) will take up most of the tax receipts, leaving nothing to pay for the free handouts… Uh-Oh!   
OK, let’s talk about something else Chuck, your jaded side is really showing this morning… 
Well, like it or don’t… The markets will be highly anticipating the print of the Stupid CPI this morning… These guys and gals in the markets all believe that the Stupid CPI holds the key to whether the Fed Heads continue to hike rates, or pivot and cut rates… I say balderdash! The Fed Heads barely give a nod to the Stupid CPI, instead using the PCE (Personal Consumption Expenditures) as their preferred inflation rate calculator… But the markets, being the markets, will make a tempest in a teapot, regarding what the Stupid CPI was, so be prepared… 
Head Fed Head, Jerome Powell, told us all in clear English language a few months ago, that the Fed Heads had two more rate hikes to go, and they’ve used one of those so far… So, either he has to come clean with his tail between bis legs and admit he was wrong, or… he goes ahead and hikes again… What do you think he’ll do? 
So, this is off the beaten path for this letter, I just can’t let this go, without commenting about it… Did you hear about the shop owner in N. California that took policing into his own hands, and subdued a potential heist from a man carrying a gun?  Here zerohedge.com on their take: “Just when it appeared that a law-abiding business owner had scored a victory against a scumbag shoplifter for once by subduing him with an almighty thrashing, the police have stepped in to criminally investigate the shopkeeper for assault.”  
So, this whole wide world is going to pieces, and this myfriends, is one of the reasons why… 
The U.S. Data Cupboard today has the aforementioned Stupid CPI… Along with the usual on a Tub Thumpin’ Thursday, the Weekly Initial Jobless Claims… I don’t know when all these announced layoffs are going to begin to show up here, or maybe they won’t, given the gov’t’s propensity to cook the books in their favor… 
To recap… Yesterday held no moves for currencies, Oil and bonds, but Gold & Silver got sold, once again… Chuck goes through the pain that will come from rising interest rates on bond servicing… Got Gold?   And in the overnight markets last night… The dollar got sold to the tune of 3 BBDXY index points, with the euro climbing back over 1.10… Gold is up $7 in the early trading today, something smells like yesterday’s fish to Chuck… 
For What It’s Worth… ok… This article is about the new mBridge system that is being built to allow instant trade notification and payment… Sort of like SWIFT, but… without the U.S.’s intervention… This snippet is long, but… worthy… here we go! 
Or, here’s your snippet: “In 2009, after the Global Financial Crisis, PBOC Governor Zhou Xiaochuan said, “The world needs an international reserve currency that is disconnected from individual nations and able to remain stable in the long run, removing the inherent deficiencies caused by using credit-based national currencies.” He proposed Special Drawing Rights, SDRs, digital reserve currency valued against a basket of commodities and currencies. The SDRs have been trialed internationally since 2019 but a means of moving it around securely, quickly, and cheaply was lacking until..

Enter mBridge
Cross-border payments, which the US dollar dominates, will reach $250 trillion by 2027, up $100 trillion in a decade. There’s just no stopping it.
The trouble is that international payments are slow and costly, and Washington’s ‘long-arm’ jurisdiction over all dollar transactions has politicized trade.
So Basle’s Bank for International Settlements came up with mBridge.
mBridge, the BIS’ digital interbank payment system, lets Chinese companies pay UAE vendors in digital e-yuan. The mBridge blockchain instantly converts the yuan payment into dirham and and credits it to the vendor’s UAE bank account. mBridge 6-8 ms. execution time and 2.2¢ transaction cost bring Beijing’s goal of frictionless trade a giant step closer.
And best of all? No US regulators, banks, or dollars are involved.
Cause for concern
The PBOC (the world’s richest central bank), the HK Monetary Authority, Bank of Thailand and the UAE Central Bank have been using mBridge with traders in China, Hong Kong, Thailand and the UAE for over a year.
Now BIS says it will release mBridge globally by Xmas.

