Gold, Copper, Oil, the 10-year, All Tells Us That Inflation Is No Biggie…

June 23, 2022

* the dollar got sold on Wednesay… 

* More price manipulation at the COMEX on Wednesday… 

Good Day… And a Tub Thumpin’ Thursday to one and all! The very hot day yesterday led to an absolutely beautiful evening and night here in my little river town. I sat outside to watch the Cardinals/ Brewers game, with good friend, Mike, and neighbor Paul, and we brought home a winner, with only today’s day game left in the series that has the Cardinals up 2-1 so far… So far, this year, the Brewers and Cardinals have split their games, and if the Cardinals can win the day game today, that would give them the edge so far this season, and a 2-game lead in the division… It was simply beautiful outside last night… especially since the Cardinals won! Tonight is the night we go to the Fabulous Fox for the Sebastian Maniscalco show… I’m really excited to see this guy live, for his specials on TV have had me in stitches, laughing out loud! I hope Kathy enjoys his humor as much as I do… The Jefferson Starship greets me this morning with their song: Miracles…

Well, after getting bought in the overnight markets Tuesday night, the dollar went back to getting sold in the U.S. session yesterday, with the BBDXY losing 4 index points! The real “mover” against the dollar this year has been the Russian ruble, as it proves daily what happens when you back your currency with something other than the good faith of the Government. But, ever sine the Swiss National Bank (SNB0 hiked rates late last week, the franc has been gaining daily VS the dollar… It’s as if the SNB came riding in on their proverbial while horse to save the franc, that was very near to parity with the dollar… I might remind everyone looking to stock up on francs, that the currency is still a negative yielding currency…

Gold is up one day, down the next, up one day, down the next, in this never ending pattern we seem to be stuck in… Gold lost $6 in trading yesterday, after gaining $7 the day before… UGH! Gold closed the day yesterday at $1,833.70. Silver found a way to gain 10-cents on the day, their one thin dime allowed Silver to close at $21.76… The price of Oil slipped again and traded at the end of day with a $103 handle. And bonds… for the life of me I can’t figure out what’s going on with bonds… It’s as if the buyers are counting on the Fed Heads to pivot and go back to buying bonds, and printing currency… That Must be the reason for the 10-year Treasury’s yield to drop to 3.15% yesterday!

To further that thought, I pulled this from Kitconews.com yesterday: “The Federal Reserve’s hawkish stance is not sustainable, and it is likely that not only will the world’s largest central bank stop raising rates altogether by the end of the year, they will reverse course and lower rates, according to Keith Neumeyer, CEO of First Majestic Silver.

Speaking to Michelle Makori, Editor-in-Chief and Lead Anchor of Kitco News at the Prospectors & Developers Association of Canada conference in Toronto, Neumeyer said that the Fed’s monetary policy pivot will likely occur by Q4 of 2022 and spur another bull rally in the precious metals.

“Once we see the Fed back up its current policy, it’s going to raise rates by probably two or three more times this year…once the market really does crack is when I’m expecting it to happen, then I think you’ll see the Fed turn around and start reducing rates. That’s going to be the beginning of the next big cycle in gold and silver,” he said.”

Ok, regular “readers” of this letter, know that I said over and over again that this dance is gonna be a drag, no wait! I said over and over again that I think the Fed Heads will think that they have done enough to combat inflation, and will want to wait to see the effects of their previous rates hikes before moving on, and when they do that, they will begin to buy bonds, and print currency, along with cut rates once again… So, you can see that others are jumping on the bandwagon here… I’m just saying…

In the overnight markets last night… There’s been little to no movement in the dollar overnight, with the BBDXY trading at 1,256 to start the day today. Gold is up $4 in the early trading today, and the price of Oil has bumped a bit higher and trades with a $105 handle this morning.  And the apparent Blue Light Special on the 10-year Treasury is still shining brightly, and the yield on that bond has dropped to 3.02% this morning… 

So… according to the price action in Copper, Gold, Oil, and the 10-year Treasury, we can all breathe easier, and forget about inflation, it’s not real, it’s not here now, or will be tomorrow, right?  These inflation indicators are telling us this, folks… I’m just not going to sit by idly and watch this either! It’s not right!  Ok, Mr. tough guy, just what are you going to do to correct these things?  Hmmm…. I guess I got carried away there, sorry… But watching these things get sold, when they should be (historically speaking) soaring, is just too much! I can’t take it any longer! Serenity NOW! 

Well, mortgage rates were climbing once again, and a 30-year mortgage (who gets those these days?) had an over 6% rate… The housing boom has finally found the pin in the room to pop the bubble! And folks looking for new houses, are being told that there aren’t any to buy… Ok, don’t tell me the supply chain disruptions have come to new housing too?

So, with all this mess in the economy, why isn’t the dollar getting sold like funnel cakes at a Sate Fair? Because the Fed Heads are still saying that they’re going to continue their assault on interest rates, and take them higher… That’s why… Hmmm… that would mean that dollar trades are dealing with fundamentals, right? I just don’t see that working for them too long…

What we have here is akin to the shootout at OK Corral! Either the markets will win, and prove the Fed Heads to be the town idiots they are, or, the Fed Heads will win and keep hiking rates and staying out of the bond market… And bring the economy to within a whisker of a collapse… So, you get to choose which door you’ll opt for… Hmmm. Monty, I take what’s behind door #2… We might be scraping the bottom of the barrel with this option, but at least inflation will be tamed… Hopefully, that is… 

So, did you hear about the moratorium on gas Taxes that the POTUS introduced yesterday? I understand what he’s dong, he’s trying to save the democrats running this fall from having to explain to their voters why inflation isn’t hurting them… (As if!) But, did the U.S. suddenly find a surplus of Tax Receipts that they can use to offset this loss of tax receipts/ income? Of course they didn’t, they are simply going back to the well that provides them deficit spending… and deficit spending is what got us into the inflation cycle now isn’t it? 

Now, I’m no fan of taxes… I hate them, I curse that them, and I pay them… reminds of the lyrics to song: The tax man taken all my dough, and left me in my stately home, all I’ve got is this sunny afternoon… So, any time the Gov’t reduces taxes I’m all for it, that is, until I see that there’s nothing to offset this loss of tax receipts/ income… I had better move on there before I say something that gets me into trouble!

The U.S. Data Cupboard today finally has something for us to view and throw darts at! Today we’ll see the Initial Weekly Jobless Claims for last week. This data has seen the weekly numbers rising in recent weeks…

Yesterday, Fed/ Cabal/ Cartel, Chairman Jerome Powell went before the Senate Banking Committee, and had this to say, ““I’m trying to lower demand growth — we don’t know that demand has to actually go down, which would be a recession,” Mr. Powell said. He later added that “this is very high inflation, and it’s hurting everybody, and we need to do our job and get inflation back on a path down to 2 percent.”

Chuck again… yes, talking out of both sides of his mouth, and not making any sense at all! I guess he learned that from Big Al Greenspan… Memo to Jay Powell: Ahem, demand growth is already waning Jay, witness the negative -1.6% GDP in the 1st QTR and the Atlanta Fed’s GDP Now system showing that the 2nd QTR will also be negative, and at best flat! You may be able to throw stuff out there at the dumb as a box of rocks Senators, but you can’t get that stuff past me!

To recap… The Tuesday night overnight session had the dollar being bought, but that buying was not handed over to the U.S. session, where the dollar got sold once again, with the BBDXY losing 4 index points yesterday… Gold has been up one day, down the next this week, and sees to be spinning its tires… In the overnight markets last night….

Before I head to the Big Finish today, I want to apologize for the tardiness of the letter this morning… I had an awful night, and then when the alarm went off this morning, I couldn’t answer the bell…  Just another sleepless night curtesy of Chemo… 

For What It’s Worth… There’s something happening here, what it is, ain’t exactly clear… The link to this article was sent to me by long time reader, Bob, and it’s about how the BRICs may be scheming to develop a new Reserve Currency, and it can be found here: BRICS developing global reserve currency – Putin (informationclearinghouse.info)

Or, here’s your snippet: “President Vladimir Putin said on Wednesday that the BRICS countries – Brazil, Russia, India, China, and South Africa – are currently working on setting up a new global reserve currency.

“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” he said at the BRICS business forum.

According to the Russian president, the member states are also developing reliable alternative mechanisms for international payments.

Earlier, the group said it was working on setting up a joint payment network to cut reliance on the Western financial system. The BRICS countries have been also boosting the use of local currencies in mutual trade.”

Chuck again… OH-NO! longtime readers may recall the BIG deal I made out of the formation of the BRICS, (Brazil, Russia, India, China, South America) and how they would be a force to reckon with in the future… Well, it looks like the future is now, and I don’t like it one iota!

Market Prices 6/23/2022: American Style: A$

That’s it for today… Can you believe that next weekend will be the 4th of July weekend? How’d that happen? It seem only yesterday I was singing: June is busting out all over! I’ll be all by myself next week, once again… This house that I had built 33 years ago, is not a big house, I was never tempted to buy a McMansion, but when I’m here by myself, it sure seems big… But, I’ll survive, I always do… I bet my former colleagues, Jen and Christine still think a man can’t function alone… My darling granddaughter, Delaney Grace will be in a play tonight that I will attend… Can you believe that my little Delaney Grace will be starting High School this fall? She’s such a sweet young girl, I hope High School doesn’t jade her… Tom Petty and the Heartbreakers take us to the finish line today with their song: Mary Jane’s Last Dance… I hope you have a Tub Thumpin’ Thursday today, and a Wonderful Weekend ahead, and don’t forget to Be Good To Yourself!

Chuck Butler

 

Yen Falls To A 24-year Low!

June 22, 2022

* dollar selling ends in the overnight markets

* Russia is not happy with the surge in the ruble… 

Good Day… And a Wonderful Wednesday to you! Well, how are you holding up in this heat? Ahhh, summer heat, you’ve gotta love it! That is unless you are a roofer, or other manual laborer that works outside in the sun! When I was a younger man, playing my guitar in the band, I used to work installing in-ground swimming pools in Oklahoma… Talk about working in the summer heat! But I was 18 at the time and the heat didn’t bother me because, I had grown up in house with only a one-room air conditioner, and was not allowed in that room during the day… I sat outside for a while yesterday, under an umbrella, and read a book.. it was hot for sure, but like I said yesterday, it IS Summer! My second favorite song by Chicago, greets me this morning: Beginnings…

The dollar continued its inch by inch drop yesterday, losing another index point in the BBDXY. Gold couldn’t find a bid all day though… It’s always strange to me when the dollar loses ground, but Gold can’t find a bid… Gold, on the day, lost $6, to close the day at $1,833.70. Silver on the other hand, speaking like a two handed economist, did find some buyers and the price in Silver rose 10-cents, to close the day at $21.76…

While we’re on Silver, I saw this bit of information yesterday, sent to me from the good Folks at GATA: “Recent data from the U.S. Commodity Futures Trading Commission suggests that Comex silver positioning is the most favorable since June 2019.

While this does not preclude more downside, it certainly suggests that any further price drops will be shallow.”

Chuck again… Yes, it does bode well for Silver, as long as the boys in the band decide to leave it alone… And Chances of that are slim and none, and Slim left town!

The price of Oil lost ground yesterday, after gaining it the day before… Oil ended the day trading with a $110 handle… Bonds were pretty much unchanged with only a 1 Basis Point drop in the 10-year’s yield.

In The Overnight markets last night… The dollar selling came to an abrupt end last night, and for some reason the overseas markets bought dollars, thus driving the BBDXY up 2 index points to 1,260 to start the day.  Gold has gained back the $6 it lost yesterday in the early trading today, and is up $7 today. Silver is giving up 19-cents to start the day..  The price of Oil has fallen out of bed in the past 24 hours, and trades this morning with at $104 handle, down over $5 overnight… 

Apparently, Oil traders finally realized that the global economies are heading to tough times, and even recessions in some countries, and the traders are running scared…  Really? They just now figured this out?  Oh well, the price of gas will be lower, and it’s about time to fill my gas tank! YAHOO! 

The 10-year Treasury’s yield has dropped more and this morning we start with a 3.20% yield… This is really getting stranger by the minute folks…I’m just saying! 

While looking up the markets prices this morning, I noticed that the price of Copper has really dropped, and trades this morning below the $4 level, for the first time in a month of Sundays… So, what’s this and the falling bond yields telling us? That, for some unknown reason, the markets participants are thinking that inflation has peaked!  

On of the things a good friend of mine, and one of my first bosses, Ed Bonawitz,  on the bond desk taught me many years ago… “the market is never wrong”… He would tell me that if you fought the markets, you would lose every time…  And this is one of those times that I feel the markets are wrong on this, but am I going to go out on a limb and be a contrarian, here? Nah, there are other fish to fry, and I think I’ll just let the markets get their rear ends handed to them! 

Well, the Japanese yen continued to drop and yesterday, reached a 24-year low VS the dollar… There are still not takers to participate in a coordinated intervention, to help the yen… The folks at the Bank of Japan (BOJ) have been wishin’ and hopin’ and thinkin’ and prayin’, for someone, anyone to say, Hey! Our currency is overvalued, we’ll sell our currency and buy yours! The only currency that’s overvalued is the dollar, and I just don’t see anyone at the U.S. Treasury thinking they need to save the yen… Besides, once the market hears that the U.S. was selling their dollars to buy yen, they would help them by selling even more dollars!

