Author: admin

Is Demand Destruction In Our Future?

June 1, 2022

* Dollar rebounds on Monday… 

* Gold & Silver start June with rallies! 

Good Day… And a Wonderful Wednesday to you!  And Welcome to June! Yesterday, here in the middle of the country, the day started out ugly, but by noon it was another Chamber of Commerce day here! But rain has moved in, and the temps will be cooler the rest of this week… I sat outside enjoying the day yesterday, and finished my last book.  Bob Dylan greets me this morning with his hit song: Knocking On Heaven’s Door…
Pfennig tradition calls for this: June is busting out all over, all over the meadows and the hill, buds are bustin’ out of bushels and the rompin’ river pushes every little wheel that wheels besudes a mill…. Ahhh, a little Rogers & Hamerstein… to start our day and month! 
Well, our first day back from the holiday weekend, was not a good one for the currencies and metals. We said good bye to May, and it appeared that we are going to be saying good bye to the currency rally, dollar selling, and the comeback for Gold & Silver. But, May too started out looking like that, and we know that the dollar ended up having 3 straight weeks of losses… So, we could very we’ll get things turned around again…  I sure hope it doesn’t take its time about doing that! 
The BBDXY had already gained 4 index points by the time I was writing yesterday morning, and continued to rally throughout the day ending up at 1,226.84, up 5 index points on the day… The euro gave up about ¼ of a cent, and even the Russian ruble, which had been on a tear in May, gave back some of those gains yesterday.  Gold & Silver started the day down, and never got off the mat yesterday. Gold lost $16.70, and Silver lost 43-cents! Gold finished the day at $1,838.10, and Silver at $21.62…  The price of Oil came back into the hemisphere yesterday and closed the day down $3 trading with a $115 handle… And Bonds, have begun to rise again, with the 10-year ending yesterday at 2.86%
It’s time to start hearing the talk about how the Fed/ Cabal/ Cartel will hike rates again this month… I’m going to go out on a limb here and say that this next 50 BP rate hike will be their last one… They may say that they are more than ready to hike again the following month, but… I just don’t see the Fed Heads having the conviction to watch what they have created (The credit economy) go down the drain, with rate hikes, besides they will be able to point to the PCE, which we talked about yesterday, and say that inflation is already falling, and there is no need to keep hiking rates… Of course they’ll leave the door open in case inflation comes back, which it will if you ask me, but by then they’ll be so far behind inflation that they’ll never catch up, so they might as well go back to the money printing tree, and start printing money again, for stimmy checks, and other bailouts…  And the people will rejoice! They will hail the Fed Heads as their saviors, because they got a check for $1,000 in the mail…  And for a moment, they’ll forget that they just paid $10 for a gallon of gas… 
Oh, did I forget to mention that we are growing closer to the election period, and you wouldn’t want to be up for re-election, without stimmy checks in people’s pockets! 
In the overnight markets last night…  Strange things have happened, in that the dollar continued to hold its gains, but the Commodity Currencies have gained VS the dollar, sans the ruble… And Gold is up $8, while Silver is up 43-cents in the early trading today. I believe there could be some short covering going on, as we start the new month…  The price of Oil has recovered $2 of its loss in yesterday’s trading, and Bonds are stuck in the mud at 2.85%, this morning…  
OK, well I watched and listened to an interview with Nomi Prins, who is a big hot in the arena of analyst, authors, speakers, and economists… Last year she wrote a book telling us how there was a huge collapse of the stock market on the way… But she has reconsidered and now thinks that that the Fed will avoid a collapse of the stock market, and thinks like I do that they will go back to the well, and print money again… I just finished an interview with Dennis Miller for his letter: Miller On The Money, yesterday, and I’ll give you a spoiler alert, on something I talked about in the letter… It’s called ‘Demand destruction’ is the term economists use. It describes the self-correcting phenomenon: how high prices cure high prices…and why inflation will take care of itself, if it is left alone. As prices rise, people can’t afford to buy so much. Because they are poorer. So, prices fall simply because there is less demand for goods and services. Less is made. Less is consumed. Prices fall. And less energy is used. ”  
I borrowed that description from Bill Bonner’s letter, and I am telling you this now so you will hear me later… this is not going to work! The higher prices we are seeing today, will never return to what they were before… Instead higher prices we see now will only continue to go higher… This won’t happen overnight, folks, but like Chinese water torture, Prices will gradually go higher and higher until you say “uncle”… 
OK… moving on to something else… Bill Bonner talked about turbine wind mills yesterday in his letter, and he is very leery ot them being able to replace fossil fuels…  And I agree… Let’s see… what happens when the wind doesn’t blow?  Don’t we need a continual flow of energy to get through our day, we certainly can’t stop every time the wind decides not blow… Or the same can be said about solar panels… What happens when the sun doesn’t shine? Shoot Rudy, we, here in the Middle of the Country, just had the chilliest, wettest spring I can recall ever experiencing, There were multiples of days when we never saw the sun… I’m just pointing out the numbskullness of the Green Deal, and all the expense of money we don’t have to spend, that it will cost… 
I can’t say that I’ve experienced any food shortages yet… Higher prices, you bet! Of course, I have no use for baby formula, and that was the short du jour this month… Remember during the ill-advised economic shutdown, the toilet paper shortage? Well, if we didn’t have people hording TP at the time, the shortage would have been lessened… And hand sanitizer, and oh well, you get the idea here… 
So, has the Russian ruble seen the best of its days?  It certainly appears that way, given that on 5/25 the ruble was trading with a 56 handle, and since then, with nothing changing,, countries buying Russian Oil still must pay for it in rubles or Gold… But there’s something in the air that’s telling me that the ruble has seen its best days… There was this surge in the currency, and it became the currency du jour, and therefore everyone had to own some rubles, and the surge got stronger, but then the surge ended, and the ruble has lost ground every trading session since 5/25…  Interest rates in Russia are still higher than the rest of the world, but with fundamentals still on the back burner, those higher interest rates aren’t helping the ruble right now… 
But the ruble remains an “oil play”… So if you are of the opinion that the price of Oil will stay high or even go higher, then this is your currency to own… At least you get a nice chunk of rubles added to your holding every 3 months! 
I have the same concern with the British pound sterling… aka ‘the pound”, or “cable”…  after falling to a 1.24 handle a week or so ago, the pound has rallied, and there’s nothing there to tell you why it has rallied, and I’m always quite suspicious of an asset that rises and there’s no reason for it to rise… Of course that conversation could be about cryptocurrencies, NFT’s, and any other Fad that’s got people’s attention. 
 