US Treasury officials worry that mBridge will help Beijing revolutionize wholesale cross-border digital payments, and that this is what will happen with all of China’s 143 trading partners:…”

Chuck again… The main thing here is that the mBridge system will facilitate SDR’s (remember Special Drawing Rights) who have been rumored to take over the reserve currency from the dollar, because it’s NOT an individual country’s currency…  
Market Prices 8/10/2023: American Style: A$.6575, kiwi .6082, C$ .7466, euro 1.1021, sterling 1.2769, Swiss $1.1456, European Style: rand 18.7682, krone 10.1361, SEK 10.6045, forint 349.60, zloty 4.0421, koruna 21.9813, RUB 97.14, yen 143.74, sing 1.3450, HKD 7.8162, INR 82.71, China 7.2088, peso 17.00, BRL 4.8829, BBDXY 1,227.22, Dollar Index 102.14, OIl $83.87, 10-year 3.97%, Silver $22.83, Platinum $902.00, Palladium $1,304.00, Copper $3.80, and Gold… $1,921.60
That’s it for today… A nice win last night by my beloved Cardinals down in Tampa Bay… It’s amazing what happens when you get batters hitting the ball, and defenders catching the ball, and pitchers throwing stikes!   Of course that’s been the recipe for winning ball teams for over 100 years, but sometimes I think the Cardinals forget about it… My wrist is still hurting like the dickens, I guess I’ll have to go and have it x-rayed… UGH!  Next Wednesday, there will be no Pfennig, as I’ll be at the hospital for scans early in the a.m.  I did get a little more sound sleep last night, thank goodness… With the house in ruins right now from the water damage, I came to the conclusion yesterday, that I’ll have to cancel the Annual Butler Family Labor Day BBQ and Pool Party… UGH!  Paul Young takes to the finish line today with his redo of the Hall & Oates song: Every Time You Go Away…  So… that’s it for this week, I’ll be glad to not wake up early the next 3 days… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and will continue to Be Good To Yourself!
Chuck Butler

China’s Economy Slips To Deflationary…

August 9, 2023

* currencies & metals rally a bit on Tuesday

* Moody’s does Fitch one better! 

Good Day… And a Wonderful Wednesday to you… My beloved Cardinals played on the East Coast time last night, which meant that I was able to watch the entire game without falling asleep during it! I chose not to sit outside last night to watch the game, and basically, I thought that if I was going to watch the game by myself, I might as well stay indoors… Long ago, in a galaxy far away, I went to my first spring training game at Al Lang Stadium in St. Pete, which is the same area as Tampa Bay… I fell in love with spring baseball, and Al Lang Stadium… A few years ago, I was speaking at a conference in St. Pete, and my hotel room looked out at Al Lang Stadium, pretty cool I thought… That was the conference when the great Mogambo Guru, came and picked me up and we went to lunch… I miss the Mogambo Guru tremendously… Uriah Heep greets me this morning with their song: Stealin’
Well, the dollar buying took a pause for the cuase yesterday, and the BBDXY lost 2 index points… Monday’s buying spree was a little too much, I would presume… The currencies didn’t gain very much, as the gains were wide spread, and not concentrated on an area, etc.  I had an awful night of sleep or better lack of sleep last night, and so at this point, I’m going to go back to sleep, for a little while, and when I awake, I’ll finish the letter… OK?  Well, then I’ll be back in a bit… 
OK, this is much better… thanks for your patience… I would like to say that yesterday’s data caused the dollar to slip, but I can’t…  The U.S. Trade Balance, (read deficit) wasn’t as bad as previous months, and it wasn’t because our exports were kicking tail and taking names later, it was because the U.S. consumer is running out of cash… but don’t tell Janet Yellen that, because she’s under the idea that the U.S. economy is strong… 
Gold started the day losing ground, and it continued throughout the day, with Gold loss at $11.40, While Silver’s loss was 32-cents to close at $ 22.85… I don’t know what to tell you about these daily attacks to the metals (even Copper is gett sold) If I were a jaded person, that knows that the short paper traders were responsible for these daily losses, I would say, Well, you know, in the past, the summer months are not kind to the metals, and this summer is no different…  There, now you have two thoughts on why metals are getting beaten around the head and shoulders daily, you can pick which one that suits you… I know which one I will choose, immediately, without meaningful consideration… 
The price of Oil, ran right back up to $82, after spending Monday getting sold, to $80… And the 10-year’s yield climbed back to 4.0%… Monday is all forgotten to these two assets… 
In the overnight markets last night, there was little to no movement once again…  In the past, I’m talking 10 years ago or so, there was rarely a night of trading that made a difference and was worthy of even talking about, But through the years things have changed…  The price of Oil did gain $ 2 more dollars overnight to trade this morning with an $84 handle! 
The BIG NEWS from yesterday came from China, who’s data rocked the markes all over the world… here’s Reuter’s account of the news: “China’s consumer sector fell into deflation and factory-gate prices extended declines in July. Anxiety is rising that China is entering an era of much slower economic growth akin to the period of Japan’s “lost decades”.
Whoa, there partner!… Who said anything about China entering a slower economic growth akin to Japan’s?  Well, I guess someone suggested it, and I for one think they are one loafer short of pair of shoes!  China has been at this economy thing far longer than anyone else, and I think they know how to keep from falling down the rabbit hole that Japan fell into in the 90’s, and hasn’t climbe out of yet… But that’s how I view it… 
The Consumer Credit (read debt) printed on Monday, and it contained some interesting tidbits… And here’s one of them, from zerohedge.com, “Americans increasingly turned to their credit cards to make ends meet heading into the summer, sending aggregate balances over $1 trillion for the first time ever, the New York Federal Reserve reported Tuesday.

