Author: admin

September 6, 2022

* currencies & metals continued to get sold on Friday

* The U.S. Oil reserves are being wasted!

Good Day… and a Tom Terrific Tuesday to you! What a grand time that was had at the Butler Labor Day BBQ & Pool Party on Saturday. It rained all Saturday morning, but by noon, the sun was out, and it became an absolutely fantabulous day! My beloved Cardinals beat the Cubs, with a whole backyard of people watching… My also beloved Missouri Tigers won their opener on Thursday night last week, and this week travel to K-State… An old Big 12 foe… I hope the Tigers got all the jitteriness and mistakes out of their system and are ready to show a Big 12 team some SEC football! Sat outside with good friends, Duane and Rick last night to watch the Clemson game… Rick graduated from Clemson, and bleeds orange!  Johnny Nash greets me this morning with his song: I Can See Clearly Now…

I wish I could say that about the markets right now, that I can see clearly that is… None of this fiasco makes one iota of sense to me, but I carry on despite my shortcomings! When I left you on Thursday morning, the dollar was still being bought, and Gold & Silver were still being treated like a red headed stepchild…  (Ok no comments on that old saying, it’s just what it is, an old saying!)  Thursday wasn’t any different in that way, trading wise, and Friday, well, Friday was something… The BLS’s Jobs Jamboree, showed 315,000 jobs created in August… Well, they did create some of those jobs, adding 109,000 of the 315,000 jobs the markets believed were added…

Of course, if the press was actually covering the jobs jamboree they would has reported the 315,000 jobs added by the BLS this way: “Job creation dropped in August from 528,000 in July, to 315,000 in August” but they didn’t, because saying it that way, doesn’t paint the picture that the Gov’t wants you to believe…  In reality there were only 206,000 jobs reported by the surveys of the Companies in the U.S. ADP said last week that the number of jobs added was 132,000, so that’s what’s really happening with labor in the U.S. For if so many jobs were actually being added each month, as the BLS would have us to believe, then there wouldn’t be so many “help wanted” signs, everywhere you look, or there wouldn’t be businesses closing for lack of workers…  I’m just saying…

So, the dollar traders took the news of the trumped-up jobs report and thought, “The Fed will have to hike rates more to calm this down” And they bought dollars… The BBDXY on Friday closed up 6 index points, to 1,305…  I’m telling you this now, so maybe you’ll listen to me later, that the dollar is so overbought, it’s getting ridiculous… The euro dropped back below 1.00, and all the other currencies, not named rubles, followed the Big Dog, euro down the drain…  They’re circling the bowl folks… it’s a sad thing to say and see each day, but it is what it is…

Gold lost $1.70 on Friday to close the week at $1,711.80, and Silver gained 9-cents to close the week at $18.25… The price manipulators just couldn’t let Gold close in the positive and they saw to it that there was some red in Gold’l number… You know, the thing that all this Gold selling is causing, don’t you? Well, if I must tell you… It’s causing the price of Gold & Silver to be much cheaper than previously… So, back up the truck! And if Chuck is right, one day soon, all this dollar buying will end, and Gold & Silver selling will end… And that will be that!

Our friends, (NOT!) at OPEC decided this last weekend to cut production of Oil, to help boost the price higher once again… It was also reported last week that the U.S. has been shipping out Oil to foreign countries from our Oil reserves…  It’s time to contact your representative and tell them the Oil reserves are for U.S. citizens so that they never have to sit on gas lines again… not for foreigners! Meanwhile the price of Oil lingers below $90, and the lack of demand is what’s causing this price decline in Oil… Once it gets to a price where gas that’s refined from Oil, is relatively cheaper at the pump, the lack of demand will go away… 

The other thing to think about with oil and gas, is that Russia has basically turned off the spigot of Oil and gas to Europe, and the U.S. is frantically attempting to replace the Oil and gas that Russia has stopped delivering to Europe… But here’s the dilemma, The U.S. can’t supply both Europe and its own citizens with enough Oil and gas to get us through a winter… Then what do we do? 

Bonds are getting sold and seeing their yields rise just about every day now, albeit small increases, but over time they seem to add up… The 10-year Treasury’s yield is now 3.21%…  That’s a far cry from the sub 1% yields the 10-year used to sport!  I would have to say that the multi-decade long Bond Rally, has come to an end… And with the Fed Heads hell bent and whisky bound to hike rates higher, the yields on bonds will continue to rise, and that’s a good thing for investors seeking yield… I’m not even going to mention that unless the Fed Heads start hiking rates really aggressively, then inflation is going to remain higher than the bond yields, and that in essence makes them negative returns!

In The overnight markets last night, the dollar continued to be overbought as the BBDXY gained 2 more index points and trades this morning at 1,307… The euro remains below 1.00, and the two currencies that look the sickest are the pound sterling, and yen… The Japanese yen is trading above 140 for the first time since 1998…  And still, the BOJ sits on its collective hands and keeps their negative yields and bond buying monetary policy in place… 

Gold is flat to up a buck this morning, and Silver is moving higher with at 19-cents gain this morning. But as we’ve known for some time now, these early morning gains in Gold & Silver can be wiped out in a NY Minute by the price manipulators… I’m just saying… 

Bonds got sold again last night, the yield on the 10-year rose a few more bips to 3.25%… The bond yield curve is still inverted, with the 3-year Treasury sporting a 3.50% yield! 

OK, my first item to talk about after the markets roundup is this story I read about this past weekend that talked about how Factory Orders here in the U.S. were supposed to gain in July only to find out that they were way off as July factory orders tumbled 1.0% MoM and June was revised down from +2.0% to +1.8% MoM.  It seems the rate hikes are already causing a slower economy, just wait until the Fed Heads are finished with their rate hikes, what will the economy look like then?

Longtime friend, and publishing guru, and bestselling book author, Bill Bonner, is always reminding his readers that the Fed Heads have no other option than to “inflate or die” …  In other words, the Fed Heads could stop hiking rates and allow inflation to take over the economy worse than it already does, and thus bring the economy to its knees with little consumer spending, or… The Fed Heads could continue to hike rates, and bring the economy to its knees, and die…  I agree with Bill on this, wholeheartedly,  While I would love to see inflation defeated, it’s going to require interest rates rising to above the inflation rate, and I always keep in the back of my mind, the words that Donald Trump said when he was running for President… “5% rates, and we’re screwed” …

Think about that for a moment, and forget about the language he used… with Billions of bonds abroad, held by foreigners, they will not sit around and hold their low yielding bond until maturity, they will sell it and buy the higher yielding bond, that comes with a much higher yield, because the Fed Heads hiked rates to combat inflation, and therefore hiked up the bond servicing costs (yield payments) And when all the tax receipts in the country go toward bond servicing costs, how will the Gov’t decide what Gov’t program goes first to the trash heap?

And who said that “deficits don’t matter?” If he were still around, I wonder if he would have a different song to sing now?

Ok, and here’s the second Item to talk about today that was printed last week “Average Credit-Card Debt Soars by 13%, Largest Increase Since 1999

The average credit card debt held by households in the United States surged by 13 percent in the second quarter, the largest increase in such debt since 1999, according to an August 30 report from the Federal Reserve Bank of New York.

More consumers are increasingly relying on credit amid sky-high inflation in order to pay their bills.

Credit card balances increased by $46 billion from last year, becoming the second-biggest source of overall debt last quarter, though it is below pre-pandemic levels.

Meanwhile, the current credit card interest rate is now at a record high of 17.96 percent, according to Bankrate, a financial advice website.

Total American household debt rose by $312 billion from the second quarter of 2021 for a total of $16.15 trillion at the end of June 2022.”

Chuck again… this is a very scary thing folks… I’m just saying! Oh, by the way, I got most of that stuff on credit cards from zerohedge.com   

The U.S. Data Cupboard is lacking this week for any real economic data, and that should be a good thing for the dollar, not having to worry about data showing the economy is slowing down…

To recap… The dollar just keeps rollin’ folks… Chuck believes that the dollar is very much overbought right now, and wonders how much longer can this go?  Gold & silver continue to be on the chopping block each and every day. And the euro fell back to below 1.0 late last week, and brought the other currencies, no named, rubles, down VS the dollar.

For What It’s Worth….  I’ve said this before, but here goes again… Every now and then our local paper, The St. Louis Post Dispatch, actually writes something original, and Sunday morning, was one of those days… this article is about the new Student Loan Payoff Plan, and quite frankly I was surprised that David Nicklaus of the Post Dispatch, agreed with me on this. Of course he puts it much nicer, and not confrontational like I do… it can be found here: Nicklaus: Student loan forgiveness may be popular, but it’s likely to make inflation worse | David Nicklaus | stltoday.com

Or, here’s your snippet: “here’s no question that our costly higher education system saddles some students with too much debt. President Joe Biden’s loan forgiveness plan, however, is the wrong solution at the wrong time.

For one thing, it’s likely to contribute to inflation. The nonpartisan Committee for a Responsible Federal Budget estimates that the plan will create $500 billion in new deficit spending, adding to demand in an economy that the Federal Reserve is desperately trying to cool down.

The committee projects that the spending will produce between 0.2 and 0.3 percentage points of extra inflation next year. That may not sound like a lot, but it makes the Fed’s job harder and increases the chances that we’ll have a recession before the central bank can cut inflation down to size.

Such worries aren’t just coming from fusty think tanks. Two prominent Democratic economists, Larry Summers and Jason Furman, also argue that loan forgiveness will make inflation worse. “Pouring roughly half a trillion dollars of gasoline on an inflationary fire that is already burning is reckless,” Furman wrote on Twitter.

Debt forgiveness raises fairness issues too. The White House argues that most of the plan’s benefits go to low- and middle-income Americans, but Biden is forgiving up to $20,000 in debt for households earning as much as $250,000 a year.

Speaking of fairness, why do college graduates deserve help at the expense of other hard-working taxpayers who have already paid off their debt, or who didn’t attend college at all?

While Biden’s plan fulfills a campaign promise and clearly helps some people, it does nothing to address higher education’s underlying affordability problem.”

Chuck again… Yes, finance-wise, this is another deficit causing problem, but moral-wise, it’s just plain wrong, to wipe out people’s debts, that never had a gun at their heads and told to take the loan…. I’m just saying…

Market Prices 9/6/2022: American Style: A$ .6770,  kiwi .6081, C$ .7615, euro .9924, sterling 1.1516, Swiss $1.0182, European Style: rand 17.2215, krone 9.9235, SEK 10.7697,  forint 405.82,  zloty 4.7471, koruna 24.7378, RUB 61.41, yen 142.02, sing 1.4044, HKD 7.8497, INR 79.83, China 6.9599, peso 19.99, BRL 5.1542,  BBDXY 1,307.53, Dollar Index 109.90,  Oil $86.50, 10-year 3.25%, Silver $18.44, Platinum $850.00, Palladium $2,036.00, Copper $4.47, and Gold… $1,712.46

That’s it for today… Quite wordy this morning… See what happens when I get a few days to read?   HA!  Cardinals got shut out yesterday by the Nationals. UGH! Back at it tonight…  My oncologist is happy with me these days, so that’s a good thing. I go to see my heart doctor tomorrow, it’s not an early appt, so I’ll still be in the saddle writing tomorrow morning before I take off for the heart doc. I’ll find out how many more years I have left with the battery in my pacemaker…  Another day of rain in the forecast today… I hope all this rain moves out today! The late great Marvin Gaye takes us to the finish line today with his song: Mercy, Mercy, Mercy… I hope you have a Tom Terrific Tuesday today, and please remember to Be Good TO Yourself! 

Chuck Butler

 

 

September 1, 2022

* currencies & metals gain on Wednesday

* But get sold overnight! 