Well, it’s June 1st, and the Fed Heads will begin, supposedly, their massive Quantitative Tightening, I have to think that this is where the cheese begins to bind for the economy, and the dollar,,, no buyers for the Treasury auctions, should make for interesting times ahead… 
The U.S. Data Cupboard today will have the ISM Manufacturing Index for May. I believe we’ll see this data continue to weaken… We’ll also see the Job Openings, and the Job Quits…  I’m fascinated by the Jobs Quits data each month, seeing that at least 4.3 Million people quit their jobs, each month.. You know, after a few months those Job Quits add up, eh? I don’t see how our economy can recover while we’re experiencing “the Great Resignation”… 
Can you blame these people that have thrown their hands in the air and say, “take this job and shove it”?  Their wages for toiling at a job that takes them away from their family, etc. can’t keep up with inflation, and they are losing ground financially with every passing day… 
To recap…  The dollar rebounded on Monday, but in the overnight markets the Commodity Currencies, sans rubles, have pushed back against the dollar, as we start a new month, with Gold & Silver on the rally tracks, and Oil pushing the envelope of higher prices… 
For What It’s Worth… Well, remember a week or so ago, when I told you about the riots in Sri Lanka over rising prices, and how that could come to America?  Well, if the people of the island nation were upset with high food and energy prices, before, they’ll probably ready to blow a gasket over the latest inflation report from Sri Lanka, and that can be found here: https://www.bnnbloomberg.ca/sri-lanka-s-inflation-surges-to-record-39-1-in-may-1.1772666
Or, here’s your snippet: “Sri Lanka’s inflation surged to a new record in May driven by costlier food and fuels, even as the island nation struggles to find a way out of its worst economic crisis.