Total credit card indebtedness rose by $45 billion in the April-through-June period, an increase of more than 4%. That took the total amount owed to $1.03 trillion, the highest gross value in Fed data going back to 2003.”
Like I said above about the Trade Deficit, the U.S. Consumer has run out of cash, and now are turning to credit cards… I don’t see this ending in anything but tears… 
In other news… telling Fitch, “anything you can do, I can do better, neener, neener, neener”… Moody’s Investors Service, took more sweeping actions in the U.S. banking sector.

Moody’s cut the ratings of 10 banks by one notch, placed six banks on review for potential downgrade, and changed its outlook to negative on 11 other banks.

Causing particular alarm on Wall Street was the fact that four of the six banks that Moody’s put on review for potential downgrade rank among the 15 largest banks in the United States.  I can’t wait to hear what Janet Yellen says about these downgrades… For sure she’ll deny their worthiness… What else can she say, she’s already gone down this road about how the U.S. economy is strong, she can’t retract now… She should, but she won’t!

 
The U.S. Data Cupboard today, still is not worthy, in fact, it’s empty today, no data scheduled… They propeller heads are gearing up for tomorrow’s Stupid CPI print… I wonder what lies the Gov’t will tell us this month?
 
To recap… the dollar buying ended on Tuesday and last night, but the turnaround to dollar selling was watered down, with the BBDXY losing just 2 index points. Gold & the other metals got sold once again yesterday, while the price of Oil rebounded.  Moody’s went whole hog on the banking sector, and downgraded a slew of banks… 
 
For What It’s Worth… This came to me from longtime reader, Bob, who is always sending me stuff to keep me informed of what’s going on… This is from Lew Rockwell, and it’s the 7 trends that a disaster is coming, and it can be found here: 7 Trends Which Indicate That Economic Disaster Is Approaching Very Rapidly – LewRockwell
Or, here’s your snippet: “#1 When economic activity slows down, less tax revenue comes in.  Right now, federal government and state government tax revenues are declining precipitously…

US state and local governments just experienced the worst decline in income tax revenues ever recorded.
This was the second steepest year-over-year percentage decline in history, with only the GFC having a worse outcome.
Note that Federal tax receipts are also dropped again, now at recessionary levels and approaching -10% on a YoY basis.
#2 When the economy slows down, trucking companies see less demand for their services.  So it is deeply alarming that truck freight volume and spending absolutely plummeted during the second quarter…
Truck freight volume and spending in the second quarter of 2023 declined by the highest levels since the early days of the pandemic, the latest U.S. Bank Freight Payment Index revealed. Spending by shippers dropped 10.9% compared to the second quarter of 2022 while shipment volume dropped 9%, according to a statement from the Minneapolis-based bank.
#3 Employment is supposed to be the “bright spot” for the economy, but the latest employment report shows that the U.S. actually lost 585,000 full-time jobs last month…
Well, one look at this month’s adjustment and it’s literally a shocker: you will not hear anyone from the Biden admin or associated economist cheerleaders mention this, but the BLS reported that in July the number of full-time jobs plunged by 585,000 to 134.274 million, the biggest monthly drop since record covid crash of 14.7 million jobs!