Good Day… And a Tub Thumpin’ Thursday to you! That’s what I need is a little Chumba Wumba to sing that song this morning, as I am dragging the line right now. Welcome to September…  It took by beloved Cardinals 13 innings to finally beat the Reds last night. Every extra inning was full of suspense… And guess what starts tonight? The start of my beloved Missouri Tigers football season! YAHOO! Fight Tigers fight for Old Mizzou… Right behind you, everyone is with you! And the Missouri Waltz, and so on, it’s time for tailgating and some good college football! And I won’t have to choose between the Cardinals and Tigers tonight, because it’s an off day for the Cardinals! That couldn’t have worked out any better! I’ll be wearing my balck and gold today and tonight, so if you want to root on the Tigers with me, drop on by, I’ll be out back! HA! REO Speedwagon greets me this morning with their song: Golden Country… “Golden country your face is so red, with all of your money you’re poor can’t be fed” Yeah,, that song…

Well, the dollar got sold yesterday, but before you go hootin’ and hollerin’ The dollar got bought in the overnight markets last night, and the buying made up for the loss during the day, and more! The Japanese yen continues to reach multi-decade lows, along with pound sterling… See what it gets your currency when you drag your feet to hike rates? The euro, on the other hand has dealt with a sloth-like moving Central Bank, but from all reports it appears the ECB will be hiking rates aggressively in their next meeting. So, those reports regarding ECB rate hikes, is what’s keeping the euro afloat right now…

The BBDXY lost 3 index points yesterday, and had some pundits believing that the overbought dollar was heading into a correction period of trading… But the overnight markets put an end to that thought, and the BBDXY gained 4 index points during the night..

Two currencies that haven’t been dragging their feet regarding hiking interest rates to combat inflation, are the antipodean currencies of Australia and New Zealand. But in their case, they get all bundled up with the rest of Asia, and that drags their respective currencies downward. These two currencies had it “all going for them” earlier this year, as Commodities began their ascent to fight inflation. But then, as I chronicled here in the Pfennig, the PPT started putting some of their Exchange Stabilization Fund (ESF) to work, buying dollars and ever since that happened, the only currency to hold its value VS the dollar is the Russian ruble… Go figure!

Gold & Silver continued to get sold yesterday, and everyone is talking about how the prospect of higher Fed rates is what’s causing Gold & Silver to genuflect… OK, for those of you not versed in the word, genuflect, it means to get down on one knee… Gold & Silver have been on their respective knees begging for a bid, and just can’t find one out there… Buyers are leery of getting caught in an engineered takedown… The buyers figure, “Why buy now, when I can buy cheaper when this is over?”

I reckon they are probably on to something there, but… to me the price of Gold doesn’t really matter, when I’m looking to buy… Maybe I’m being short some silverware in the box, by thinking that way, but it’s who I am… I have never looked for bargains when buying anything. If I feel I need to buy something, I go out and buy it, right then, and there!

So, as I told you above the overnight markets last night quickly dispelled any thoughts that a correction in the overbought dollar was in store… The BBDXY gained 4 index points and trades this morning at 1,299… The U.S. Data Cupboard probably had something to do with the dollar selling yesterday during the day, and we’ll talk about that in a bit…

Yesterday, I told you that Goldman, aka Lola had told clients that commodities should be bought, and this morning I have two more casino banks steering clients to something… Let’s get to the skinny on that hey?

On Bloomberg.com this morning, there’s this title: Goldman, Citigroup Tell Clients to Bet Big on Singapore Dollar…  And here’s why they believe this is the direction that investors should take… 

“While the relentless greenback strength has clobbered Asian currencies this year, Singapore’s dollar has held up relatively well thanks to a hawkish central bank and recovering economic growth. The currency has weakened 3.8% against the dollar in 2022, but has strengthened against all of its Asian peers with the exception of the Hong Kong dollar. “

For those of you who are new to class, the Singapore Monetary Authority (MAS) does things differently than everyone else. They use a range that the Sing dollar is allowed to trade in, thus using the currency as their internal rate… So, in the end, it appears that Goldman and Citi believe that the MAS which has adjusted the range twice already this year, will do so again at their next meeting in Rocktober…    I, myself, have always thought the MAS version of adjusting interest rates would be better than having a group of eggheads that have never worked a day outside of the Fed, arbitrarily set the internal rate…  I’m just saying… 

So, either the MAS in Singapore is going to adjust their range in Rocktober, or, both Goldman and Citi are long sing dollars and need for everyone else to prop us heir trading position…  For haven’t I always told you to be careful when these Casino Banks make these calls, due to their inner drive to make their long positions profitable?  Why yes, you have Chuck, and thank you for that!  HA! 

Ok, just to keep you up to date with market lingo…  The new buzzword that’s being used over and over again is “Growth Recession”…   this term came about after Jerome Powell’s 7-minute speech at the Jackson Hole boondoggle last week. As I told you earlier this week, Powell, told his audience, and thus the world, that the U.S. economy will need to suffer some pain as the Fed Heads continue to hike rates to combat inflation. 

The “Growth Recession” means that the Fed Head will have to slow economic growth to achieve their goal of reducing inflation.  I find this new term being as being useless… Because, we already know that rate hikes slow an economy!  Oh, well… we move on despite their shortcomings! 

To back up the thoughts that the Fed Heads will continue to hike rates to combat inflation, Cleveland Fed Head, Mester, believes that the Fed Funds rate will be 4% by early 2023, and that she does not anticipate the Fed Heads cutting that Fed Funds rate in 2023…    

Well, in my humble country boy opinion,  while 4% rates would be significant move toward fighting inflation, it’s not going to cut the mustard!  As I’ve explained before, historically speaking, a Central Bank needs to hike rates above the inflation rate to achieve their goal…  I’m just saying… 

OK, enough of Fed Head talk, too much of that could cause a bad rash! 

I read an article this morning that talked about how U.S. farmers are warning that there could be a tomato shortage coming… That means tomatoes, salsa, paste, marinara, spaghetti sauce, would all be affected…  

Now, I would draw the line in the sand, if I went to a Mexican Food restaurant and they charged me for my chips and salsa! But, if this warning about tomatoes comes to fruition, then we could very well see that happen… UGH!

The ADP Employment Report yesterday, showed that only 132,000 jobs were added in August..  Now keep that in mind when the BLS issues their jobs report on Friday this week. I’ve always contended that the U.S. should use the ADP report as their official jobs report, because ADP simply counts the number of new jobs that were added to their computer, and doesn’t get into forecasting jobs, and saying they existed when they don’t! 

The so-called experts are calling for 328,000 jobs to have been created in August. So, I guess we’ll have to wait until Friday to see what the BLS has up their sleeve…  Ala Bullwinkle! 

Today’s Data Cupboard has the weekly Initial Jobless Claims, and revisions of 2nd QTR Productivity and the Employment Cost Index…  I really, truly don’t believe the markets even notice revisions any longer… I’m just saying… 

To recap… The dollar saw some selling on Wednesday, but before anyone could say this is the correction we’ve been waiting for, the dollar turned around and got bought in the overnight markets last night.  The Japanese yen and U.K. pound sterling are sporting multi-decade lows VS the dollar, and looking very sickly… Chuck talks about inflation, the Fed Heads, and lingo this morning, hope you didn’t miss that!

For What It’s Worth…  There’s something happening here, what it is ain’t exactly clear (Buffalo Springfield)…  this article came to from longtime reader, Bob, and it’s about how many zombie companies are in the U.S. and other countries, and it can be found here: Up to one-third of all Australian and US companies could be “Zombies” – Christopher Joye | Livewire (livewiremarkets.com)

Or, here’s your snippet: “Since 2019, we have been warning about the rise of “zombie companies” kept alive by perpetually cheap money care of the near-zero interest rate and QE-to-infinity policies of profligate central banks in the period following the GFC. The worry is that as interest rates now normalise, many of these zombies could fail to survive, creating waves of corporate defaults the likes of which has not been seen since the 1991 recession in Australia and during the GFC in the US.

We have, therefore, updated our quantitative zombie detection models to cover both Australia and the US. And we have stress-tested some of the definitions of what is, and is not, a zombie. The standard definition for a zombie is a company that meets two tests:

They have existed for more than 10 years, and
They have an interest coverage ratio (ICR) of less than 1 for 3 years in a row.
There are other more complex definitions that we employ, but this will suffice for our public research. So the ICR is defined as the ratio of a company’s earnings before interest and tax (EBIT) relative to the interest (note, not principal) repayments on their debt. If the firm’s ICR is less than one, it is not earning sufficient income to repay the interest due on its debt. Hence the “zombie” moniker.

As a final exercise, when classify companies as zombies only using the data from their last financial year alone, as opposed to requiring them to have ICRs less then one for three years in succession. The final panel of the table below shows that the zombie share rises further to 39% in Australia and 37% in the US.”

Chuck again… yes, the article is a good one and should be used in determining stock values of these zombie companies… The article also has a table chart that’s useful. 

Market prices 9/1/2022: American Style: A$ .6817,  kiwi .6096,  C$ .7691, euro 1.0015, sterling 1.1569, Swiss $1.0218, European Style: rand 17.1474, krone 10.0263, SEK 10.7251,  forint 398.75,  zloty 4.7023,  koruna 24.4259, RUB 60.41, yen 139.31, sing 1.3794, HKD 7.8477, INR 79.55, China 6.8999, peso 20.18, BRL 5.1848,  BBDXY 1,299.56, Dollar Index 109.06, Oil $87.86, 10-year 3.19%, Silver $17.71, Platinum $839.00, Palladium $2,060.00, Copper $3.49, and Gold… $1,701.37

That’s it for today and this week of course… Tomorrow I visit my oncologist for my monthly blood draw, and examination. Last month, the nurse drawing my blood asked me if I was ok? I said, darlin, if I had a dollar for every time I’ve been stuck with a needle in the last 15 years, I would be a rich man… My wife gets mad at me when I call someone “darlin” I tell her, I’m an old man now, who cares?  Root, root, root for old Mizzou! Go Tigers! I’m so excited… The Moody Blues take us to the finish line today with their song from the Seventh Sojourn album, which is one of the albums I would take to the island, another discussion someday,  and the song is: Lost In A Lost World…    which aptly describes where I am these days! I hope you have a Tub Thumpin’ Thursday today, and a fantastico Labor Day Weekend! Please Be Good To Yourself! 

Chuck Butler

 

 

 

August 31, 2022

* Currencies & metals get sold on Tuesday

* And the overnight markets didn’t give them any reprieve… 

Good Day… And a Wonderful Wednesday to you! If I were a betting man, I would have made a bet, yesterday, that the Cardinals would find it difficult to score runs last night, after scoring 13 runs the night before, and I would have won! My beloved Cardinals lost 5-1 last night to the weak Reds… UGH! It was an absolutely beautiful evening siting outside watching the ballgame with good friend, Mike… And with the game in the Eastern time zone, it was an early start, and finish! I love it when the games are in the Eastern time zone! The Beatles greet me this morning with a song from their acclaimed album: Sgt Pepper’s Lonely Heart Club Band: She’s Leaving Home…

Well, the overnight selling of the dollar on Monday night, wasn’t followed up on in Tuesday’s trading, as the dollar took back those 4 index points it lost the night before, and upped the ante with 2 additional index points to close the day at 1,295… The dollar just keeps rollin’, rollin’, rollin’ on the river (Ike & Tina Turner) I don’t know when it’s going to stop, but it will at some time, and then the markets will see what goofballs they were for buying dollars. That’s my story and I’m sticking to it! Did I mention that my first wife was a young Elizabeth Taylor? Yeah, that’s the ticket! (Jon Lovitz)

Ok, Chuck this is no time to be playing around, and having fun! You’re supposed to be all stoic and mad about how things are going, like having 11.2 Million job openings in the U.S., and having 4.2 Million people quit their jobs last month, and so on… But Hey! If there is something I’m mad about , it’s the way that Gold & Silver just keep getting chopped up like liver! Goldman Sachs, aka Lola, is telling clients that now is the time to buy Commodities… Hmmm… You know the old saying, that whatever Lola wants, Lola gets, right? It will be interesting to see if Gold & Silver begin to turn around, now that August is coming to an end.

Gold yesterday lost $13.30, and closed the day at $1,724.40, and Silver lost 36-cents to close at $18.51…. Throw them a life jacket, or life saver, something to keep them from downing, eh?

The price of Oil slipped again, back to its up one day, down the next trading pattern. Oil ended the day yesterday trading with a $91 handle… And Bonds saw the 10-year Treasury yield gain a bip to 3.11%…

In The overnight markets last night… The dollar continued to get bought, and the BBDXY gained 3 more index points and sits at 1,298 this morning. This is really getting out of hand folks… Thee’s is no reason for all this dollar buying in my opinion, and dollar strength along with higher interest rates in the U.S. is not what the overseas markets that use dollars and dollar financing need right now, but they are being asked to take it or leave it… 

Gold & Silver are back on the chopping block again this morning, with Gold down $12, and Silver down 30-cents to start the day. OK, PPT, we get it, and you too price Manipulators, we get that you’re trying very hard to make people want to sell their Gold & Silver, to make these metals look sickly and so on… But, it’s not working with me, I’m not selling, and you dear reader shouldn’t either, for Gold is a store of wealth, and not a commodity to be bought and sold on whims…  I’m just saying..  