Consumer prices in the capital Colombo rose 39.1% from a year earlier, the Department of Census and Statistics said in a statement Tuesday. That compares with a 35% gain predicted in a Bloomberg survey of economists and 29.8% the previous month.

The Central Bank of Sri Lanka, which this month left borrowing costs steady while letting previous increases to filter through the economy, had predicted price gains to touch 40% amid a shortage of essentials in the absence of dollars to pay for imports.

A sharp fall in the Sri Lankan rupee and heightened global uncertainty stoked prices. After having lost more than 40% following a devaluation in March, its currency has slowed its decline against the dollar since mid-May. 

The country battling its worst economic crisis since independence needs $4 billion this year in emergency funds but a deal with the International Monetary Fund remains elusive. Securing an aid from the IMF would require structural reforms such as raising taxes and pruning expenditure, steps that could further aggravate pain for its citizens.”

Chuck again… We used to have a saying on the margin desk, when a margin account holder would be under the required percentage of equity in their account… We used to say, “if you loved “x” stock at $80, you’ll really love it $40″…     I don’t know why I just told you that, something in the Sri Lanka story triggered my memory back to when I used to run the margin desk at a regional brokerage house.. 

Market prices 6/1/2022: American Style: A$ .7228,  kiwi .6537,  C$ .7926, euro 1.0726, sterling 1.2572, Swiss $1.0416, European Style: rand 15.5090, krone 9.3530, SEK 9.7582,  forint 366.46,  zloty 4.2780,  koruna 23.0642, RUB 63.26, yen 129.28, sing 1.3701, HKD 7.8461, INR 77.52, China 6.6686, peso 19.62, BRL 4.7422,  BBDXY 1,226.97, Dollar Index 101.87,  Oil $116.65, 10-year 2.85%, Silver $21.90, Platinum $997.00, Palladium $2,017.00, Copper $4.32, and Gold… $1,846.06

That’s it for today, and this week… I apologize for the tardiness of the letter today… I couldn’t sleep last night, and didn’t get to sleep until the middle of the night, and just couldn’t answer the bell this morning… I have no idea what was keeping me awake… Drove me nuts! Cardinals blow a lead in the 8th, but win it in the 10th, last night… Day game today, but they’ll have to dodge the raindrops to play 9… The Cardinals will head to Chicago tomorrow, to play the Cubs… A BIG rivalry… And Happy Birthday, to Jerry McCoy, daughter dawn’s husband…  Chilliwack takes us to the finish line today with their great song: Fly By Night…   I hope you have a Wonderful Wednesday and a fun rest of the week… I’ll be getting scanned tomorrow bright and early, and then I’ll get to my fun weekend!  Please Be Good To Yourself! 

Chuck Butler

The Price Of Oil Soars!

May 31, 2022

* Currencies end the week up VS the dollar

* But the dollar roars back in the overnight markets last night… 

Good Day… And a Tom Terrific Tuesday to you! How was your Memorial Day Holiday? Did you take a moment to remember someone in your family’s history that fought for our freedom? I did, and almost broke down in tears…  All my kids and grand kids were here yesterday, to celebrate the holiday. I cooked them some yummy pork steaks, and the grand kids braved the cold pool water and swam. The weather was Chamber of Commerce weather, and so, everyone had a grand day! The Rascals greet me this morning with their song: A Beautiful Morning… 

Well, with yesterday, being a holiday, and the NY Casino banks closed, one would have thought that Gold & Silver would have nothing but green lights to take them higher, without interference… But Noooooo! The European and Asian banking arms of the NY Casino Banks took up the slack, and played games with Gold & Silver all day yesterday.  Gold ended the day flat as a pancake (Head East), but at one point in the day the green lights were leading Gold higher and it climbed to $1,867, only to see that wiped out, and the sellers allowed Gold to finish the day unchanged… Silver on the other hand didn’t fare too well, and lost 16-cents on the day. Gold closed yesterday at $1,855.10, and Silver at $22.05.