#4 U.S. employers have already announced more job cuts this year than they did in all of 2022, and the hits just keep on coming…”

Chuck again… And excellent viewpoint and one that I’m sure Janet Yellen would have a different view of.  I could only get you 4 of the points, to get the rest, click on the link above… 
Market Prices 8/9/2023: American Style: A$ .6535, kiwi .6058, C$ .7446, euro 1.0980, sterling 1.2738, Swiss $1.1407, European Style: rand 19.0092, krone 10.2237, SEK 10.6902, forint 353.39, zloty 4.0720, koruna 22.0971, RUB 97.54, yen 143.40, sing 1.3457, HKD 7.8207, INR 82.82, China 7.2071, peso 17.08, BRL 4.9036, BBDXY 1,230.69, Dollar Index 102.40, Oil $84.03, 10-year 4.0%, Silver $22.80, Platinum $896.00, Palladium $1,236.00, Copper $3.75, and Gold… $1.922.81
That’s it for today… Thanks for your patience this morning, those extra 2 hours of sleep really helped me get going this morning… Well, when Goldy and Arenado don’t hit consistently, the Cardinals lose… And they lost again last night, UGH! The rest of the season, is nothing more than an early audition for next year’s team… That’s what it comes down to, when you’re so far behind and trade away star players… The three amigos will ride again today… (inside thought) …  the pain in my wrist continues to keep me from doing a lot… It’s going to be a rainy day today, so get your Golashes out, and your slickers, and don’t forget the rain hat!  When I was a young boy, I loved it when it rained because then I could go out  and jump in the puddles!  I taught all three of my kids to do that! Jethro Tull takes us to the finish line today with his rock classic song: Aqualung…  I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!
Chuck Butler

He’s Baaaaaccccckkkk!