And the price of Copper, which had recently been on the rally tracks derailed in the last 24 hours and has seen its price drop to $3.54 from the $3.72 it enjoyed just a few days ago.  The Fed Heads throwing cold water on Growth, has probably scared quite a few Copper investors into selling, I would think. 

The price of Oil slipped back below $90 overnight, and trades this morning with an $89 handle, while bond yields rose one more bip overnight to trade this morning with a 3.12% yield. (The 10 year that is) 

Long time ago, I met Addison Wiggins, I believe in New Orleans, and the granddaddy of all the shows, The New Orleans Investment Conference. At that time he was working with Bill Bonner on the Daily Reckoning, and helping Bill write books. Empire of Debt was one of those. Then he wrote his own book, The Demise of the dollar, of which I wrote the Forward for… I tell you all that because he has a new venture he’s taken on and it’s called: The Wiggin Sessions… He can be found here: The Wiggin Sessions (libsyn.com)

Yesterday, Addison led off his letter with a quote from Ernest Hemmingway, that I found to be so appropriate for today… here’s the quote: “Now is no time to think of what you do not have. Think of what you can do with that there is.”

Told you… now that’s bang on if you ask me!

Yesterday or Monday, I was talking about the lies the Gov’t keeps telling us, and in Monday’s 5 Minute Forecast, Dave Gonigam highlighted the latest “white lie”, here’s Dave: “After sifting through the numbers, The Associated Press finds that “more than 3,600 shipments of wood, metals, rubber and other goods have arrived at U.S. ports from Russia since it began launching missiles and airstrikes into its neighbor in February.”

Granted, that’s down 40% from a year earlier… but it doesn’t exactly fit the narrative about “crippling” Russia”

Chuck again… (more from Dave Gonigam) “Yes, it Turns out Russia makes certain things no one else really can: “Russia’s dense birch forests create such hard, strong timber that most American wooden classroom furniture, and much home flooring, is made from it.”

We have the hedonically adjusted CPI numbers each month, we have the bogus employment numbers each month, we have the Gov’t telling us they have a new description for a recession, and that’s just what’s going on now… Our Gov’t has lied to us through the years many times… But like the good children we all are, we just shrug, and say, “That’s the Gov’t, you can’t fight them”…

Yesterday’s U.S. Data Cupboard had some disappointing prints for us to view… First of all the Home Price Index fell 2% in June, and only showed an 18% price increase year to year, when the previous month’s gain was 20%… I hear home prices sounding like the wicked witch, “I’m melting, I’m melting, who would have thought that some little rate hikes could destroy my home prices?”

We also saw the stupid Consumer Confidence soar earlier this month, when the bear market rally was in place… Not so much in place any longer, now, right? And finally, the Job Openings increased last month to 11.2 Million from 11.0 Million the previous month, and Job Quits came in at 4.2 Million… down from 4.3 Million previously and for every month for the last year!

Today’s Data Cupboard as the ADP Employment Report, which has basically been rendered useless by the BLS’s Jobs report each month and all their jobs created out of thin air… But the ADP report will print today, and it’s supposed to be a peek at the Jobs Jamboree…

To recap… The dollar got sold Monday night, but by Tuesday morning, it was back to buying dollars by the truckload. The BBDXY gained 6 index points on the day, and Gold & Silver got smacked around the head and shoulders pretty good all day. Chuck is thoroughly disgusted with the price manipulators taking pound after pound of flesh from Gold & Silver.. Shoot Rudy, the price manipulators even showed up on Sunday Night with arms full of short Gold/ Silver paper trades!

For What It’s Worth… Not a lot on the docket this morning, but I did find this article from Dough Noland at dollarcollapse.com talking about Jerome Powell, and I think he agreed with me that Powell was the only adult in the room last week in Jackson Hole. The article can be found here: Doug Noland: Powell is a good man but he’ll be “ruthlessly tarred and feathered” – DollarCollapse.com

Or, here’s your snippet: “I appreciate that Jay Powell is no ideologue. His Fed has made some historic missteps, and Powell as Chair has sometimes flailed. But I’m willing to cut him some slack. I hold his predecessors responsible for the Bubble predicament. Greenspan and Bernanke certainly share responsibility for the absolute mess made of contemporary central bank doctrine. No doubt about it, decades of poor analysis, flawed doctrine, bad decisions and obfuscations are coming home to roost on Powell’s watch. The future holds so much uncertainty. One thing seems clear: he’ll be ruthlessly tarred and feathered.

I believe Powell is a good man and wants to do right for the country. At critical junctures, Greenspan and Bernanke consistently veered toward looser and ever more precarious policy courses. Never did I witness the courage necessary to accept the short-term pain necessary to improve long-term outcomes (including reducing the likelihood of catastrophic financial and economic crises).

Monstrous egos put our nation’s wellbeing in jeopardy. When circumstances turned tough, they would resort to BS justification for only more outrageous monetary accommodation. Greenspan and Bernanke were both dangerous ideologues and inflationists that handed the keys to our nation’s future to Wall Street – in the process nurturing a prolonged cycle of runaway monetary inflation, speculative Bubbles, and deep financial and economic maladjustment.

Powell’s Jackson Hole speech was short and powerful. No academic elements with the potential to muddle his message or be misinterpreted. Ideology-free. Powell’s presentation was also notably short on doctrine. No talk of the Fed’s “dual mandate” – not a single mention of “maximum employment.”

Powell: “The Federal Open Market Committee’s (FOMC) overarching focus right now is to bring inflation back down to our 2% goal. Price stability is the responsibility of the Federal Reserve and serves as the bedrock of our economy. Without price stability, the economy does not work for anyone.”

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance. Reducing inflation is likely to require a sustained period of below-trend growth.”

“While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

Chuck Again… I think that Dough Noland does a very good job of explaining why Powell had to be so hawkish, in the face of the markets wanting a pivot. 

Market Prices 8/30/2022: American Style: A$ .6858,  kiwi .6131, C$ .7624, euro 1.0001, sterling 1.1623, Swiss $1.0209, European Style: rand 17.0459, krone 9.9945, SEK 10.6802,  forint 402.80,  zloty 4.7282,  koruna 24.5476, RUB 60.54, yen 138.60, sing 1.3967, HKD 7.8487, INR 79.45, China 6.8941, peso 20.18, BRL 6.1712, BBDXY 1,298.37, Dollar Index 108.95,  Oil $89.48, 10-year 3.12%, Silver $18.12, Platinum $850.00, Palladium $2,143.00, Copper $3.54, and Gold… $1,712.20

That’s it for today… A rough day all around for the markets, and the Cardinals yesterday and last night… My beloved Cardinals are back at it tonight in Cincy, before they come home for a weekend series against the Cubs! I see a day game on the schedule for next Thursday, I wonder if I can get some of my buddies to go to the game? That sounds like fun to me! Good friend, Duane, has volunteered to help me with some of the cooking for Saturday, so that’s a great thing for me! Tomorrow, it’ll be September… So, I’ll see you, in September, see you when the summer’s through! Jethro Tull takes us to the finish line today with his rock classic song: Aqualung… My longtime friend, and former boss, Frank Trotter, is a HUGE Jethro Tull fan, so there you go Frank! I hope you have a Wonderful Wednesday today, and please remember to Be Good To Yourself!

Chuck Butler

August 30, 2022

* Currencies & Metals get sold on Monday

* What’s really happening with the economy? 

Good day… And a Tom Terrific Tuesday to you! Well, from the first game in Cincinnati last night it was apparent that the Cardinals brought their bats! They beat the Reds 13-4., hitting the 13-run pool! Peggy Jordan, was a woman that taught me how to trade currencies, she used to run the 13-run pool at Mark Twain Bank… I never won it! UGH! There were two hour and a half rain delays last night, and what I thought would be an early night, turned into the night owl again! UGH! But Albert Pujols hit home run number 694 last night. He needs 6 more to reach 700… the games are counting down, along with available at bats…. Will he make it? Three Dog Night greet me this morning with their song: Easy To Be Hard… When I was a young man, I saved my money to buy the Three Dog Night Live at the Forum album… I would get in trouble for turning the record player up too loud, playing that album!

Do kids, for the most part, even save money, first of all, and second, save money to buy something they want? Or, do their parents, just buy it for them and make life easy for them? I’m guessing that’s the case, although I haven’t seen the data on that! HA!

Well, the dollar kind of wandered about yesterday, finally ending the day up one index point, in the BBDXY… The BBDXY ended the day at 1,293… There are all kinds of people out in the newsletter, article writing world that don’t think that we as a country are heading in the right direction… I believe, in talking to people, that more and more people are coming to the realization that the media and Gov’t lie to us about the status of the country, and that “something is not right”… these Americans, for the most part, don’t know how to express what they are feeling in terms of economics, but dagnabit they are darn sure there’s something wrong… And the Gov’t isn’t telling us what it is…The Gov’t denies the recession, they deny that the deficit is too large, they deny that, oh, Chuck, stop… It’s just not worth it to get all riled up in the morning any longer, you don’t have co-workers to share you feeling with any longer!

Ok, so Gold fought back yesterday, as it was getting sold in the morning and was down $14, Gold found a bid and starting coming back about mid-morning, and ended the day down only $1.50, to close at $1,738.20. Silver also fought back from its early morning loss of 14-cents to close the day at $18.87…

I had a dear reader send me a note yesterday, and just say, “I can’t believe the way Gold and Silver are getting priced these days”…

In the overnight markets last night, the dollar buying ended abruptly, with the BBDXY losing 4 index points overnight. The euro has climbed back above 1.0. but Gold & Siver are getting sold this morning, with Gold down $5 and Silver down 14-cents in the early trading.  In an answer to that question above, I can say that the markets are looking at the rate differential that the dollar enjoys and will continue to widen if what the Fed Heads say is true, and the markets refuse to look at the “net rate” that takes into consideration, the inflation rate. 

But it’s not just the so-called rate differential that’s playing on the field here… We also have the price manipulators, who have seen this weakness in Gold & Silver, and have decided to “pile on”…  Now, in football that’s a penalty, piling on, but in metals, whatever the price manipulators want to do, they get away with… 

To me, these recent trials for market manipulation are just window dressing to appease the masses that the Gov’t is looking out for them, when in reality, they aren’t. For it is my contention, and always has been, I’ve never wavered on this thought… That the Gov’t is behind the price manipulation. They have always since the days right after cutting the dollar loose from Gold, have worried that people would find Gold more valuable than the dollar and the Gov’t couldn’t have that. 

So, in some back room full of cigar smoke, and pictures of dogs playing poker on the walls, the Gov’t cut a deal with the bullion banks that if they carried through the price manipulation the Gov’t would look the other way when it came to, “really prosecuting price manipulation”…  

Remember years ago when Bart Chilton, the president of the CFPB, the organization that regulates Commodities, said he would look into the Silver price manipulation, and then weeks later, he said that he couldn’t find anything… I believe that Chilton received a memo from the Gov’t telling him to zip it, and make this all go away…  Chilton was a smarter guy than what he appeared to be, and he probably found Silver manipulation, but had to put it under his hat, and walk away… 

The things that really bothers me about the Bullion Banks and their price manipulation is that they have clients in the bank that hold Gold & Silver, so they deliberately punish their own clients’ portfolio values?  I guess they do, and they smile while they do it…  Now that’s what I don’t get, about this whole price manipulation scheme… 

OK, let’s talk about something else this morning… Well, here’s another bone of contention I have with the Gov’t, and it’s the lies they keep spewing about the economy…  I found this next piece on CNBC.com this morning, and think everyone should listen to what this guy says, because I do!  here you go! “People are not being sensitive enough to this economic slowdown and what it’s going to be mean for corporate earnings and profit margins,” the Bleakley Advisory Group chief investment officer told CNBC’s “Fast Money” on Monday.

The National Association of Home Builders/Wells Fargo Housing Market Index dropped into negative territory in August. This is the eight month in a row builder confidence fell. In a news release, NAHB chief economist Robert Dietz said, “Tighter monetary policy from the Federal Reserve and persistently elevated construction costs have brought on a housing recession.”