The dollar, which had been sold going into the holiday weekend, finished yesterday down again, with the BBDXY at 1,221.63…  The economic data late last week was not good for the dollar, fundamentally speaking, and while I would like to think that fundamentals are a part of dollar pricing, I know better…  The real mover the last couple of trading sessions has been the price of Oil… Oil trades this morning with a $118 handle… Putting the screws to us is what this represents, folks, and if you don’t see that for what it is, then…  Well, I don’t know what to say… 

In the overnight markets last night, the dollar was bought, by the bucket full, and the BBDXY rose to 1,225 this morning… Gold is down $6 and Silver is down 20-cents in the early trading today… Why these two are down befuddles me…  But then I’m someone that think logically, and the logics tell me that Gold & Silver should be soaring right now… 

There’s a piece of information on the ruble and yuan in the Bloomberg.com this morning, so here’a snippet of that article: “The emerging multi-polar world now includes foreign-exchange markets — as China and Russia, the biggest challengers to U.S. supremacy, boost direct trading between their currencies.

Monthly volumes on the ruble-yuan pair have surged 1,067% to almost $4 billion since the start of the war in Ukraine as the two nations seek to reduce their reliance on the dollar and boost bilateral trade to overcome current and potential U.S sanctions. The spike coincides with a rally in the ruble to a five-year high against the yuan.”

I attended a Happy Hour with my former colleagues at EverBank on Friday last week, and at that event, Chris Gaffney told me something that I had not read or even heard about, and that is that the Brazilian Central Bank has been on strike for over a month now!  And that got me thinking about the Brazilian currency, the real…  The real has been on the rally tracks, all the while the Central Bank has been on strike… Hmmm… Maybe, just maybe, the don’t need a Central Bank in Brazil!  I’m just saying… 

Hey, did you hear or read about the Fed/ Cabal/ Cartel’s holdings?  The folks at www.wallstreetonparade.com spelled it out for us last week, so I’ll let them explain this to you: “the New York Fed’s trading operation (officially called the System Open Market Account or SOMA) currently owns 38 percent of all outstanding U.S. Treasury Securities with 10 to 30 years remaining until maturity.”

Does that concern you? Probably not, because the total size of the Treasury market is some $22 Trillion… But, to me, this is concerning, because no one entity should be allowed to have a such a concentrated position in our financing mechanism…  The other thing that bothers me is that, while we’ve been told that the Fed Heads will simply allow bonds to mature and not reinvest, what happens if they have to sell their bonds?  Well, for that one I have an article in the FWIW section today that will answer that question, and hear me now, so you can listen to me later, you’re not going to like the answer… 

So… with the price of Oil soaring to $118, who do we blame for this? Well, if you’re part of the Government, you blame the Oil companies… But… if you’re not part of the Government, you blame the government!  That’s what I do! As a part of their Green Deal, they have basically shut down Oil production in the U.S., making us have to buy our Oil from terrorists… And do you believe for one minute that the terrorists want to give us a discount? 

The economy is on the tenterhooks, and the price of gas that we use every day, is rising and taking huge chunks out of our disposable income…  And you can thank the Government for that…   “I’m from the government and I’m here to help.”   Ronald Reagan said that those were the terrifying words known…  

I keep telling you that inflation is not just a U.S. thing… It was reported over the weekend that Eurozone inflation has hit 8.7%… And that’s true, unaltered inflation folks, no hedonic adjustment for the Eurozone… And like it was with the dollar… When there are inflation problems, the markets begin to think about rate hikes… And with the belief that the rate hikes will calm inflation, they mark up the currency…  Probably a great example of putting the horse before the cart…  And so it is with the euro, which a month ago, was heading to parity with the dollar, and now trades with 1.07 handle… 

The U.S. Data Cupboard today, has the S&P/Shiller Home Price Index for March… This data has shown home prices slipping the last few months, and I don’t expect that to have changed in March…  The data this week will be sporadic, but will culminate with the Jobs Jamboree on Friday… 

Last week’s data included a revision for 1st QTR GDP, and that revision was not a good one, with GDP hitting negative -1.5%,…  The Fed Heads preferred inflation calculator, the PCE (Personal Consumption Expenditures) slipped in April from 6.8% to 6.3%… But don’t get your hopes up here folks… this is just a blip and most likely will return to show inflation rising next month. 

To recap… The dollar continued getting sold into the holiday weekend, but has rebounded in the overnight markets of last night. Gold and Silver aren’t faring well in the early trading today, while the price of Oil soars…  Chuck is concerned about the Fed’s holdings, and what could happen if they have to sell their bonds… And inflation soars in the Eurozone… 

For What It’s Worth…  OK, I talked about this above this morning, and how it will tell you the answer to the question, of what happens if the Fed Heads need to sell bonds?  And it can be found https://www.reuters.com/markets/us/fed-carrying-330b-unrealized-losses-its-asset-according-q1-financial-statement-2022-05-27/     

Or, here’s your snippet: “The U.S. Federal Reserve is carrying $330 billion in unrealized losses on its holdings of U.S. Treasury and mortgage-backed securities as of the end of March, according to newly released financial statements showing the impact of rising interest rates on the market value of the Fed’s balance sheet.

The central bank’s holdings of nearly $9 trillion in assets still allowed the Fed to remit $32.2 billion to the U.S. Treasury in the first quarter of 2022, according to the documents.
But the losses on the Fed’s investments, an $8.5 trillion portfolio that surged higher through asset purchases designed to keep financial markets stable through the pandemic, pose a potentially tough political problem for the central bank.
Bill Nelson, chief economist at the Bank Policy Institute, said that adjusting for the appreciation in its assets the Fed had seen through the end of last year, the unrealized losses were an even larger $458 billion.
Criticized for continuing to buy assets even as the economy was well on the way to healing from the pandemic, it is now trying to reverse course and shrink its holdings, particularly of mortgage backed securities.
If it chooses to speed the process by selling some of those assets, the unrealized “paper” losses would have to be booked as a tangible hit.”
Chuck again…  All we can do is hope that things don’t get so bad that the Fed Heads need to sell bonds, instead of just allowing them to mature… 
Market Prices 5/31/2022: American Style: A$ .7189,  kiwi .6520,  C$ 7888, euro 1.0734, sterling 1.2600, Swiss $1.0428, European Style: rand 15.6143, krone 9.4170, SEK 9.7929,  forint 367.50,  zloty 4.2664,  koruna 23.0226, RUB 61.98, yen 128.00, sing 1.3701, HKD 7.8472, INR 77.63, China 6.6588, peso 19.59, BRL 4.7532,  BBDXY 1,225.87,  Dollar Index 101.69,  Oil $118.77, 10-year 2.81%, Silver $21.78, Platinum $962.00, Palladium $2,044.00, Copper $4.29, and Gold… $1,849.26
That’s it for today… Besides the rotten egg they laid on Sunday, My beloved Cardinals had a good Holiday weekend… Is there a hotter hitter in baseball right now than Paul Goldschmidt?  I’m scheduled for new scans on Thursday this week, so there will be no Pfennig on that day… I don’t believe they’ll find anything new, but, you don’t know if you don’t look, eh? I’m still all by myself at home, for 10 more days… I seem to be doing just fine though… Blackfoot takes us to the finish line today with his over 10 minute jam session of a song: Highway Song…  I hope you have a Tom Terrific Tuesday today, and please, Be Good To Yourself!
Chuck Butler

 

The Dollar Returns To the Selling Block…

May 26, 2022

* Currencies gain VS the dollar in the overnight session

* Gas Pumps get reprogrammed to accept double digit pricing! 