August 7, 2023

* dollar rallies while Chuck was gone… 

* A tsunami of Treasuries hit the streets… 

Good Day… And a Marvelous Monday to you! I’m back! And full of you know what and vinegar! The U.S. saw a ratings drop, the Fed Heads did hike rates again, and we’re seeing a debt explosion… All those things and more in today’s Pfennig!  I had a very relaxing vacation, except for the news that our house back home, had a water pipe burst and flooded our house, with lots of damage and ruined things… We had a restoration team come in and do what they do, and now we wait for the insurance adjuster to come and view the damage. I can’t say that coming home the other night, wasn’t fun to come home to this mess… Faces greet me this morning with their song: Ooh La La 
Well, where to start? The dollar on Friday last week got sold, which was the first time in about 10 days… The BBDXY lost 4 index points on Friday, after the weaker than expected Jobs created number was printed by the BLS… There were 280,000 jobs added to the surveys by the BLS… And the total reported was 187,000… So, in reality, there was negative job growth in July… But then that’s just how I compute it, the markets tend to take the BLS’s stuffing of the voting box, as the gospel… 
The euro, which was trading near 1.12 when I left, has fallen back to 1.10… The BBDXY was down to 1,220, when I left, and on Friday it closed at 1,226, and that was after it lost 4 index points!  The chart on the dollar looks like the dollar fell off a cliff come January of this year, and then sloped back up on a bunny hill… 
The rest of the currencies have followed the Big Dog, euro’s lead, and gone up before the recent dollar rally, and then back down when the dollar rallied… I know that really didn’t need to be explained, but once my fat fingers started typing, it was all over but the shouting! 
Gold has traded alongside the currencies, as the dollar rally, that came out of left field, and in the face of a downgrade of U.S. Debt… Gold finally found a bid on Friday, but its gains were capped by the short paper traders… Silver fell in line with Gold’s trading pattern, as usual… 
The price of Oil has really rallied while I was gone… Oil traded with an $82 handle on Friday… that’s been quite some steady climb by Oil in the last two weeks. The Saudis and the Russians announced last week that they will support the production cuts until Sept… 
And the news from the U.S. on Debt issuance is just as I said it would be… A Tsunami of new Treasuries hitting the markets ,and not getting much activity… So, when that happens, the yield on the bonds has to go higher to attract buyers… The 10=year’s yield is 4.04%… 
In The overnight markets last night… The dollar buying returned, with the BBDXY gaining nearly 2 index points. The euro has slipped to a 1.09 handle, and even the Petrol Currencies haven’t been able to hold their gains with the rallying Oil price, the dollar’s hold on them is too strong right now. The Bank of England hiked rates last week, and this rate hike and the words from the BOE that more rate hikes might need to be made, hasn’t helped pound sterling… And when a rate hike doesn’t help a currency, well… that’s not a good thing… 
Gold is down $8 in the early trading today, so the beatdown of the shiny metal continues… All I can say about this beatdown is that it certainly has presented to you some cheaper buying opportunities!   The price of Oil held onto the $82 handle last night, and the 10-year’s yield bumped higher to 4.10% this morning.  It appears that we will start the week on a down note in the currencies and metals…  And I don’t see anything in the Data Cupboard this week that will turn things around… The only piece of data that is scheduled, that could move the markets is the Stupid CPI that will print on Thursday this week… 
Deficit spending is getting out of hand once again…Speaking of deficit spending… Did you know that: The US National debt is up $1.8 trillion since the debt ceiling “crisis.”
It took the US 209 years to add the first $1.8 trillion in debt.
we just did it in just 8 weeks after a “historic” debt ceiling deal.  
Isn’t that scary? Good friend, Dennis Miller wrote in his letter (www.milleronthemoney.com) last week that ” the Debt Clock shows us that by 2027, our national debt will be $43.3 Trillion… 
You know something that I’ve always told my dear readers is that a strong currency reduces inflation… Or that a weak currency invites inflation in the economy..  So, with those thoughts in mind, you have to believe that whether the economic data shows (stupid CPI) that inflation is falling, you can point to the strong dollar… Yes, the dollar has lost some ground recently, and if that continues, one would think that inflation falling is just a short-term phenomenon…   For those of you keeping score at home… The dollar gained over 30% during its bull run in 2022, and has lost about 15% do far this year… So, all-in-all, the dollar is still strong, just not “as strong”… 
The Big News while I was gone, was not the FOMC raising rates, as one would think, but instead it was the stripping of the AAA rating of U.S. Debt, by Fitch… Here’s the 1440 report on that: “Credit rating agency Fitch has lowered the United States’ perfect AAA rating by one level to an AA+, citing an expected fiscal deterioration over the next three years, rising government debt, and concerns about what it calls an erosion of governance. The decision comes two months after Fitch placed the US on a negative watch as a result of delays in a debt-ceiling deal.

 Fitch is the second major agency to downgrade the US; the S&P Global in 2011 was the first to strip the nation of its AAA rating. The ratings are an independent assessment of a government’s creditworthiness and ability to pay its financial obligations. Read an overview of credit ratings here.

The US government’s repeated standoffs and last-minute resolutions on debt and fiscal issues are one of the reasons for Fitch’s decision. The agency also noted the nation’s debt, which has swelled to a record $32.6T due to a number of factors, including tax cuts and spending initiatives. Fitch predicts the US deficit will rise to 6.3% of gross domestic product in 2023 from 3.7% in 2022.”