 

Chuck again… Peter Bookvaar was the fellow speaking there, and I follow him on twitter, which always gives me some insight as to what’s going on … I’m just saying… 

The U.S. Data Cupboard has the S&P/ Case Shiller Home Price Index (HPI) for June this morning… This data set has seen weakened prints the previous months, and I don’t expect June’s report to be any different.  We’ll also see the stupid Consumer Confidence report, which is nothing more than a pulse taken of the stock market, and when this report was compiled, the stock market was having a bear market rally, so expect this report to show an improvement, for this month…   

The other things we’ll see are the Job Openings and Job Quits for July… I always find the Job Quits number to be interesting… 

To recap… The dollar continued to get bought, albeit at a lesser rate, yesterday, but then got sold in the overnight markets last night, with the BBDXY losing 4 index points.  Gold & Silver still can’t find a bid, that the price manipulators don’t offset.. And Chuck gives us the skinny on how he believes the price manipulators get away with what they do… 

For What It’s Worth… I’ve told you all for years how I’m addicted to the 5 Minute Forecast each day. Dave Gonigam is the lead person on the letter, and I met him some years ago now, at a Show. A very nice guy, and quite witty I must say! Well, he wrote something yesterday that I pulled or the FWIW article today, and you can find the whole article here: Biden’s Bailout (Student Loan Forgiveness) – 5 Min Forecast

Or, here’s your snippet:”But here’s the point, one that will be highly relevant this winter not just to Europeans but to Americans: Natural gas is quickly becoming a global market like oil.
Until very recently, transport of natural gas was limited mostly to pipelines — which made it at most a regional thing, maybe a continental thing. Shipping it over the ocean requires…

1. A specialized departure terminal where the gas is supercooled into a liquid state — where it takes up a lot less space. This is LNG, or liquefied natural gas
2. Specialized tanker ships that can accommodate LNG
3. A specialized arrival terminal where the LNG is returned to a gaseous state and pumped into a pipeline.

For a long time, and for reasons you can readily understand, LNG was much more costly than plain ol’ natgas in a pipeline.

Then Russia invaded Ukraine… Western governments imposed sanctions on Russia… and European leaders committed themselves for better or worse to a crash program of swearing off Russian gas imports.
Suddenly, American LNG started looking more attractive.
At the same time, Asian customers are also stepping up for imports of American LNG — setting off a bidding war with the Europeans.
If you suspect all these LNG exports overseas will end up making your own natgas more costly here at home… you’re absolutely right. “When you heat your house,” says Byron, “you are now competing with Rotterdam and Shanghai.””

Chuck again… Like I said last week, Europe has 3 months to figure out how they will heat homes this winter… And let’s hope that same problems isn’t plaguing us here in the US.

Market Prices 8/30/2022: American Style: A$ .6945,  kiwi .6186, C$.7695, euro 1.0038, sterling 1.1728, Swiss $1.0302, European Style: rand 16.7879, krone 9.7284, SEK 10.6131,  forint 405.18, zloty 4.7171,  koruna 24.4881, RUB 60.65, yen 138.09, sing 1.3947, HKD 7.8484, INR 79.45, China 6.0293, peso 19.93, BRL 5.0293,  BBDXY 1,289.60, Dollar Index 108.37, Oil $94.27, 10-year 3.06%, Silver $18.71, Platinum $865.00, Palladium $2,127.00, Copper $3.70, and Gold… $1,733.51

That’s it for today… I tried to sit outside to watch the baseball game last night, but the air was very “muggy”, and I thought, “go inside you dummy!”, and I did… Cards and Reds go at it again tonight, let’s hope their didn’t wear out their bats last night! August is coming to an end tomorrow… And for once, I’m not happy to see it go, for the weather has been fantabulous in August this year for us in the MidWest… The luck of the draw has me once again going to my oncologist on a Friday this month… So, you all have that going for you! HA! No getting out of not having the Pfennig show up in your email box a day this week because of a doctor’s appt.! I’ll start my cooking for the BBQ on Saturday on Friday morning… And finish it around noon on Saturday… This year’s BBQ won’t be as Big as the ones we used to have before Covid. I guess people found other things to do this weekend, after not having the Butler BBQ for two years! Apparently, they’ve forgotten how yummy all the food is and what a great time we have in the backyard and the pool! Oh well, we’ll have lots of fun any way! Gladys Knight and the Pips take us to the finish line today with her version of the Marin Gaye song: I Heard It Through The Grapevine… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

August 29, 2022

* Jerome Powell’s 7-minute talk, sends the dollar higher

* Is more fiscal irresponsibility in our future? 

Good Day… And a Marvelous Monday to you! A strange weekend of sorts for yours truly.. It started out great, sitting outside watching my beloved Cardinals play on Friday night. Saturday was a blur to me, I have no idea what I did all day, and suddenly it was night and the Cardinals were back on TV! Saturday night had grandkids, Braden and little Evie stay with us… I woke up Sunday morning to the sound of little feat running through the house, and thought… I love that sound! And silently wished I could wake up every morning to that sound! My beloved Cardinals had to play the dreaded Sunday night game last night on ESPN… I do NOT LIKE SUNDAY NIGHT GAMES! Sundays are for day games, and an end to the week… Neil Young greets me this morning with his song: After The Gold Rush…

Well, after the Gold rush, and it’s coming one of these days, there will be no physical Gold for one to buy, unless they want to pay astronomical prices for it…It’ll be too late baby, now it’s too late, because we really didn’t listen to Chuck…

7 Minutes… That’s all it took for Fed Head Chairman, Jerome Powell, to way lay stocks on Friday… His speech only lasted 7 minutes, and he told us all that we are going to have to suffer some pain… Ahem, memo to Jerome, but we have already suffered pain! Interest rates are going higher…

Here’s a snippet of what he said, ““There will very likely be some softening of labor market conditions, while higher interest rates, slower growth, and softer labor market conditions will bring down inflation. They will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation.” – Jerome Powell at Jackson Hole, Wyoming

So, Jerome is being the only adult in the room.. It’s difficult to believe, but there he is, trying to tell everyone that the Fed Heads are going to continue to hike rates until they get inflation under control… Europe’s not doing that, China’s not doing that, and Russia is fighting a war, they can’t have their attention taken away with fighting inflation!

But I’ll stop my sticking up for Powell right there… Just because he’s acting like an adult now, doesn’t excuse him or give him credit for growing up late… Besides, what’s going to happen when the Gov’t’s new deficit spending bill starts sending the bills to be paid, and the preposterous Student Loan forgiveness idea bills come, and there’s no money to pay them? The Treasury will have to issue new Bonds, and the more fiscal irresponsibility will be printing more dollars to pay for them, and that, my friends, is what got us in the pickle to begin with… Excess Money Supply!

Now, if Powell had said all that about hiking rates and people having to suffer and added that the Fed would not be party to any new money supply, well, then we would have something to write home about!

It’s the first time that a Central Bank will have raised rates during a recession… Think about that for a minute, and then tell me the genius of buying dollars… Because that’s what happened on Friday, the dollar got bought by the bushelful and it was all about rate differentials… Obviously, not “net rate differentials, because if that were the case, the Fed Heads are still over 6% in the red when inflation is taken into account. Stocks got sold, Oil got sold, currencies got sold, bonds got bought (?) and dollars got bought… Stocks saw a 1,000 point drop in the Dow… That’s crazy, and in the past it would have caused major hand wringing and chicken littles running around screaming the sky is falling! But these days, it’s just a drop in the bucket? Oh, I’m sure a lot of people got burned on Friday, but, as my friend said at our local watering hole Friday afternoon, “I’m not worried, stocks always come back”… I shook my head and tried to explain how it could take years, and was he willing to hold during all that time, but he would not listen…

Gold lost $19.80 on Friday… higher dollar rates, and price manipulators make for a bad scene for Gold, folks.. Now Gold has to pick up the pieces again… Silver lost 35-cents, but remained above $19, barely, but above it nonetheless. Gold finished the week at $1,740.10, and Silver at $19.02… India, China, Russia, and other countries have Central Banks buying physical Gold by the truck load. You don’t think they know something that we don’t, do you? Well, I do! Follow the money… I’m just saying…

In The overnight markets last night… The dollar got bought some more and sits this morning near a 20-year high for the green/peachback. The BBDXY has gained over 2 index points and sit this morning at 1,294… OUCH, now that’s going to leave a mark!  The currencies look so sickly this morning, and Gold is getting sold in the early markets this morning. Gold is down $14, and Silver has dropped below $19. 

Bonds slipped and the 10-year is trading with a 3.10% yield this morning. I still don’t get what happened on Friday with bonds… But it looks as if saner heads have prevailed today…  The price of Oil slipped from last Thursday’s figure and trades this morning with a $93 handle. 

If the dollar continues on this path, it will hit a 20-year high… And that brings me back to 2002, and everyone was buying dollars like funnel cakes at a State Fair, and I saw cracks in the veneer of the dollar, and wrote a white paper, Titled: The Declin Of The Dollar…  The press lit into me like I was a leper, and my white paper was not worthy of printing. 

But who had the last laugh? It was me for in Feb of 2003, the dollar began a long decent that lasted 10 years…  Back in 2002, the rest of the currencies looked sickly too, but… they had all been on a recent trend of getting their ducks in order, while the U.S. was spending money they didn’t have, and getting into a war they didn’t need to fight, and eventually, the dollar collapsed, in price that is. Gold soared and was a run-away train… 

So, what’s different this time? Well, the currencies of the countries abroad, aren’t getting their ducks in a row this time… They’re still messing with ultra-low interest rates and bond buying, and run-away inflation. Shoot Rudy, is there any wonder why the Japanese yen is trading with a 138 handle this morning, as their interest rates remain negative? 

I’ve said this before, so get ready for more of it… The dollar is burning very bright right now… And like a star, it’s going to burn the brightest before it burns out… Russia, India and China are making claims that they have rid themselves of dollars, or last least nearing that feat.  So, if China doesn’t show up at the Auction window to buy all those Treasuries that are coming from all the deficit spending, who’s going to pick up the bonds that don’t get sold? 

Well, when this occurs, the only thing the Fed, and Treasury will have up their respective sleeves is to buy the bonds themselves… I just don’t see any other way… They will be self-financing, and history tells us that this will bring about a drop in the dollar… 

The U.S. Data Cupboard last week was very disappointing to say the least… Consumer Spending was up only .2% in July, and Consumer Income was only up .3%, 2nd QTR GDP was revised up but it still remained negative, and the rest of the housing data was awful, Industrial Production was disappointing, and the whole Data Cupboard was a rotten mess last week, but the dollar rallied… Go figure… 

To recap… the dollar is driving higher to near a 20-year high this morning, after Jerome Powell, spent just 7 minutes telling the audience at the Jackson Hole Boondoggle, that the Fed Heads are going to continue to fight inflation with interest rate hikes and there will be some suffering… Chuck pointed out that we had already suffered… But it was important for the markets to hear that, and stocks lost 1,000 points, hearing that. 

For What It’s Worth… Well, it’s long been thought that to combat inflation you need to have interest rates higher than the inflation rate…  And I contend that the Fed Heads waited too long to start hiking rates to combat inflation. This article refutes that contention, and so in an effort to be “fair and balanced”, this article talks about raising interest rates isn’t going to fight inflation and it can be found here: Fed Can’t Fix Fiscal-Driven Inflation: Jackson Hole Paper – Bloomberg

Or, here’s your snippet: “The Federal Reserve won’t be able to curb inflationary pressures because they are rooted in expansionary fiscal policy, according to a paper presented at the central bank’s annual Jackson Hole conference on Saturday.

“The fact that approximately half of the recent increase in inflation has fiscal roots poses some specific challenges for policy makers today. Not only fiscal inflation tends to be highly persistent but it also requires a different policy response,” the paper’s authors, Francesco Bianchi of Johns Hopkins University and Leonardo Melosi of the Chicago Fed, wrote.

The US central bank began raising interest rates in March, and many officials have since said they were too slow to begin doing so. Bianchi and Melosi argued that beginning to tighten sooner wouldn’t have made much difference for inflation, however.

“When inflation has a fiscal nature, monetary policy alone may not provide an effective response. To show this, we ask whether tightening monetary policy earlier on could have prevented the post-pandemic increase in US inflation,” they wrote.

“The increase in rates would have resulted in only a modest reduction in inflation, at the cost of a large reduction in output. This large sacrifice ratio arises because when inflation has a fiscal nature, the central bank is not uniquely responsible for its reduction.”

Chuck Again…  Phooey! I didn’t attend night school and ace my economics classes to have to listen to junk like this… 

Market Prices 8/29/2022: American Style: A$ .6869,  kiwi .6120,  C$ .7665, euro .9995, sterling 1.1697, Swiss $1.0328, European Style: rand 16.9044, krone 9.7750, SEK 10.6365,  forint 410.20,  zloty 4.7456,  koruna 24.6069, RUB 60.98, yen 138.53, sing 1.3966, HKD 7.8477, INR 79.65, China 6.9167, peso 20.04, BRL 5.0640, BBDXY 1,292.54, Dollar Index 108.85, Oil $93.46, 10-year 3.10%, Silver $18.67, Platinum $860.00, Palladium $2,133.00, Copper $3.72, and Gold… $1,726.91

That’s it for today… Man, my iPod has been playing some great songs this morning while my fat fingers flew across the keyboard!  Cardinals win 2 of 3 from the defending Champion, Braves this past weekend, winning their two games with late inning rallies… We received Biblical proportions of rain yesterday evening… The creek behind my property, was raging! I started getting ready for this coming weekend’s Labor Day BBQ yesterday… Lots to do… but I’ve got plenty of time, as long as I don’t procrastinate, which was never my bag, but in retirement, I’ve gotten soft… Oh well… Ian Gomm takes us to the finish line today with his song: Hold On…  Don’t know that one? YouTube it, I think you’ll like it! I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself!

Chuck Butler

 

 

 

August 25, 2022

* currencies & metals rally on Wednesday

* The Housing Bubble has found a pin… 

Good day… And a Tub Thumpin’ Thursday to one and all!  Yet another Chamber of Commerce Day in the MidWest yesterday. We haven’t experienced a “normal August heat day” in over two weeks! And this modest temperature is supposed to last through Labor Day! My beloved Cardinals couldn’t find their bats again last night. UGH! And our best hitter in the lineup last night, got tossed by a smirking, smug didn’t ask for help on the call, umpire… Other than that, it was a great day and evening for yours truly yesterday, so I had that going for me! I have a sneaky feeling that today’s letter will be short-n-sweet, as I was reading last night and early this morning, and not much is being talked about right now… I guess we’ll have to wait for the Jackson Hole boondoggle for everyone to sit and take notice again…  Bob Marley greets me this morning with his great song: Three Little Birds…   “People don’t worry, cause every little thing is gonna be alright” … Apparently that song was first recorded in 1977, and first released in 1980… It sure doesn’t apply now, eh?

Well, I left you yesterday with the thought that the Gold & Silver performance in the morning wasn’t that bad ad if all things were equal the losses could be overcome on the day.  Well, believe or don’t.. They were overcome, with Gold gaining $3.20, and Silver gaining back its 18-cent loss in the morning to finish the day flat as a pancake (Head East)… Gold ended the day at $1,752.50, and Silver at $19.21…

I told you yesterday that the dollar was way overbought, and that usually meant for a correction to come about in the markets, but these days no one knows what direction asset classes are going from day to day… Well, the dollar got sold in the US. Session yesterday, just like it did on Tues, only to see it come back in the overnight markets. The BBDXY lost 3 index points yesterday and ended the day at $1,289.24… The euro remained below 1, but it did add ½-cent to its value to climb closer to the 1 figure once again.  Even with the dollar index losing ground, the currencies remain sickly looking… With the Petrol Currencies at least showing some life each day…

The price of Oil rose again yesterday, but this time only by 50-cents, but by doing so, it climbed to a new handle of $95…  And bonds… Man, when the bond boys finally figured out that the Fed Heads weren’t going to pivot next month, they went to work on getting yields higher once again, and the 10-year Treasury yield has gone from 2.55% at the start of this month, to 3.10%, where it ended up yesterday…

In the overnight markets last night… Well, believe it or don’t, but the dollar got sold overnight too! The BBDXY lost 3 more index points overnight, and trades this morning at 1,286… The euro remains below 1, but some of the other currencies, like Norwegian krone, are looking as if they want to be healed…  

Bonds and Oil are sitting at their same levels as yesterday’s close: 3.10% and $95…  There have been a parade of Fed Heads hitting the speaking circuit this week, and all of them, including the dove king, Neal Kashkari, have all talked about how the markets got it all wrong, and that interest rates have to go higher to combat inflation. 

Now, all the markets need is confirmation from Jerome Powell, in his Jackson Hole Boondoggle speech tomorrow. If he does paint a picture of gloom, despair, and agony on the U.S. for if it weren’t for bad luck we’d have no luck at all… then you forget about this strong dollar rally, and a return of the bear market rally in stocks. 

Of course, that’s not going to happen, for the deep state has a say in what Powell says tomorrow, and their speechwriters have probably got a pocket full of speeches that paint a different picture altogether.  I’m just saying… 

China decided to fight Powell’s strong dollar yesterday and fixed the renminbi at a higher level than we’ve seen in a while.  The Chinese could have been shooting a cannon ball over the bows of the short sellers of renminbi, and the short sellers have been multiplying by the basketful. 

The U.S. Data Cupboard yesterday, had a very disappointing Durable Goods Orders and Capital Goods Orders combination report…  Durable Goods were flat as a pancake (Head East), and Capital Goods were supposed to be strong, but only gained .5%… 

And I might as well talk about the housing market that’s dropping like flies, and won’t get the chance to recover, as long as the Fed Heads are all talking about fire…  This is from zerohedge.com on the housing number yesterday: “After yesterday’s dreadful collapse in new home sales (and Toll Brothers’ less than rosy picture overnight), analysts expected another monthly decline in pending home sales in July (though not as violent as the June plunge). They were right as pending home sales dropped 1.0% MoM (beating expectations of a 2.6% drop but that was largely driven by a downward revision for June data)…

This is the 8th monthly drop in the last 9 leaving sales down 22.5% YoY. Aside from the COVID lock-down, this is the biggest YoY drop since April 2011.Aside from the COVID lock-down crash, this is the weakest Pending Home Sales Index level since October 2011.”

So, not only are existing home prices falling, but also new home sales are suffering too… This is getting ugly, but, we have Super Potus to save them, for who knows, maybe he’ll follow up the student loan bail out with a bail out of home prices, he’ll guarantee that your home price will not fall!  Boy am I glad we have leaders that see that these things need to be done! 

I’m being my usual smart alec there folks, don’t for one minute believe that I think the Gov’t should spend money they don’t have on boondoggles and things that shouldn’t be being bailed out… 

To recap… The dollar correction is going on as I write… It began on Tuesday, but then the overnight markets didn’t go along, so on Wednesday the dollar correction began again and this time the overnight markets played along. Gold is up to start the day today, after rallying yesterday to overcome the early morning loss.  And housing is dropping like flies… Got Gold?

For What It’s Worth… I talked about how China had fixed the renminbi at a higher level yesterday, and then I found this article on Bloomberg.com that explains it, and so that’s our FWIW article for today, and it can be found here: China Starts Stealth Fightback Against Powell’s Strong Dollar – Bloomberg

Or, here’s your snippet: “China took steps to support the weakening yuan Thursday, after a resurgent dollar pushed the currency to a fresh two-year low.

The People’s Bank of China set its yuan reference rate at a stronger-than-expected level for the managed currency, as a widening monetary policy gap with the US continued to weigh. It was seen a signal the central bank wants to slow the pace of yuan depreciation, which has accelerated as aggressive bets on US rate hikes boosts the greenback.

“The strong yuan fix by PBOC could be a warning shot to speculators who bet against the yuan in volatile times,” said Fiona Lim, senior foreign exchange strategist at Malayan Banking Bhd in Singapore. “While a weaker currency can help improve its export competitiveness, the central bank needs to guard against a snowballing effect that can aggravate market volatility and worsen imported inflation.”

The PBOC had largely refrained from pushing back against the currency’s weakness until this week. It set Thursday’s fixing 120 pips stronger than the average estimate in a Bloomberg survey of analysts and traders — the widest gap since February 2020.

“These moves suggest subtle intervention to prevent further, rapid weakness,” said Peiqian Liu, chief China economist at NatWestGroup Plc.”

Chuck again… I’ve explained this many times in the past, but I’ll do so again because I haven’t done so in a long time… The Chinese currency is the renminbi, the slang name for it is yuan.  The media uses yuan because it’s easier for them to say and spell…   I’m just saying… 

Market prices 8/25/2022: American Style: A$ .6973,  kiwi .6236, C$ .7741, euro .9976, sterling 1.1838, Swiss $1.0373, European Style: rand 16.8287, krone 9.6661, SEK 10.5733,  forint 409.24,  zloty 4.7674,  koruna 24.7079, RUB 60.02, yen 136.43, sing 1.3895, HKD 7.8470, INR 79.88, China 6.8470, peso 19.88, BRL 5.0924,  BBDXY 1,286.43, Dollar Index 108.39, Oil $95.35, 10-year 3.10%, Silver $19.30, Platinum $884.00, Palladium $2,063.00, Copper $3.69, and Gold… $1,760.85

That’s it for today… I got a bit snippy this morning regarding the bail out of student loans… sorry about that, I just can’t get past feeling like a “Chump” for paying for my kids’ college expenses… Cardinals lose to the Cubs last night… Cardinals doing what they normally do, play to the level of their competition…  They play a day game today, on get away day… The Braves come to town this weekend, now that will potentially be a good tough series… we shall see, eh?  REO Speedwagon takes us to the finish line today with their great 70’s song: Riding The Storm Out…   I hope you have a Tub Thumpin’ Thursday today, and Please for goodness sakes, Be Good To Yourself! 

Chuck Butler

 

August 24, 2022

*OPEC’s Warning lights a fire… 

* Bad data in the U.S. means strong dollar… go figure… 

Good Day… And a Wonderful Wednesday to you! Another Chamber of Commerce Day here in my little river town yesterday. This year’s version of the dog days of summer, has been very pleasant… Last night as i sat outside watching my beloved Cardinals, it got chilly, and I ended up going back inside to watch the rest of the game. I just don’t recall an August with weather like this… My grandkids went back to school yesterday, along with the teachers, Dawn and Andrew.. Robert Palmer greets me this morning with his song: Put On Your Sailing Shoes… 

Well, we had a rally of sorts yesterday in the currencies and metals… The BBDXY lost 5 index points and fell back to finish the day at 1,288. The euro remained under 1, however, and even with the drop in the BBDXY, the currencies still look very sickly and in need of a medicine..  The dollar is very overbought at this point folks… And usually, the markets will correct an overbought position, but who knows what these boneheads are going to do now? 

Gold finally found a bid yesterday and ran with it, gaining $11.40 on the day to close at $1,748.30… This rally could be seen as the start of something, but I doubt that it will, as the strong dollar right now is smothering everything else around it, and it will take some time for all that to be removed…  Silver also found a bid yesterday, and gained 12-cents to close the day at $19.21

That warning I told you about yesterday, from the folks at OPEC regarding how they would Act if the markets didn’t iron out the hinky pricing of Oil, has resonated with traders, and the price of Oil gained another $2 yesterday, and ended the day trading with a $94 handle…  That’s an $8 gain in the last 4 trading days for the price of Oil, which last week at this time was sporting an $86 handle… 

The yield on the 10-year Treasury rose again and this time to a 3.05% yield yesterday…  This rise in the 10-year’s yield has got to be an answer to the light bulb going on in Traders’ heads that I talked about on Monday, that centered around traders finally getting the message that the Fed Heads are going to keep hiking rates. 

Speaking of the Fed Heads keeping their rate hike hats on…  I had been under the impression that the Fed Heads would opt to hike rates 50 Basis Points at the September meeting, instead of the 75 Basis Points that has been their level of choice the previous two meetings… But, the more I think about this, the more I’m inclined to say that the Fed Heads will keep their rate hike at the 75 Basis Points level…  

I say that because, in my heart of hearts, I have to think that the Fed Heads see their dilemma of being so far behind the inflation rate and that they need to play catch-up…  I do admit though, that my hope that they see their dilemma is overweighing my first thought that they are all a bunch of knuckleheads and if there’s a way to screw this up, they will find it… 

In the overnight markets last night, it was as I expected it to be, a giving back session… The dollar got bought overnight, and the BBDXY has gained back 3 index points of the 5 it lost yesterday. I’m still thinking that the dollar is overbought at this point, and something has to give soon… Apparently, yesterday was not the “soon” we were looking for! 

Gold starts the day down $4, and Silver down 18-cents… UGH! Of course, these are small numbers that could easily be overcome today, but that’s not the trend that we’ve seen lately, with the daily trading.  So, I’m not hopeful at this point of the morning. 

Well, it’s that time of year again, when all the elites in the financial world gather for a major boondoggle in Jackson Hole Wyoming… And this coming Friday, the Big Fed Head, Jerome Powell, will be speaking, and the markets will all be listening to see if he gives any hint as to how the Fed Heads will vote at the next FOMC. 

Powell’s speechwriters must be going bananas, because the Personal Consumption Expenditures (PCE) will print on Friday morning, just ahead of his talk… For, if the PCE shows that inflation has weakened, it could change his talk, and on the other side if the PCE remains strong, it could change his talk… What to do, what to do?  

The markets are ga-ga over what the Fed Heads have to say… C’mon wake up! The Fed Heads are not the panacea here… They are not going to save us from the evils of a debt ridden, inflation racked, everything bubble, economic mess!  Nope, it’s not going to happen folks..  And as soon as the markets finally get the memo on that, the dollar will continue to be overbought. 

The U.S. doesn’t have inflation cornered…. it’s soaring all over the globe, and in Europe it’s worse than it is here, that is if you use the stupid CPI that the BLS hedonically adjusts as a comparison.  The Eurozone PMI (manufacturing index) dropped below the line in the sand, 50 level last month… So, Europe not only has inflation soaring, they also have a recession on the way, just like the U.S. has seen… 

In the “old days”, I used to say that whatever goes on in the U.K. it comes on our shores a few months later… But that’s back when everything in the markets made sense, and things were different than they are today… 

I sit here each day for hours and try to figure out what the hell is happening with Gold, as inflation continues to be at the top of the list of articles that get printed…  Then I read this piece on Kitco. com that made sense… Check it out: “After falling 3% last week, gold was trading near three-week lows Monday as the strong U.S. dollar continued to pressure the metal. But there could also be another reason for gold’s poor price performance, according to Bloomberg Intelligence.

Year-to-date, gold is down 4.3% despite massive inflation concerns, which are still top of mind for central banks worldwide. And one potential explanation could be that the gold market has been looking for deflationary forces to win out in the long term.

“Gold’s poor performance despite the greatest inflation in 40 years may show that the metal, considered a store of value, has been anticipating enduring deflation and is resuming its propensity to outperform most commodities,” Bloomberg Intelligence senior commodity strategist Mike McGlone said in a note Monday.”

Chuck Again…  OK… I explained this to you before, but here goes again… When prices soar, as they have here in the U.S., consumers change their priorities in what they buy and don’t buy… So, let’s take widgets… As widgets get overpriced, consumers stop buying widgets, and that causes the prices to drop because no one is buying widgets…  deflation… 

I don’t know and it’s too early to tell for sure, if this deflation thing is going to come to fruition… We’ve got to get through the soaring inflation first, and I don’t see that happening any time soon.  but the metals traders are “looking ahead” apparently… ? 

The U.S. Data Cupboard yesterday had two very scary headlines: 

U.S. Services Sector Collapsed in Augus

U.S. New Home Sales Crashed in July       

And the dollar gets bought overnight? How on earth did those traders figure that the dollar needed to be bought after seeing those two data headlines?   I shake my head in disbelief, folks… 

Today’s Data Cupboard has the Durable Good Orders, and Capital Goods Orders for July… I don’t expect them to show any goodness in these data prints… But in the past few months, bad data in the U.S. is good for the dollar… Go figure!  I have a FWIW article for you today that will give you the willies, so stay tuned! Don’t touch that dial! 

To recap… The dollar backed off its recent domination of the currencies and metals yesterday, but only briefly, as the overnight markets returned to dollar buying. OPEC’s warning seems to have done the trick with the price of Oil gaining again, after OPEC warned traders about their trading of Oil and its hinky prices… Chuck talks about deflation, following inflation this morning, you won’t want to have missed that!

Before we head to the Big Finish today, I have a bone to pick… Well, I received word last night that the POTUS is getting set to announce that the US Govt will forgive student loans of $10,000… that’s just great! Who’s going to pay for that. Well, I am, and you are that’s who! And to think I was finished paying college tuitions after I paid in full for all three of my kids to attend college! Silly me! This news ticks me off to no end! 

For What It’s Worth…  Well, this is a good FWIW article in that it expressed fear about the situation in the U.S. and it can be found here: Can’t Pay Utility Bills? 20 Million US Homes Behind on Payments, Facing Shutoffs – Bloomberg

Or, here’s your snippet: “Adrienne Nice woke up early on the morning of July 25 to news she’d been dreading. The power company, Xcel Energy Inc., had shut off the electricity to the small Minneapolis apartment she shares with her teenage son, just as a heat wave was bearing down on the city.

Nice had been struggling financially ever since the pandemic hit, racking up more than $3,000 in past-due utility bills. The warnings she’d gotten on her monthly statement—“FINAL NOTICE” scrawled in big, bold letters—had prepared her to some degree, but it was still jarring to find the fridge dark and the air conditioner silent. With temperatures set to reach 95F (35C) in the coming days, she needed the power back on, and fast.

The Nice household is one of some 20 million across the country—about 1 in 6 American homes—that have fallen behind on their utility bills. It is, according to the National Energy Assistance Directors Association (Neada), the worst crisis the group has ever documented. Underpinning those numbers is a blistering surge in electricity prices, propelled by the soaring cost of natural gas.

 

The power bill crisis is even more acute in Europe, where the spike in natural gas prices has been far greater in the wake of Russia’s invasion of Ukraine. Policymakers there have sprung into action, throwing billions of euros in aid at struggling families to help them pay bills. There’s been no meaningful talk of doing anything on a similar scale in the US, where the hand-wringing has been dedicated, as always, to the gyrations of gasoline prices at the pump.

Utility shutoffs can have deadly consequences, though, a risk that’s becoming more palpable as summer heat shatters records. Already gut-punched by soaring prices for just about everything, more and more people are facing a choice among food, housing, and keeping the power on. “I expect a tsunami of shutoffs,” says Jean Su, a senior attorney at the Center for Biological Diversity, which tracks utility disconnections across the US.”

Chuck again… 20 Million homes can’t pay their utility bill?  And that’s just the start of it, I’m afraid… Recall I said above about how consumers have to decide what to spend money on these days and what not to spend money on…  Apparently 20 Million homes have decided that they wont’ pay their utility bill… 

Market Prices 8/24/2022: American Style: A$ .6898,  kiwi .6178,  C$ .7698, euro .9930, sterling 1.1786, Swiss $1.0313, European Style: rand 17.0380, krone 9.6946, SEK 10.6664,  forint 414.13,  zloty 4.8040,  koruna 24.7965, RUB 60.26, yen 136.73, sing 1.3954, HKD 7.8467, INR 79.81, China 6.8690, peso 19.95, BRL 5.1059,  BBDXY 1,291.21,  Dollar Index 108.92, Oil $94.53, 10-year 3.05%, Silver $19.03, Platinum $881.00, Palladium $2,006.00, Copper $3.65, and Gold… $1,745.60

That’s it for today… Well, my beloved Cardinals had to settle for a split in their doubleheader yesterday with the Cubs. I don’t believe the Cardinals’ bats arrived from Arizona until the second game yesterday… I got to see a former colleague and longtime friend at lunch yesterday. Ann Hopkins came to Fenton! Good friends, Duane and Mike joined me outside yesterday afternoon for the 1st game of the doubleheader, but then I sat outside by myself for the second game… Poor, poor pitiful me (Linda Ronstadt) HA!  The Counting Crows take us to the finish line today with their song: Round Here…  I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!

Chuck Butler

 

 

August 23, 2022

* Currencies & metals get sold on Monday

* Chuck steps out of his lane and makes a call… 

Good Day… And a Tom Terrific Tuesday to you! Has anyone else been following the resurgence of Albert Pujols? Just a week ago he was 11 home runs away from 700… At that time I didn’t believe he would get enough at bats to reach 700… But now a week later, he’s only 7 away! And the other teams the Cardinals are playing are doing the Cardinals and Pujols a big favor by pitching left handers! Oh, and Albert’s home run last night was the only run in a 1-0 win for the Cardinals over the Cubs…  And another wonderful day, weather-wise here in my little river town! The Kinks greet me this morning with their song: Sunny Afternoon…

Well, the dollar buying continued throughout the day yesterday, with the BBDXY gaining 5 index points. The dollar pushed the euro to a 2 decade low below parity. I found this on Bloomberg.com “The euro fell to a new two-decade low as a resurgent dollar and the prospect of a difficult winter for the region begin to bite. The drop is just the beginning of a deeper descent for the currency, according to strategists.

The common currency fell as much as 1.1% to 0.9928 Monday, below the prior two-decade low of 0.9952 reached in July — shifting away from a brief period of relief that propelled the euro to about $1.03 earlier this month. The currency was trading Monday at levels last seen in 2002, just a few years after the currency came into existence.” 

And needless to say, but I will anyway… The rest of the currencies fell in behind the Big Dog, euro, and look very sickly once again… 

Gold found a way to gain back some of its $12 early morning loss, and ended the day down $10, with a price of $1,737.90. Silver also fought back a bit and turned its early morning loss of 18-cents to a loss of 7-cents and climbed back over $19… Silver’s close was $19.09

The price of Oil was steady Eddie yesterday and remained in the $90 range all day… I also found this on Bloomberg.com this morning: “Oil clung to $90 at the conclusion of a volatile session after Saudi Oil Minister Prince Abdulaziz bin Salman warned the disconnect between the futures market and supply fundamentals may force OPEC and its allies to act.

West Texas Intermediate pared more than $4 of losses intraday to settle above $90 a barrel, still finishing cents below the previous session. The Saudi oil chief warned that “extreme” volatility and lack of liquidity in the futures market are moving prices in ways that don’t conform to fundamental supply-and-demand factors. The divergence may prompt the OPEC+ alliance to act.”

Chuck again… Yes, if you would have asked me, I would have told you that I thought something was “hinky” about the price of Oil lately… The article didn’t say what the OPEC members could do to “act”, but whatever it is, I’m sure it will help the price of Oil to rebound.

Bonds saw the 10-year’s yield rise to 3.01% to end the day yesterday… I don’t think that the rise of the 10-year’s yield is going to stop there… I’m just saying…

In the overnight markets… There’s been little movement, as the BBDXY has gained only 1/2-index point. The euro has dropped further, and unless the dollar is about to reverse this strong trend, it doesn’t look good for the single unit…  Gold & silver are not starting the day on the right foot, with both down just pennies to start the day, but down, nonetheless. 

The price of Oil has gained $2 in the overnight markets, I think, on the OPEC warning… But then only the Shadow knows with these markets! Oil is trading with a $92 handle this morning. Bonds were stuck in the mud overnight, and the 10-year’s yield remained at 3.01%… 

Well, the Bears got their revenge on the stock market Bulls yesterday, and the Bear Market rally came to an end, as the Dow lost 640 Points… I’m not turning into a stock jockey, just wanted to point out that this is the beginning of what could be a decade of no returns for stocks…  Don’t worry, I hear your broker saying to you, “stocks always come back”… But, are you of the age that would allow you to benefit from owning stocks for the next ten years before they began to rally again?  The Wall Street Journal said that stocks could be in a decade of losses… Stifel’s chief equity strategist also said the same thing… So, see it’s not just me…

OK, that was me stepping out of my lane to make that call… I don’t do that very often, so it should raise a red flag, so you don’t miss it… 

Good friend, Dennis Miller, sent me this last night that he had found on wolfstreet.com “The $675 million of senior unsecured 30-year bonds that meme-stock darling Bed Bath & Beyond issued in 2014, and that are due in 2044, with a coupon interest of 5.165%, collapsed to a new closing low of 15.8 cents on the dollar today, with some trades being below 15 cents, after having plunged all last week from the meme-stock inspired dead-cat bounce.

That would be a yield to maturity of 33%, assuming that the company pays the interest for the life of the bond and doesn’t default, and at maturity pays off the bond. But with this yield, the bond market is signaling that a default and a bankruptcy filing are imminent, with a massive haircut for unsecured bondholders”

Chuck again… this is just beginning folks for Corporations that took out so many low rate loans that are now having problems because of the debt load, and the Corporation can’t refinance the debt, because the loans would no longer be low rate!  Uh-Oh!

I see said the blind man as he spit into the wind…. It’s all coming back to me now! The zombie corporations that got low rate loans are going to see it all coming back to them soon…  Got Gold?

The U.S. Data Cupboard today has the “flash” prints of US PMI (manufacturing index) for this month… This won’t mean that the whole August PMI is this number, just what it is to date…  And I expect it to weaken once again.  This Data that gets printed today, will probably not take into consideration the awful print we saw in the Empire (NY REGION) region recently… So, to me it’s basically worthless… And I hope the markets don’t pay it any attention!

To recap…  Well, the dollar is on a roll and taking no prisoners, and I just don’t see how this will end without tears… The dollar gained 5 index points yesterday and pushed the euro to a 2-decade low.  Gold & Silver can’t buy a bid these days, as the dollar strength in the currencies, is spilling over to the metals. OPEC warned that they will act if the markets don’t straighten out… Ooooh, you just wait until your father comes home!  

For What It’s Worth.. I had a Daniel Di Martino Booth, article all lined up until I saw this article in Ed Steer’s letter this morning. This is a “made for the movies story” about a Gold heist in Russia… And it can be found here: $13 million gold heist busted at Moscow airport — RT Russia & Former Soviet Union

Or, here’s your snippet: “An international conspiracy to smuggle 225 kilograms of gold worth an estimated 760 billion rubles (roughly $12.7 million) through Moscow was thwarted by sharp-eyed customs agents, the Federal Customs Service (FTS) of Russia announced on Thursday.

The scheme involved two groups of three travelers who swapped suitcases inside Vnukovo Airport. The group, bound for the United Arab Emirates, was caught with a number of gold bars in their bags.

The attempted heist took place on August 11, the FTS said in a statement. According to the customs service, three Armenian nationals smuggled the gold into the airport in their carry-on luggage. Since Armenia is a member of the Eurasian Economic Union, they were not subject to customs controls. Once inside, however, they traded suitcases with a trio of Russian citizens, who had come in with empty baggage. The Russians were en route to Dubai in the UAE.

Customs officers monitoring the airport’s security cameras, however, noticed something strange – three passengers dragging their wheeled suitcases with considerable effort. They began following the trio and saw them swapping bags with the other men, proceeding to the gate for their Yerevan flight with much more spring in their step. The customs inspectors decided to do a spot check on the passengers headed to the UAE, who had already boarded their flight.

“The smugglers with the valuable cargo were detained by Vnukovo customs operatives after boarding their plane,” the FTS said.

After stepping on board and checking the suspects’ bags, customs officers found 45 gold bars, the FTS said in the initial report. None of them had been declared or cleared customs inspection. All had the legally mandated serial numbers and other identification marks. The newspaper Kommersant later reported that the haul amounted to a total of 71 gold bars – 14 ingots of 12kg each and 57 smaller, one-kilo bars. 

Prosecutors said they intend to charge the group with three felonies, including criminal conspiracy and smuggling of goods designated of strategic importance.

A Moscow court ordered the three Armenian nationals jailed until September 11. They were identified as Artak Ayvazyan, Karen Darbinyan and Arman Harutyunyan, officially unemployed. Their attorneys made a motion to keep them under house arrest instead, but the court denied it. The Russian citizens were released pending trial after signing statements that they would not leave Moscow.”

Chuck Again… Whew! That was close! Can’t you see some script writer taking this story and making a movie out of it?  FWIW at its best! 

Market Prices 8/23/2022: American Style: A$ .6875,  kiwi .6176,  C$ .7680, euro .9925, sterling 1.1762, Swiss $1.0344, European Style: rand 17.0725, krone 9.7908, SEK 10.6949,  forint 414.03,  zloty 4.8103,  koruna 24, 8449, RUB 60.10, yen 137.48, sing 1.3961, HKD 7.8473, INR 79.86, China 6.8472, peso 20.07, BRL 5.1684,  BBDXY 1,294.17,  Dollar Index 109.5, Oil $92.01, 10-year 3.01%, Silver $18.96, Platinum $877.00, Palladium $2.014.00, Copper $3.64, and Gold… $1,737.74

That’s it for today…Cardinals and Cubs play 2 today in Chicago… Somewhere in Heaven, Ernie Banks is smiling! I need a new book to read… I like detective novels… And I think I’ve read just about everything that’s out there! A short-n-sweet Pfennig for you this morning, as I just can’t get myself to write about this dollar strength, other than what I’ve said so far… Whenever I hear the song that’s our take us to the finish line song today, I think of a good friend, Laura Baur, for it’s her favorite song… The Scorpions take us to the finish line today, with their song: Still Loving You…  I hope you have a Tom Terrific Tuesday today…  And Please! Be Good To Yourself!

Chuck Butler

 

 

August 22, 2022

* Currencies & metals see major selling late last week

* The Gov’t’s bond servicing costs are soaring higher! 

Good Day… And a Marvelous Monday to you! WOW! What a wonderful weekend here in the Midwest, weather-wise! I don’t recall an August where the temps are moderate, and a lovely breeze blows throughout the day! These are supposed to be the “dog days of summer”, and instead they have been “pleasant puppies”! My beloved Cardinals swept the snakes in Arizona, and now visit Wrigleyville for 5 games in 4 days… That’s tough on a pitching staff, so I’ve got to hope that their newfound depth holds…  The Allman Brothers greet me this morning with their big hit song: Melissa

Well. last week the light bulb over traders heads finally lit up, as they finally figured out that the Fed Heads are going to keep hiking rates, maybe not as aggressively, but hiking them nonetheless, and that brought about a dollar rally to write home about! The last two days of last week, saw the BBDXY rise from 1,273 to 1,286!  The euro is flirting with parity to the dollar once again, after weathering the last storm, the euro doesn’t look like it has the oomph to fight again… 

The currencies, for the most part, have all been taken to the woodshed by the traders, with only the Petrol Currencies holding ground to the dollar. The Russian ruble actually gained VS the dollar and trades this morning with a 59 handle… The Norwegian krone slipped just a bit, along with the Canadian dollar / loonie, while the Brazilian real held steady Eddie… 

The Chinese renminbi has been unable to hold steady, as the rate differential between the dollar and renminbi has widened after last week’s Chinese rate cut.  This rate differential is becoming a real problem for the renminbi and it’s only going to get worse, folks…  And if the renminbi is suffering, the Singapore dollar suffers alongside the renminbi. I’ve explained this relationship plenty of times in the past, so I won’t go down that road today again, other than to say that it’s an export competition thing… 

Gold got sold late last week, and on Friday, lost $11, to close the week at $1,748.60… Silver just keeps getting sold by the bushelful, and lost 46-cents on Friday to close the week at $19.16…  Historically, August is not a good month for the metals, but this August things are getting out of hand, with the selling getting very uncomfortable… Platinum and Palladium also saw major selling late last week, so the selling is not just in Gold & Silver. 

Bonds got sold last week, as that light bulb over traders’ heads got lit… the 10-year’s yield rose to 2.99% to end the week, and in the overnight markets last night it briefly touched 3.03%…  The Price of Oil held steady Eddie into the weekend, and trades this morning with a $90 handle. 

In the overnight markets last night… There’s been more dollar buying and the BBDXY has gained another 2 index point overnight. The euro is basically at parity with the dollar as it trades at 1.0015 this morning. The last time the euro was this low, it was on its way higher, and I was a one man band with the currency trading, and answering the phone… Jen was the one-woman band on the stock side, and our do it all assistant, Cheryl, was a rock… Can you say 1999/ 2000?  Yikes! That seems like ages ago! 

Gold has lost another $12 in the early trading this morning, and Silver has lost another 18-cents to bring it below $19!  Crazy, eh?  All the problems in the world, and they keep mounting, and Gold is getting sold? I’m at wits end here folks… All my beliefs of how markets work, are circling the bowl, every day… UGH! 

OK… Well with everyone in the markets agreeing that the Fed Heads are going to keep hiking rates, and there’ll be no “Powell Pivot”, in the near future, one has to turn their attention to the Fed’s borrowing costs… Those are rising folks, and not by inches, the costs are soaring, and that was before the last 75 Basis Points rate hike was made at the last FOMC meeting. 

The Fed Heads have their work cut out for them, with regards to fighting inflation with rate hikes. They got started way too late, and then they only hiked rates 25 Basis Points. It took a few months before the Fed Heads got serious about fighting inflation, with a 75 Basis Points rate hike (should have been more than 100 Basis Points, but I digress) . So not only are the borrowing costs soaring now, they are going to go cyberspace in the future, and then all hell breaks loose, folks… 

For, the question then begins to be centered around, “Who’s going to buy all those Treasuries, that are used to finance the debt”?  And then the next question for the Gov’t is “what service do we cut, in order to service the bond costs?”  Debt will eventually be our kryptonite folks… 

This Fed Head from Minneapolis, Neal Kashkari, has inserted his foot in his mouth, many times in the past, and just last week, he did it again, check this out from Kashkari: “So the question right now is, can we bring inflation down without triggering a recession? And my answer to that question is: I don’t know,” Kashkari said, during a talk with business leaders in Minneapolis.

He said he didn’t think the economy was in a recession right now.”

Chuck again… Memo to Kashkari, we are in a recession, and you should know better than to fight that fact!  Oh, and just last week, a survey of the large corporations in the U.S. all said that they are going to be laying off large numbers of workers… Hmmm

Reuters reported last week that “Swiss exports of gold to China in July rose to their highest since December 2016, Swiss customs data showed on Thursday, as demand in the world’s largest bullion market improved.

Switzerland shipped 80.1 tonnes of gold worth 4.4 billion Swiss francs ($4.6 billion) to mainland China, up from 32.5 tonnes in June and the second-highest monthly total in figures that stretch back to 2012.

Retail consumers in markets like China often buy less when prices rise and more when they fall. China had also in July emerged from COVID-19 lock-downs earlier in the year.

The surge in shipments to China lifted Switzerland’s total gold exports to 186.2 tonnes in July, again the most since 2016.

Switzerland is the biggest refining and transit hub for gold and its data offer insight into global market trends.”

Chuck again, and it wasn’t only China that was receiving record amounts of physical Gold from Switzerland. India also was on the list of countries receiving record amounts of physical Gold… 

So… we’ve come a long way from the edge of the cliff that we peeked over early in July… The Bank of Japan (BOJ) was the first to make it clearly understood that they are not going to step away from their current Monetary Policy of negative rates and bond buying.  And the Fed Heads were sending so many confusing signals no one knew what to expect next from the Fed Heads…  And once again, the markets stepped back away from the edge of the cliff… Apparently, they didn’t like what they saw when they peeked over the edge… I don’t think anyone would like what they saw there either! 

Now, we’ve moved sufficiently away from the edge of the cliff, only to be revisited at a future date, and the risk off trading has been thrown out with the bath water… The dollar is flexing its muscles once again, and everything that isn’t dollars gets taken to the woodshed… 

Last week’s U.S. Data Cupboard was a mixed bag-o-nuts… Industrial Production and Capacity Utilization surprised with increases, but Retail Sales were flat as a pancake (head East), and Leading Indicators were negative… All in, I would say that the Data Cupboard, last week, was a disappointment. 

This week’s Data Cupboard is sporadic with data prints that move the markets, and we’ll see the first one on Wednesday, and then we’ll have to wait for Friday when Personal Income and Spending will print. Bad data prints have had the opposite effect on the dollar, than in the past… I’m just saying… 

To recap… The dollar traders have finally gotten the memo that the Fed Heads are going to keep hiking rates, and the buying of the dollar has gone hog wild… the BBDXY has gained 15 index points since last Thursday morning, and the euro has reached parity with the dollar this morning. The Fed’s borrowing costs are soaring folks… And that is not going to stop any time soon, so what service is going to be cut to serice the bonds? 

For What It’s Worth… In a recent interview I did with good friend, Dennis Miller, we discussed what kind of recession this is that we’re in, and that discussion can be found here: What Kind Of Recession Is This? – Miller on the Money

Or, here’s your snippet: “DENNIS: Chuck, once again, thanks for your time in helping educate our readers. In my recent column, What is normal? I pointed out in a normal economy, interest rates for both lenders and borrowers are above the inflation rate. Today – not even close!

Technically we are in a recession, but we are seeing “Help Wanted” signs everywhere.

Chuck, you analyze each week’s unemployment reports, what are they telling you about what is happening in the labor market?

CHUCK: It’s a crazy mixed-up world we live in these days, Dennis. Just last week we saw the Bureau of Labor statistics (BLS) print a 528,000 jobs created number for July…. But looking under the hood, I found that 340,000 of those jobs were created out of thin air by the BLS (they made up the number). That leaves only 128,000 real jobs created in July, and that would look like it should.

Each Month the BLS reports that 4.3 million people quit their jobs. I find this to be quite telling of the labor markets these days.

The pandemic, and subsequent economic shut down, has created a country of people that won’t work for minimum wage, won’t work long hours, and won’t work in an office, or restaurant, or retail store, etc.

That’s why you see so many HELP WANTED signs, people just don’t want to work any longer.

The Weekly Initial Jobless Claims have been ratcheting up in recent weeks and is beginning to look like it will explode higher very soon.

So, to sum it all up…. The employment situation in this country isn’t as rosy as the BLS or the Gov’t want us to believe it is. And all signs point toward very weak employment, during this recession that we are in.”

Chuck again…  Yes, it is a crazy mixed-up world of markets right now, and it takes a lot of gray matter to keep up with them and understand what the heck is going on… I give it my best effort, the old college try if you will, and in these interviews, I do with Dennis Miller, he gives me tough questions to answer. He puts me through the gauntlet! I hope you have a chance to go to his website and read the full interview… 

Market Prices 8/22/2022: American Style: A$ .6918, kiwi .6206,  C$ .7702, euro 1.0015, sterling 1.1813, Swiss $1.0426, European Style: rand 17.0402, krone 9.7838, SEK 10.6573,  forint 405.74,  zloty 4.7446,  koruna 24.6174, RUB 59.82, yen 136.78, sing 1.3848, HKD 7.8457, INR 79.56, China 6.8384, peso 20.19, BRL 5.1695,  BBDXY 1,288.06, Dollar Index 108.29,  Oil $90.00, 10-year 2.99%, Silver $18.98, Platinum 886.00, Palladium $2,053.00, Copper $3.62, and Gold… $1,736.43

That’s it for today… The Butler family celebrated daughter Dawn’s birthday yesterday, a grand time was had by all (I think!) I put the Green Big Egg through the paces, and we had some scrumptious smoked turkey for dinner! I cut eating any bread out of my diet last week, and it paid off, I don’t think I can do that all the time, but every now and then it’s ok… At my age, and physical limitations, I find it very difficult to lose any more weight than I already have…  In fact, I’ve been at the same weight now for a couple of months… UGH!  Heartsfield takes us to the finish line today with their great song: Pass Me By… I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

August 18, 2022

* currencies & Metals don’t get ambused last night! 

* Retail Sales were flat, so what are consumers spending money on now? 

Good Day… And a Tub Thumpin’ Thursday to you! I probably had the most to eat at a sitting in a couple of years, last night, as we took the grandkids to a Mexican restaurant for dinner. The kids love chips and salsa, so we let them go at them! Little Evie even got into eating chips and salsa… Everett was the only grandkid that couldn’t make it, as he had football practice. My darling granddaughter, Delaney, (I call her little d) is starting high school in a week, and she’s all excited about that. Yes, it’s been 15 years since she was born… YIKES! My beloved Cardinals won again last night VS the Rockies, and the Cards and Rockies go at again today, in a day game… I couldn’t find anyone that wanted to go to the game with me, so… I’ll sit out back and watch the game at home… R.E.M. greets me this morning with their mega hit song: Losing My Religion

Well… for the second day in a row, the dollar didn’t gain anything during the U.S. session, but gains a bushelful in the overnight markets… Yesterday, the dollar was stuck in the mud, and the BBDXY lost 1 index point. So, that meant that before the trading books were handed over to the Asian and then the European traders, the currencies traded in the same clothes that they had on all day… Gold & Silver got smacked around, and suffered large losses yesterday… Gold lost $14, and closed at $1,762.60, and Silver lost 38-cents, to close at $19.88… Gold & Silver started the day in the dumps, and never recovered, and before you knew it the day came to a close and they had worse losses than they started the day with!

It’s all about this mantra that “inflation has peaked”… or “peak inflation”… I’ve told you that I just don’t see it playing out that way, that July’s drop in inflation, was just a blip on the record books… August might also reflect a narrowing in inflation continuing, but then watch out! You know, I was always taught when I came on the trading desk, that traders are always looking ahead, and they trade based on what they see ahead… So, apparently, traders these days, are thinking that inflation has peaked… Because that’s how their trading…

The price of Oil gained $2 yesterday, and closed the day trading with a $88 handle. And Bonds were bought bringing the 10-year’s yield down to 2.87% at the end of the day…

In The overnight markets last night… there was no ambush last night as there was the previous two nights. The BBDXY gained 1 index point overnight, and the currencies appear to be stuck in a rut this morning. Gold is up $7 in the early trading this morning, and Silver is down 4-cents, so a mixed bag of results so far for the metals this morning. 

The price of Oil gained a buck overnight, and trades this morning with a $89 handle.  This Oil pricing is really getting to me folks… Up, down, up , down, and then sideways and upside down!  Is there lack of demand or there isn’t lack of demand, someone please make a decision and trade from it, please? 

I would have thought that with the price of gas falling, that consumers would have more dollars in their respective pockets to spend on other things, but from the looks of Retail Sales in July, that wasn’t the case, and that leads me to believe that consumers have just taken a blow to the midsection, and are still reeling from that blow… And will they come back to the stores once the sting of the blow abates?  In other words, will they forget the pain? I’m thinking that they will, but then the wolf is always at the door, folks, and other things might cause another round of blows to the midsection.. 

Like the pricing of food…  for instance, last month food prices were up 1.1%.. and just a look at some of the items, eggs were up 4.3%, and other things like shelter was up .5%… So, what I’m saying here is that there are other things to spend one’s money on that are basic needs… 

Yesterday was one of those “no where to run, no place to hide days” in the markets… Stocks were down, bonds were down, currencies were down, metals were down, and it was just plain ugly anywhere you looked yesterday… (The price of Oil was up marginally throughout the day yesterday) Was it the disappointing July Retail Sales that brought about all this selling yesterday? Retail Sales for July were flat as a pancake( Head East ), and when you take out food and energy, as if we could actually do that in practice not just on paper, Real Retail Sales were up just 0.01%… So, the BHI was bang on once again…

Well, maybe in stocks and bonds, but as far as the currencies are concerned, it should be been a watershed report for them, as this report would indicate that the economy is slowing, and that could sway the Fed Heads in the amount of a rate hike they want to announce in September…And the metals should have never been on the chopping block yesterday, or any day before it for that matter!

The Fed Heads FOMC Meeting Minutes were out yesterday and they sure painted a different picture than what the markets are trading on… I found this on CNBC this morning: “Federal Reserve officials at their July meeting indicated they likely would not consider pulling back on interest rate hikes until inflation came down substantially, according to minutes from the session released Wednesday.

During a meeting in which the central bank approved a 0.75 percentage point rate hike, policymakers expressed resolve to bring down inflation that is running well above the Fed’s desired 2% level.

They did not provide specific guidance for future increases and said they would be watching data closely before making that decision. Market pricing is for a half-point rate hike at the September meeting, though that remains a close call.”

Chuck again… Well doesn’t that just take the cake? The Fed Heads spell out what they are thinking, and the markets trade as if they don’t believe them… Hmmm… I know, I know, I wouldn’t believe them either, but there’s an old saying about not fighting the Fed…

In an article I found on Bloomberg yesterday, the secrets of JP Morgan’s Metals Trading came to everyone’s attention… Check this out from Bloomberg.com “The trial of JPMorgan Chase & Co.’s former head of precious metals has offered unprecedented insights into the trading desk that dominates the global gold market. 

The proceedings have already shone a new light on the inner workings of the business, from its profitability and market share to its largest clients.

In summary: the business is a consistent moneymaker for JPMorgan, notching up annual profits between $109 million and $234 million a year between 2008 and 2018. The lion’s share of that comes from trading in financial markets, but the bank does plenty of physical business as well. Trading and transporting physical precious metals makes the bank about $30 million a year on average.

Still, the profits disclosed in the trial have been overshadowed more recently: in 2020, JPMorgan made $1 billion in precious metals as the pandemic created unprecedented arbitrage opportunities, according to people familiar with the matter.”

Chuck again… I have no problem with a business making profits that seem out of the ordinary, as long as they aren’t cheating the customers or the markets, doing fraudulent things, and underhanded dealings… 

We’ll see the usual fare for a Tub Thumpin’ Thursday today with the printing of the latest Weekly Initial Jobless Claims… these reports have shown a marked increase in the number of claims in recent weeks, which contradicts the BLS trumped up jobs creation report…  We’ll also see the leading indicators which last month printed negative…  And finally Fed Minnesnowta, Neal Kashkari will be speaking, and as has been his habit of opening mouth and inserting foot, I’ll be interested to see if he decides to keep his trap shut…  

My dad taught me that it is far better to allow people to think you are a fool , than to open your mouth and remove all doubt…. 

To recap…  The currencies and metals didn’t get ambushed last night, and that’s a good thing. Gold is up $7 early this morning, so we have that going for us! Chuck talks about all kinds of things this morning, so if you passed over something, go back and read it again! HA! 

For What It’s Worth… I’ve said this before, but I really like Matthew Piepenburg’s writing for Swiss America… His latest article was picked up by the Dollar Collapse web site, and it’s here that I’ll send you to find Matthew’s article title: Modern American Policy: Stupid or Sinister? And that article can be found here: Matthew Piepenburg: Modern American Policy: Stupid or Sinister? – DollarCollapse.com

Or, here’s your snippet: “American policy has been acting in ways which suggest either a desperate ignorance or a sinister restructuring of the national narrative.

Surveying the Senseless

The USA is now staring down the barrel of four-decade high inflation, an inverted yield curve and the highest debt levels in its history as Wall Street recently enjoyed the strongest relief rally since 2020 on the bad news of yet another Fed rate hike (75bp) into a percolating liquidity crisis.

Huh?

In a Fed-led dystopia marked by years of printed rather than earned liquidity, bad news is now good news to markets who nervously seek pretexts for central bank stimulus rather than actual earnings or GDP.

In such distorted landscapes, positive jobs data creates sell offs and crippling rate hikes induce rising stocks.

For almost 2 years, while we and other candid market observers were warning of crippling inflation, our central bankers were describing it as “transitory” with a dishonesty similar to the current recession is not a recession meme.

Huh?

Meanwhile in DC, we see growing signs of a political culture less about public service and more about self-service.

Wealth disparity in the home of the brave has passed the highest levels ever recorded and points directly to the slow and empirical death of the American middle class.”

Chuck… oh, the article is longer as Matthew goes through more steps that just make U.S. policy questionable, so take the time to do to the website provided above, and read the whole article…

Market Prices 8/18/2022: American Style: A$ .6957,  kiwi .6287,  C$ .7758, euro 1.0167, sterling 1.2062, Swiss $1.0489, European Style: rand 16.7130, krone 9.6616, SEK 10.4048,  forint 397.75,  zloty 4.6459,  koruna 24, 1767, RUB 60.13, yen 135.20, sing 1.3816, HKD 7.8448, INR 79.68, China 6.7903, peso 19.98, BRL 5.1662,  BBDXY 1,272.98,  Dollar Index 106.69, Oil $89.31, 10-year 2.88%, Silver $19.84, Platinum $930.00, Palladium $2,176.00, Copper $3.63, and Gold… $1,769.95

That’s it for today, and this week of course… Saturday will be my darling daughter Dawn’s Birthday… I won’t tell you how old she will be, that wouldn’t be nice of me. But it doesn’t matter, because she doesn’t appear to be that age… She’s tiny, and petite and built just like my grandma… She is still a kindergarten teacher in the school district that she grew up in. So Happy Birthday Boo! When Dawn was a little girl, about 2 or 3, I started calling her Boo Boo (Yogi’s bear partner) and she still has an uncle that refers to her as “the Boo”… Cardinals won last night 5-1, so no dramatics like the night before… The Cards go for the sweep today… Journey takes us to the finish line today, with my fave song from them titled: The Girl Can’t Help It… I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow, and that you don’t forget to Be Good To Yourself!

Chuck Butler