While the Japanese yen falls, the Russian ruble gains… The ruble has really outperformed all other currencies so far this year, and now the Russians are not happy with the surge in the ruble, and want to curtail the ruble’s ability to gain, without inviting inflation into their economy… I have an FWIW article on this later this morning, so please stick around for that!

Oh, and the Russian ruble has strengthened further overnight and trades with a 52 handle this morning! 

I had a dear reader send me a note and ask me to talk about the Singapore dollar (Sing)… She must be a newer reader because I used to talk about the sing quite a bit, and show that they were so tied to the Chinese renminibi, that it was scary… Not a technical tie to the renminbi, but a trading tie that basically followed the Chinese currency. Singapore is in competition with China for exports, and therefore can’t allow their currency to get to far out of whack from the renminbi… 

Moving on… The Asian currencies have been getting treated like a rental car, by the markets, and it’s all based on the fact that the Asian Central Banks have taken a more patient stance with rate hikes, VS the aggressive rate hikes by the Western Central Banks…   These folks (Asian Central Banks) have been doing this far longer than any other region, and they usually get it right, but this time, I have to question their collective lack of movement… But like I’ve said about the Japanese yen, they need inflation to spur on their economy… Not the kind of runaway inflation like we have here in the U.S. but 1-2% inflation in Japan would get things moving, for Japan has been in a deflationary scenario for over two decades now… 

The U.S. Data Cupboard today, still is lacking any real economic data, instead we get Fed Head talks… Today’s edition of Fed Heads on the talking circuit, will have Fed/ Cabal/ Cartel Chairman, Jerome Powell, testifying before the Senate Banking Committee… I’ve been quite hard on the Beaver, haven’t I June? I’ve called him on his lies, and intentional omittance of important information… So, I wonder what tid-bits he’ll throw out there today, that I’ll be able to diss him with? 

To recap… The dollar continued to get sold yesterday, but in the overnight markets the selling came to abrupt halt. Gold lost $6 yesterday, and has gained it back this morning…  The U.S. Data Cupboard is bare, and that’s really a good thing, because recent data has been just plain awful!  The yen has fallen to a 24 year low VS the dollar, while the Russian ruble continues to gain VS the dollar… 

For What It’s Worth… As I mentioned above, this is an article that talks about what Russia can do to halt the surge of the ruble, without allowing inflation and it can be found here: RUB USD Russia Debates Ruble Fix Without Dismantling Inflation Targeting – Bloomberg

Or, here’s your snippet: “ Russian officials are considering ways to keep the ruble on a tight leash without abandoning inflation targeting as they hunt for tools to tame the currency’s surge after sanctions ended the central bank’s ability to intervene directly.

Rather than removing a commitment to target price growth, officials would need a new mechanism as long as sanctions on the central bank are in place, according to people familiar with the matter. Among other options being considered is a further loosening of rules on currency operations for companies active abroad and more access to foreign exchange for households and businesses at home, they said.

The debate spilled into the public this week when First Deputy Prime Minister Andrey Belousov revealed authorities had discussed prioritizing economic growth and setting a goal for the ruble instead of inflation. The issue has taken on more urgency as the ruble surged to a seven-year high, increasingly posing a threat to exporters and public finances.

In the view of some senior officials, Russia needs to devise alternative instruments that would help steer the ruble in a way similar to a system the central bank had in place until 2014, the people said, asking not to be identified because the information isn’t public. At the time, it used foreign reserves to manage currency swings within a corridor.

Belousov, one of President Vladimir Putin’s top economic advisers, has said an “optimal” level for the ruble is between 70 to 80 rubles per dollar, relative to its Monday closing price of near 55.5. The Finance Ministry based its budget calculations for 2022-2023 around an exchange rate of about 77 and envisages a weaker ruble in the two subsequent years.”

Chuck again… Well, you may want your currency to be 77/ weaker, but this is what happens when you allow the markets to determine a currency’s value… You’ve already cut your interest rate from 20% down to single digits… if that didn’t scare away investors, I don’t think jawboning lower, it will help you…

Market Prices 6/22, 2022: American Style: A$ .6903,  kiwi .6255, C$ .7705, euro 1.0520, sterling 1.2240, Swiss $1.0351, European Style: rand 15.9647, krone 9.9640, SEK 10.1409,  forint 375.96,  zloty 4.4533,  koruna 23, 4855, RUB 52.87, yen 136.18, sing 1.3892, HKD 7.8500, INR 78.38, China 6.7124, peso 20.08, BRL 5.1274,  BBDXY 1,260.17, Dollar Index 104.50, Oil $104.74, 10-year 3.20%, Silver $21.49, Platinum $940.00, Palladium $1,885.00, Copper $3.98, and Gold… $1,839.96

That’s it for today…  Well that was quite a game at the plate for Cardinals rookie Nolan Gorman last night, as the Cardinals won their game VS the Brewers… Like I said yesterday, they need to win VS the Brewers, and last night was a start! I getting excited about tomorrow night… We’re going to see Sebastian Maniscalco, who in his specials on cable, had me cracking up and laughing out loud…  Should be a good time!  Be careful out in the sun folks, no need to get a heat stroke!  Neil Young takes us to the finish line today with his song: Four Strong Winds… I hope you have a Wonderful Wednesday today, and please remember to Be Good To Yourself! 

Chuck Butler

 

A New Inflation Hedge?

June 21, 2022

* The dollar continues to get sold… 

* The Swiss National Bank Hikes rates! 

Good Day, and a Tom Terrific Tuesday to you! A real pitcher’s duel last night in Milwaukee, had the Brewers besting my beloved Cardinals 2-0. It was the first game of 4 game set VS the Brewers, so it would behoove the Cardinals to win the next 3 games! Well, my Father’s Day was simply delightful, all my kids were here, along with the grandkids, and the temps had backed off a bit making it a picture perfect day to be outside! My two sons took over the cooking for the day, and did a bang up job! If only the Cardinals could have won on Father’s Day, that would have topped the day! I got to see my dentist yesterday, and she told me I was doing fine, with my teeth that is… The ones I have remaining are holding up fine. The Beatles greet me this morning with their song: Norwegian Wood… “I once had a girl, or should I say, she once had me?”

Well, forget about all the nastiness in the markets, and the economy that is failing on all 8 cylinders right now, because Fed St. Louis President, James Bullard, gave a speech yesterday, and said, (you won’t believe these words came out of his mouth) “That he expects the U.S. economy to remain robust”… Still trying to sway the people into believing the lies that the Gov’t, Treasury, and now the Fed Heads keep spewing out of their mouths, so that the people don’t turn to rakes and pitchforks and storm the gates… Or, more likely, vote the bums out in November… But can you believe he had the braziness, or the audacity to say something like that, when the first quarter’s GDP was negative -1.6%, and the 2nd QTr’s GDP is forecast to be flat, with no growth, and probably even negative, thus making this a Technical Recession… You know, if I had been in the audience, when Bullard was making this claim, I would have, put my hand in the air, and started in my best Arnold Horshack voice, “Call on me, Call on me, Call on me, Mr. Kotter, I mean Bullard!

And I would have asked him to show the proof of a robust economy, and to prove the folks that compute GDP that they were wrong… But since these Fed Heads have rock star status, no one, and I mean no one in the audience even thought to question him!

Well, the dollar had been getting sold since the middle of last week, and yesterday was no exception. The dollar saw selling throughout the day. The BBDXY has lost 4 index points since last Thursday morning. The euro is back above 1.05, and Gold had a good day last Friday, but didn’t see enough bids to keep Gold from closing the day at -$1.10, to close yesterday at $1,839.70, and Silver lost 8-cents to close yesterday at $21.66….The Boys in the Band kept a lid on Gold all day, not allowing to get its head above water all day…

The price of Oil rebounded $2 yesterday to close the day with a $112 handle, and just what’s going on in bonds is becoming stranger than fiction… Bond yields have dropped since the Fed hiked rates last week… Go figure… So, do you think it’s the Fed Heads doing the buying, even though they pinky swore that they wouldn’t buy bonds again?

In The Overnight Markets last night… The dollar continued to get sold, with the BBDXY  losing another 1 index point to trade this morning at 1,257. The euro has bumped higher, as is always the case when the dollar loses ground.  The Russian ruble continues to be the best performing currency this year, even after its horrendous start! The Swiss franc has bumped higher after the SNB rate hike last week, but c’mon the Swiss banks still charge you for deposits!  

The price of Oil has slipped again overnight, and fallen back to a $109 handle this morning, and Bonds continue to get bought, bringing the yields down, in a case of mistaken identity… I say that because, people are buying the 10-year, thinking that its yield has peaked… 

Well, late last week, the Swiss National Bank (SNB) hiked their internal rate 50 Basis Points from negative -.75% to negative -.25%, their first rate hike in 15 years! And guess what Deutsche Bank then announced? Try not to laugh out loud at your desk, you could get in trouble, or wake someone up! Deutsche Bank announced that they believe that after the rate hike that the Swiss franc is now a better hedge against inflation than Gold…. They truly said that! A currency that charges you for holding a deposit, is better than Gold at hedging inflation? LOL!

Well, now wait a minute there Chuck-a-roo… It is true that while you have Swiss francs on deposit, you’ll get charged, but for the most part the currency isn’t manipulated like Gold is subjected to on a daily basis… But, I’m still not buying it! There was a time about 8-10 years ago, when the SNB put an artificial cap on the franc’s upward movements to keep it from getting out of line with the euro… But, eventually, the floor/ ceiling didn’t last, and it was scrapped… Also, remember the man that put the cap on the franc, only to find out his wife had profited Big Time and he was put to shame and removed at SNB President…

That puts the Bank of Japan and the European Central Bank as the only two major Central Banks that haven’t done anything to combat inflation in their countries… The Bank of Japan (BOJ) is a different animal that I’ve explained previously, why they will drag their feet to the rate hike window, but the ECB is just plain stupid…  I present my case here: Earlier this month, the ECB met and instead of hiking rates then, they announced that even though inflation is soaring in the Eurozone, they would wait until July to hike rates… Wait, What?  They must think that the soaring inflation will magically disappear in June, and they won’t have to hike rates come July!  Stupid, stupid, stupid! 

There was an article in the Atlantic this past weekend that talked about how the end of the Everything Bubble doesn’t mean that the little guy will be helped… You, know, that the Everything Bubble, was a result of the Fed’s zirp (zero interest rate policy), printing more currency than at any time in the past, and buying bonds of zombie companies, to keep them afloat… Well, as Meatloaf once sang: Two out of three ain’t bad”… In that I mean that the Fed Heads have begun to aggressively hike rates, to end ZIRP… They have said, that they are out of the bond buying business… But I’m sure Money Supply isn’t taking on any water right now, and the proverbial printing press is still working overtime… So, 2 out of 3…

But who knows for sure what the heck the Fed Heads are doing right now with Bonds… As I stated above, bond yields have fallen since the Fed Heads hike rates last week… When bond yields drop, that means the price of the bond has gone up, and the only way for that to happen is the bond sees buyers lined up, down the street and around the corner, past the deli, and the laundry… Or, in lieu of many buyers, one HUGE BUYER could be taking up the slack… And that one HUGE BUYER is….. You’re going to have to use your own imagination, about who that could be, and I’m sure you will have no problem in coming up with who that might be!

I don’t know if you saw this or not, I’m guessing you didn’t… But Reuters reported last week about a meeting taking place overseas, that the members are calling the “new G8”… Let’s check in to see what’s up: “The speaker of the Duma, Vyacheslav Volodin, may have created the defining acronym for the emerging multipolar world: “the new G8”.

As Volodin noted, “the United States has created conditions with its own hands so that countries wishing to build an equal dialogue and mutually beneficial relations will actually form a ‘new G8’ together with Russia”.

This non-Russia-sanctioning G8, he added, is 24.4% ahead of the old one, which is in fact the G7, in terms of GDP in purchasing power parity (PPP), as G7 economies are on the verge of collapsing and the US registers record inflation.

The power of the acronym was confirmed by one of the researchers on Europe at the Russian Academy of Sciences, Sergei Fedorov: three BRICS members (Brazil, China, and India) alongside Russia, plus Indonesia, Iran, Turkey, and Mexico, all non-adherents to the all-out Western economic war against Russia, will soon dominate global markets.”

I hope the “new G-8” will have more to do with what’s going on in the world that the G-8 that the U.S. runs… I think that in all of the years that I’ve been writing the Pfennig, it marks 30 years this year, I only recall one time the U.S. led, G-8 met and came back with a message of currency intervention to save the euro, which at the time was falling toward parity with the dollar… One time! Only one time… In that case I’m staying home and relaxing in my PJ’s until noon, no need to travel to what-ever-the-name-of-the-country-du-jour-is… I’ll just call it in, and not wait on hold while the votes are counted!

The U.S. Data Cupboard yesterday, only had the aforementioned James Bullard speech, and today’s Cupboard has more speeches form the Fed Heads, and tomorrow, Fed Chairman Powell, will face the music of the Senate Banking Committee, while the actual data prints just aren’t on the docket for this week, so far… I long for the days when we would see a plethora of data prints, and not just speeches by the Fed Heads!

To recap… The dollar continues to see selling, that began in the middle of last week…The euro is back above 1.05… In all that dollar selling, Gold has had a governor put on it’s upward movements, by the price manipulators… The Swiss National Bank hike rates last week, but their internal rate on deposits is still negative…  And the overnight markets saw more dollar selling, but Gold & Silver are in the red to start the day today. 

You know, today’s traders, for the most part, have never seen a bull market! It’s comforting to know that they’ll deal with all those derivatives when they come flying off the shelves to make the holder good on the trade… NO! that isn’t comforting at all!

For What It’s Worth… I came across this article this past weekend, and made a note to come back to it, and when I did, I liked it a lot, for it is a very intelligent person, saying the “all-everything bubble” is getting popped, and the article can be found here: Economist Mohamed El-Erian says that central banks are catching up to inflation after years of loose monetary policy | Fortune

Or, here’s your snippet: “Wednesday’s decision by the Federal Reserve to hike interest rates by 75 basis points was its biggest hike since 1994, and economists are starting to digest what a paradigm change it is.

One of the world’s most prominent Fed watchers, Mohamed El-Erian, chief economic adviser of financial services firm Allianz and president of Queens’ College at Cambridge, says it’s part of a “great awakening” for central banks, as several others took action this week.

For instance, the Swiss National Bank imposed a 50 bps increase, its first since 2007, and the Bank of England initiated a more modest hike of 25 bps. The European Central Bank (ECB) recently announced at an emergency monetary policy meeting that it would initiate its first rate hike in over a decade next month and continue with another in September.

Before this spate of dramatic hikes, central banks had been significantly leading investors astray, he said on CNBC’s Squawk Box on Thursday.

“It’s about time we exit this artificial world of predictable massive liquidity injections, where everybody gets used to zero interest rates, where we do silly things where there is investing in parts of the market we shouldn’t be investing in, or investing in the economy in ways that don’t make sense,” he said. “We are exiting that regime, and it’s going to be bumpy.”

El-Erian is referring to the fact that for most of the past 14 years, monetary policy in the U.S. and internationally has been consistently loose, with the Fed and other central banks setting interest rates low and letting money flow to commercial banks by buying up assets and stocks. (Some critics argue that the 1990s were also extraordinarily loose.) That spurred economic growth in the face of several economic crises but also led to multiple economic bubbles—from housing to crypto to VC-backed subsidies for things like cheap Uber prices—existing at once. Now, all those bubbles are poised to dissipate as banks tighten their policies and stop the free flow of cash.”

Chuck again… El-Erian goes on to say that the impetus of this shift was the 75 Basis Points rate hike by the Fed. Whatever it is that’s causing this shift, I’m all for it!

Market Prices 6/21/2022: American Style: A$ .6947,  kiwi .6331,  C$ .7722, euro 1.0553, sterling 1.2261, Swiss $1.0333, European Style: rand 15.9345, krone 9.8061, SEK 10.0818,  forint 375.78,  zloty 4.4011,  koruna 23.3955, RUB 54.71, yen 135.94, sing 1.3862, HKD 7.8500, INR 78.06, China 6.6995, peso 20.18, BRL 5.1906  BBDXY 1,257.96,  Dollar Index 104.30, OIl $109.91, 10-year 3.28%, Silver $21.69, Platinum $941.00, Palladium $1,864.00, Copper $4.05, and Gold… $1,833.37

That’s it for today… The hot temps are back today here in the Midwest. I heard someone say the other day, “we’re not even to summer yet”… I thought, hey! we’ve seen these hot June’s before, this is nothing new, and besides I’d rather it was hot than cold!  I watched the 007 movie, No Time To Die, and without giving away the ending, I saw something in the movie that I never would have thought I would ever see! I’ll leave that there… Little Evie stayed with us on Saturday night, and we had her in the pool…She is fearless! I think she might be ready to swim by the end of summer! She has a dad that’s a swim coach, and aunt that used to be a swim coach, and an uncle that was quite the swimmer too… Three Dog Night takes us to the finish line today with their song: Out In The Country… I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself!

Chuck Butler

 

What Happened Yesterday?

June 16, 2022

* Currencies, and metals rally on Wednesday

* Atlanta Fed’s GDP forecast a zero % 2nd QTR GDP! 

Good day, and a Tub Thumpin’ Thursday to one and all! Well, if you were James Rickards and you had cried wolf 3 previous times about the stock market collapsing, and now you cried wolf again, and things didn’t work out in your favor, where would you hide? I’m not knocking Jim, just pointing out something I keep pointing out and that is that it is very difficult to actually pick a day that the stock market will collapse… For those of you keeping score at home… Stocks rallied yesterday, after the Fed announced their 75 Basis Points Rate hike… Now, I still believe, as James Rickards does, that the stock, housing, and everything bubbles are going to get popped, it just didn’t happen yesterday. Marvin Gaye greets me this morning with his great song: Inner City Blues…

The dollar actually got sold after the rate announcement, so… as I said yesterday, it appeared that there was a case of buy the rumor of a rate hike, and sell the fact, in place… The BBDXY lost 8 index points yesterday, the first time the dollar has been sold like that in a month of Sundays! Here’s MarketWatch’s view of yesterday: “After a muted initial reaction that saw the Treasury yield curve briefly invert, prices of bonds, stocks and even cryptocurrency prices rallied as Powell left enough wiggle room on the size of the hike that investors can expect at the July meeting, with Powell saying that he could go with 75 basis points or 50 basis points — and that the Fed would, as always, remain data dependent.”

Chuck again… yes… and believe it or don’t, Gold & Silver also rallied on the day! Gold gained $26, to close the day at $1,835.50, and Silver gained 65-cents to close the day at $21.77… There was no sight of the price manipulators yesterday, so Gold & Silver were free to move about the country! I wonder just what traders are thinking these days…. Like I proposed, in an earlier Pfennig… I suspect the Fed Heads will feel as though they’ve done all they can to combat Inflation, and revert to smaller rate hikes, if any… And judging from what the MarketWatch article says… “Powell left enough wiggle room on the size of the next rate hike”…

In the overnight markets last night…. The dollar fought back and rallied nearly 3 index points in the BBDXY. The euro has dropped below 1.04, and even the Norwegian krone is getting sold, as it trades this morning with a 10 handle…  The Russian ruble saw a little slippage overnight, but is still the best performing currency VS the dollar. 

Gold & Silver can’t stand their profitable day yesterday, and are getting sold in the early trading today, with Gold down $10, and Silver down 26-cents.  The price of Oil has really stumbled on a fear of lack of demand, and trades this morning with at $113 handle.  Bonds, have really gotten sold, and the 10-year’s yield has risen to 3.54%!    The yield curve is stil inverted with higher yields in shorter dated bonds… 

Where do we go from here? Now that all of the children have grown up? How do we spend our time, knowing nobody gives us a damn? (Alan Parsons) if the markets aren’t impressed with the 75 Basis Points rate hike, then why should we be impressed? The markets had this pie in the sky idea that Jerome Powell would turn into Paul Volcker, and hike rates 100 Basis Points and then come out emphatically saying that another one just like that one will come next month… I can tell you this now, it is my impression that Jerome Powell didn’t want to hike rates 75 Basis Points, but he was out voted, but now he has 6 weeks to convince his fellow Fed Heads that they do not need to hike rates 75 Basis Points more, that they need the usual time period that it takes for a rate hike or cut to take effect in the economy…

The other thing I see here with the markets and the Fed Heads, is that the markets have now come to the realization that the Fed Heads are so far behind the inflation 8-ball that they can’t even see it any longer… The People of this country are also finally realizing this… The U of Michigan Consumer Confidence report started in 1951, and in all that time it has never been as low as it was last month… And in a recent poll, the POTUS’ approval rating was lower than Jimmy Carter’s was in 1979, when inflation was lower than it is now! And we all know what happened to Jimmy Carter’s reelection bid, right?

I’m not a political person… Shoot Rudy, if you want to tick off half the people that are in a room, just give your views on Politics… I just that this data comparing him to Jimmy Carter was interesting…

Oh, and even with the rally in Bitcoin yesterday, the cryptocurrency is down over 70% since last November… I’m going to put to bed a lot of people’s FOMO (fear of missing out) with that information, I know… You can thank me by sending me a donation… HA! Just kidding…

Want some more interesting data? Ok, here goes: The 10 year Treasury yield now exceeds the levels of 2018 that markets couldn’t handle then forcing the Fed to flip flop on rate hikes & Tapering, and began cutting rates 3 times in 2019.

The difference between now and then… The 2018, levels are being exceeded with over $8 trillion in additional debt added in less than 4 years. WOW! That’s very interesting, eh?

And here’s Dave Gonigam at the 5 minute Forecast yesterday with his input on interesting points:
“By the time you read this, the Fed will have raised short-term interest rates by three-quarters of a percentage point — something it hasn’t done since 1994.

We’ll unpack the nuances tomorrow… but in a way, they don’t really matter. What matters is that this is the third increase in three consecutive Fed meetings — a sequence that’s preceded nearly every market crash since 1919.” – Dave Gonigam from the 5 Minute Forecast

So, as you can see, there’s a reason for calling for a stock market collapse… But it will take more than one day for that to happen, in my humble opinion!

The U.S. Data Cupboard yesterday, had the May Retail Sales for our viewing, and what we saw was not good… May Retail Sales, printed negative -.3%… Things are costing too much apparently, and there just wasn’t enough Mother’s Day Sales to help the Retail Sales data… And of course, we’ve already gone over the Fed Heads’ rate hike with a fine tooth comb…

To recap… The Fed hiked rates 75 Basis Points, but left the door open for a smaller size rate hike next month… This news shocked the market, and instead of buying dollars, they sold dollars, and instead of selling stocks, they bought stocks, and instead of selling Gold, they bought Gold… Crazy days, indeed, but a case of buying the rumor and selling the fact, for sure! In the overnight markets, the dollar got bought, and recovered some of its losses yesterday, which totaled 8 Index points in the BBDXY dollar index… Gold & Silver are giving back some of their gains yesterday in the early trading, and the price of Oil has dropped $5 overnight… 

For What It’s Worth… OK, you all recall the Atlanta Fed’s GDP Now program, that shocked the markets at the start of the year, claiming that 1st QTR GDP would be zero, right? Well, they were right, in fact the 1st QTR GDP was -1.6%… Well, guess who’s claiming 2nd QTR GDP will be zero again? Oh, you guessed it, there’s no fooling you! This article can be found here: Atlanta Fed Slashes Q2 GDP Forecast To Zero Confirming Technical Recession | ZeroHedge

Or, here’s your snippet:” Curious why stocks are soaring today ahead of an expected 75bps rate-hike by The Fed (further tightening financial conditions as QT starts shrinking the Fed’s balance sheet)?

The answer comes courtesy of the Atlanta Fed which just confirmed the economy is in technical recession.

After a week of rampant jawboning to adjust the market’s expectation for The Fed’s actions later today (after last Friday’s unexpected resurgence in CPI), the continued erosion in economic data (most notably retail sales this morning) has prompted The Atlanta Fed to slash its forecast for Q2 GDP growth from +0.9% to 0.0%, meaning the US is now right on the verge of a technical recession (after Q1’s contraction).

According to the Atlanta Fed’s GDPNow model estimate for real GDP, growth in the second quarter of 2022 has been cut to just 0.0%, down from +0.9% on June 6, down from 1.3% on June 1, and down from 1.9% on May 27.

As the AtlantaFed notes, “After recent releases from the U.S. Bureau of Labor Statistics, the U.S. Census Bureau, and the U.S. Department of the Treasury’s Bureau of the Fiscal Service, the nowcasts of second-quarter real personal consumption expenditures growth, second-quarter real gross private domestic investment growth, and second-quarter real government spending growth decreased from 3.7 percent to 2.6 percent, -8.5 percent to -9.2 percent, and 1.3 percent to 0.9 percent, respectively.”

In short: the U.S. consumer is getting tapped out, just as we have been warning repeatedly.

Which also fits with Jamie Dimon’s recent “downgrade” of the economy from “storm clouds” to “hurricane”… and also makes some sense given the recent collapse in macro data relative to expectations…

Chuck again….  Ooh, may I have another one of those technical recessions? Oh don’t worry, you’re going to get them in the coming quarters… I’m actually surprised that the powers that be don’t squelch the Atlanta Fed’s GDP Now folks, and their reports!  

Market Prices 6/16/2022: American Style: A$ .6951,  kiwi .6250,  C$ .7726, euro 1.0387, sterling 1.2138, Swiss $1.0207, European Style: rand 15.9902, krone 10.0744, SEK 10.2966,  forint 383.47,  zloty 4.5372,  koruna 23.8078, RUB 57.24, yen 132.84, sing 1.3907, HKD 7.8499, INR 78.07, China 6.7183, peso 20.58, BRL 5.0569,  BBDXY 1,263.37,  Dollar Index 105.00, Oil $113.39, 10-year 3.45%, Silver $21.43, Platinum $934.00, $Palladium $1,862.00, Copper $4.13, and Gold… $1,823.90

That’s it for today… Well, my beloved Cardinals couldn’t make it a 4 game sweep last night VS the Pirates, but finished the home stand 5-2, which is pretty darn good… I stayed up to watch the Tampa Bay / Colorado Stanly Cup finals game 1 last night… and it went into overtime!  So, once again I’m dragging the line this morning… Sat outside with good friend, Duane, to watch the baseball game last night, he bagged me around the 6th inning, and I had to sit through a game that saw the Cardinals have runners on base just about every inning, and fail to score… UGH! Well, I’m back to the weight I was a year ago, when I was at my lowest level in over 15 years! Now, if I can only go lower! This Sunday is Father’s Day… I won’t bore you with tales about my dad, like I’ve done in past years… I do want to say that Father’s are so important in a child’s life, just like a Mother is, I look at my 3 kids and think that they have carved out nice lives for themselves, and hopefully I had something to do with that! So hug your dad! Tell him you love him! Make him feel good!  And there will be no Pfennig on Monday… I have a tooth problem, and I get to go see my Dentist,  Holly….. Sniff-N-The Tears takes us to the finish line today with their song: Driver’s Seat… Years ago, I highlighted this song, and soon I was talking on the phone with the bass player from the band! I hope he’s still a reader! I also hope that you have a Tub Thumpin’ Thursday today, and will please remember to Be Good To Yourself!

Chuck Butler

 

 

It’s A FOMC Day!

June 15, 2022

* Interest rates in the U.S. will be raised today… 

* Billing dead people… 

Good Day and a Wonderful Wednesday to you! My beloved Cardinals swept the Pirates in the double header yesterday, and the second game, Cardinals pitcher, Mile Mikolas, almost pitched a no- hitter… 8 2/3rds of no hit ball! I’ve been in the stadium for a no hitter many years ago, when Bob Forsch pitched one against the Montreal Expos… It was so tense last night for that last batter, I almost turned the TV off because I couldn’t deal with the tension! Again, I’ll ask, is there a hotter hitter in baseball than the Cardinals, Paul Goldschmidt? If the season ended today, he would sin the MVP award hands down! But, we’re not even half way through the season… My good friends, Duane and Mike sat outside with me last night to watch the game… It was warm, but not as hot as it was during the day! I’m going to surprise everyone today, with my song that greets me… It’s The Carpenters and their song: Superstar…

Well, the Pfennig was very tardy yesterday, but I had an excuse, and it wasn’t because my dog ate it, or that It fell out of my hand on the way to school and wind blew it away…. Technical reasons… was the cause of the tardiness… These things happen now and then, so I don’t get all upset when they happen, and wonder why the hell did I wake up so early to get the letter out and then not have it go out… I’ve grown up and my temper is controlled now…

Today’s the FOMC day, and we’ll peal the band aid off interest rates… At least that’s what the markets are anticipating, the FOMC will do, with a 75 Basis Points rate hike… I went out on a limb yesterday and said that I thought that after tomorrow, the Fed Heads will think that they’ve done enough to calm inflation for now… That will bring about dastardly results, but that’s something that’s coming our way whether the Fed continues to fight inflation, or takes a pause for the cause…

The dollar, after spending the overnight markets wallowing around in the mud, got bought again in the U.S. session yesterday, the BBDXY gained 5 points, to close the day at 1,271.62…. The larger they are the harder they fall, isn’t that what your dad taught you many years ago? For, it’s what my dad taught me, and I think it will play out with the dollar, but we all have to very, very patient… But, If, I’m any good at reading the tea leaves, and the looking into the witches’ boiling cauldron… I believe we’ll all be still in our places with bright shining faces to see the all mighty dollar fall to its knees…

So, with the dollar getting bought left and right, Gold never found a bid yesterday, and lost $10.20, to close the day at $1,809.50, and silver lost 1-cent to close at $21.12… Man, I sure wish I was still employed and making the money I used to make, so that I could allocate more to physical Gold & Silver…

The price of Oil slipped again and ended the day trading with a $119 handle, while bonds continued to get sold, and see their yields rise, with the 10-year’s yield ending the day at 3.42% We’re getting very close to the time that we’ll need to buy bonds again, folks… very close, but hold your horses at the gate, because it’s not time yet!

In the overnight markets last night… well, believe it don’t, but the dollar saw some selling overnight… The BBDXY lost 3 index points last night, and Gold is up $24 in the early trading… What’s up with that? Could we be seeing a case of buy the rumor, sell the fact?  Could the markets be seeing things like I do, in regards to the Fed Heads and what they will say after they hike rates 75 Basis Points today?  That would be a first time in the blue moon, that the markets agreed with Chuck!  We’ll have to wait-n-see until this afternoon, when the Fed Heads announce the rate hike, and then tell us what’s on their collective minds…. 

So, like I just said, Gold is up $24 in the early trading today, and Silver is up 46-cents. Ed Steer asks the question this morning, “Are we done to the downside now?”  Well, if things go the way I think they will today, I would say, yes….   The price of Oil slipped a bit overnight and trades with a $118 handle this morning… Bonds got bought overnight too, and the yield in the 10-year dropped from 3.42% yesterday to 3.36% this morning.   

Oh, and I need to mention that the one currency still standing up to the dollar, is the Russian ruble… See what happens when you back a currency with a commodity, like Gold or Oil? The ruble gained VS the dollar overnight and trades this morning with a 55 handle…  

I found this in Dave Gonigam’s excellent 5 Minute Forecast yesterday… “Yes, the media are starting to invoke memories of 2008. “Liquidity in the market is worse than it was leading up to Lehman,” Christian Hoffmann tells Bloomberg.

Hoffmann would know, having worked for Lehman Bros. at the time it imploded in September 2008. Lehman, you might recall, was the seminal “oh s***” event of the global financial crisis.”

Uh-Oh! Liquidity is becoming a problem? Double Uh-Oh! Now, I’m not trying to scare you all… I’m simply attempting to point out what’s coming, so you can make the investment portfolio changes you need to make… But I’m telling you here, so maybe you’ll listen to me later, that all investment portfolios need to have allocations to Gold & Silver!

So, just so you hear this one more time from me… Today, June 15th, is the day that James Rickards has chosen as the day the stock market begins its collapse with one huge downward swing today… To be perfectly clear, Rickards has said this same thing about 3 times for 3 different dates in the past, and not one has produced a collapse of the stock market… But this time, I think he’s on to something, and it’s all tied to the Fed’s FOMC today… While I’m not here to talk about stocks, I am here to talk about the economy, and since 2009, when Quantitative Easing was first introduced, along with ZIRP (Zero interest rate policy) the stock market, in the minds of the masses, has become “the economy”…

I can’t begin to tell you just how screwed up the whole shootin’ match of our economy, the dollar, the stock market, bonds, etc. have become… And what they will turn out to be.. screwed up!

And to add to that totally rainbows and butterflies thought (NOT!) this also was in the 5 Minute Forecast yesterday: “Small-business owners are as glum as they’ve ever been in their working lives, judging by the National Federation of Independent Business’ latest survey.

The headline number on its “Optimism Index” isn’t too awful — ticking down slightly in May to 93.1, on par with the period from 2011–2016. But when it comes to expectations for business conditions during the next six months, the response is the weakest in the 48-year history of this survey.

“Expectations for better business conditions have deteriorated every month since January,” write NFIB economists Bill Dunkelberg and Holly Wade. “Small-business owners remain very pessimistic about the second half of the year,” Dunkelberg adds, “as supply chain disruptions, inflation and the labor shortage are not easing.”

Asked to identify their single-most important problem, 28% of survey respondents cite inflation. But good help is still hard to find, with 23% citing “quality of labor.” Taxes and personnel costs are tied for third place, each cited by 12%.” – The 5 Minute Forecast 6/14/2022

OK… A dear reader asked me to talk about the rot on the vine of the Japanese yen… You know, a few years ago I talked about Japan as a “basket case”, and that they were hanging on by a string… Well, that string was stretched, and lasted until recently… The yen is trading around 1.35, a level it hasn’t seen in nearly 40 years, and the outlook for the currency is not good, with some analysts calling for yen 150! At 150, the yen wouldn’t bring Japan to its knees, but it would allow inflation into the economy, and unless the Bank of Japan failed to learn from the Fed heads mistakes on dealing with inflation, they will have to come off their negative rates, and starting acting like an adult!

The U.S. Data Cupboard yesterday had the PPI (wholesale inflation) for May, and it increased .8% in the month… This data simply shows us that inflation pressures that we feel will not be abating any time soon…

Today’s Cupboard is dominated by the FOMC meeting that will culminate this afternoon, but before we get there, we’ll see the color of the May Retail Sales…. Remember that I told you earlier this week that the Butler Household Index (BHI) indicates to me that May Retail Sales will be disappointing at best… There’s just enough disposable income to go around to boost Retail Sales folks…

To recap… The dollar continued to gain hand over fist on Tuesday, during the U.S. session, with the BBDXY gaining 5 index point on the day! Chuck still thinks the dollar is like a star getting ready to burn out… The Fed’s FOMC meeting is today, and we’ll most likely see the Fed Heads raise their Fed Funds rate 75 Basis Points (3/4%)… And that will most likely be the pin that the housing bubble and stock bubble or for the everything bubble to find and pop!

People like me that grew up in a time in this country where fundamentals ruled, right and wrong, was clear cut, and people paid their debts, and didn’t look to the Gov’t to pay them for them, just don’t get how things could get this bad again… We never learned a darn thing from 2007/08, did we?

For What It’s Worth: it was like pulling teeth without pain killers this morning, finding a worthy FWIW article, and I finally settled on this one, that talks about an Australian Finance Co. that was billing dead people. Only in these days can something like that happen, and it can be found here: Former CBA subsidiary Avanteos fined $1.71m after charging dead people fees (brisbanetimes.com.au)

Or, here’s your snippet: “A former subsidiary of the Commonwealth Bank has been fined $1.71 million for charging fees to almost 500 dead superannuation members after it failed to reveal the practice in its disclosure statements.

Avanteos Investments Limited pleaded guilty to 18 offences in December last year for failing to update defective disclosure statements for a number of its superannuation products. The inaction meant fund members were not told they would be charged adviser service fees after they died.

As a result, over a period of more than two years, a total of 499 dead members were charged almost $700,000 in fees by Avanteos, which traded as Colonial First State Custom Solutions. It has since refunded the fees to members’ estates or beneficiaries.

On Wednesday, Judge Trevor Wraight of Melbourne’s Country Court described Avanteos’ conduct as a “very serious failure of corporate governance”. He also labelled it an example of a financial corporation putting its own interests above those of its investors as he ordered the company to pay $1.7 million.”

Chuck Again…  I mean after all the shenanigans that Wells Fargo pulled in recent years, I’m surprised there aren’t more of these scandals out there being exposed…. And maybe with all the bad stuff that’s going to come down the pike they will be exposed…  And that reminds me of the scandals when the dot.com bubble popped… 

Market Prices 6/15/2022: American Style: A$.6950,  kiwi .6257,  C$ .7735, euro 1.0475, sterling 1.2116, Swiss $1.001, European Style: rand 15.9899, krone 9.9325, SEK 10.1444,  forint 378.79,  zloty 4.4567,  koruna 23.5836, RUB 55.92, yen 13514, sing 1.3902, HKD 7.8499, INR 78.07, China 6.7070, peso 20.59, BRL 5.1168,  BBDXY 1,268.38,  Dollar Index 105.20, Oil $118.39, 10-year 3.36%, Silver $21.51, Platinum $948.00, Palladium $1,850.00, Copper $4.22, and Gold… $1,832.76

That’s it for today… I’m tired this morning, having stayed up to watch the baseball game, and to watch the recap, to hear what the players thought about the near no-hitter… Same Bat Time, Same Bat Channel for tonight’s game! My beloved Cardinals then head to Boston to play 3 games VS the Red Sox this weekend… Michael Wacha a pitcher for the Red Sox, used to pitch for the Cardinals… The Cardinals will face him this weekend… Tampa Bay and Colorado begin the Stanley Cup Finals Series tonight… Tampa Bay is the two-time defending Champions, so they’ll be difficult to beat, in my opinion… But what do I know, I picked the Blues to win it all! Well, it was HOT here yesterday, and will the same today… I like warm weather, not hot weather, but I know I can’t be choosy… We’re always at the whim of Mother Nature! The great band, Yes, takes us to the finish line today with their song: Soon… I hope you have a Wonderful Wednesday today, and please remember to Be Good To Yourself!

Chuck Butler

 

 

Gold Gets Whacked Courtesy Of….

June 14, 2022

* The dollar got bought by the bushel full on Monday

* A potential bank run going on in China… 

Good Day… And a Tom Terrific Tuesday to you! Well, it’s a hot one, like 7 inches from the midday sun… My beloved Cardinals came from being down 0-5, to win last night! They GET to play 2 today, in the 100+ temps… All I’ll say about that, is the current players should be happy as can be, that they don’t wear the old wool uniforms that players wore years ago… I wore wool unis, and they were hot… I recall one year while I was playing catcher, the temps were 100+, and I would come to the bench soaked with sweat, and the moms would put cold wet towels over my head. They were like manna from heaven! I was named the best player on the team that year, and afterward, my baseball career had peaked! But I continued playing until I was 18… College baseball wasn’t as big a deal as it is nowadays, and I had no pro scouts, looking at me, so, I hung up my cleats, and went to play music instead! The Grassroots greet me this morning with their song: Let’s Live For Today…

Well… yesterday was just plain ugly in the markets… Stocks got sold, Bonds got sold, Gold & Silver really got sold, and I’m sure the cryptos were rocked on the news that one of the cryptos had announced they were not allowing withdrawals… Uh-Oh! The only thing that went up was the dollar… The BBDXY rose 5 more index points yesterday to close at 1,266… Like I said last week, this trading in the dollar has gotten out of control, and reminds me a dying star, that burns its brightest right before it goes out… The dollar certainly is burning bright right now…

I don’t want to talk about the Gold & Silver action yesterday, but I guess I’ll have to… Gold lost $53 on the day to close at $1,818.70, and Silver lost 88-cents to close at $21.03… No need to double check those numbers, they are correct! Gold spent the day being subjected to arms full of short Gold contracts showing up at the COMEX… My good friend, Dennis Miller, will be sending out a letter on Thursday this week regarding dollar cost averaging… To me, I’ve always been someone that as far as stocks are concerned, I never dollar cost averaged my trades… But I have with Gold & Silver, taking the opportunity to buy at cheaper levels when they were presented to me…

My longtime friend, and former colleague, Ty Keough, used to tell clients, when their currencies lost value to the dollar, “This is the time you get to buy more of the currency that you like”… Now that’s dollar cost averaging for you! And I’ve always written that there are times to batten down the hatches, and only look to buy if the opportunity presents itself…

So, these are some very cheap levels for Gold & Silver, what will you do about that? I’m fully allocated with the amount of Gold & Silver that I own, and so I’ll have to sit this opportunity to buy cheaper on the sidelines…

The price of Oil rebounded yesterday and ended the day trading with a $121 handle… And bonds? Oh My! The 10-year Treasury’s yield rose to 3.37% after starting the day at 3.25%! The bond boys are making sure that they will see yields rise, now that the Fed Heads are out of the bond buying business…

In The overnight markets last night… There was little to no movement in the dollar, so the markets took a breather last night, and backed off from buying more dollars. But they didn’t sell the dollar either, so it was a nothing night… Gold & Silver are basically flat this morning. Could the markets already be prepping their books ahead of the FOMC rate announcement tomorrow?  It sure does look that way to me.  The price of Oil is trading with a $121 handle this morning, and Bonds, too have taken a breather in the overnight markets. 

I had a dear reader write me this past weekend, and ask me to write about ways the Federal Gov’t could reduce inflation… Well, I think I have done that in bits and pieces, but here goes… The Gov’t needs to stop deficit spending… The deficit spending requires that more dollars are printed, and bring about more inflation… They could really, truly, come to the inflation fight with the proper weapons… Large rate hikes would also help to fight inflation, but would make paying our bond servicing requirements an absolute hell… The thing I would like for our Gov’t to do, is to stop deficit spending, stop bailing out zombie companies, and see the Fed Heads tobelie hike rates like they really mean to stop inflation, and worry about the bond payments later, because if you did these things, the economy would come around, and tax receipts would increase and with the economy moving forward, they could begin to cut rates again… But never, as low as they were, near zero, more like normal interest rates…

There’s not one thing on that list, that would be difficult to achieve… But, most likely, none of them will be achieved… Cut deficit spending? Yeah, when pigs fly!, stop bailing out zombie companies? Yeah, when all the rivers run dry! Hike rates like they really mean to stop inflation? Yeah, this I would really like to see!

I told you yesterday, that there are rumors going around, someone’s underground, no wait! I told you yesterday that the rumors are that the Fed Heads will hike rates 75 Basis Points tomorrow… Now that would be a step in the right direction, if it were to be followed by like rate hikes in the coming months, but, I’m afraid that the Fed Heads are going to believe that they had done enough to calm inflation, and will not follow up with like rate hikes in the coming months….

My longtime friend, Bill Bonner, had this to say about that: “If the Fed halts inflation and lets things return to normal, it will mean a crash on Wall Street… business failures… defaults… unemployment… depression and bankruptcies. But the misery will probably be over in a couple years.

If the Fed lets inflation continue, on the other hand, the consequences will be ambiguous at first… and then catastrophic, stretched out over many years of war, revolution, hunger, poverty, destitution and chaos.” – Bill Bonner in his Bonner Private Research letter dated 6/13/2022

I don’t recall a time in my past, working in the bond dept, that I saw yields rise so quickly… It’s as if there was all that pent up frustration of wanting to move higher, but being held back by the Fed Heads and their Treasury purchases, and then finally the pressure valve was released! No backstopping by the Fed Heads has released the Kraken! I began working in the bond dept back in 1979, at the First National Bank of St. Louis… In 1992, I switched to currencies and foreign bonds, and then in 1999, just currencies, and metals… So, I’ve been around the block a time or two, and have seen just about every kind of movement in bonds that exist… And this upward movement that’s happened so quickly, is new to me!

U.S. two-year Treasury yields rose above 10-year borrowing costs on Monday – the so-called curve inversion that often heralds economic recession – on expectations interest rates may rise faster and further than anticipated.

Fears the U.S. Federal Reserve could opt for an even larger rate hike than anticipated this week to contain inflation sent two-year yields to their highest levels since 2007. – Reuters

Ah… the 2-year Treasury… nobody follows that bond! Except when it can indicate a recession! The 10-year Treasury’s yield has gained 33 basis Points since last Thursday…

OK, the U.S. Data Cupboard yesterday told us the Fed NY’s inflation forecast out one year is 6.6%, so still high… And today’s Cupboard has the PPI (wholesale inflation) for May, and the expectations for the data is to show a decrease in final demand… Hmmm… I wonder what these guys were smoking when they made that forecast? I’m just saying…

To recap… It was an very ugly day yesterday, with only the dollar surviving, if you will… The BBDXY gained 5 index points yesterday, stocks were sold, bonds were sold, and Gold & Silver really got sold, while the dollar flourished… Chuck believes the dollar is acting like a star that’s getting ready to burn out… The Fed Heads meet tomorrow and after their FOMC meeting they will announce their rate hike decision… Right now the markets are expected 75 Basis Points to be announced… We’ll see tomorrow… The Cryptos saw their ability to withdraw removed…. Uh-Oh… And the Treasury bond market is indicating that a recession is coming…

For What It’s Worth… OK…. this article is about a potential bank run going on in China… of all places!  The article can be found here: There’s a run on Chinese banks and it’s being ignored by the world | Asia Markets

Or, here’s your snippet: “In the anatomy of an economic crisis, a bank run is the point of no return.

Bank runs occur when people scramble to withdraw cash from banks in fear of collapse. In the worst cases, banks’ liquid cash reserves are exhausted, not everyone gets their money and the bank defaults.

It’s a grim scenario which, fortunately, has occurred rarely in history.

The most significant bank runs in the United States took place during the 1930’s Great Depression. More recently, there were runs on numerous U.S. banks during the Financial Crisis in 2008.

In Asia, bank runs have also been rare. A run on Japanese banks in 1927 led to the collapse of dozens of institutions across the country. There was a banking crisis in Myanmar in 2003 which the country has never really fully recovered from.

But perhaps since the Great Depression, none has been as significant compared to what is seemingly unfolding in China right now.

In recent years it has become clear the Chinese people are losing faith in their financial institutions. There’s been anger over harsh COVID lock-downs in Shanghai recently, while the collapse of China Evergrande saw rare public demonstrations as residents faced the prospect of losing their life savings used as deposits for housing.

“Return our money” the Evergrande protestors chanted at Evergrande headquarters in Shenzhen in 2021.

The song book is eerily similar at bank branches in a number of China’s rural provinces right now.

Multiple sources contacted by Asia Markets, have confirmed deposits at the following six banks have been frozen since mid-April.”

Chuck again… Cyptos are falling, the stock market is in bear market territory, Gold keeps getting sold, Bond yields are soaring, and now this, in China? YIKES…. I’m going to go put away all the sharp objects that could be used to maim, now… Excuse me… 

Market prices 6/14/2022: American Style: A$.6892,  kiwi .6243, C$ .7732, euro 1.0451, sterling 1.2093, Swiss $1.0065, European Style: rand 16.0682, krone 9.9400, SEK 10.1499,  forint 381.13,  zloty 4.4555,  koruna 23.6801, RUB 57.07, yen 134.45, sing 1.3916, HKD 7.8500, INR 77.98, China 6.7345, peso 20.53, BRL 5.1158,  BBDXY 1,266.18,  Dollar Index 105.03, Oil $121.64, 10-year 3.34%, Silver $21.07, Platinum $932.00, Palladium $1,807.00, Copper $4.21, and Gold… $1,817.62

That’s it for today, except to say, Happy Flag Day! I remember longtime friend, and former Big Boss, Frank Trotter, always would go on vacation around Flag Day! I wonder if he still does that? A nice comeback win for my beloved Cardinals last night, and they widen their 1st place lead to 1 game… They’ll play their rivals, the Brewers 4 games next week, those will be HUGE games! Congrats to new Cardinals Hall of Famer, Matt Holiday… Once again I was bummed by the fans vote, that Matt Morris didn’t get enough votes… People forget that Matt Morris was once the best pitcher on the team for a multiple of years! Cardinal great, 2nd baseman, Julian Javier, was also named to the Cardinals Hall of Fame… I have no problems with the 2 inductees, I just wished that there was room for Matt Morris! A day-night double header today at Busch Stadium in the heat… Those that play the first game in the sun, will most likely be given the night off… My fave Van Morrison song takes us to the finish line today with his song: Into The Mystic… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

The Dollar Bulls Take No Prisoners!

June 13, 2022

* currencies & metals get sold first thing this morning… 

* Are our leaders Clueless, and out of touch?

Good Day… And a Marvelous Monday to you! A beauty of a weekend for us here in the Midwest… Braden and Evie stayed with us Saturday night, and little Evie was so darned cute! Two years old, and ready to take on the world! Silly girl… I just adore her! Braden spent most of his time on his iPad, but I did get him to go swimming for a while… My beloved Cardinals couldn’t stand prosperity, and sweep the Reds, no… they lost the last game in the series on Sunday… My good friend, Dennis Miller, will be happy that his Tampa Bay Lightening reached the Stanley Cup Finals… I’m really hurting with a tooth ache… Since I had to have almost all my teeth on the right side of my mouth removed for the tumor that kept growing, I’m resigned to chewing only on my left side, and now a tooth on my left side is hurting… UGH! Well, that’s one way to lose weight! The band, Spirit, greets me this morning with their great 70’s song: It’s Nature’s Way… A song that I relate to in a Big Way!

The dollar took no prisoners on Friday, and the euro, well I hinted that if the European Central Bank (ECB) disappointed the markets by delaying their rate hike, that the euro would be in trouble, and trouble is what it found… The euro dropped 3 cents in its price, and the markets were in no mood to give the euro a break… Even though the ECB said it would hike rates next month, the markets know all too well that next month, may never come… The BBDXY gained almost 20 index points from where it traded on Thursday morning, and from the looks of the overnight trading there isn’t anything stopping the dollar from gaining more…

Gold gained $23 on Friday, and one has to scratch one’s head to wonder what the heck is going on here? The dollar was soaring, and Gold rallied? Go figure, right? I’m not one to look a gift horse in the mouth, so Gold gained $23.80 on Friday to close the week at $1,873.20, and Silver gained 23-cents to close the week at $22.01… The price Of Oil saw a skid of over $4 from its price on Thursday morning… It seems that China is locking down again, and that dampens the demand for Oil, and thus the slippage that we saw late last week in the price of Oil. The 10-year Treasury saw a huge gain in its yield to 3.20%… What’s the reason for all these huge movements in the dollar and bonds?

Well, MarketWatch had a report on Sunday, that talked about how the Fed might be considering a 75 Basis Point rate hike this week… What else can they do? Even the hedonically adjusted, stupid CPI (consumer inflation) printed at a 40 year high of 8.6% for May, and prices are not abating, they are rising still! John Williams at shadowstats.com has inflation really at 16.8%… Now, that certainly feels about right, doesn’t it? But to get back to the Fed Heads… If they choose to hike rates 75 Basis Points, they will all but admit that they have fallen way behind inflation, and need to play catch up… I fear that this could be the pin in the room that the stock market bubble will find… I sure hope you all have taken steps to protect your investment portfolios… There’s always the chance that the Fed Heads will only hike rates 50 Basis Points, and if that holds true, then the rot on the stock market’s vine will be exposed, but not as obvious as a 75 Basis Points hike would expose it…

So, now, it’s 75 Basis Points on the docket for This week’s FOMC meeting, and that news got the dollar bulls all riled up, and the bond boys looking to mark up yields… But what will the Fed Heads say after they hike rates 75 Basis Points (if they do)? Weill that be the end of their rate hikes, or will they show that they are serious about fighting inflation? Remember me telling you that St. Louis Fed President, James Bullard said that he would like to see the Fed Funds rate at 3.50% by year end? Well, the Fed Heads are still along way from that level, but IF they hike rates 75 Basis Points this week, they’ll be on their way toward that level!

A 75 Basis Points rate hike will all but drive a stake into the heart of the housing market… Or at least that’s how I see it happening… I sure hope I’m wrong, but it could very well be, like I said above, the pin that the housing bubble has been looking for, for sometime. I guess at this point we’ll have to wait-n-see what the Fed heads have up their sleeves on Wednesday…

In the overnight markets last night… The dollar continued to get bought, an now is 27 index points higher in the BBDXY dollar index, than it was at the close on Friday! That’s right! The BBDXY trades this morning at 1,261, and I can’t see what will stop the dollar bulls right now… Gold is getting sold, and giving back most of its gain on Friday, in the early trading today, along with Silver not getting any love…  The price Of Oil remains $118, and bonds are seeing their yields getting marked upward… The 10-year this morning sits with a 3.25% yield… 

I just don’t see the rhyme or reason for all this dollar buying because of a 75 Basis Point rate hike… Not when our real interest rates , when taking in inflation, are still negative… And to me, the fact that the Fed Heads will all but be saying out loud that they screwed up and are behind the inflation 8-ball, should be enough, in my mind, to send the dollar to the woodshed… But those days of fundamentals are gone, folks… and I shake my head in disgust!

It sure was good to see Gold climb higher on Friday without interference. I received this from the good folks at GATA on Saturday, check it out: “Daniela Cambone couldn’t address gold market manipulation when she was doing interviews for Kitco News, and her successors there still can’t, but this week, now that she is at Stansberry Research, she got around to it during an interview in Zurich with Commodity Discovery Fund manager and financial author Willem Middlekoop.

Cambone invited Middlekoop to explain why gold hasn’t exploded with inflation along with other commodities, to which Middlekoop replied: “We know the gold price is managed by selling all these futures, all this paper gold, this silver, through the Comex” — the New York Commodity Exchange. But, Middlekoop noted by way of a graph, the Comex lately has become much more of a physical market with a lot of metal being taken out of it.

Then Middlekoop elaborated a bit uncomforably for Cambone.

“You’ve been in this industry for a long time,” Middlekoop said. “In your previous job maybe you weren’t allowed to discuss this. But there’s a lot of paper out there and many of those ounces have been sold several times.”

Cambone didn’t dispute him.

Middlekoop, one of whose books is “The Big Reset — The War on Gold and the Financial Endgame,” also said he thinks an international financial reset involving gold is already under way, as indicated by renewed central bank purchases of the monetary metal and the steady increase of the gold price in many currencies besides the dollar. The dollar, he said, will be the last currency to yield to gold.”

Chuck again… Well, it’s about time that other people besides me, are talking about the price manipulation of Gold & Silver using the futures contracts…

Oh, and in Ed Steer’s Saturday letter he showed that there are 160 day of production of Silver to cover the short positions in the metal, and 44 days of production to cover to the short positions in Gold…
I love Ed’s Saturday letter for this information…

The University of Michigan Sentiment collapsed in preliminary June data, crashing from 58.4 to 50.2 (massively below the 58.1 expectations). The current conditions gauge sank to a record-low 55.4 from 63.3, while a measure of expectations decreased to 46.8 from 55.2. It’s about time Consumers said what’s on their minds, and not be fooled by the Gov’t, who just last week tried to tell everyone that this the most robust economy that they have seen… C’Mon give me a break! If this economy is robust, I’d hate to have to see what they call it in a few months, when the collapse is in… I’m just saying!

So, last week the stupid CPI showed consumer inflation at a 40-year high… Inflation, as measured by the stupid CPI, hasn’t been this high since 1981… Let’s take a trip in the time machine back to 1981, dododododododoododo… The first Space Shuttle was launched… The DeLorean Car was first produced, the Iran hostages were released, the air traffic controllers went on strike, and then President Reagan fired them! So, these things were a long time ago, Shoot Rudy, 1981 is a year before my oldest son Andrew was born! And you know what comes next from the Gov’t? Price Controls… Yes, this is not being considered right now, as far as we know, but it will soon.. You can bet your bottom dollar on that!

Got Gold? Really… this is not just a silly saying that I add from now and then… This is a question that should be taken seriously… Sure, Gold is not soaring alongside inflation, but in my humble country boy opinion, this is good for all of you who haven’t hedged your investment portfolio with Gold, because the price hasn’t taken off yet… Yet, is the key word here, and in my opinion, which could be wrong, but I doubt it, Gold will take off for higher ground, soon… And when it does, don’t go calling your favorite coin dealer, for he won’t be able to find physical Gold for you… And then Carole King’s song: It’s too late Baby, now It’s too late, will be playing in your head…

And to further the discussion about the Gov’t leaders being either clueless, or dumb as a box of rocks, you choose, Sven Heinrich, someone that I’ve used his Tweets before, Tweeted this this morning… “Worst consumer sentiment on record, highest inflation in 40 years, longest bear market since ’08 with the highest household asset location in history & yet Janet Yellen is amazed that consumers are so pessimistic.
One wonders how out of touch decision makers really are.”

Yes, I do wonder how out of touch these people are… And like I said above, either they are clueless, or a dumb as a box of rocks, and I truly don’t believe they are dumb… I believe they have decided to play clueless, that way when the whole shootin’ match goes up in smoke, they’ll say they had no idea that this was about to happen… Mark my words on that, folks… I can hear them now…

The U.S. Data Cupboard doesn’t have a lot for us this week, but what it lacks in volume, it makes up for in weight… We won’t see much until Wednesday, when May Retail Sales will print, and then later that day the FOMC will announce their rate decision… The Butler Household Index (BHI) indicates that Retail Sales will be disappointing at best… So, in my best attempt to warn you about things that will be happening, I hope you have placed your stop loss trades on your stocks that have profits, you have enough Gold & Silver, and that you are ready to hunker down and wait for the hurricane that JPMorgan’s Jamie Dimon said the U.S. was facing, to blow over…

To recap… it’s all about the dollar and the FOMC meeting this week folks… The dollar is taking no prisoners, as the talk has shifted from a 50 Basis Points rate hike to a 75 Basis Points rate hike, and why it helps the dollar doesn’t register with Chuck, but then he’s always thought logically… The Data Cupboard doesn’t have much this week, but what it does have comes on Wednesday…

For What It’s Worth… this article, too, was in Ed Steer’s Saturday letter, which I found to be very FWIW worthy… It’s about currency collapse, and so forth, and can be found here: Protection from a currency collapse (goldmoney.com)

Or, here’s your snippet: “While markets seem becalmed, financial conditions are rapidly deteriorating. Last week Jamie Dimon of JPMorgan Chase gave the clearest of signals that bank credit is beginning to contract. Russia has consolidated its rouble, which has now become the strongest currency by far. The Fed announced the previous week that its balance sheet is in negative equity. And there’s mounting evidence that we have a nascent crack-up boom.

Russia now appears to be protecting the rouble from these developments in the West, while previously she was only attacking the dollar’s hegemony. China has yet to formulate a defensive currency policy but is likely to back the renminbi with a commodity basket, at least for foreign trade. If it is taken up more widely by the members if the Shanghai Cooperation organisation and the BRICS, the development of a new commodity-based super-currency in Central Asia could end the dollar’s global hegemony.

These are major developments. And finally, due to widespread interest in the subject, I examine the outlook for residential property values in the event of a collapse of Western fiat currencies.

The mechanics of an apocalypse

Against the grain of the establishment, for years I have been warning that the world faces a fiat currency collapse. The reasoning was and still is because that’s where monetary and economic policies are taking us. The only questions arising are whether the authorities around the world would realise the dangers of their inflationary and socialistic policies and change course (extremely unlikely) and in that absence in what form would the final crisis take.

History tells us that fiat currencies always fail, only to be replaced by Mankind’s sound money — metallic gold, and silver. And now that fiat currencies have seen a rapid debasement followed by soaring commodity and raw material prices, interest rates should be considerably higher. Yet, in the Eurozone and Japan they are still suppressed in negative territory. The reluctance of the ECB and the Bank of Japan to permit them to rise is palpable. Worse still, even with just the threat of a slowdown in the issuance of extra credit by the commercial banks, we suddenly face a sharp downturn in economic and financial activities.”

Chuck again… This is a very long article, and if you want more, simply click on the link above…

Market Prices 6/13/2022: American Style: A$ .6985,  kiwi .6298,  C$ .7791, euro 1.0471, sterling 1.2205, Swiss $1.009, European Style: rand 16.0337, krone 9.8562, SEK 10.1344,  forint 381.24,  zloty 4.4298,  koruna 23.6135, RUB 57.23, yen 134.03, sing 1.3890, HKD 7.8500, INR 78.03, China 6.7359, peso 20.27, BRL 5.0422,  BBDXY 1,261.00, Dollar Index 104.83,  Oil $118.88, 10-year 3.25%, Silver $21.68, Platinum $946.00, Palladium $1,875.00, Copper $4.24, and Gold…. $1,851.39

That’s it for today… I do believe that I’m here all week, try the veal, and tip your waitresses! HA! Well the 46th wedding anniversary of Chuck & Kathy, was celebrated with son Andrew, his wife, Rachel, and their kids, Braden and Evie… No biggie… it’s what happens when you live with someone for 46 years! She doesn’t like flowers, she doesn’t want any more jewelry, she hates cards, so, I just hug her and say happy anniversary! Oh, I forgot, I’m not supposed to talk about her in the Pfennig, so if she finds out I did, I’ll know who told her… I was telling everyone a story about how the night before the wedding, 46 years ago, I sat on the front porch of my mom and dad’s home, with my good friends, Robin and Mike, and we proceeded to tell my mom all our high school capers, of which she would say, “I knew that”… Jonathan Edwards takes us to the finish line today with his song: Shanty… I hope you have a Marvelous Monday and please remember to Be Good To Yourself!

Chuck Butler

 

The ECB Kicks The Can To Next Month…

June 9, 2022

* dollars, metals, bonds, cryptos, everything gets sold… 

* Russian rubles is the winner, winner, chicken dinner! 

Good Day… And a Tub Thumpin’ Thursday to you! My beloved Cardinals have run into a road block in Tampa the last two days, with the final game a day game today… I have gotten a kick out of seeing all that red in stands in Tampa, representing Cardinals fans… The Cardinals used to have spring training in St. Pete, for 57 years they were there… I took my family to the old Al Lang Stadium next to the marina when the Cardinals were in St. Pete a couple of times… And it appeared that there were tons of Cardinals fans still in the St. Pete region! The Rays are called the Tampa Bay Rays, but their stadium is in St. Pete! Those were fun times on St. Pete Beach back in the day for the Butler family! The Marshall Tucker Band greets me this morning with their song: Searchin’ For A Rainbow…

Well, my “day off” yesterday, from writing, first took me to the hospital to visit my oncologist… Then I went to buy a new TV, for the living room. Brought it back home, and then it took me a couple of hours to get it up and running, connected the WiFi and so on… I’ve said this before, but here goes… I’m not your last choice for a tech person! My oncologist is very happy with me… I’m losing weight, albeit slowly, (that’s her preference), my blood work is good, my blood sugar is good, right now… But as I told her yesterday, “the wolf is always at the door”…

So… while I was out yesterday, the dollar bumped along and is closed the day up 1 index point from where it was on Tuesday at 1,235… The euro climbed back above 1.07, and one would have thought after the glowing revue from UBS regarding the Aussie dollar (A$), and then following that up with a 50 Basis Points (1/2%) rate hike from the Reserve Bank of Australia (RBA), that the A$ would be kicking tail and taking names later, but that’s not the way things work any longer, folks… Besides… Their 50 Basis Points rate hike only brought their internal rate to .85%…

Gold  was hammered all day yesterday, and ended the day down $1.00 to close at $1,853.10, while Silver couldn’t find a bid all day either and ended the day down 18-cents, to close at $22.35…  I was reading the Daily Reckoning yesterday, and something that Jim Rickards said, caught my eye… Rickards said, that “Gold is so cheap right now, it’s practically a steal.”… Rickards goes on to explain his reasons for that thought, and if you’re interested in his thoughts on Gold, you can click here: The Real Reason Why Gold Has Stumbled – The Daily Reckoning 

The real mover since Tuesday has been the price of Oil, which closed yesterday at $122 and change… There are calls now that economists are seeing the price of Oil rise to $150… by the end of summer! WOW! Now that would certainly cause a disruption in the supply chain, as Truckers will have to feel as though they have to cut back or go broke! Quite Frankly, I can’t believe they’re not there already! Oh, U.S. Gov’t, can’t you hear me knocking, on your door? (Rolling Stones) But I’m not going to go on a rant about all that again this morning… I’m feeling pretty darn good this morning, and nothing is going to make me mad… Ahem, Chuck, you forgot about… Oh, never mind!

In the overnight Markets last night… The dollar slipped a bit, losing one index point in the BBDXY… There was some profit taking in the price of Oil, and the precious metals are getting sold out of the starter’s gate again this morning.  The 10-year Treasury is steady Eddie at 3.04%, and the cryptocurrencies are looking for a bid.  Everything is looking weak this morning… Gold is down $8 in the early trading, and Silver has lost the $22 handle once again… 

The Russian ruble is on the move again, and in the last 24 hours it has been the best performing currency. The ruble trades this morning with a 57 handle! WOW! Now that’s a move!  Like I said before, the ruble is an “Oil play”, and depending on your outlook for Oil… My outlook is for the price of Oil to remain high and go higher…  I’m just saying… 

The European Central Bank (ECB) is meeting right now, while my fat fingers are going to town on the keyboard, you should see them flying around! The ECB has been like the Fed/ Cabal/ Cartel, was in that that they continue to drag their feet in the face of soaring inflation… But that has to stop today, and I’m thinking that the ECB will buck up and hike rates out of the negative territory today… We, might find out by the time I finish so, if we do, I’ll let you know…

You might recall me writing a week or so ago, about how economists and analysts had agreed to say that the ECB would be hiking rates soon, and that’s what lit the fire under the euro to rise from the near dead, to the 1.07 level… Now, if the ECB disappoints today… Uh-Oh…

The Reserve Bank of New Zealand (RBNZ) announced yesterday that they are going to begin to sell the NZGB’s they bought in the last couple of years… This was BIG NEWS, because the Fed Heads have decided to allow their bonds to mature and not roll them over, but not to sell them, like the RBNZ is going to do… It helps that the RBNZ wasn’t in as deep dookie with regards to debt as the Fed Heads…

And Doug Casey threw this cat among the pigeons, saying that “Woke Companies will go Broke”…

I personally hope he’s right, especially the zombie companies, that are already broke, but are being kept alive by the Fed Heads… Let ‘em all die, and hopefully what starts up in their place, is a good strong company that takes its revenues, pays dividends, pays its employees, and puts the rest into capital improvements… Notice, I didn’t say make stock buy backs!

Getting back to currencies… The Japanese yen slid further weaker VS the dollar yesterday, ending the day trading with a 134 handle… Well, this is what I expected a long time ago, but somehow the yen kept plugging along, until finally, the Bank of Japan (BOJ) couldn’t plug any more holes, the dam began to leak… And now the BOJ is pleading with the major Countries to hold a coordinated intervention to stem the selling of the yen… So far, there have been no takers to their pleas…

For What it’s Worth… I saw this article and thought, now here’s a FWIW article if there ever was one! This is about how high earners are feeling pinched these days, and it can be found here: Advice for High Earners With Student Loans 2022 – Bloomberg

Or, here’s your snippet: “How much does it take to feel flush in the US these days? Not even $250,000 a year will get you there, according to a recent survey by Pymnts.com and LendingClub Corp., which found that 36% of those earning at least that amount say they’re living paycheck to paycheck.

Considering $250,000 is almost four times the median US salary and puts you in the top 5% of earners, it’s pretty unnerving that so many say they are spending everything they make each month. (And this was a census-balanced survey; they didn’t just ask people in high-cost areas such as New York and San Francisco.)

It’s even more disconcerting when you realize that most in that category haven’t had to make student loan payments for more than two years. Almost everyone has been taking advantage of the moratorium on federal student loans, which allows borrowers to press the pause button on payments without any interest accruing.

Student loan debt is a big deal for many in this crowd. More than 32% of total federal student loan debt is held by households with incomes from about $107,000 to $374,000, the largest percentage of any income group, according to the Education Data Initiative. The average amount of student debt within that group is $45,965 — also the highest for any income bracket.

For those with professional or doctorate degrees, which are common among top earners, the debt burden is often much higher. Student loans for MBAs total more than $66,000, while law school is more than $145,000 and medical school is north of $201,000. Assuming even just the average of $82,800 in total student debt for a graduate school borrower means monthly payments of about $950 a month have been on hold for almost 30 months.

When those payments will start coming due again is anyone’s guess. The Biden administration extended the moratorium in April until Aug. 31. The president is reportedly considering canceling up to $10,000 of debt per borrower, but potentially limiting it to those who earn less than $150,000 (or $300,000 for married couples).

It’s unlikely that those earning $250,000 or more will see any substantial forgiveness, which means their budgets are going to become even more stretched. According to the Pymnts.com survey, more than 12% of those earning at least $250,000 say not only are they living paycheck to paycheck, but they’re unable to pay some of their bills.”

Chuck again… remember back in the days of the height of the pandemic, and the Gov’t decided that they were going to give passes to: Students, renters, home owners, and instead of requiring them to send in checks, the Gov’t sent them checks? I said then that it was a bad precedent to start, and that proved to be bang on, considering that two more checks were sent out, and people still haven’t had to make payments!

This just in… The ECB announced that they are not moving rates this month, but expect to lift off in July, and will begin to taper their bond holdings this month…  Now, that’s a tricky way to disappoint the markets, but leave them wanting…  Not now, but later, dear…   Well, at least they didn’t leave the euro hanging on a line… I’ll give them that… But in reality, they have delayed their response to the soaring inflation in the Eurozone, and if I were a citizen there, I would not be happy! 

Market Prices 6/9/2022: American Style: A$ .7171,  kiwi .6445,  C$ .7959, euro 1.0727, sterling 1.2542, Swiss $1.0227, European Style: rand 15.2708, krone 9.4791, SEK 9.7914,  forint 369.00,  zloty 4.2788,  koruna 23.0059, RUB 57.94, yen 132.85, sing 1.3755, HKD 7.8484, INR 77.76, China 6.6770, peso 19.56, BRL 4.8853,  BBDXY 1,234.26,  Dollar Index 102.26, Oil $121.97, 10-year 3.04%, Silver $21.93, Platinum $988.00, Palladium $1,942.00, Copper 4.35, and Gold… $1,845.35

That’s it for today, except to send along GREAT BIG HAPPY BIRTHDAY GREATINGS to one of my fave people in the world, Laura Baur! Happy Birthday Laura Lou! On Sunday, Chuck & Kathy will celebrate our 46th year of marriage… I know I’ve told you this before, but for me… it was love at first sight all those years ago, when I was running on the track, and first spotted her performing cheers… OK.. I’m hoping that our kids will use our marriage as a template for theirs! And I’m now 15 years into having been diagnosed with Stage 4 Metastatic renal cell carcinoma! Next week on the 14th will be the anniversary of my first caner surgery… I remember the day, that my good friend, Doc. Jeff Atkins, came to my door to tell me that I had cancer… I said to him then, “I’m going to beat this thing”… Well, I haven’t beaten it yet, but so far I’m winning! And that’s that! It was sad news the other day to learn that Jim Seals, of Seals & Crofts had died, and so with him in mind, Seals & Crofts takes us to the finish line today with their song: Diamond Girl… I hope you have a Tub Thumpin’ Thursday today, and please remember to Be Good To Yourself!

Chuck Butler

 

Calls For Intervention In Yen, Are Being Made…

June 7, 2022

* dollar buying is strong in the overnight markets

* Hedge Fund sues the LME, for market manipulation… 

Good Day… And a Tom Terrific Tuesday to you! I plum forgot to tell you the results of my scans last Thursday… My oncologist sent me a note Thursday night, that said, “ Scans are clean, no new sign of cancer, keep up the good work, see you next week” Which reminds me that on Wednesday, tomorrow, there will be no Pfennig, as I’ll be at the oncologist to get poked for blood, and go over the details of the scans… No Cardinals baseball last night, so I had all kinds of time to read articles… And I failed miserably! Instead, I got out my 1935 Martin guitar, and tried to recall anything I could! A friendly neighbor urged me to get back to playing, at the graduation party on Sunday, and so… Now, we’ll see if I keep it up… I recall the first time I ever picked up a guitar, I wanted to learn how to play songs on it so badly, I played until my fingers bled… And then I couldn’t play it again for a week! UGH! I always loved playing my guitar, and singing along, but these days, my voice has gone through the gauntlet of radiation, and years of medicines… One of the artists I used play all his songs, Neil Young, greets me this morning with his song: Only Love Can Break Your Heart

We began the day and week yesterday morning having seen the selling of the dollar in the overnight markets, only then to see the dollar’s loss erased in the U.S. session… Hmmm, and just yesterday, I was talking about the ESF (Exchange Stabilization Fund) and it appears to me as though it was put to use in good fashion, as the BBDXY gained 5 index points on the day! The euro slipped back below the 1.07 handle. Gold couldn’t hold its early gains either, and ended up losing $9.90 on the day to close at $1,842.20, while Silver was able to hold onto a small piece of its early gains (+44-cents), and ended the day up 13-cents, to close at $22.13… The price of Oil gained a buck, and the 10-year’s yield rose to 3.04%…

Some might say that the Treasury’s gains in yield is what got the dollar bought, and Gold sold… I say baloney! The markets are supposed to forward looking, not current reactions based, and if they were forward looking, they would be staring right down the barrel of a sawed off shotgun! And if the markets really think the Treasury’s 3.04% yield is the cat’s meow, they need to look at the yield VS inflation, and tell me again why people buy negative yielding bonds! Oh, and if inflation isn’t bad enough, our friends (NOT!( at Saudi Arabia, announced that they were upping the price for their Oil… Which, if you read my tirade last week about how the Gov’t has shut down U.S. production, and we have to rely on terrorists for our Oil… Don’t get me started again on that subject!

In the overnight markets last night…. the dollar has been bought as if there is a blue light special on dollars… The BBDXY has gained another 2 index points and trades this morning at 1,234… The dollar reminds me of a star that’s about to burn out, for it will burn the brightest right before it does burn out…  Gold is up in the early morning trading by $7, and Silver is flat, as we start our day…  The price of Oil trades with a $118 handle again today, and appears to be waiting for the next shoe to drop before moving any higher.  And bonds are also flat this morning trading with a 3.03% yield in the 10-year Treasury… 

The good folks at GATA sent me this note that they pulled from Reuters: “U.S. hedge fund Elliott Associates is suing the London Metal Exchange (LME) for $456 million for cancelling nickel trades after chaotic trading in March that forced the exchange to suspend its nickel market, the LME said today.

The legal action piles more pressure on the exchange, which is being probed by regulators and is struggling to restore trust and volumes in its nickel market.

Elliott said the LME should not have halted trading and erased deals after prices more than doubled to over $100,000 a tonne in a matter of hours on March 8.”

Chuck again, well it’s about time somebody started suing these exchanges for their blatant disregard for clients’ losses… Now, if someone with some deep pockets would file a lawsuit against the COMEX… We might get somewhere! Or, even better the commodity regulators for allowing such blatant trading to harm clients!

And that ties in so well with this… In Ed Steer’s Saturday letter, he always highlights the “days to cover chart”.. This chart tells us the number of days of production it would take to cover the short positions… And that chart told us on Saturday that it would take 164 days of production in Silver to cover the short positions, and 44 days of production in Gold to cover the short positions… I find that shorting something before it’s even taken out of the ground, like metals, is different than shorting green beans or corn… There’s always a chance that weather or other mother nature tricks could play hell with yields of beans or corn…

I’ve said this before so listen to me this time… I believe that it should be unlawful for any entity to short more metal than they hold in their trading accounts… Enact that law, and watch the metals soar! Write your representative, and you can even call it “Chuck’s law”!

OK, moving on to other things this morning… In yesterday’s 5 Minute Forecast, editor, David Gonigam, quoted me from yesterday’s Pfennig, regarding the fall of the dollar’s use by international countries… I read the 5 Minute Forecast, daily, for David does a great job and writes excellently!

The rot on the Japanese yen is being exposed, as the yen drops to a two decade low VS the dollar. Long ago, in a galaxy far away, I wrote in the Pfennig about how the over two decade muck of deflation and no economic growth could use some inflation, and to to achieve that, the Bank of Japan (BOJ) should allow the yen to weaken to allow it import other countries inflation… Not a lot of inflation would do the trick, not the runaway stuff we’re seeing here now… 

Well, the yen is dropping like a rock again, and the calls for intervention from the BOJ are being heard loud and clear, but the rest of the world is playing deaf, and blind to Japan’s problem… So the yen is trading this morning at a two decade low of 132, and is probably just the beginning of the rot being exposed on the yen’s vine..  I’m just saying… 

Over this last weekend I came across an article that caught my eye… This was the headline in USA Today: “’I exhausted my savings’: Inflation has Americans turning to loans, credit cards to cope. Does it pose big risks?
Some Americans are relying on credit cards to make ends meet.” – USA Today

Chuck again… We will begin to see the damage done here to consumer credit lines when the next data print that encircles that item prints… When we last saw Consumer Credit (read debt) the first quarter showed that it had increase 1.7 Trillion dollars since the last quarter of 2019, and it stood at $15.84 Trillion… So, it does appear to me that the rot is already showing on the Consumers’ Balance Sheet vine… And that can’t be a good thing going into a period of high inflation, and a slower economy…

Oh, and guess what prints today? Yepper, Consumer Credit for April will print, so we’ll get to see the color of the latest report… I’m guessing here that it won’t be pretty…

Well, the good folks at GATA also sent me a couple of notes this past weekend about how India’s imports of Gold surged in the month of May, and so too did other countries… Buying physical Gold instead of dollars, apparently… Gold in just about every other currency on earth is at all time highs, it’s just that here in the U.S. with the ESF propping up the dollar, Gold lags…

In my best Andy Rooney voice, “Did you ever wonder, how the CFTC (commodities regulator) never found price manipulation in Silver?” Because they never looked! They said they did, but who was there to call them on it? No one… And since the price manipulation is so blatantly obvious, they would have to have been blind, not to find it… I rest my case..

The U.S. Data Cupboard yesterday was bare, and today, we’ll get the aforementioned Consumer Credit report, this one will be for April… The data prints this week will come straggling in and probably smell like a wet dog… Tomorrow’s Cupboard, has nothing for us… Well, actually it does have a print, but it’s something we don’t care about, or I don’t care about, so it’s nothing to me! Don’t forget that on Friday this week, the latest stupid CPI (consumer inflation) will print for May… You won’t want to miss that, just so you can throw darts or tomatoes at the folks that put together this report…

To recap… The dollar’s selling overnight the previous night was shut down during the U.S. session and the dollar index gained 5 index points, thus pushing the euro back below the 1.07 handle. Gold couldn’t hold its early morning gain, and Silver nearly gave back all of its early morning gain. Are consumers using their credit cards for everyday purchases now? And hedge fund Elliot Assoc. is suing the LME for cancelling their orders in nickel… It’s about time someone took action against these clearing houses or regulators, for allowing clients to lose money…

For What It’s Worth… this article really just rehashes all the things I’ve talked about, yelled about, whined about and so on, but I think it’s important to hear these things from other voices, so you don’t think I’m just a cranky old man…  This article can be found here: What happens when the “experts” are wrong? | ZeroHedge

Or, here’s your snippet: “Think about it– inflation has been raging for more than a year. Yet they’ve changed almost nothing.

Most notably there’s the Chairman of the Federal Reserve, Jerome Powell, under whose leadership the United States has experienced its worst inflation in 40 years.

His approach so far has been nothing short of extraordinary. It started in February last year when he denied inflation was even a problem, insisting that “inflation is just very, very low”.

A few weeks later he started singing the ‘inflation is transitory’ chorus. By June 2021 he doubled down, saying that higher inflation would soon wane. That’s also when he projected a 2021 inflation rate of just 3.4%.

By December, his 3.4% inflation projection proved hilariously wrong; 2021 inflation came in at 7%. And yet the Fed still hadn’t yet lifted a finger to stop it.

He even gave a press conference late in the year saying, “I don’t think that we’re behind the curve. . . I do think it’s premature to raise rates today. I don’t think that’s controversial, certainly, I don’t know anyone arguing for that today.”

 

Seriously? Out of hundreds of millions of people across the country suffering higher prices, he literally didn’t know a single person who thought the Fed should be doing more to fight inflation? What a joke.

But this comedy of errors gets better.

Home prices across the US had surged 20% by December 2021. And yet, the Fed was still printing tens of BILLIONS of dollars per month to ‘support the housing market’. This is more ridiculous than Kanye West receiving millions of dollars in PPP loans (which really happened).

Apparently the Fed didn’t think that a 20% surge in home prices was reason to change anything about their approach.

This is the larger point– everything was broken. Powell’s Fed printed trillions of dollars and helped engineer inflation. Yet they failed to predict it. They rejected it. They downplayed it. They continued fueling it. And they did absolutely nothing to stop it.

In any rational organization this person would have been fired long ago. And yet, two weeks ago, he was sworn in for his second, five-year term as Fed Chairman.

It’s the same story with Janet Yellen– Powell’s predecessor as Fed Chair who is now the US Treasury Secretary.

Similarly, Yellen failed to see how keeping interest rates near zero for years and years could possibly lead to inflation. She also failed to see how trillions of dollars in government spending could possibly lead to inflation. And she has failed to do anything about it.

Yellen at least had the stones to admit she made a mistake; last week she told reporters that she was wrong when she called inflation “small and manageable” back in 2021.

Like Jerome Powell, though, she’s still in her job.

The list goes on and on. Nobel Prize winning economist Paul Krugman also recently acknowledged that he “called inflation wrong last year” when he insisted that government spending would not cause inflation.

(Krugman is the same guy who went on CNN years ago suggesting the government should lie about a phony alien invasion as an excuse to spend more money.)

It’s extraordinary how some of the most prominent ‘experts’ have been so wrong. And yet they’re all still in their same positions.

I’m not trying to be cruel; we’re all human, and we all make mistakes. But it’s silly to pretend that these experts are flawless and infallible.

They’re not flawless. They’re not infallible. Nothing is.

Chuck again… the article was written by Simon Black, who is very good at pointing out things, and expounding on them… I enjoy reading his stuff! 

Market Prices 6/7/2022: American Style: A$ .7175,  kiwi .6437,  C$ .7944, euro 1.0668, sterling 1.2496, Swiss $1.0235, European Style: rand 15.3607, krone 9.5313, SEK 9.8399,  forint 365.57,  zloty 4.2966,  koruna 23.1933, RUB 61.16, yen 132.80, sing 1.3767, HKD 7.8458, INR 77.71, China 6.6704, peso 19.53, BRL 4.7943,  BBDXY 1,234.54,  Dollar Index 102.61, Oil $118.31, 10-year 3.03%, Silver $22.06, Platinum $1,012.00, Palladium $2,017.00, Copper $4.36, and Gold… $1,848.47

That’s it for today, and tomorrow, but I’ll be back on Thursday… I was telling my good friend, Dennis Miller, about the problems I’ve having recently with my stomach acting up… I think the chemo is beginning to wear on my digestive system… But as I told him, “if that’s the price I have to pay to have clean scans, then so be it”… Well, I’m still all by myself here, until late Thursday night… I was just informed that Kathy will be heading back to Florida on the 25th, to be with her old teaching friends… then I’ll be all by myself once again for a week…The late great, Marvin Gaye takes us to the finish line today with his song: What’s Going On?  I hope you have a Tom Terrific Tuesday today, and please remember to Be Good To Yourself! 

Chuck Butler

 

 

 

 

D-Day Remembered…

June 6, 2022

* Friday’s job Jambore was a farce… 

* The dollar gets sold in the overnight markets… 

Good Day… And a Marvelous Monday to you! Well, as usual, when I get scanned, I have to drink the barium for contrast, and the barium has always upset my stomach, and then you add in my daily chemo, and I’m thrown for a loop for 24 hours… And that’s what happened last Thursday to Friday morning, but then I was good to go! Good Friend Mike came by and we sat outside watching the Cardinals, Golf, and Hockey! Today, we remember, D-Day, June 6, 1944… Project Overlord, was the largest invasion by sea in history… Jane’s Addiction greets me this morning with their song: Been Caught Stealing… 

Well, the dollar rallied on Friday, after the Jobs Jamboree said that there were 390,000 jobs created in May… Well, I’m here to tell you that the BLS in their infinite wisdom decided to add 213,000 jobs to the surveys they received.. Now, would the dollar have gained on the day if the jobs number was 177,000? Far below the expectations? I doubt it… but then, there’s always the PPT with their treasure trove of funds, in the Exchange Stabilization Fund, that can be used at any time to prop up the dollar… But with the markets being blind to the fact that the BLS number is fake, they bought dollars… Because… with employment so strong, supposedly, there’s nothing keeping the Fed Heads from hiking rates further, which increases the dollar’s yield differential to other currencies…

The BBDXY moved higher on Friday and closed at 1,229.93, up over 4 index points on the day. Gold lost $17.20 on the day to close the week at $1,851.30, and Silver lost 36-cents to close the week at $21.90. I get why Gold & Silver lost ground on Friday, IF…. You believe the BLS report on jobs… But If I were still a trader I would be pointing out the discrepancy, and making a big deal out of it… But then again, no one ever listened to me, then, so why would they listen to me now? Back in 2001, when I wrote the white paper titled: The Decline of the Dollar, and we tried to get the press to comment on it, no one would touch it with a ten foot pole, but… once the dollar began its 10 year slide in Feb 2002, everyone wanted to talk to me and ask me how I knew this was coming…

All the facts were there, staring people in the face, but no one wanted to believe what they were seeing… except me, of course! The dollar’s trend has run its course, now, starting with the exposure of the debts of Europe in 2011, but this time, things are different, in that, the markets no longer move on fundamentals, and instead are driven by 1. Trader sentiment, and 2. The Exchange Stabilization Fund… , and that’s all I have to say about that!

In the overnight markets last night… The dollar got sold, and erased the dollar’s gain from Friday. The BBDXY is down 2 index points this morning, and Gold is up $3 in early trading, while Silver is out in front of eveything else this morning and is up 41-cents… The price of Oil is unchanged at $118.87, and Bonds are getting that feeling that there will no longer be support for them from the Fed/ Cabal/ Cartel.. The 10-year’s yield has risen to 2.95%… 

So, there’s been a recall vote on Boris Johnson in the U.K., and it looks like he’s in trouble, but we’ll have to wait-n-see… Also, the Swiss Bank UBS, issued a press release that said, “UBS thinks that buying the Australian dollar (A$) is a phenomenal trade.”  Hmmm… apparently, UBS is long A$’s, and they need everyone to buy to prop up their trade… I know, I nkow I’m being cynical here, and it bothers me because I happen to agree with them… 

I came across this bit of information on Friday last week… MarketWatch had this article that I’m going to give you a snippet of here regarding the dollar’s diminishing importance around the world: “The U.S. dollar’s status as the dominant global reserve currency shows few signs of waning, despite a flurry of challenges from Russia and China, as MarketWatch reported this week.

But if the dollar does eventually cede its status as the most popular currency for central-bank reserves, international trade and bank deposits, then this latest data point will likely be remembered as a milestone.

On Thursday, the International Monetary Fund reported that the percentage of international currency reserves denominated in dollars has fallen below 59% to a new low of 58.81%.” 

58%? Wow, that’s low… I remember years ago, when I was doing presentations, I would talk about how the dollar had fallen to 63% of international reserves denominated in dollars…  To me, this tells me that all the talk about how countries are dumping dollars is coming to fruition… I’m just saying… 

OK, I was going to write about this last week, but decided that it just wasn’t worth getting everyone all riled up… I’m talking about the news that the U.S. was going to supply Ukraine with a rocket system… When I heard that, my mind immediately went to the thought that this was a bad thing to do, because Russia could convey that as an act of war against them… Well, as the weekend went on, that’s exactly what Russia thought, and Putin warned the U.S. that Russia would attack Western cities if Ukraine uses the rocket system we provided them… Now, this could all be saber rattling, or it could be the last thing on earth we want to hear… Because, once you get the two heavyweights in the ring, the nuclear weapons come out… Now, that’s a comforting thought today, isn’t it? I’m sorry but this was on my mind all weekend, and when something’s on my mind, longtime readers know, that I’m going to write about it! I have to hope that all this is just saber rattling, but when you deal with the likes of Putin, you have to take him for his word… I have something for you in the FWIW section today regarding all this, make sure you don’t miss it!

The U.S. Data Cupboard this week is basically bare for most of the week, with only the stupid CPI for May printing on Friday this week… The U.S. Data recently has been disappointing at best, but it still doesn’t point to a recession… The Atlanta Fed’s program that first told us that the 1st QTR GDP would be negative, are showing that the 2nd QTR GDP will be 1.1%… So, that negates a recession… But this slow moving, very uneven economy is still prevalent in our daily lives…

To recap… The Jobs Jamboree last Friday set the tone for dollar trading the rest of the day.. The BLS added 213,000 jobs to the surveys, to make the job creation number look good for May, and the markets went hook line and sinker for the trumped up report. The BBDXY rallied over 4 index points on the day, and Gold & Silver both gave back the gains they had made the day before.

For What It’s Worth… Well, the Davos crowd, that likes to think they know better than al of us, was still at it last week, and came to debate between Henry Kissenger, and George Soros, regarding what should be the course of action in Ukraine… And that article can be found here: Davos 2022: The Octogenarian Oligarch Cage Match – Gold Goats ‘n Guns (tomluongo.me)

Or, here’s your snippet: “I never thought I’d live to see the day when the “Too Old to Rule the World, But Too Young to Die Crowd” (apologies Ian Anderson) would meet at Davos and fight over what to do about Russia.

In a twenty-four hour period two of the most influential men on the planet came out swinging as to what course of action the Davos Crowd should take in Ukraine.

The first blows were landed by Mr. Realpolitik, Henry Kissinger, who most people were surprised to find was still alive. Kissinger true to form told everyone that it was time to begin negotiations for a settlement with Russia soon.

“Negotiations on peace need to begin in the next two months or so, [before the conflict] creates upheavals and tensions that will not be easily overcome,” the 98-year-old veteran diplomat said of the crisis. The outcome will determine the rest of Europe’s relationships with Russia and Ukraine alike, he said. “Ideally, the dividing line should return to the status quo ante,” he said.

“I believe pursuing the war beyond that point would turn it not into a war about the freedom of Ukraine, which had been undertaken with great cohesion by NATO, but into a war against Russia itself,” he added.

Kissinger is simply talking sense, knowing full well that the situation in Ukraine is getting very close to militarily unsalvageable for Ukraine. You know things are bad when the British Press is now acknowledging this, even though The Telegraph was told to change the original headline.

Even Western reporters on the ground there are admitting the truth…

The front in the Donbass is collapsing on the heels of the surrender, sorry “evacuation,” from the Azovstal Steel Factory of the Azov Regimen’s top commanders.

The Ukrainians aren’t just running out of ammunition, the men are running out of morale. When you break the will of an army, it doesn’t matter what you try to force feed into the conflict it won’t change the outcome. If reports are true Ukraine will only see about 15% of the $40 billion the Biden Junta approved last week.”

Chuck again… Well, it’s difficult for me to agree with Henry Kissinger on anything, but in this case I’m in full agreement, we need to find a solution/ compromise/ end of the war, before it escalates further!

Market Prices 6/ 6/ 2022: American Style: A$ .7222,  kiwi .6527,  C$ .7960, euro 1.0729, sterling 1.2565, Swiss $1.0396, European Style: rand 15.3087, krone 9.4002, SEK 9.7430,  forint 361.70,  zloty 4.2716,  koruna 23.0454, RUB 61.70, yen 130.64, sing 1.3731, HKD 7.8455, INR 77.63, China 6.6396, peso 19.49, BRL 4.7780,  BBDXY 1,227.00,  Dollar Index 102.12, Oil $118.87, 10-year 2.95%, Silver $22.33, Platinum $1,033.00, Palladium $2,021.00, Copper $4.37, and Gold… $1,854.47

For What It’s Worth… Well, late last week, I finally broke down and went out to buy a new laptop… I did so, brought it home and it wouldn’t turn on… UGH! I had to take it back, and buy a different one! I was NOT a happy camper! But the new one works just great, no problems, and I’m up and running this morning, without problems, and I have to tell you that at my age, I’m not good with problems any longer! I call them “frustrations”.. And you can hear me saying, “I need these frustrations like I need a hole in my head!” So, yesterday was the graduation party of Ms. Allison Road… My… time has passed! She’s a grown woman now, and heading to Xavier next fall… I held her when she was a baby! Congrats to her parents, Rick and Laura, you’re now empty nesters! The Temptations take us to the finish line today with their song: The Way You Do The Things You Do… I hope you have a Marvelous Monday today, and please remember to BE Good To Yourself!

Chuck Butler