Chuck again… And to think that Treasury Secretary, Janet Yellen, has some harsh words for Fitch… She actually said, “The U.S. economy is strong and not worthy of a credit downgrade”…   Oh brother! 
And there was something else that happened while I was gone worth mentioning… The saying on the trading desk was “When Chuck’s away, the currencies rally”… But this time, they didn’t rally… In fact the dollar bounced from the lows we saw before I left… This is one of those periods that prove a trend is not a One-Way Street, folks… Just wait… the dollar depreciation is still in the cards…
Well, while I was away, Ed Steer had this in his daily letter that I thought was very worthy of sharing with you: ““In the end, more than freedom, Athenians wanted security. They wanted a comfortable life, yet lost it all; security, comfort, and freedom. When they finally wanted, not to give to society, but for society to give to them; when the freedom they wished for most was freedom from responsibility; Athens ceased to be free and was never free again.” ~ Historian Edward Gibbon
You know, you can always check out what Ed is talking about (Gold & Silver and other metals) here: www.edsteergoldsilver.com 
There’s a good article here: The End of the Great Keynesian Experiment | Sprott Money News  that talks about the end of the Keynesian experiment, and where we are headed with our deficit and debt… I won’t get into that now, but I think it would behoove you to click on the link and read the article… The good folks at GATA sent that to me, while I was gone… 
The U.S. Data Cupboard last Friday, had the July Jobs Jamboree, and it was not a good one, as only 187,000 jobs were created in July, but… the hourly wages were up 4%… 
In addition, on Friday, the July ISM printed (manufacturing index), and it remained well below the 50 level, at 46.4%… Remember, any number below 50 equals contraction…. 
To recap… The dollar has been on the rally tracks since Chuck left, and the day he returned, the dollar got sold… the BBDXY lost 4 index points on Friday, after the trumped up jobs number still failed to meet expectations… The price of Oil is soaring… And Gold has followed the currencies moves…  The price of Oil is soaring and looks to be on firmly on the rally tracks. 
For What It’s Worth… Well, I came across this article while on vacation, and it talks about something that I mentioned above, so if you missed that go back and read it!  This article can be found here: Yields Surge After Treasury Boosts Auction Sizes More Than Expected, Sees Debt Issuance Tsunami On Deck | ZeroHedge
Or, here’s your snippet: “We gave a big picture preview of the debt flood (and fiscal crisis) that is coming to the U.S. this past Monday when, looking at the latest Treasury debt estimates, we showed that the U.S. predicted a near-record $1 trillion in debt sales in the current quarter (up from $$733BN forecast previously) and $852 billion in Oct-Dec quarter, numbers so staggering they are usually associated with economic crises…

But in this case a surge in debt issuance meant to sustain the illusion of the deficit-busting Bidenomics, which has managed to keep the U.S. economy from imploding only thanks to massive new debt and deficit spending, or what BofA’s Michael Hartnett called “The Era of Fiscal Excess”, something which Fitch finally realized last on Tuesday when it became only the second rating agency in history to downgrade the U.S. AAA rating.
And while the endgame here is the first ever $1+ trillion in U.S. interest payments which we expect will hit within the next two quarters…
This morning we got a more granular preview of how we get there, when the Treasury published its quarter refunding statement, in which the U.S. boosted the size of its quarterly sale of longer-term debt for the first time in over 2 1/2 years, testing buyers’ appetites amid an increase in government borrowing needs so alarming it helped spur Fitch Ratings to cut the U.S. sovereign rating from AAA (and judging by the surge in yields this morning, the appetite may be lacking).
While investment funds have been gobbling up paper – mostly to fund basis trades – the moment the basis trade blows up again, as it did in Sept 2019 and March 2020, the Fed will come running in to backstop everything.
Well, dear reader, the ‘print or die’ scenario is on full public display now. It’s only a matter of time before it shows up in the currency.”
Chuck again…  It’s a real shame that our so-called leaders have led us down this path of destruction, isn’t it? 
Market Prices 8/7/2023: American Style: A$.6568, kiwi .6101, C$.7474, euro 1.0980, sterling 1.2740, Swiss $1.1409, European Style: rand 18.6000, krone 10.1499, SEK 10.6243, forint 355.16, zloty 4.0223, koruna 22.0611, RUB 96.03, yen 142.26, sing 1.3410, HKD 7.8066, INR 82.74, China 7.1895, peso 17.09, BRL 4.8746, BBDXY 1,227.43, Dollar Index 102.26, Oil $82.04, 10-year 4.10%, Silver $23.43, Platinum $919.00, Palladium $1,263.00, Copper $3.83, and Gold… $1,936.15
That’s it for today… Quite wordy today, but then I’ve been gone for two weeks, so that was bound to happen! While I was gone, I made a quick trip to Boca Raton, where the Rule Symposium was being held, and sat in and listened to a longtime friend, Frank Trotter give his talk about his new bank: Battle Bank… I got to meet up with Frank and his marketing guru, Jason Coots for lunch… It was the first time I had attended a conference and not talked, presented, and not worn a suit!  My beloved Cardinals made some trades at the trade deadline, trading away the players that would be free agents at the end of the year, and getting prospects… It will be some time before we know if that plan worked…  A Flock of Seagulls take us to the finish line today with their song: A Space Age Love Song…  I hope you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler