Author: admin

August 16, 2022

* dollar continues to push higher vs the currencies and metals

* Price manipulators aren’t scared of the law… 

Good day… And a Tom Terrific Tuesday to you! A beautiful day here in my river town, with a light breeze blowing as good friends, Duane and Mike sat outside . with me, and enjoyed the evening! No baseball for me last night, UGH, but my night wasn’t wasted! I got a call from a former colleague, at Mark Twain Bank, and EverBank. Ann Hopkins called me and we had a great conversation for an hour! We made plans to meet later this week! I’m so excited to see her again! I’m always free to meet my former colleagues whenever they decide they want to see me again! Paul McCartney and Wings greet me this morning with their song: Band On The Run…

Well, the PPT must have made a strong impression on traders in the overnight markets the night before, and the dollar continued to gain yesterday albeit at a slower pace than in the previous nights trading. The BBDXY gained 1 index point yesterday, but the pressure on the currencies remained in tact, and there’s going to have to be something happen to change this direction that the dollar is heading right now. And even then, I question if the dollar will be knocked off it pedestal right now… The pundits all are claiming that China’s reported slowdown (they cut rates) is the cause of the dollar strength right now, but I say that’s hogwash! The dollar was brought out of its doldrums by the PPT, and it will take a few days for the fear of more PPT intervention before the currencies and metals get back on the rally tracks…

Gold lost $23.90 yesterday, thus wiping out most of its gains the last week. Silver lost 60-cents and it also lost most of its gains last week. Gold close the day at $1,781.10, and Silver closed at $20.37… I shake my head in disgust over the way the metals were traded yesterday… What on earth had changed in the world, from last Friday, when it appeared that Gold & Silver were on their ways to higher ground? Oh, China cut their interest rate, but isn’t that a reason to buy the metals? The PPT really did a number on the currencies and metals, and I have nothing more to say about that!

In my opinion, the 10-year Treasury’s yield has been lower than it was a month ago, and yesterday the yield dropped 5 basis points to 2.78%, so what’s the allure of the dollar? I’m just saying… The price of Oil bumped higher to an $88 handle yesterday, but that’s small potatoes, and I doubt that the price of Oil will remain so low, given that OPEC is about to meet and discuss production… It’s my view that our friends at OPEC (NOT!) will see the lack of demand and cut production, which should turn the price of Oil around once again..

In the overnight markets… there was more dollar buying, and the currencies all look sickly once again. The BBDXY gained 5 index points overnight, and the euro has fallen below the 1.02 figure once again. The Aussie dollar, which at the close of last week, looked unbeatable, is staggering after taking a shot from the dollar in the midsection…  I saw a headline on an article that said” The dollar reigns amid fears of a slowdown”…  Yeah, it’s like that and it has me turned inside out, and upside down! 

Gold starts today down $5 and Silver starts the day down 17-cents… All the metals have been subjected to price manipulation, and management of the metals… That’s Gold, Silver, Copper, Platinum, Palladium, all getting managed by the price manipulators… I would have thought that seeing the leader of the biggest casino bank, JP Morgan, get caught red=handed price manipulating Gold, that it might put the kyboshes on price manipulation, at least until this all cools down, but nooooooooo!  

The price of Oil continues to act like a kid on a pogo stick, up and down, up and down, with today it being an up day, with the price trading with a $90 handle.  Bonds are steady Eddie, with the 10-year yielding 2.80% this morning… 

Yesterday, a long time reader, Bob. Sent me a link, that I’ll share with you, to a walk around tour that took place in Boston.. Yes, Boston in the U.S.A. The next time someone in the Gov’t says the U.S. economy is strong, tell them to look at this: Streets of Boston, Mass Ave, Albany Street and Southampton Street Documentary August 03, 2022 – YouTube

I do not like to have to include videos like that to make my point, but when it come to push and shove, I’ll do it because… I want people to see what the real America is like, when you don’t have millions in savings… C’mon watch it, it’s only 6 minutes long!

OK, now that your thoroughly depressed… Speaking of being depressed, I burned my finger on a pan of bacon I was taking out the oven last night… Darn, that hurts! I applied ice to it immediately, but I’m sure it’s going to bother me for days… So… how was that for a diversion away from the depressing video? My old PR guy, would be happy as a lark, right now!

Yesterday in Dave Gonigam’s 5 Minute Forecast, he highlighted some of James Rickards thoughts on Gold, so here’s Rickards in the 5 Minute Forecast: “While the Federal Reserve is scrambling to raise short-term rates — the rates they have control over — longer-term rates are climbing down. The yield on a 10-year Treasury note peaked in mid-June at 3.48%. As we write this morning, it’s 2.77%. That drop is confirmation “that the economy is slowing down and rates are in a downward trend,” says Jim.

Too, the yield on the 2-year T-note remains higher than the 10-year at 3.2%. That’s an unnatural condition known as an “inverted yield curve,” almost always a precursor to recession.

“This combination of declining yields and an inverted yield curve signaling even lower rates in the future is an impetus for higher gold prices,” Jim says. “Gold competes with Treasury notes and stocks for investor allocations. When rates are coming down and stocks are on a downward trend also, that’s a tailwind for the dollar price of gold.”

Chuck again… and to that note… the yield on the 10-year fell more yesterday, down to 2.78% from Monday morning when it was 2.82%…

Well, what have we here? I found this on Reuters last night, and copied it so I could include it in today’s letter… I’ll let you read this without comment up front: “Several major Wall Street banks have begun offering to facilitate trades in Russian debt in recent days, according to bank documents seen by Reuters, giving investors another chance to dispose of assets widely seen in the West as toxic.

Most U.S. and European banks had pulled back from the market in June after the Treasury Department banned U.S. investors from purchasing any Russian security as part of economic sanctions to punish Moscow for invading Ukraine, according to an investor who holds Russian securities and two banking sources.

Following subsequent guidelines from the Treasury in July that allowed U.S. holders to wind down their positions, the largest Wall Street firms have cautiously returned to the market for Russian government and corporate bonds, according to emails, client notes and other communications from six banks as well as interviews with the sources.”

Chuck again, does that sound like a weakening of the sanctions on Russia? It sure does to me…

The U.S. Data Cupboard has the July prints of Industrial Production, and Capacity Utilization for us today… I’m not expecting any great shakes from these two prints… Yesterday the NY Empire regional Manufacturing Index lost 31.3 points last month! This is a pulse of the manufacturing in the NY state area, and it was down 31 points last month! That can’t be good, folks…

To recap… Sunday night into Monday morning’s rout on the currencies and metals didn’t let up on Monday, albeit at a much slower pace. The BBDXY gained 7 points overnight and 1 more during the day yesterday. Gold & Silver got the $%$# kicked out them yesterday, giving back most of their gains from last week. Chuck is at a loss in regards to why the dollar rallied so strongly, unless the PPT is the answer…

Before we head to the Big Finish today, I want to talk about how on this day in 1969, the rock festival known as Woodstock, got under way… this was the greatest rock festival of our time, and as a young musician, at the time, I so wanted to be there. But the state of NY was so far from St. Louis Mo, that it was impossible for me to do so. The movie that was made from the festival, became famous, and got played at the Butler house over and over again. Long ago, at Mark Twain Bank, I ran the operations of the Bond Dept, and when a new hire would start, I would hand them the VHS of the movie Woodstock, and tell them they needed to watch the movie before coming back to work. I’m sure that wouldn’t be allowed in today’s environment, because I’m sure I would hurt someone’s feelings! Nevertheless, today marks the observance of Woodstock, August 16, 1969… I still get chills when I see the Alvin Lee and 10 years after performance, and Sly Stone…

For What It’s Worth… This is an interesting article that I found on Bloomberg.com, that talks about alternative currencies taking the place of the dollar in the Russian Wealth Fund, and it can be found here: Yuan, Rupee, Lira May Replace Dollar, Euro in Russia Wealth Fund – Bloomberg

Or, here’s your snippet: “Russia is considering purchases of China’s yuan, India’s rupee and Turkey’s lira for its wealth fund under a budget mechanism that uses excess income from energy sales.

The central bank disclosed a possible mix of currencies for the first time in a report on the policy outlook for the next three years on Friday. It said others can also be included, without giving more specifics.

“A considerable amount of investments” from the Wellbeing Fund will also go into domestic projects from 2022-2025 since they are necessary to help the economy adapt to changed circumstances as a result of sanctions, according to the report.

With euro and dollar purchases blocked by international sanctions over Russia’s war in Ukraine, Finance Minister Anton Siluanov has previously indicated that Russia may turn to other currencies to top up the Wellbeing Fund and possibly invest in the yuan as it expands trade with Asia.

Bank of Russia Governor Elvira Nabiullina has warned against using volatile currencies, while supporting a return to saving windfall income from oil and gas sales. The central bank had earlier urged the government to order state companies to convert their foreign-exchange holdings into the currencies of the nations that haven’t joined in sanctions against Russia.”

Chuck again… Remember what a boost it was to the Chinese renminbi to be included in the Special Drawing Rights? Well, if the Russian Central Bank goes ahead with these changes it could be a big boost to the currencies above…

Market Prices 8/16/2022: American Style A$ .7005,  kiwi .6327,  C$ .7746, euro 1.0124, sterling 1.2020, Swiss $1.0521, European Style: rand 16.4366, krone 9.7255, SEK 10.4048,  forint 400.30,  zloty 4.6405,  koruna 24.2381, RUB 61.32, yen 134.40, sing 1.3804, HKD 7.8415, INR 79.39, China 6.7884, peso 19.90, BRL 5.0965,  BBDXY 1,272.56,  Dollar Index 106.53, Oil $90.18, 10-year 2.80%, Silver $20.11, Platinum $931.00, Palladium $2,129.00, Copper 3.59, and Gold… $1,776.52

That’s it for today… I got chased from the backyard yesterday, when grandson Everett showed up with a few of his friends to swim… I went inside, and twiddled my thumbs, wondering what could I do? I finally texted my good friend, Duane, and asked him if he was doing anything exciting? No was his answer, so we decided to do nothing together! HA! My beloved Cardinals get back on the field tonight for the first of 3 games with the Rockies… We need to turn the table on the Rockies, who took 2 of 3 from us in Denver last week. The Butler Labor Day BBQ & Pool Party is back on for this year! We had to take two years off because of Covid, but as far as I’m concerned that’s history! And that means I’ll be putting the Big Green Egg to work all weekend leading up to the party! I’m so excited that we’ll be hosting this event once again, and hopefully for years to come without breaks! The Guess Who takes us to the finish line today with their song: Share The Land… “Maybe I’ll be there to take your hand, maybe I’ll be there to share the land that they’ll be giving away, when we don’t’ live together”… yeah that song… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

August 15, 2022

* Currencies & metals close the week on an up note.

* The difference between “no inflation”, and “real inflation”

Good Day… And a Marvelous Monday to you! What a wonderful weekend, weather-wise here in my little river town. These are not the dog days of summer that I recall as a youth! And today, August 15, would have been the day we began 2 a-day football practice…But that was 50 years ago Chuck, why do you still recall that? Those practices were burned into my memory bank many years ago that why! Went to see my darling granddaughter, Delaney Grace, in a musical play yesterday and she did a great job in their version of Bonnie & Clyde… She’s become such a strong voice when singing, and man can she dance! Delaney and her family visited NYC this summer, I’m sure she visions herself on Broadway someday… Doucette greets me this morning with his song: Mama Let Him Play… (some very good guitar work in this song)

Well, the dollar selling ended on Thursday last week, and on Friday, the dollar just wallowed around in the mud all day with all the other pigs… The BBDXY gained 1 index point on Thursday and Friday combined, so you can see that there wasn’t much movement in the currencies. The euro did slip from the 1.0334 it traded at on Thursday morning, but the Aussie & kiwi dollars each gained on both days.

Speaking of kiwi, the Reserve Bank of New Zealand will meet tomorrow (The 17th for them) and I fully expect the RBNZ to hike rates another 50 Basis Points brining their OCR (official cash rate) to 3%… The RBNZ too is behind the inflation 8 ball just like the Fed is, as inflation in New Zealand is running above 8%, which is quite a bit higher than their target rate of 1-2%… Any way, since currency traders don’t’ seem to be interested in making a currency suffer for having interest rates below the inflation rate, I don’t see kiwi getting smacked around, but instead to garner some love from investors for the higher than the average bear interest rate.

Gold was down on Thursday last week, and up on Friday… Go figure! Gold closed the day up $14.00 and breached the $1,800 level that the price manipulators had so brazenly capped it at earlier in the week a few times. Gold finished the day at $1,805. Silver traded in the same manner as Gold did, losing a little ground on Thursday, and then making it up and more on Friday… Silver gained 58-cents on Friday, and closed the week at $20.97…

The price of Oil ended the week trading with a $91 handle… And Bonds got sold late into the week with the 10-year’s yield rising to 2.84% I mentioned this last week, but Germany and the other European countries (not Club Med) have 3 months to figure out how they are going to heat their homes this winter… The European Union made overtures about cutting off Russian Oil, and then Russia said, “fine we’ll sell our oil to India, China, Iran, and any else that will pay for in rubles or Gold…

In The overnight markets last night… The PPT dogs must have been released, because this morning looks completely different than Friday’s close. The dollar is soaring this morning as the overnight markets have gotten the message from the PPT to prop the dollar up, and they have done just that! The BBDXY is up 7 index points this morning, the euro has dropped back below 1.02, after visiting 1.03 on Friday. The Aussie dollar has given back some of its gains, and even the Russian ruble got sold and trades this morning with a 61 handle. 

Part of the rubles’ problems this morning are being caused by the price of Oil falling out of bed. Oil trades this morning with an $87 handle!  Gold & Silver have gotten caught up in the dollar rally, and Gold is down $20 this morning, while Silver has given back 58-cents of its recent gains. 

I was feeling so good on Friday, watching Gold & Silver rise… At the same time I was fretting about the PPT, when were they going to come in, and mess this dollar selling all up? Well, I got my answer this morning… UGH! 

You know, in theory, the PPT makes sense for a country to have a wealth fund to get their currency out of a pickle time to time…  But, I’m no fan of price interference / manipulation. I believe markets should trade freely without interference from a Gov’t or Central Bank. Currencies, stocks, bonds, metals, they should all trade based on their fundamentals… 

Oh, I know, I’m dreaming about the “old days” once again…  The great song by Chicago, come to mind here: “Old days Good times I remember
Fun days Filled with simple pleasure Drive-in movies Comic books and blue jeans Howdy Doody Baseball cards and birthdays Take me back
To the world gone away Memories Seem like yesterday”  

Can you believe the BS that was being spread about last week regarding the CPI print? Let’s listen in the POTUS… ““I just want to say a number: zero. Today, we received news that our economy had 0 percent inflation in the month of July – 0 percent. Here’s what that means: while the price of some things go up – went up last month, the price of other things went down by the same amount. The result?: Zero inflation last month.”

Ahem… Mr. President, you really don’t believe that do you? C’Mon let’s be adults here and say that the annual / year on year, inflation rate is 8.5%.. So there may have been less inflation in July, but there wasn’t “zero inflation”… Now, wouldn’t that have been a better statement, and not left yourself out there for smart Alecs like me to point out how wrong you were?

Everyone should write him a note and point out that there WAS inflation in your household last month!

Oh, and while you’re at it, you also might mention something he seems to have forgotten… The food-at-home index, which represents food purchased in places like grocery stores for consumption at home, jumped by an annual 13.1 percent, which is the fastest pace since March 1979.

Do you remember 1979? Things were awful in the U.S. inflation was still strong, Fed President Volcker had begun his huge rate increases, The Oil embargo was still stinging, and we still had U.S. citizens held as hostage in Iran…

OK, onto something else… Not that I keep up with what’s going on in Argentina, other than the reports that Bill Bonner files when he’s living there, but this news caught my eye, and I think will get yours too… Argentina’s central bank raised its benchmark interest rate by 950 basis points on Thursday as the country struggles to keep a lid on spiraling inflation that rose to a 20-year high of 71%, according to new data.

The central bank raised the benchmark “Leliq” rate for the 28-day term to 69.5% from 60%, a rate the bank set just two weeks ago when it hiked the rate by 800 basis…

Ok, I get it, why talk about Argentina when they are a banana republic/ 3rd world country, and the U.S. is not… Well, let’s not go there because I can show you how the U.S. is just like a banana republic…. But for comparison purposes let’s say they are not… Well, I’m not saying that the U.S. will ever be raising interest rates 900 Basis Points to combat inflation, But what if they were? YIKES…

Joel Bowman who writes for Bonner Private Research included a job description of the new Agents of the IRS…  and one of the requirements listed included: ““Carry a firearm and be willing to use deadly force, if necessary.”  

Chuck again… I want you to focus on that… OK, last week there was a report that the in the Inflation Reduction Act that there was an allocation of $80 Million to the IRS… The IRS says they are going to beef up Agents, and they could be coming for you! Why do IRS Agents need guns, ad the ability to use deadly force? All those mental giants (NOT!) that call for defunding the police, I would have to say that this news will drive the bonkers!

I find taxation something that I do not care for… I would have been right with the colonial folks who revolted on the Tax Stamp Act, and other taxes… these days, the POTUS sends his tax plan to Congress where it gets a rubber stamp applied… We’ve come a long way from revolting over taxes, to allowing them to be shoved down our throats!

Moving on… The U.S. Data Cupboard this week gets back on the real economic data prints train tracks… First up tomorrow is Industrial Production, and Capacity Utilization, on Wednesday we’ll see the color of the July Retail Sales… The Butler Household Index is not indicating that Retail Sales will be strong in July, just an FYI…

To recap… the currencies and metals were mixed going into last weekend. Down on Thursday, up on Friday… Gold has breached the $1,800 figure, finally… And Silver ended the week within spitting distance of $21… Chuck has a problem with the Potus’ claim that there was no inflation last month… And what on earth is an IRS Agent going to do with guns and a license to kill? The overnight markets the PPT got their message abroad, and the dollar has recovered a lot of its losses from last week in the overnight markets… It’s an ugly morning, and start to the week… 

For What It’s Worth… Here’s a piece from Bill Bonner’s letter late last week titled “What If They’re Wrong?” And you can find the article here: What if They’re Wrong? – Bonner Private Research (substack.com)

Or, here’s your snippet: “On climate… on inflation… on the economy… on how best to run YOUR life?

Yesterday, Massachusetts signed onto the Great Transition crusade. The Washington Post:

“Described as a “landmark bill,” the Massachusetts climate legislation notably includes a provision — the first of its kind for the state — that would allow 10 municipalities to legally ban fossil fuel infrastructure in new and major construction projects. With this policy, certain cities and towns in Massachusetts could soon join others across the country that have taken similar steps to change local building codes to block the use of fossil fuels, such as natural gas — meaning many people who want gas stoves or furnaces are probably out of luck in these places.”

What if they’re wrong? What if trying to change the earth’s climate is a wild goose chase?

The Pentagon was in the news yesterday too. In what ‘CovertAction’ calls the “Most Bloated Military Budget in History,” Democrats and Republicans joined hands to deliver defense contractors an $850 billion payday – a $45 billion increase.

Supporters say the US needs to spend such huge amounts of money to counter the many threats they’ve managed to stir up – Russia, China… terrorists… gender inequality!

A Lifetime Setback

But what if they’re wrong? What if all that spending actually weakens the US economy… frightens foreigners… and causes potential enemies to ‘gun up’ themselves?

Terrorists… Chinese… Russians – aren’t we pushing them to find new forms of money… new weapons… new friends?

What does it matter if you’re wrong?

Marry the ‘wrong’ person, for example, and you might dread every breakfast.
Making the wrong career choice, too, could be a lifetime setback.

In matters of public policy, the consequences of wrongness are directly proportional to the ambition of the undertaking. Generally, the grander the project, the greater the damage. Many public policies are just reflections of a consensus – drive on the right… don’t throw trash out the window – and do little damage.”

Chuck again… Yeah… the Gov’t was so wrong with their shut down of the economy… there are always consequences of actions…. I don’t think Gov’ts ever consider the consequences of their actions… I’m just saying…

Market Prices 8/15/2022: American Style: A$ .7034,  kiwi .6370,  C$ .7750, euro 1.0197, sterling 1.2097, Swiss $1.0575, European Style: rand 16.4034, krone 9.6801, SEK 10.2944,  forint 391.28,  zloty 4.5936,  koruna 23.9658, RUB 61.65, yen 133.32, sing 1.3767, HKD 7.8371, INR 79.53, China 6.7762, peso 19.97, BRL 5.0953,  BBDXY 1,267.40, Dollar Index 106.21, Oil $87.55, 10-year 2.82%, Silver $20.26, Platinum $937.00, Palladium $2,172.00, Copper $3.59, and Gold… $1,774.35

That’s it for today… Well, my beloved Cardinals won 2 of 3 and extended their lead over the Brewers this past weekend… They should have swept them! One bad pitch cost them the game on Saturday night… the nights here have been very enjoyable to sit out and watch the baseball games… Albert Pujols reached back to 2010, yesterday and hit two home runs in the game! A race to the finish line now for the Cardinals and Brewers to see who wins the division. Had a good time Saturday at the St. Paul Soccer Tournament, hanging out at the beer booth with friends, Duane, and Rick, and with Allison Road! Ok… Leon Bridges takes us to the finish line today with his song: I’m Coming Home… Don’t know that one? YOUTUBE it I think you’ll like it, I know I do! I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

 

August 11, 2022

* Currencies turn the table on the dollar… 

* The Inflation Reduction Act will not live up to its title… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Another beautiful day, weather wise, here in my little river town yesterday, I spend a good part of the day outside! Little Evie was here last night, and her and I went for a short stroll down the street… I was telling her how a man is supposed to walk on the outside of the street so that the horses can’t nip at the ladies walking on the inside. She laughed at me and told me I was silly… I laughed at me too, and told her she was right! My beloved Cardinals got back to winning last night beating the Rockies. It was good to see them come out of the gate in the 1st inning and score 5 runs, just to let the Rockies know that there would be no more spankings! Robert Plant greets me this morning with his song: In The Mood…

And that song puts me in the mood to talk about how 2 of the 3 JPMorgan metals traders that were being tried for price manipulation, were found guilty yesterday, and sentencing won’t take place for a year, but the ruling calls for years in prison, but you and I both know that won’t happen… The finding of these two guilty adds to the previous problems at JP Morgan… So, I have to ask this question… “How does Jamie Dimon still have a job?”

OK, I got that off my chest… The dollar got sold further as the day went along yesterday… The BBDXY lost 10 index points, and ended the day at 1,259. The euro climbed to within spittin’ distance of 1.03, and the pound sterling, who had trouble gaining after the BOE announced a rate hike last week, finally got up off the mat, and moved higher. Gold lost $1.50 on the day, while Silver gained 9-cents. Gold finished the day at $1,793.90, and Silver at $20.69… It was an “up day” for the price of Oil yesterday, and black Gold, Texas Tea, gained $3 to end the day with a $91 handle.

I haven’t seen a day where the dollar gets sold like it did yesterday, in a moth of Sundays… So, here’s the skinny on what caused the dollar to get sold, stocks to rally, and Gold barely move at all… The stupid CPI printed yesterday, and the markets and spin doctors did exactly what I said they would do… They would trumpet the print of inflation at 8.5%, down from June’s 9.1%, and think that the Fed’s previous rate hikes have brought inflation down, and that they won’t need to hike rates so aggressively any longer…

And that’s exactly what happened yesterday… But remember what I told you yesterday, about what happened in the 70’s… that in the midst of rising inflation, we had a month or two of slowing inflation, and then all hell broke loose with inflation once again… I’m thinking that this is very eerily familiar with that time, eh?

But you know what? The only real reduction in prices last month came from the Oil prices, which were down almost 8% for the month… But… before you go out an party, Food was up 1.1% — eggs alone were up 4.3% — and shelter’s up 0.5%. Also up for the month: medical care, motor vehicle insurance, household furnishings and operations, new vehicles and recreation.

It’s really a misleading report folks… I wouldn’t be jumping back into the stock market with both feet, based on a hedonically adjusted inflation report from the Gov’t… George Carlin the famous comedian said it best when he said, “I have a rule and it’s I never believe anything the Gov’t tells me”… Pretty good rule if you ask me, given their track record in just the last 3 years!

In the overnight markets last night… The dollar got sold further down the river, and the BBDXY lost 2 more index points, the euro did move past 1.03, and the Aussie dollar (A$) is trading above 71-cents this morning. The Currencies look healthier than they have been for some time this morning, after the dollar selling yesterday and in the overnight markets.  

Shoot Rudy, even the Chinese renminbi gained overnight, and the yen got off the mat before the count reached 10!  And no sign of the PPT? I’m sure they’ll show up sometime before the week is out… 

Gold & Silver have not seen any love from the dollar selling though, as Gold starts the day down $3 and Silver starts the day down 15-cents… but the day is young, and with all this dollar selling the metals should turn around at some time.  I say “should” but in reality, there’s no given in the markets any longer based on fundamentals, and historic trading patterns. 

The price of Oil is up a buck this morning and is trading with a $92 handle, while bonds got bought yesterday… Hmmm… if everyone in the markets is now convinced that the Fed is going to pivot in September when they next meet, then why would you buy a bond at today’s yield?  I’m just asking the question, because it seems to be strange to me… 

Publishing and author guru, Bill Bonner says that the U.S. just looked at strike three come right down the middle… Let’s go to his daily letter to get what he’s talking about..  “And so… the strike-out is complete…
Strike one: real wages are going down…
Strike two: real GDP is going down (US in recession)…
Strike three: Real productivity is going down….
And you’re out! 

How do you like that? Mighty Casey, the USA, has struck out.” – Bill Bonner in his Bonner Private Research letter… 

Well, no one that I read, believes the Inflation Reduction Act, is going to do anything to reduce inflation, but what the heck, the leaders of this country tried, right? You can’t blame them if they have a box of rocks for brains We elected them! It’s our fault that the country is heading down the path of destruction… OK, I’m getting carried away here, it’s not our fault, unless you want to point the blame finger at the fact that we didn’t ride our elected leaders hard and put them away wet, and let them know that they wouldn’t be getting reelected if they kept allowing money to be spent that we didn’t have!

I get a new Agora newsletter that just showed up in my email box, titled: Agora Uncensored… Here’s the opening thought in the letter yesterday: “Only in America can our leaders call an inflationary bill that spends $430 billion of taxpayer money an “Inflation Reduction Act.”

Only in America can we have two straight quarters of negative economic growth, and leaders deny we’re in a technical recession. (We own a Dictionary, Mr. Powell.)

And… only in America can the stock market have a rip-your-face off rally because “inflation” was only 8.5% in July.

But here we are.

Gasoline prices fell more than expected last month (they’re still VERY expensive. The primary reason they fell is that demand is LOWER than it was during the Summer of COVID).

Home prices are unaffordable, but good news.

They were less “less affordable” than expected in July.

And good luck at the grocery store because my Cheerios are now the size of a tissue box.”

Chuck again… Yes I too feel the same way, everything is so confusing and backwards, and caddy Wampus! It’s so difficult to look at any news, or data print and know for sure which way the markets will trade based on the news or data.

I’m still on stock market collapse watch… I just wanted to let all those boys crying wolf know, that the wolf hasn’t shown up yet…

A handful of Fed Heads will speak today, following the lead by a couple yesterday who reiterated that more rate hikes will be needed… At least they are saying the right things, let’s see if the Fed Heads today do the same… 

The U.S. Data Cupboard yesterday had the stupid CPI that we talked about above. And today’s Data Cupboard will have July’s print of PPI (wholesale inflation), which should follow the stupid CPI’s lead and not be as strong as it was in June (+1.1%), but still be up and thus keeping the pressure on consumer prices…  We’ll also see the usual Tub Thumpin’ Thursday fare today when last week’s Initial Jobless Claims print… Recall that two weeks ago the claims surged to 260,000 and I truly believe that this surge will contunue… 

To recap… the dollar is getting sold down the river, and the PPT is nowhere to be seen… The euro has climbed above the 1.03 figure, and the Aussie dollar is above 71-cents this morning! Gold & Silver haven’t been allowed to participate in the dollar selling, but Chuck thinks that they will at some time, but then only the Shadow Knows…   The Inflation Reduction Act is not going to reduce inflation, or do anything to help the middle class…  What else did you expect from our elected leaders who have a box of rocks for brains? 

For What It’s Worth… Ok, I saw this article on Reuters and said to myself, “this is the kind of article that the FWIW section was made of”… This is an article about NYC charging a fee for causing congestion… Really! and the article can be found here: New York City drivers could face up to $23 a day congestion charge | Reuters

Or, here’s your snippet: “New York City could introduce a traffic congestion charge of up to $23 a day late next year, which a study released on Wednesday projected would reduce the number of cars entering Manhattan by 15% to 20%.

The city wants to charge a daily variable toll for vehicles entering or remaining within the central business district, defined as between 60th Street in midtown Manhattan and Battery Park on Manhattan’s southern tip.

New York, which has the most congested U.S. traffic, would become the first major U.S. city to follow London, which began a similar charge in 2003.

New York lawmakers approved the plan in 2019, and it was originally projected to start in 2021. But the federal government under President Donald Trump did not take any action.

The Federal Highway Administration (FHWA), which must approve the move, said on Wednesday it approved the required environmental assessment. The agency will review public comments submitted by Sept. 9.

It did not give a timeline for its decision, but the Metropolitan Transportation Authority (MTA) said the fee could come into effect up to 10 months after approval is granted. That period would be for system design and implementation.

“Congestion pricing is good for the environment, good for public transit and good for New York and the region,” MTA CEO Janno Lieber said.

Passenger vehicle drivers could pay $9 to $23 to enter at peak times, while overnight tolls could be as little as $5. Drivers could apply existing bridge and tunnel tolls to congestion charges.”

Chuck again… What kind of charge/ fee will they think of next?  I find this kind of nickel and diming people to be stupid thinking… 

Market Prices 8/11/2022: American Style: A$ .7101,  kiwi .6421,  C$ .7829, euro 1.0334, sterling 1.2205, Swiss $1.0625, European Style: rand 16.1618, krone 9.4992, SEK 10.0261,  forint 381.91, zloty 4.5333,  koruna 23.5850, RUB 60.98, yen 132.54, sing 1.3695, HKD 7.8460, INR 79.63, China 6.7394, peso 20.02, BRL 5.0924,  BBDXY 1,259.15, Dollar Index 104.93, Oil $92.88, 10-year 2.77%, Silver $20.54, Platinum $960.00, Palladium $2,262.00, Copper $3.64, and Gold… $1,791.42

That’s it for today…  After all the very hot days we’ve had here in the Midwest, this new run of not-so-hot days is great! I can go outside and not wilt! Cards and Rockies in a day game today… I love day baseball! I also like watching the Little League World Series games… The teams consist of 12-year old kids that are a true reflection of life… One kid might be 5-6 and weigh 200 lbs, and another kid might be 5 feet tall and weigh 100 lbs dripping wet… Well, not that I’m bragging about this, but I have now read all of the Stone Barrington novels, with only the 2 newest ones to be read, when they become paperbacks… that 62 books folks…  Before this, I read all of the Harry Bosch books, the Atlee Pine books, and others… Maybe I should be finding a new hobby?  The great King of Soul, James Brown takes us to the finish line today with his song: Papa’s Got a Brand New Bag…  I hope you have a Tub Thumpin’ Thursday today, and will have a wonderful weekend ahead, and please remember to Be Good To Yourself!

Chuck Butler

 

August 10, 2022

* Currencies turnaround their overnight gains on Tuesday

* Gold gets capped at $1,800… 

Good day.. And a Wonderful Wednesday to you! OUCH! Now that’s going to leave a mark! That’s what the Cardinals pitchers had to think last night as they got spanked by the Rockies. The game was so ugly that I turned the TV to the little league World Series… The sun finally came out yesterday, and it was very nice out, so much so, that I even took a short stroll down the street! I often don’t feel up to going out for a stroll, and when it’s in the 90’s I just forget about it! The great sultry voice of Dionne Warwick greets me this morning with her song: Walk On By… Now that’s a voice I would wake up to any old day!

As I hit send yesterday morning, I noticed that Gold was pulling back from its early morning gain of $12… The price manipulators must have gotten well fast and returned to work! Gold ended the day up $4.70, yo close at $1,79470. Silver gave back some of its 73-cent gain on Monday, to the tune of 14-cents, and close the day at $20.61… The BBDXY, which reflected that the dollar had been sold in the overnight markets recovered a bit and ended the day up 4 index points… I keep saying this over and over again, sounding like a broken record, but to me, I believe that currency traders want to sell dollars, for they know the U.S. in a mess, but with the PPT having their pockets bulging with Exchange Stabilization Funds propping up the dollar, I believe traders think it’s like “fighting city hall”…

The euro remained above 1.02 on the day Tuesday, but could not muster enough interest in traders to bid it higher on the day. The Aussie dollar (A$) traded ever-so-briefly at 70-cents yesterday, before falling back… Sort of like the command that the red coats used to use “fire and fall back”… A longtime reader, sent me a note yesterday, asking why the Mexican peso seemed to be stuck in the mud… I fired off an article from my friends at FXStreeet, for his viewing pleasure, but to give you the Reader’s Digest version, Mexican interest rates still aren’t strong enough to give investors a “risk premium”, but with the price of Oil still strong, these two things are fighting each other, and that leaves the peso stuck in the mud…

I wish the dollar’s strength was more easily explained! Sure the Fed Heads are raising interest rates, but, they are still so far behind the inflation 8 ball that they can’t be seen! I’ve explained this before, but for those of you who missed class that day, with inflation at 16% (per shadowstats.com) and our official Fed Funds Rate at 2.5%… That’s a real negative rate of -13.5%… Oh, sir, may I have another? NOT

The price of oil slipped by a buck yesterday, and ended the day trading with a $90 handle, and Bonds remained steady, with no movement…

In The overnight markets last night… the dollar got sold again in the overnight markets and were right back to the same level this morning as the BBDXY was yesterday morning, 1,269… So the BBDXY is down 4 index points to start the day today.  The euro is holding above 1.02, and the rest of the currencies fall into line behind the Big Dog euro… All of the currencies except the Czech koruna, which is the outlier this morning, having rallied to trade below the 24 handle for the first time in a month of Sundays. 

Gold has given back the $4 it gained yesterday in the early trading today, and it starts the day at $1,790. Silver has lost 18-cents to start the day, and trades this morning at $20.43…   The price of Oil has dropped again to an $88 handle this morning, and bonds are still stuck in the mud. 

I mentioned above that the price manipulators apparently got back to work yesterday… Gold was capped at $1,800 yesterday, and it was so brazenly done that even a blind man could see it!  Ed Steer mentioned in his daily letter that can be found here: Ed Steer’s Gold and Silver Digest (edsteergoldsilver.com)… this how Ed described it: “Once again there was obvious interference in precious metals prices on Tuesday — and it was most egregious in gold, where its price was capped and smacked lower the moment it broke through $1,800 spot. Silver, platinum and palladium had their comeuppance in COMEX trading in New York as well.

Gold, silver and platinum are now above their respective 50-day moving averages by a bit — and with the low volumes we’ve seen in the first two precious metals over the last few days, there’s not much sign of panic short covering by the Managed Money traders as of yet.”

Chuck again… one of these days, and I hope it’s soon, but know in my heart of hearts it won’t be, that these dastardly price manipulators are all lined up along a wall and given their last cigarette…   The good folks at GATA, Ed Steer, me, and others have laid out the ponzi scheme of price manipulators for all to see, but to date, most people turn a blind eye toward our attempts to bring this to light… 

Speaking of things that seem to be stuck in the mud… Let’s visit the Hong Kong Dollar or honker if you will… I read a piece over the weekend that talked about how much the Hong Kong Central Bank was having to spend to keep the peg of the currency to the dollar… Then I found this on Blooomberg.com, for your edification… “The Hong Kong Monetary Authority, the de-facto central bank, has a mandate to keep the currency trading at HK$7.75 to HK$7.85 per US dollar. The current band was set in 2005 and has never been broken. When it gets too close to one end or the other, the HKMA intervenes, either by buying or selling the city’s dollars. When HKMA uses its foreign exchange reserves to buy Hong Kong dollars from the commercial banks, the aggregate balance of Hong Kong dollars in the banking system — interbank liquidity — goes down accordingly. From May 11 through late July, the HKMA bought a total of HK$172 billion ($22 billion), shrinking the balance by more than half. That tighter liquidity pushes up local borrowing costs.”

Chuck again… So, you see it’s the peg that keeps it so range bound, and tight in the range. Remember when the U.K. turned over the country of Hong Kong to the Chinese? I wrote then that it was my belief that the Chinese would allow the honker to begin to float, so they could get their feet wet, so to speak, and learn about having a floating currency. They would allow this to go on for a couple of years, before then allowing their renminbi to float, and folding the honker into the renminbi…

I had no inside information that had me believing that, it’s just how I would do it if I was just given a country that had a different currency than mine, and that it was pegged to the dollar… But, as you all know, none of that happened, and the peg to the dollar still exists…

I was also technically wrong when I said at the Orlando Money Show in 2003, that by the end of the decade the renminbi would be the reserve currency… I say technically because while it wasn’t “THE” Reserve currency it did become “A” reserve currency as it was included in the Special Drawing Rights (SDRs)

But you won’t see me beating myself up over those two wrong statements of how I saw things working out… Time change, things change, I change… I roll with the punches, adapt, improvise, and change my stance…

Speaking of China… Reports yesterday have China’s inflation rising to a two year high, with pork really surging… Looks like inflation is taking hold over the world… And especially in countries that have shut down their economies during the plandemic… But also countries that have oodles of debt… I’m just saying…

Yesterday, I pointed out how behind the times the Bank of Japan was, and that was why the Japanese yen was hanging by it fingernails to the edge of the cliff… Well, I read yesterday that the Bank of Japan is planning on announcing a continuance of their current monetary policy, (read negative rates) … I can see traders stomping on the yen’s fingernails once that news gets wide distribution…

The U.S. Data Cupboard has the stupid CPI for us today… July Consumer Price Inflation (CPI) will print this morning, and the so-called experts have inflation falling in July from June… And you can bet your bottom dollar that the spin doctors will be saying that the Fed’s rate hikes are taking hold, and that inflation is now under control… Well, I’m telling you that when you hear that junk, just turn it off, because it couldn’t be further from the truth!

Here’s where knowing history might help us… In the 70’s, when we had a run of high inflation, there was a time when it appeared that inflation had been beaten back, only to have it rise up again a month or two later… I fear that this is what we are going to experience now… People will get lazy, and assume the rate hikes so far are good enough…  Got Gold? 

To recap… Tuesday was a turnaround Tuesday, and not for the good for the currencies, as the dollar selling in the overnight markets Monday night, was turned around to a gain for the dollar by the end of the day Tuesday. Gold’s rise was capped at $1,800, in a brazenly disgusting display of price manipulation.  And the BOJ thinks that they can continue their negative yeilds monetary policy without harm. The yen fell to 136 on the news, just like Chuck thought it would… 

Before we head to the Big Finish this morning, I wanted to point something out that just doesn’t make sense to me, and I wonder what the ROI is on missiles…  Reuters reported this morning that: “Russian shelling killed 11 people in Ukraine’s central Dnipropetrovsk region overnight.”  The Russian shelling netted only 11 kills, that just seems like they are wasting ammunition and money… But then I’m not a fan of any war, so there’s that… 

For What It’s Worth…  Well this is the second time this week that I’ve chosen a piece of the 5 Minute Forecast for the FWIW…  I saw the stuff on this piece a week ago, and thought, that this is the most disgusting display of being an elite that I can think of… This is Dave Gonigam’s thought on the Fed San Francisco President, Mary Daly, and her comments on inflaton… Take it away Dave!

Maybe you saw the story last week: San Francisco Fed President Mary Daly put her foot in it during an interview with Reuters — waving off inflation as no big deal. “I don’t feel the pain of inflation anymore,” she said.
“I’m not immune to gas prices rising, food prices rising; I sometimes balk at the price of things, but I don’t find myself in a space where I have to make trade-offs, because I have enough. Many, many Americans have enough.”

And the trade-offs people do have to make are no biggie, she added: “You may not be able to go to the vacation you want. You may end up instead camping or doing a staycation.”

Easy for her to say. In her current gig, Daly pulls down $427,000 a year. Granted, San Francisco is expensive, but still…

➢ Which reminds us: Earlier this summer, the well-heeled Garrison Keillor of A Prairie Home Companion fame similarly blew off inflation: “Don’t be disheartened. Deal with the problem. If you’re troubled by inflation, cut back on expenses. Don’t buy sparkling water. Fill up the glass with tap water and if you want bubbles, stick a straw in the water and blow.” For real…

Anyway, it was the most tone-deaf moment by a Fed leader since New York Fed chief Bill Dudley’s edible-iPad moment more than a decade ago.”

Chuck again…  in case you forgot what Bill Dudley’s edible-iPad moment was here’s a quick explanation: On the basis of a wonky concept known as “hedonic adjustments,” Dudley essentially told the crowd that consumer price inflation was a figment of their imaginations. He cited the iPad — which had come on the market barely a year earlier.

“Today,” he explained, “you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.”

Chuck again, that’s for real folks… he actually said those things back in 2011… Dudley stepped down from the Fed in 2018, never to be heard from again… 

Market Prices 8/10/2022: American Style: A$ .6970,  kiwi .6309,  C$ .7765, euro 1.0247, sterling 1.2101, Swiss $105.45, European Style: rand 16.4649, krone 9.6814, SEK 10.1279,  forint 387.90,  zloty 4.5865,  koruna 23.8289, RUB 60.86, yen 136.00, sing 1.3771, HKD 7.8481, INR 79.51, China 6.7554, peso 20.20, BRL 5.1156,  BBDXY 1,269.08,  Dollar Index 106.27, Oil $88.84, 10-year 2.79%, Silver $20.43, Platinum $934.00, Palladium $2,194.00, Copper $3.59, and Gold… $1,790.41

That’s it for today.. A Short letter yesterday, a long one today, sort of like the price of Oil, up one day down the next!  16-5 was the score of the baseball game last night as the Rockies routed the Cardinals… Death by a 1,000 cuts was what watching this game was like… One of the good things about baseball, is you can forget about yesterday’s game, because there’s another game to play today! Not much else going on so… Steely Dan takes us to the finish line today with their great song: Aja…  Aja, when all my dime dancing is through I run to you… Yeah, that song…  I hope you have a Wonderful Wednesday today, and please Be Good To Yourself! 

Chuck Butler

 

 

 

 

August 9, 2022

* The dollar gets old on Monday and Monday night

* Currencies inch higher in the overnight markets

Good Day… And a Tom Terrific Tuesday to you! Yesterday was supposed to be our last day of reaching 90 degrees for the next 10 days, so it will be interesting to see what happens today. I for one, know that the yesterday held onto the 90’s, as I tried to read outside, but was driven back in by the heat of the sun… UGH! I apologize for yesterday’s letter tardiness… About a year or so ago, I wrote about how I was retired now, and I wasn’t going to set an alarm any longer, and I would write when I woke up, whenever that may be in the morning… Well, I tried that out yesterday, and well, it felt pretty good to wake up when my body was ready to wake up, but… I kept sounding like the White Rabbit… I’m late, I’m late, I’m late to a very important date. The Eagles greet me this morning with their song: Wasted Time…

I know that yesterday’s tirade about the spending bill, taxing bill, claptrap bill, whatever you want to call it, was wasted time… Because it’s water under the bridge now… I think the markets were not happy with the makeup of the bill, because Silver had one hell-of-a-day yesterday, gaining 74-cents on the day! Gold’s gain wasn’t too shabby either, with Gold gaining $12.60 on the day! The BBDXY lost 4 Index Points on the day, giving the currencies some breathing room from the oppressive pressure the dollar has had on them for some time now. But when I looked at the currencies last night, they looked as though they were still trading in the day before’ s clothes… So, I don’t know where the BBDXY lost its 4 Index Points, but it wasn’t to the euro, Aussie, kiwi, and others…

Gold, by the way, closed the day at $1,790.00, and Silver at $20.74… And would have to think that the price manipulators were all out sick yesterday! There’s going to be hell to be paid when they return I’m afraid…

The good news there is that Ed Steer reports this morning that it was short covering that pushed Silver higher yesterday.. I like the sound of that “short covering”… Let’s hope that’s a trend that continues! 

The Price of Oil rebounded yesterday, after falling to an $88 handle, it jumped back to a $90 handle to end the day… There are so many traders out there that want to punish Oil for lack of demand… I have to say this anecdotal view, and that is the last two times I’ve pulled into a gas station, all the pumps were taken and I had to wait… It sure doesn’t look like a lack of demand from where I sat in my car, waiting my turn!

In the overnight markets last night… the dollar was sold further down the river, with the BBDXY losing another 4 points to trade this morning at 1,269… The euro has climbed back above the 1.02 figure and the rest of the currencies are inching higher VS the dollar. Gold is up a buck and change to start the day, while Silver has given back 11-cents of its gains yesterday. 

The price of Oil inched higher to trade this morning with a $91 handle, and bonds were pretty much stuck in the mud yesterday with the 10-year’s yield at 2,79% this morning.  I don’t know if you’ve been watching it or not, but Copper sure has rebounded from a sell off the past couple of months… Copper is up 10-cents since before I left on vacation… 

I’m so fed up with our elected leaders… I wish I could put them all on a slow boat to China! They, as a group, continue to throw trash on the middle class, and leave their wealthy buddies without fear of taxation… I’m middle class, I was born middle class, and I’ll die middle class, that is if there is still such a thing when it comes my time! My dad used to tell me this bit: “Chuck, every time a guy like me (middle class) starts to get ahead in life, the hand of Gold smacks me back down to earth”… These days we could say that the hands of elected leaders keep smacking us down…

And here we go again… Our elected leaders haven’t pushed back on this one iota… What is he talking about now? Ahhh grasshopper, pat attention here for this is Russ and Pam Martens reporting on their web site: www.wallstreetonparade.com: “On July 28 last year the Fed announced that it was creating a $500 billion permanent bailout facility for the trading houses (“primary dealers”) on Wall Street to support “smooth market functioning.” The Fed gave the facility the bland name of “Standing Repo Facility” or SRF. What the Fed was effectively doing was creating a new “discount window” where both Fed member banks and Wall Street trading houses could obtain billions of dollars in cumulative loans if a liquidity crisis arose.
The resolution issued by the Fed in conjunction with the announcement indicates that the $500 billion ceiling can be “temporarily increased at the discretion of the Chair.” That means that Fed Chair Jerome Powell, who just recently started a new four-year term, has the power, without any advice and consent from Congress, to throw unlimited amounts of money at the trading houses on Wall Street. …

The Federal Reserve is doing something it has never been allowed to do in its 109 years of operation. And the Fed is doing it without any pushback from Congress.”

Chuck again… yes, congress not doing their jobs of protecting us from financial failure… I shake my head in disgust!

And then on top of that, Reuters reported this over the weekend: “The trillions of dollars in overnight cash tucked away daily at the Federal Reserve could turn into a major headache for banks that could squeeze their balance sheets and impair their ability to lend.

The Fed’s reverse repurchase facility (RRP) has attracted a wide array of market participants, helping mop up excess liquidity in the financial system. Led by money market funds, volume at the reverse repo window has topped $2 trillion for 39 straight days.

The Fed is paying a record reverse repo rate of 2.3% following its 75-basis-point interest rate hike last week. Barclays expects daily reverse repo levels to hit between $2.8 trillion and $3.0 trillion by the end of the year.

Investors are effectively taking deposits away from banks and putting them into government money market funds, which invest mainly in Treasuries and repos. These money funds, in turn, funnel the cash to the Fed’s overnight window.”

Oh, what a tangled web we weave, eh?

Early in July, the Japanese yen was rallying and had caused some of the short sales in yen to be closed out, thus pushing the yen even higher VS the dollar. But then once that event was taken care of, traders got back to selling yen, and it has lost of the ground it had gained and then some, as the yen moves ever so close to the 135 handle. The yen is the worst performing currency this year, and well it should be, because they have not joined the rest of the industrialized nations and hiked their interest rates…

Last week, the Trade Deficit for July printed, and it has narrowed from the June number of $85 Billion, narrowing to $79.6 Billion… Here’s MarketWatch.com with their take on this deficit: “The U.S. posted a record trade gap last year and is on track to do so again in 2022 despite a recent downtrend.

A higher deficit subtracts from gross domestic product, the official scorecard of the U.S. economy. The large trade gap was the chief reason GDP contracted in the first quarter for the first time since the start of the pandemic.

While a lower deficit gave a boost to second-quarter GDP and might do so again in the third quarter, the benefit is unlikely to last. The global economy has weakened and that will probably curb U.S. exports.”

Yes, U.S. consumers are strapped to find more quarters in the sofa and recliner to pay for their cell phone bills, much less anything else that might come from another country (which for the most part is everything including the kitchen sink!) Remember late last year when I told you that it was being reported that a large percentage of U.S. consumers didn’t have $400 saved to pay for an unexpected Bill? Well, let’s see now we bring this up to date, and those same households are in worse shape… Inflation, no interest on their deposits, stock market sinking, Companies starting to lay off workers… it all adds up to one big headache for U.S. consumers…

The U.S. Data Cupboard just has the stupid 2nd QTR Productivity report for us today… The number will be negative, and will show that workers are not working longer hours…

To recap… the BBDXY lost 4 index points yesterday, but the currencies all look like they are trading in Friday’s clothes… The price of Oil rebounded back to $90 handle on the day, and bonds got bought… Gold gained $12 on the day yesterday, and Silver gained 73-cents! It was a good day for Gold & Silver, and Chuck thinks the price manipulators must have all been out sick! I can imagine that there will be hell to pay when they return! Chuck talks about some trickery the Fed has pulled over our eyes, and how congress has failed once again to protect us from financial collapse…

Before we head to the Big Finish today, I wanted to say a word in remembrance of Olivia Newton John, who died yesterday at the too young age of 73… She amazed young boys in Grease, and then a recording career… RIP Olivia Newton John

For What It’s Worth… A year or so ago, I went ballistic over news that a college had forgiven the student loans… Now it’s even worse, the Gov’t is considering paying down Student Debt… Obviously, with money it doesn’t have, and will turn to taxpayers to pay these debts… I can’t even begin to explain how awful this will all be, and to that end, this 5 minute video from Prager U, came across in my email box, and how timely it was! Take 5 minutes to watch this video, please; : https://www.prageru.com/video/the-student-loan-forgiveness-scam?utm_source=Iterable&utm_medium=email&utm_campaign=campaign_4802504

That’s it for today for The FWIW… I hope you enjoy the video…

Market Prices 8/9/2022: American Style: A$ .6980,  kiwi .6289, C$ .7777, euro 1.0229, sterling 1.2106, Swiss $1.0486, European Style: rand 16.6354, krone 9.7074, SEK 10.1512,  forint 388.76,  zloty 4.5990,  koruna 24.3427, RUB 60.66, yen 134.92, sing 1.3782, HKD 7.8488, INR 79.65, China 20.7527, peso 20.22, BRL 5.1124, BBDXY 1,259.96, Dollar Index 106.17, OIl $91.89, 10-year 2.79%, Silver $20.63, Platinum $941.00, Palladium $2,063.00, Copper $3.58, and Gold… $1,791.55

That’s it for today… My beloved Cardinals get back on the field tonight at Coors, in Denver Co. With it being Mountain Time, the game will be on much later than usual, and that means I will not be watching the complete game. UGH! I sent my longtime friend, Mike, a birthday text yesterday, and he responded, “Thanks Charlie, the years just keep getting tougher”… Mike has been experiencing some getting older pains, that are tough on him as he is a carpenter… Getting Old isn’t for sissies… I had an old man tell me that a couple of years ago… Next up is my daughter Dawn’s birthday… Now she is the poster child for not looking her age! The letter is shorter today because of not having a snippet to the FWIS article… And it’s on time today! The Allman Brothers take us to the finish line today with their song: Statesboro Blues… “if you can’t make it your sister Louise said she can go”… Yeah that song! I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself!

Chuck Butler

 

August 8, 2022 

* Currencies & metals get sold on Friday

* Chuck points out the problem with the jobs report… 

Good Day… And a Marvelous Monday to you! WOW, What a weekend of great baseball was played this past weekend, as the mighty Yankees came to town, and got swept by my beloved Cardinals! The only bad part of the weekend was the awful home plate umpiring in yesterday’s game… Electric balls and strike callers were in need badly!  The Temps were very hot here, but that’s going away for a week or so… The Stone Temple Pilots greet me this morning with their song: Interstate Love Song

OK, what the heck happened to Gold on Friday? I was doing my crosswords puzzles and decided to look in on Gold and saw that it was up $23!  Then just for grins I decided to check it at the end of the day, only to be greatly disappointed, in that Gold had lost $14.80 on the day to close the week at $1,776.41. Silver traded in the same manner being up early and then losing it as the day went on. Silver lost 24-cents to close the week at $19.91

So, here’s the skinny, right or wrong, mostly wrong, but here goes anyway…  The Jobs Jamboree showed that 528,000 jobs were created in July, and that pretty much put the kyboshes on the thoughts in the markets, that the Fed was nearing an end to their rate hike campaign, for inflation was going to be still soaring if there were 528,000 jobs created in July, right? 

Let’s see… 340,000 of those jobs were added by the BLS after the surveys came in…  So, using my new math skills, 528,000 minus 340,000 equals 188,000 real jobs were created… Now 188,000 doesn’t sound like anything that would get the Fed to stop hiking rates, does it? NO…  I can’t begin to explain my frustration with the BLS (Bureau of Labor Statistics) … They see a weak number of 188,000 come in through the surveys of businesses across the country, and they decide to goose it higher, but in this case, they not only goosed it higher, they also leap frogged it higher! 

The currencies didn’t fare any better after the BLS trumped up jobs report, and the BBDXY gained 6 Index points on the day, and that was after it had gained 4 Index Points on Thursday.  The euro dropped back below 1.02, and all the currencies followed suit. Well, technically, not all of the currencies lost ground… The Russian ruble didn’t crack, and the British pound sterling, got a boost when the Bank of England hike rates 50 Basis Points… The boost was more like a goose… but the BOE decided that they would finally take inflation seriously, and the pound sterling trades liked it… 

The price Of Oil continues to get slapped around like a, oh never mind, the last time I used the phrase I was going to use, I received tons of emails from red heads…  The demand question is still hanging over the price of Oil like the Sword of Damocles…  Oil trades this morning with a $88 handle… 

Bonds saw some selling on Friday, and the 10-year Treasury, the bellwether bond, saw its yield rise… 

In the overnight markets last night… The dollar got sold, and looks like it was simply a case of “the dollar was overbought on Friday, time to correct that”, and the BDDXY has given back 4 Index Points, and Gold is up $7 in the early trading, while Silver out performs, as usual, gaining 41-cents! 

I was scanning ZeroHedge.com yesterday, and came across this article that talks about how the European Union (EU) is retreating on their sanctions to Russia…  Well, if you ask me, it’s about time! They have poked the bear, and the bear fought back, and now it’s time to retreat…  here’s a snippet of the article: “The EU has begun its retreat: It has taken the first steps in unraveling energy and food sanctions on Russia. Will other steps follow? Or will the pan-West, Russia-phobic axis strike back with further belligerence? Nothing is settled yet, but were the retreat to continue, and the separate Ukraine grain export accord hold together, it will be generally good news for the Region.

The bigger issue is of whether – even a more substantive EU retreat ensues – this will make a difference to the larger economic paradigm. Unfortunately, the answer is very probably not.

The EU’s seventh package of sanctions on Russia, whilst ostensibly posing as an increase in sanctions (which it is for certain gold imports into the EU that have no real impact on Russia) – and with a small extension of the list of controlled (mainly tech) items – the package represents, in reality, a concealed retreat.”

Germany and the Eurozone have 3 months to figure out how to get Russia to return to sending them oil to heat their homes…  And this is the first step of their plan…  

In fact, it is my humble country boy opinion, that the U.S. and Europe’s plan to isolate Russia and to that end, China too, have failed miserably, and it’s time to reconsider… 

Speaking of China, they continued to buzz the island of Taiwan over the weekend, with war planes and missiles…  If I’ve learned one thing about China through the years it is this… When the Chinese say they are going to do something, they aren’t kidding, they aren’t pulling one’s leg, they aren’t going to fail…   So, it will be a test of will power… The U.S. says they will defend Taiwan, And the Chinese say, no you won’t…   Uh-Oh!

Oh, Boy! we’ve got another spending plan that’s just been approved by the Senate…  We’re talking about a $437 billion climate, health and tax package, that in my humble opinion is nothing more than a help the wealthy, claptrap, stuffing the pockets of lobbyists, private equity firms, electric car makers, and more pork barrel spending…  

Longtime friend, and publishing / newsletter guru, Bill Bonner has this to say in his daily letter: “And so it came to pass last week, the Democratic Establishment unveiled legislation supposedly designed to help “hard working American families” and advertised as the “Inflation Reduction Act.”

We admire bald-faced lying as much as anyone. If we could get away with it, we’d probably do it too.

Still, it is shocking how brazenly dishonest the feds can be. The deal struck between Senators Manchin and Schumer could be honestly described in many different ways. It is a pot-pourri of graft, corruption, giveaways, bribes, waste… counterproductive tax increases… green energy boondoggles… subsidies to pill poppers… a few billion here… and a few billion there…”

Wages in the U.S. are not keeping up with inflation… The latest data on Wages had then increasing more than 5% in the last year, but, with inflation running at 16%, or even the Fed’s watered down inflation figure of 9.1%, there’s a deficit… And that’s not a good thing for the middle class folks that are the motor of this country… 

The U.S. Data Cupboard this week is very lacking… We only have the stupid CPI print for July on Wednesday on the docket this week… All the other data is 2nd and 3rd tier stuff that the markets don’t care about…  The CPI is a hedonically adjusted print of what consumer inflation is in this country, and it’s basically worthless!  Well, that’s my opinion on it! I prefer to check was John Williams over at www.shadowstats.com has computed inflation to be. He uses the same math that they used in the 70’s and 80’s before, Bill Clinton and Alan Greenspan and the Boston Commission decided that the data needed some “adjustments”… 

To recap… The Jobs Jamboree on Friday really sent the dollar soaring, and the currencies to the woodshed, along with Gold & Silver.  Chuck points out that 340,000 of the 528,000 jobs created in July were just that “created” out of thin air!  Gold & Silver are up in the early trading today, reversing Friday’s sell off… Bonds got sold on Friday, along with Oil, which is trading this morning with a $88 handle…  The Gov’t is spending money they don’t have again… UGH!

For What It’s Worth…  Well, I’m a longtime reader of the 5 Minute Forecast, that’s so excellently put together by friend, Dave Gonigam. He put together a report on Student Loans that was printed on Saturday, and I’m going to use it as the FWIW article today…  To read the 5 Minute Forecast, you have to subscribe to one of the Agora publishing letters… 

Here it is… “Uncle Sam is owed $1.4 trillion in student loan debt… and will likely have to write off 14% of that total, or about $197 billion.
So concludes the Government Accountability Office — which recently crunched the numbers to reflect the reality of the pandemic relief enacted by Donald Trump and continued by Joe Biden.

“Suspending payments, freezing interest rates at 0% and stopping collections on defaulted loans added $102 billion in costs to the loan program,” says a Wall Street Journal summary of the GAO’s findings.
The bizarre thing — the Journal piece doesn’t mention this, but we pointed it out in 2016 — is that the accountants at the Department of Education assume the government will never incur student loan losses via the borrower’s default… because under a 2005 law, student loans can’t be wiped out in bankruptcy.

That was fantasy then — and delusion now.

Meanwhile, we ran across figures recently from the Student Loan Justice organization: The median age of a student loan borrower is 35. And the half that’s over 35 owes a lot more money on average — about $41,900. The under-35 set owes an average $25,300.

Hmmm… Is that accumulated interest, the pursuit of advanced degrees or both?

We imagine Joe Biden’s minions will factor these numbers into their political calculations: Do they extend the current loan-payment pause past its current deadline — Aug. 31? Stay tuned.”

Chuck again… I just love the way Dave doesn’t beat around any bushes when he writes… Reminds me of someone that I know real well… I just can’t think of his name right now! HA! 

Market Prices 8/8/2022: American Style: A$ .6988,  kiwi .6294, C$ .7796, euro 1.0197, sterling 1.2116, Swiss $1.0442, European Style: rand 16.6156, krone 9.7407, SEK 10.1616,  forint 386.23,  zloty 4.6137,  koruna 24.0385, RUB 60.72, yen 134.90, sing 1.3782, HKD 7.8499, INR 79.65, China 6.7577, peso 20.26, BRL 5.1188,  BBDXY 1,271.21,  Dollar Index 106.24,  Oil $88.18, 10-year 2.80%, Silver $20.30, Platinum $941.00, Palladium $2,208.00, Copper $3.54, and Gold… $1,782.8O

That’s it for today, except to send out a Great Big Happy Birthday to my dear friend, Mike Karvas…  Mike and Chuck have been best friends since the 2nd Grade… You don’t get many lifelong friends to share you trials and tribulations with, and I cherish this lifelong friend!  Yesterday, would have been my mom’s birthday… it’s been 24 years since she passed and I still miss her…  OK… Cardinals are in first place and sport a 7-game win streak! Now, they’re playing baseball! hitting pitching, defense, base running!  The Yankees are a great team, but they ran into a buzz saw in the Cardinals…  The great Johnny Rivers takes us to the finish line today with his song: Poor Side of Town…  I hope you have a Marvelous Monday today, and please Be Good To Yourself!

Chuck Butler

August 4, 2022

* Currencies and metals remain in tight ranges on Wednesday

* Geopolitical problems have Gold rising in price today

Good Day.. And a Tub Thumpin’ Thursday to one and all! Cards and Cubs were rained out last night, and suddenly I was at a loss as to how to spend my evening! Would I go upstairs and attempt to have meaningful conversations with Kathy? I would I get a book out and read? Would I find something else on TV? Or, would I start reading a ton of emails that I have in the my email boxes? Well, didn’t choose any of those options, choosing instead to do research for the letter today… Now, what a great way to spend the evening, eh? A GREAT BIG HAPPY BIRTHDAY today to my darling granddaughter, Delaney Grace! And good luck to oldest son, Andrew, who will go under the knife today and have shoulder surgery… I always remind people going to surgery to say a prayer for the surgeon… The Foundations greet me this morning with their 60’s song: Baby, Now That I’ve Found You…

Well, yesterday I made a Big Ado about how I believed the Plunge Protection Team (PPT) had stepped in to save the dollar from further weakness on Tuesday. And to prove my point, yesterday, the dollar wallowed around in mud all day, and never made a move up or down on the day. So, without all the outside interference (price manipulation), the dollar was left to its own devices, and couldn’t get off the ground… I rest my case! The BBDXY gained only .09 on the day, and was trading in the same clothes at the close of the day that it had on at the beginning of the day…

Gold held onto to most of its early trading gain yesterday ending the day up $5.40, and closing at $1,766.60. Silver gained 9-cents to close at $20.15… Gold weathered the engineered take down on Tuesday, and is back to gaining VS the dollar… The price of Oil dropped to its lowest level since last February, when it was on the way up… Oil ended the day yesterday trading with a 91 handle… The recession fears really have Oil traders worried about lack of demand… And well they should be worried, but it still the summer driving season, so that should keep demand strong for now…

The Russian ruble continues to defy odds, and remain strong in the face of all this dollar strength that’s dominated the currencies for a couple of months now. The ruble trades this morning with a 60 handle, which is a far cry from the lofty levels it traded following the Russian invasion into Ukraine. I told you a long time ago that the sanctions that the West have put on Russia will only harden their want to meet growth expectations in lieu of the sanctions. I don’t like the sanctions, never have, never will… And to talk a bit about that is the Guardian.com

“ Western sanctions against Russia are the most ill-conceived and counterproductive policy in recent international history. Military aid to Ukraine is justified, but the economic war is ineffective against the regime in Moscow, and devastating for its unintended targets. World energy prices are rocketing, inflation is soaring, supply chains are chaotic and millions are being starved of gas, grain and fertiliser. Yet Vladimir Putin’s barbarity only escalates – as does his hold over his own people.

To criticise western sanctions is close to anathema. Defence analysts are dumb on the subject. Strategy thinktanks are silent. Britain’s putative leaders, Liz Truss and Rishi Sunak, compete in belligerent rhetoric, promising ever tougher sanctions without a word of purpose. Yet, hint at scepticism on the subject and you will be excoriated as “pro-Putin” and anti-Ukraine. Sanctions are the war cry of the west’s crusade.”

Chuck again… alrighty then, I guess we know who agrees with Chuck on this…

In the overnight markets last night: The dollar got bought by not by much, as the BBDXY has gained about 2/3rds of an index point at this point in the morning. So the currencies, for the most part, are trading in the same clothes this morning as they were yesterday morning. 

Silver has gained 15-cents in the early morning trading, and Gold has gained $17! Wanna know why Gold is pushing the envelope this morning? Well, it has to do with the FWIW article today, so when you get there, you’ll do the V-8 head slap and say, “Know i see why!”  Spoiler alert, it has to do with China and Taiwan…   The price of Oil has slipped another buck overnight, and Bonds are getting bought again after a day of selling… 

Well, one of the things I researched last night, was the dwindling inventories of physical Silver at the exchanges… Here’s a note from the good folks at GATA on just that: “One trend in the precious metals markets that has yet to get widespread coverage but deserves more attention is the plummeting inventories of physical silver in the London vaults of the London Bullion Market Association.

These LBMA vaults comprise vaults in and around London run by the bullion banks JP Morgan, HSBC, and ICBC Standard Bank, as well as the London vaults of three security operators, Brinks, Malca-Amit, and Loomis, the London sub-Billion Market Association.

Quietly and almost under the radar, the quantity of silver held in the LBMA vaults has been consistently hemorrhaging for seven months now. Latest data from the LBMA as of the end of June 2022 shows that the LBMA vaults now hold only 997.4 million ounces of silver (31,023 tonnes).

Compares to t he end of June 2021 when LBMA silver inventories stood at 1.18 billion ounces (36,706 tonnes), the LBMA vaults’ June 2022 month-end silver inventories are now 182.7 million ozs (5,683 tonnes) lower than a year ago — a whopping 15.48% lower compared to June 2021. “

Chuck Again… We’ve been hearing about a shortage of Silver for months now, and it now appears to be unfolding right before my eye! There are all kinds of bad things that can come from this lack of physical Silver inventory, with the only good thing being a forced rise of the price of Silver!

OK, getting back to what Chuck thinks… Can anyone out there recall when Chuck first began carping about the Debt in the U.S. ? Well, it was a long time ago, and back then the debt would be considered today, to be small! But Debt is a problem, and I so took Dick Cheney to the carpet for his saying that “Deficits don’t matter”, back in the day… It was simple to see where it was going, for me at least… If you print a $1 Trillion Deficit one year, and the markets don’t react, then you know that you can do that every year, and add even more in down years, and the markets won’t rebel… And that’s where we are today, with nearly $31 Trillion in Gov’t Debt, Corporate debt is more than $23 Trillion, and Consumer Debt is $16 Trillion…

In my last appearance at the Vancouver Investment Symposium in 2015, I made a big deal out of the fact that total debt in the U.S. had hit $50 Trillion… Well, today 7 years later, the total is $70 Trillion… And that debt is not going down one iota, folks… It’s almost like Sisyphus who Zeus dealt him the eternal punishment of forever rolling a boulder up a hill in the depths of Hades…

Now, I’m not saying that all debt is bad, for there are times a Corp, a Consumer need to go into debt for a short period of time… But that should be the only good kind of debt…

There’s been quite a bit of talk about a “Debt Jubilee”, where all debts are forgiven… I hope to never see that happen while I’m alive… For it would mean that everyone got off Scott Free! And set a very bad precedence going forward.

So barring a Debt Jubilee, the only way to pay down these debts is to adopt austere budgets… But since that seems to be a thing of the past, with no appetite for doing so now, because it would mean their ability to get reelected would diminish, I say we’re in deep dookie as a country…

The Gov’t sets the table for everyone else… If the Gov’t goes deep into debt, then Corporations do the same, and if those two do it, then consumers follow…

The U.S. Data Cupboard had two real economic reports for us yesterday, and they seem to defy the rash of recent economic prints that were awful… June Factory Orders increased from 1.8% in May to 2.0%, and Corporate Equipment Orders gained in June too, from .5% in May to .7%.. If you were only looking at these two prints you would be a naysayer to the recession talk… But it takes more than two prints to make an economy folks…

Today’s Data Cupboard has the usual Tub Thumpin’ Thursday Fare of Weekly Initial Jobless Claims, and it will also have the June Trade Deficit…

To recap… Chuck’s thought that Tuesday’s dollar gains were PPT driven sure did give him fuel for the fire yesterday, as the dollar wallowed in the mud all day, not moving up or down, without any interference… Gold gained $5 and Silver gained 9-cent yesterday… Somebody agrees with Chuck’s thoughts on the sanctions placed on the Russian economy by the West. The ruble continues to be the best performing currency this year, despite those sanctions! Debt is everywhere, and should be the biggest concern everyone has with regards to this country’s future…

For What It’s Worth… Well, here we go… Let’s hope this is all a show, to express to the world and the U.S. that they are not kidding. But my spider sense is tingling and I’m thinking of really bad things that come from this, display of strength, by China. The article can be found here: China fires missiles into waters off Taiwan in largest ever drills | Reuters

Or, here’s your snippet: “China fired multiple missiles around Taiwan on Thursday, launching unprecedented military drills a day after a visit by U.S. House of Representatives Speaker Nancy Pelosi to the self-ruled island that Beijing regards as its sovereign territory.

The exercises, China’s largest ever in the Taiwan Strait, began as scheduled at midday and included live-firing in the waters to the north, south and east of Taiwan, bringing tensions in the area to their highest in a quarter century.

China’s Eastern Theatre Command said at around 3:30 p.m. (0730 GMT) it had completed multiple firings of conventional missiles in waters off the eastern coast of Taiwan as part of planned exercises in six different zones that Beijing has said will run until noon on Sunday.

Taiwan’s defense ministry said 11 Chinese Dongfeng ballistic missiles had been fired in waters around the island. The last time China fired missiles into waters around Taiwan was in 1996.”

Chuck Again… Well, know you see why Gold is much stronger this morning.. Geopolitical problems are always good for Gold.. And these goings on in S. Asia, are a poster child for Geopolitical problems! 

Market Prices 8/4/2022: American Style: A$ .6978,  kiwi .6306,  C$ .7790, euro 1.0169, sterling 1.2084, Swiss $1.0410, European Style: rand 16.7336, krone 9.7234, SEK 10.1847,  forint 389.24,  zloty 4.6398,  koruna 24.2485, RUB 60.81, yen 133.85, sing 1.3792, HKD 7.8499, INR 79.47, China 6.7568, peso 20.42, BRL 5.2831,  BBDXY 1,272.96,  Dollar Index 106.24, Oil $90.97, 10-year 2.72%, Silver $20.30, Platinum $907.00, Palladium $2,056.00, Copper $3.50, and Gold… $1,783.17

That’s it for today… My thoughts and prayers are with son Andrew this morning… I know he’ll come through just fine… So, if I know that, why am I so concerned this morning? And another BIG HAPPY BIRTHDAY to my little d… Delaney Grace is 15 today! I’ll always know how old she is, because she was born the year I was diagnosed with Stage 4 metastatic renal cell carcinoma… and had the first two of my major cancer surgeries… Cards and Cubs play a double header today… Somewhere in heaven Ernie Banks is liking the sound of playing 2! I’m going to the regular scheduled game tonight, on the tickets I won in the writing contest… I don’t enjoy going to night games downtown in St. Louis… But, I’ll make the exception when I have free tickets! I’m a day baseball fan… which is why I enjoy Spring Training games so much! The Rascals takes us to the finish line today with their song: It’s A Beautiful Morning… I think I’ll go outside for a while, and just smile, just take in some clean fresh air… Yeah that song… I hope you have a Tub Thumpin’ Thursday today, and a great weekend ahead, and please remember To Be Good To Yourself!

Chuck Butler

August 3, 2022

* currencies and metals get sold on Tuesday

* American consumers are racking up the debt… 

Good day… And a Wonderful Wednesday to you! What a disappointing trade deadline for my beloved Cardinals… Sure they received two starting pitchers that they needed, but neither one of them are what I would call a bonafide starter! We traded away a young pitcher for an old pitcher, and a gold glove centerfielder, every day player for a pitcher I had never heard of, who will pitch once a week! I find this performance by our General Manager, to be very disappointing… Oh well, we carry on despite our shortcomings! It was a much nicer day here yesterday, and I was able to sit outside for much longer and read, have my lunch, etc. Chicago greets me this morning with their song: Old Days…

Good times I remember! Oil days, times I’ll always treasure! Yes, we alll wax nostalgic at times, and hearing that song had me thinking about times in the past… Times when fundamentals ruled the markets and you could place trades based on a country’s fundamentals or outlook on fundamentals… The great Stevie Wonder had a song titled: I Wish… I wish those days would never stop… Well, unfortunately, they did, and markets are ruled by trader sentiment these days, and that sentiment may or may not take into consideration the fundaments in place, but from what I’ve seen they definitely do not!

OK… I beat around the bush long enough here… The dollar came back with a vengeance yesterday, with the BBDXY gaining 7 index point! Wait, What? Yes, the dollar buying was fast and furious, and never stopped to take a pause for the cause. So, just when I thought that dollar traders had finally gotten the memo about how a currency shouldn’t rally during a recession, with inflation soaring, the prove me wrong again! I have to say that to me, this reeks of PPT participation… A move that strong in one day had to be PPT Participation, there’s no two ways about it!

On Monday of this week, I noted that the dollar had been weak while I was gone, but wondered how long it would be before the PPT started spending some of their treasure trove in the Exchange Stabilization Fund. Well, I think, no make that I’m sure I got my answer to that question yesterday!

And Gold? Well, the boys in the band showed up at the COMEX with arms full of short Gold paper trades yesterday, and well, we all know what happens when they do that! Gold lost $12 yesterday to close the day at $1,761.20, and Silver also saw short Silver paper trades in bunches, and Silver lost 38-cents on the day to close at $20.06

It was an ugly day in the markets… I might have been a beautiful day outside, inside the ugly was being spread around and it was not pretty to watch.

In the overnight markets last night… There was some slippage in the dollar, but not anything close to the gain it had yesterday. The BBDXY lost 2 index points overnight, and Gold is up $5 in the early trading, while Silver has fallen back below $20 this morning. Bonds got sold yesterday and through the night, and the yield on the 10-year rose to 2.75%, from yesterday morning’s 2.66%…

Well, the data for 2nd QTR Credit came in yesterday and it showed that credit card debt increased by 13% in the quarter, which was the largest gain in credit card debt in 20 years! Do you see what I’m seeing here? That folks are paying higher prices for their gas, groceries and giggles, and putting it all on their credit cards… And I’m sure these banks that provide the credit cards, are licking their chops, because they’re getting ready to hike the rates they charge on the debt they carry, to the atrocious levels they were before… I don’t see how this doesn’t turn into tears, folks… But then that’s just me!

Oh, and that data on 2nd QTR Credit Card Debt came to us curtesy of the Fed NY! And they didn’t stop there! The total Consumer Debt for the 2nd QTR for Americans IOU totaled $16.15 trillion through the end of June, good for a $312 billion — or 2% — increase from the previous quarter

The way consumers are spending money they don’t have, and piling up debt, you would think that they know something… . That the Gov’t will forgive their debt… Yeah, good luck with that!

So, what the heck has happened to the currency and metals rallies that were going on while Chuck was gone? They are proving to be nothing more than a dead cat’s bounce… (no cats were harmed here, it’s just an old saying in the markets) In other words, the rallies were nothing more than a mini-correction, that didn’t last… So much for my hopes and wishes that Gold was ready to take off to higher ground…

The best laid plans of mice and men, eh? Ok, let’s move onto to something else…

The markets were on edge yesterday, as Pelosi went ahead and visited Taiwan to assure them that the U.S. wouldn’t abandon them. She went ahead and visited Taiwan after the Chinese had said that she shouldn’t make that visit, without provocation… Well, nothing happened yesterday, other than China announcing some tariffs on Taiwan exports to China… But that doesn’t mean that something won’t happen eventually… As I said yesterday in my Chuck Again section of the FWIW, that I don’t like the direction this is all going for the war mongers of D.C.

The U.S. Data Cupboard yesterday had the Job Openings and Job Quits data for June… Job openings plunged in June to their lowest level since September 2021 in a potential sign that a historically tight labor market is starting to slow.

The total of employment vacancies fell to about 10.7 million through the last day of June, a decline of 605,000 or 5.4%, according to the Job Openings and Labor Turnover Survey released Tuesday by the Bureau of Labor Statistics. I have to think that this is a sign of the slowing of the economy… But that won’t mean anything to the dollar traders…

But… The Job Quits data showed that another 4.3 Million people quit their jobs in June… This data has been steady Eddie for months now, showing the same 4.3 Million Jobs Quits a month…

Today’s Data Cupboard will show us the color of the July Factory Orders and Capital Equipment Orders… Now these are REAL economic numbers folks… The economy can’t grow without Capital being put to work buying buildings, desks, computers, etc. This is how an economy grows, and not on Corp. buybacks of stock…

To recap… The dollar got a boost from someone or some party yesterday and the BBDXY gained 7 index points! Gold got sold to the tune of $12 and Silver lost 38-cents on the day… Chuck called it an ugly day for the markets, as bonds also got sold by the bushel full! Chuck calls the rallies in metals and currencies while he was gone, a dead cat’s bounce… nothing more than a mini-correction that had no legs… So, it’s back to square one with dollar buying…

Before I head to the Big Finish today I want to say RIP to the great Vin Scully, who passed away yesterday at the age of 94… other than Jack Buck I would listen to a Vin Scully broadcast above all others!

For What It’s Worth… Well, we have 6 more weeks of Fed Head comments about the direction of interest rates, are you ready for that? I’m not! No way! Please tell it ain’t so Joe! So, if that’s what’s in our future, we might as well get the first shot of comments… This article can be found here: Fed’s Mary Daly says ‘our work is far from done’ in raising rates (cnbc.com)

Or, here’s your snippet: “The Federal Reserve still has a lot of work to do before it gets inflation under control, and that means higher interest rates, San Francisco Fed President Mary Daly said Tuesday.

“People are still struggling with the higher prices they’re paying and the rising prices,” Daly said during a live LinkedIn interview with CNBC’s Jon Fortt. “The number of people who can’t afford this week what they paid for with ease six months ago just means our work is far from done.”

Separately, Chicago Fed President Charles Evans opened up the possibility of another large rate hike ahead, but said he hopes that can be avoided, with the Fed being able to bring down inflation without having to use harsh policy tightening.

So far this year, the central bank has raised its benchmark interest rate four times, totaling 2.25 percentage points. That has come in response to inflation running at a 9.1% annual rate, the highest level since November 1981.

The Fed in July raised its funds rate 0.75 percentage point, the same as it hiked in June. Those were the largest back-to-back increases since the central bank started using the funds rate as its chief monetary policy tool in the early 1990s.

But Daly cautioned that no one should take those big moves as an indication that the Fed is winding down its rate hikes.”

Chuck Again… Oh great one Fed Head says that their work isn’t done, and the other says, that it is almost done… Just what we need… Fed Heads not singing from the same song sheet!

Market prices 8/3/2022: American Style: A$ .6931,  kiwi .6264,  C$ .7774, euro 1.0191, sterling 1.2180, Swiss $1.0425, European Style: rand 16.7121, krone 9.7204, SEK 10.2203,  forint 388.79,  zloty 4.6140,  koruna 24.1783, RUB 60.81, yen 133.05, sing 1.3810, HKD 7.8500, INR 78.98, China 6.7518, peso 20.66, BRL 5.2797,  BBDXY 1,271.19, Dollar Index 106.24, Oil $93.17, 10-year 2.75%, Silver $19.94, Platinum $901.00, Palladium $2,060.00, Copper $3.52, and Gold… $1,766.60

That’s it for today… A shorter version of the Pfennig this morning… I woke up at 4 am, and couldn’t go back to sleep, so I just got up and wrote, and at that hour there wasn’t much out there… So, there you have it! My beloved Cardinals beat the Cubs last night 6-0.. The Cardinals are 2 games out of 1st place… They can’t be losing to teams with losing records like the Cubs, Pirates and Reds… Tomorrow, will be Delaney Grace’s 15th birthday! She’s in High School now! Can you believe that time has flown by like that? Next year she’ll be driving! UGH! She sure makes me feel old! Oh well… The Doobie Brothers take us to the finish line today with their song: Another Park, Another Sunday…  I hope you have a Wonderful Wednesday, and please remember to Be Good To Yourself!

Chuck Butler

August 2, 2022

* dollar fights back in the overnight markets last night

* Chuck hopes it’s all just saber rattling… 

Good Day… And a Tom Terrific Tuesday to you! OK, I had a dear reader send me a note yesterday, saying that he would take up a collection to keep me writing! OK, you called my bluff… I’m not going anywhere, so you all are stuck with me! A pretty dull day yesterday, the weather was hotter than a firecracker, and I only spent about an hour outside, due to the heat. I’m all alone at home right now, but Kathy comes home tonight, so the quiet that exists now, will end! HA ! Don’t tell her I said that! And I’m talking to you: Lisa, and Lynn! The Zombies greet me this morning with their song: All You Zombies… Whenever I hear that song, it takes me back to 1987, and we were having a 4th of July pool party, and we had a new camcorder, and were filming a lot of the goings on in the back yard, and this song, All You Zombies, was playing on the boom box…

Well, the weakness of the dollar recently, was brought to a pause yesterday, now we’ll have to see which way it decides to go… Continue to get weaker, or rally back? I believe that all signs are pointing to door #1, as far as the options go… But, as I said in the Pfennig yesterday, one has to wonder whether the PPT is going to spend some of those Exchange Stabilization Funds that they have stored up, to prop up the dollar or not… The BBDXY actually gained 1 index point yesterday to close the day at 1,263. The euro climbed 10 bips, and the rest of the currencies kind of held their ground. The price of Oil took another hit yesterday. After briefly trading over $100 last week, the price of Oil has fallen by $7 total, with yesterday’s $3 loss putting the price to trade with a $93 handle.

Gold gained $6 yesterday to close the day at $1,773.50… Silver lost a penny yesterday… That’s right! Silver lost 1-cent yesterday to close the day at $20.44 I’m reading article about how the Fed has induced a short squeeze in Gold… And that’s why Gold has been gaining a little bit each day… I would have to think that if was a real short squeeze, then the upward movement in Gold would be greater than it has been… I’m just saying…

The 10-year Treasury is on a roll folks… all that bear market for bonds that existed before July came along, is gone with the wind… The Fed/ Cabal/ Cartel’s 2 back-to-back 75 Basis Point rate hikes has really got the bond bulls on cloud nine… They think the Fed Heads are really serious about fighting inflation back… I would have to say that I question their thinking on that one. I really do… For I’m of the opinion that the Fed heads will pivot soon, maybe not in Sept (their next meeting), but a head fake will probably be their choice in Sept. With the rate hike being much less than 75 Basis Points… And that leads to no rate hike at the next meeting, which would be the last one before the mid-term elections… For Heaven’s sake, the Fed Heads can’t be seen as being political! HAHAHAHAHAHA! As if!

In The overnight markets last night… Well, the dollar fought back, and gained in the overnight markets last night. The BBDXY gained nearly 3 index points and trades this morning at 1,265… The euro has given back its gains from yesterday, and the Aussie dollar fell back below 70-cents overnight… We’ll have to see how this all plays out in the U.S. trading session today, but I have this feeling that this is no more than a head fake, and that we’ll get back to dollar weakness soon… The price of Oil has wrapped a tourniquet around the bleeding and trades this morning with a $94 handle.

Gold is up $6 in the early trading this morning, and Silver is down 3-cents, so that’s where we are to start the day today… 

The 10-year’s yield has fallen to 2.55%… as I just said above, the 10-year is on a roll!

I have one more thought to share with you on the FOMC’s 75 Basis Point rate hike last week… Ok, so everyone is up in arms about how the Fed is pushing the economy to a collapse, but that’s the price you pay for all the years of easy money, zero interest rates, currency printing, and everything else they Fed and Gov’t has done to ruin the economy… Besides that 75 Basis Point rate hike brought our Fed Funds Rate to 2.50%… How are you expecting to fight inflation that’s 15%, with 2.5% rates? As they say in the country, That dog ain’t gonna hunt! But the beltway folks, the elites, the dark side, all believe that 2.5% rates will do the trick of bringing inflation down…

Shoot Rudy, if the Fed Heads did nothing, and let inflation run its course, we would be in the same boat as other 3rd world countries that did the same thing… So, to the masses that don’t really follow this stuff, or are too young to remember the 70’s, they would say that at least the Fed Heads are fighting inflation… But longtime followers of the markets, and readers of the Pfennig, know better, that 2.5% rates are doing nothing, nada, squat, nil, a big fat goose egg, toward fighting inflation…

Well… I guess I was on mark with most of what I said yesterday, as there were no dissenting comments in the Pfennig Replies box yesterday! YAHOO! Everybody does love me, they really do! Well, what else would I take from that? Well, maybe you all are just tied of telling me I’m full of baloney! Nah, that can’t be, it’s gotta be that everyone loves me! HA!

Alrighty then… now that we have that settled… let’s see what else Chuck has on his mind this morning!

About 10 years ago, a colleague of mine, David Galland, gave me a book for a Christmas present, the book? The 4th Turning, by authors, Stauss and Howe… They tracked these 4 turnings through history, and surmised that the U.S. was in a 4th turning… What’s in a 4th Turning? I’m glad you asked! Here’s a brief explanation curtesy of Doug Casey’s International Man.com : “Then, in a Fourth Turning, again a generation later, power having been seized, the sociopaths seek total power – the elimination of all freedoms, to be replaced by totalitarian rule.

Historically, in a Third Turning, a complacent people make it possible for sociopaths to take power. In a Fourth Turning, the sociopaths exert that power.

It matters little whether the excuses put forward by political leaders are climate control, racial equity, CBDCs, cancel culture, owning nothing, digital IDs, transhumanism, vaccine mandates or a Green New Deal, the objective is singular: total dominance of the ruling class over the subservient class. Any excuse will do, if it has totalitarian rule as its outcome.

In any Fourth Turning, those who are more thoughtful and forward-thinking will begin to make sense of the ruse, but find themselves being heavily criticized by all and sundry. The media will do all within their power to slap down those who denounce the ruling class. But more to the point, the greater proportion of the populace will remain in their slumber and resist the awakening strenuously.”

Chuck again… Hmmm, does that sound like where we are as a country right now? I suggest you pick up the book the Fourth Turning, by Strauss and Howe, and learn what comes next… spoiler alert, it ain’t pretty!

So… the major countries of the world, have all hiked rates to combat inflation in their respective countries… Well, all except Japan… The Japanese remain the poster child for negative rates, and from what I read about what’s going on there, I don’t see that changing any time soon!

There are still many cross trades in dollar/ yen… And so with the recent dollar weakness, the yen has rallied back from the 136 level to 132, still extremely very weak… Japan has always sought, well since 1998, some inflation in their economy, but not like they are seeing now, for the high inflation is destroying the Japanese economy… It’s time for the Bank of Japan (BOJ) to get off their rear ends and hike rates… But that’s not going to happen, so the yen should remain very weak…

Before I left on my annual summer vacation, the Aussie dollar (A$) had lost a lot of ground, with a large chunk of that loss coming after the Reserve Bank of Australia (RBA) hiked rates! While I was gone, the A$ rallied from the 68-cent handle to over 70-cents… The Australian economy is recovering from their Covid induced slow down, and I expect to see more rate hikes coming from the RBA in the future, so hang on to those A$’s… of course that’s my opinion and I could be wrong on that!

The Petrol Currencies that include the : Russian ruble, Norwegian krone, British sterling, Brazilian real, Canadian dollar, and even the Mexican peso, have really lagged in moving with the price of Oil… when the price of Oil first began to rise late last year, these currencies all rallied alongside Oil, but since the price of Oil reached $90 the Petrol currencies have lagged… I think this has something to do with the volatility that the price of Oil has seen in recent months. I suggest that the currency traders are not fond of volatility, and have chosen to remain on the sidelines while the price of Oil goes up and down, over and over again…

The U.S. Data Cupboard today has the Job Openings and Job Quits data for June for us to view today… The Job Quits data is always interesting to me, as it has remained steady Eddie for months now at 4.3 million job quits each and every month… St. Louis Fed President, James Bullard will be speaking today, and he’s always good for a quote about the next rate hike….

To recap… The dollar weakness took a pause yesterday, but the euro found a way to eke out 10 Bips in gains VS the dollar on the day. Gold gained $6 on the day, and Silver lost 1-cent… Chuck discusses the prospects for the yen, and the Aussie dollar in today’s letter. And Chuck thinks that we as a country, are in our 4th Turning… The overnight markets brought us to where we are this morning with the DDBXY

For What It’s Worth… I couldn’t find anything that was really FWIW worthy today, so this article comes to us from Bloomberg.com and talks about how Pelosi rattled the chains of China last week, and has the potential to lead us to war… and the article can be found here: Nancy Pelosi Trip Moves Japan Yen, Taiwan Dollar, Other Asian Currencies – Bloomberg

Or, here’s your snippet: “Pelosi’s trip is creating a fresh pressure point for investors already dealing with the prospects of a US recession, worldwide rate hikes and surging inflation. The moves so far suggest traders are hedging against tension escalating, with analysts warning of the tailrisk of a conflict between the world’s two largest economies that wreaks havoc on global markets.

“China will show her displeasure by ratcheting up retaliatory actions, but it won’t get out of hand given its economy is weak,” said Rajeev De Mello, a global macro portfolio manager at GAMA Asset Management in Geneva. “However, the risk is if there is any military ‘incident,’ which could lead to an accidental military escalation, which would stress global financial markets.”

While the White House has sought to dial back rising tensions by insisting there is no change in its position toward Taiwan, which China considers as part of its territory, Beijing has called Pelosi’s visit a “dangerous gamble” with grave consequences. It has responded to past visits by foreign officials with large sorties into Taiwan’s air defense identification zone or across the median line that divides the strait.”

Chuck again… oh that’s just peachy isn’t it? Now we have not only 1 super power mad at us and ready to launch missiles, but now we have 2 super powers not pleased with our stance… How are you going to fight a war VS Russia and China at the same time? Oh, I can see the war mongers in Washington D.C. wringing their hands that they finally get to fight a real war, and not one where the enemy hides in caves. I cringe even thinking about all this folks, and I would be you would be too…I’m hoping that this is all just saber rattling… Just wishin’ and hopin’ and prayin’… (Dusty Springfield) 

Market Prices 8/2/2022: American Style: A$ .6940,  kiwi .6298,  C$ .7781, euro 1.0234, sterling 1.2218, Swiss $1.05, European Style: rand 16.5782, krone 9.6906, SEK 10.1542,  forint 387.67,  zloty 4.5962,  koruna 24.0749, RUB 60.34, yen 130.98, sing 1.3784, HKD 7.8498, INR 78.15, China 6.7583, peso 20.47, BRL 5.1860,  BBDXY 1,265.80,  Dollar Index 105.55, Oil $94.26, 10-year 2.55%, Silver $20.41, Platinum $916.00, Palladium $2,179.00, Copper $3.53, and Gold… $1,779.02

That’s it for today… thanks to those of you who took a moment yesterday to send me a “welcome back” email… I read the letter written by Rob Rains each day regarding the St. Louis Cardinals, and a couple of weeks ago he put out a challenge to his readers to respond with their thoughts on what he had just written about… So, being the crazy Cardinals fan that I am, I fired off my opinions on the team, and a couple of days later, I received an email from Rob, that said that “you are a Winner!” and my winnings were 2 tickets to the Cards/ Cubs game this Thursday night! YAHOO! I think I’ve told you this before, but if I didn’t, here it is… My mom, always thought I was going to a sports caster, or writer, she always thought I had the eye for things going on in games… So, after winning the writing contest, I’m thinking, is it too late to start a new career? HA! Ok, the band Looking Glass takes us to the finish line today with their song: Brandy… Brandy, you’re a fine girl what a good wife you would be… Yeah that song… I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself!

Chuck Butler

 

August 1, 2022

* the dollar turns around… 

* Recession or Depression? 

Good Day… A Marvelous Monday to you!  And welcome to August! The dog days of summer are upon us now… I can say that I had a totally enjoyable summer vacation, where our weather was ideal and better than it was back home! That rarely happens this time of year, but it did this year! Baseball’s trade deadline is also upon us, and it will be interesting to see what teams are brave enough to better their teams now using prospects. My beloved Cardinals are usually not in that mix of teams, but there’s always a first time, eh? I saw the currencies and metals rally while I was gone, also as usual… I’ll remind everyone again that if you all want to take up a donation for me to go away forever, I will be glad to do that! HA!  The Climax Blues Band greets me this morning with their song: Couldn’t Get It Right

Where to start? For there’s been a ton of stuff that I would have liked to have commented on in the last two weeks, but most of that is just old news now, and it’s time to move forward…  

On Friday, last week, the dollar continued to weaken from its high in mid-July. And Gold gained $9.70 and ended the week on an up note at $1,767.50. Silver also gained on Friday, with a 33% gain on the day that equaled 33-cents! Silver closed the week, back above 20-cents, at 20.45-cents… 

The price of Oil bumped back above $100 briefly on Friday, but ended the week trading with a $98 handle. Bonds are back on the rally tracks and defeating the bond bear market that had developed earlier this year. The 10-year trades with a 2.66% yield!  Somethings awry here, folks, and this is going to end up in tears… That’s my story and I’m sticking to it! 

In the overnight markets last night, the dollar got sold again, and lost 5 index points, leaving the BBDXY trading at 1,262 this morning…  The fact that the U.S. is in a recession, even though our leaders say “no it isn’t!”, and the rotten data, including rising inflation, have got the dollar bulls on the run, folks… Now we have to wait-n-see if the PPT (plunge protection team) is going to spend some of those Exchange Stabilization Funds, that they have stockpiled, or will they let this play out?  

I for the life of me, can’t imagine a world where there is not dollar manipulation, and an effort to prop it up… So there’s that… but for now the dollar is weaker and getting weaker by the day. 

The price of Oil has lost another $2 in overnight trading and trades this morning with a $96 handle… 

The one thing that I heard while on vacation, was that the POTUS and other leaders deny that the U.S. in in a recession…  But here is the fact: The U.S. economy shrank for a second quarter in a row—a common definition of recession—as businesses trimmed their inventories, the housing market buckled under rising interest rates, and high inflation took steam out of consumer spending. 

The leaders of this country want you to play stupid, and believe them when they say, “This time it’s different”…  Well, I’ve never liked that phrase, and still don’t…  Yeah, it’s different in the fact that a usual recession touts a large unemployment number, and this time we have a large open jobs number… That’s the only difference, I see… 

Longtime readers may recall me talking about how the U.S. economy was really in depression, and has been since the mortage meltdown… I know, those pictures of the last depression in the U.S. of soup lines and downtrodden people are your picture of a depression…  Well, I explained this years ago and will do so again now… There are no soup lines because these people get their money each month in a debit card from the U.S. Gov’t, and then they can buy a new cell phone, and whatever else they need to get by… 

But let me ask you this, if the U.S. was in such great shape, why then did the Fed need to continue with zero interest rates, and currency printing, and stimy checks from the Gov’t?  Hey! maybe the leaders of this country are technically correct that it isn’t a recession, because it’s really a depression?  HA!  As if they had arranged the box of rocks that is their brain to organize a thought like that! 

Well, either way, it’s not a good thing for the dollar, the economy, your investment portfolio, etc.  

And there was the Weekly Initial Jobless Claims last week throwing cold water on the leaders claim that “it’s not a recession because job growth is strong” claim…  Initial Claims rose to 256,000 last week, and the 4-week average of initial claims is now at its worst level since November 2021. I would think that this number would continue to get bad… And when that gets so bad, the Fed will pivot and stop hiking rates… 

James Rickards called for another stock collapse last week, calling it the 4th Horseman… I really thought that maybe he was onto something but it all turned out to be nothing… Again pointing out that saying the stock market will collapse on “x” day, at “x” time, is very risky, and crazy if you ask me…  I do believe that this move in stocks is simply what they call “a bear market rally”… And that usually leads to what they call a “Bear Trap”, so be extra careful out there folks, update your stop losses, and stay ahead of the markets… 

As I always tell you, I’m not a stock jockey, and don’t play one on TV or stay at a Holiday Inn Express… But I did sink my teeth into the stock business when I started this long journey through markets back in 1973, so I do have some knowledge of its inner workings… 

I mentioned above that the U.S. Data recently had been awful… So, I guess I need to prove that statement:  Well, let’s see here… How about Home prices dropping? Or the number of continuing claims of unemployment remaining high, or the PCE rising to 4.8% (the Fed’s preferred inflation data) , or Disposable consumer income going negative?   And one of the bright spots had some rot on the vine exposed, when Personal Spending came in at 1.1%, but when you look close you see that most of that spending gain was because of the higher prices that are being paid for everything!  And we can’t forget that last week the 2nd QTR GDP report said that we had two quarters of negative growth…  

This week’s U.S. Data Cupboard doesn’t have much in the way of real economic data for us to see… There will be one or two real economic data prints this week, but that’s it!   So, the dollar has nothing to prop it up this week, I’m just saying… 

To recap… the dollar weakened while Chuck was gone, and once again, he’s offered to go on permanent vacation, for the right price! HA!  The U.S. is in a recession, don’t believe what you hear on TV from the POTUS or any other leader! Stocks are in a bear market rally… The price of Oil bumped higher last week but has since given up about $4…  And weak data is fueling the dollar’s weakness… 

Before I head to the Big Finish today, I wanted to note the passing of the great Bill Russell this past week… After the Hawks left St. Louis for Atlanta, back in the day, I turned my sights to the Boston Celtics as my new fave team, and the leader of that team was Bill Russell…  We also lost Tony Dow, last week, Wally on Leave It To Beaver…  RIP Bill, and Tony… 

For What It’s Worth….   So, what’s causing the dollar to rally and then turn around and get sold?  Maybe this article from the FT will straighten things out for you… The article can be found here: Is the dollar about to take a turn? | Financial Times (ft.com)

Or, here’s your snippet: “The U.S. dollar has had a spectacular run, having risen more than 10 per cent against other major currencies since the start of the year.

Actually, not a few governments and central banks would prefer the adjective “disastrous” to “spectacular”. For developing countries, from Sri Lanka to Argentina, the greenback’s rise has made servicing dollar-denominated debts, already a difficult task, essentially impossible.

For emerging markets such as Chile that are not heavily saddled with debts, it has raised inflation by increasing the local-currency equivalent of dollar-denominated food and energy prices. Inflation and the fall in its currency have forced the Bank of Chile to raise its policy interest rate an extraordinary nine times in the past year and now to deploy its reserves in support of the peso exchange rate.

For the European Central Bank, there has been the embarrassment of seeing the euro fall to parity against the dollar. For the Bank of Japan, there is the fact that the yen has been the worst-performing advanced-country currency on the planet this year.

Why the dollar has strengthened is no mystery. Seeing both high inflation and strong growth, the Federal Reserve has been raising interest rates faster than other big central banks, drawing capital flows toward the U.S.

The ECB, despite having cautiously kicked off its tightening cycle last week, is moving noticeably more slowly. The curtailment of Russian energy supplies is already weighing on European growth, and higher interest rates would send a fragile Italian debt market reeling, given the ill-timed rise in political uncertainty in that country.

The Bank of Japan, meanwhile, has no immediate reason for thinking that the country’s “lowflation” problem has been solved, and is not inclined to abandon its “yield-control” policy to keep interest rates down. Neither the BoJ nor the ECB will be matching the Fed by raising policy rates in 75 or 100 basis-point increments.

The idea that, in these recessionary circumstances, inflation will remain in the high single digits and the Fed will therefore be forced to continue its tightening cycle, is quite daft.

As Fed chair, Paul Volcker kept raising rates in the face of a recession — and the dollar kept soaring — because inflation remained stubbornly high for several years. There is little sign of similar inflation inertia today.

So if the economy and inflation weaken, the Fed will pause, and the dollar will reverse direction. This is no longer a risk that can be dismissed.”

Chuck Again… Didn’t I continue to say over and over again during the Dolar’s rise that it reminded me of a star? A star burns the brightest right before it burns out?  I think the FT was too soft with its final comment, here… I’m just saying… 

Market Prices 8/1/2022: American Style: A$ .7042,  kiwi .6332,  C$ .7830, euro 1.0251, sterling 1.2244, Swiss $1.0532, European Style: rand 16.4711, krone 9.6394, SEK 10.1356,  forint 390.34,  zloty 4.6243,  koruna 24.0207, RUB 62.45, yen 132.17, sing 1.3759, HKD 7.8499, INR 79.02, China 6.7526, peso 20.29, BRL 5.1729, BBDXY 1,262.06,  Dollar Index 105.90, Oil $96.94, 10-year 2.66%, Silver $ 20.45, Platinum $910.00, Palladium $2,272.00, Copper $3.53, and Gold… $1,772.12

That’s it for today… It’s good to be back in the saddle again… I told good friend, Dennis Miller, last week, while on vacation, that, “I like waking up when normal people wake up, and I could get used to this!”  Baseball nuts like me will be glued to the MLB station, waiting on Trade news today and tomorrow… For once in a Blue Moon, I don’t have to skip a day of writing for a doctor’s appt, and it will be on Friday this week!  I hear you saying, Why don’t you just always get them on a Friday? Ahh, grasshopper, you take what you get when it comes to these oncologists!  Ok, the trio of songs that take us to the finish line today comes from Robert Palmer, and the three songs are: Put On Your Sailing Shoes, Hey Julia, and Sneaking Sally Though the Alley…   You’ve got to play them in that order!  I hope you have a Marvelous Monday today, and please Be Good To Yourself! 

Chuck Butler