Good day… And a Tub Thumpin’ Thursday to one and all! How about our Blues? A HUGE overtime win in Denver last night prolongs the series, with the next game Friday night in St. Louis!  The Enterprise Center, where the Blues play, will be hopping with fans, while the Cardinals take on the hated Brewers down the street… Friday night will be a crazy night here in St. Louis! I’ll be out in my back yard, watching and switching from game to game, on my TV outside…  I am so hyped up about Friday night, that I don’t know if I’ll get through today, first! Sorry if you’re not into me talking about the sports and teams I love… I had a reader last week, cancel his subscription because he didn’t like me talking about the teams… UGH! I guess he didn’t get the memo that this is MY letter, and I’ll talk about anything I want to! And that’s That! The great Johnny Rivers greets me this morning with his song: Baby, I Need Your Lovein’
Well, the dollar wrapped a tourniquet around its recent bleeding yesterday, and the overnight markets provided that tourniquet, as the gains the dollar made in the overnight markets were not added to during the U.S. session, and the BBDXY Index ended up 1,231.95… And that tells me that it was just a dead cat bounce for the dollar… The selling of Gold & Silver continued throughout the day yesterday… Gold ended the day down $14.20, to close the day at $1,848.20, and Silver lost 23-cents to close the day at $21.96… Up one day, down the next… That’s what Gold & Silver have done this week, so far..  The euro closed yesterday’s U.S. session at 1.0699, spittin’ distance from 1.07.. A few weeks ago the euro looked like it was headed to parity with the dollar… But just like it did quite a few years ago, it reached a point, where it looked bad, and then turned around. I told you earlier this week that the futures market has the euro trading at 1.10 by year end… 
If that plays out, then the dollar is due for some weakness, because the euro is the offset currency to the dollar, and when one goes up the other goes down and vice versa… The price of Oil slipped below $110, yesterday, and Bonds stayed steady Eddie at 2.75%, after rallying strongly on Tuesday… 
In the overnight markets last night… The euro did indeed cross into the 1.07 handle, and the BBDXY Index got back to losing ground, with the index losing 2 points overnight. Gold is down in the early trading today $9.56, and Silver is also down 8-cents to start the day. Ed Steer tells me that the delivery month of May is upon us, and it could be a wild one, so let’ see where that takes Gold & Silver…  The price of Oil seems to be held in a tight range of $109-$111… And $111 is where we’ll find Oil this morning. Bonds haven’t budge much since Tuesday’s massive yield drop (bond rally), and the 10-year is 2.76% this morning… 
I received an email from a dear reader yesterday that outlined 12 prophecies about the future of our economy and country… It was scary, and this one that I’ll highlight, is just one of the 12… So, here it is, but first put away all sharp objects! “Gas prices will continue to surge higher, and many Americans will be shocked by how high they eventually go.  If you can believe it, in Washington State at least one gas station has now reprogrammed their gas pumps “to make room for double-digit pricing”…
At the 76 Gas Station in Auburn, Washington located at 1725 Auburn Way North, gas pumps have been reprogrammed to make room for double-digit pricing. In March, they still had single-digit programming.
A spokesperson at 76 confirmed to The Post Millennial that the gas pumps were reprogrammed to allocate for double-digit pricing. Although not confirming that they are expecting prices to increase up to $10.00 or more, the current trend suggests the possibility.
Supplies of fuel will continue to get even tighter in the months ahead.  Earlier today, I heard from a reader on the east coast and a reader in the middle of the country that both said that diesel is now being rationed where they live.  So far, I have not been able to confirm that this is happening on a widespread basis.”
Chuck again… So, if the gas company doesn’t believe that gas prices will hit $10, why then are they reprogramming their pumps to allow for double digit gas costs?   I have to say that this is all getting very scary folks… Food shortages, the U.N. said that we have only 6 months of wheat for the world, and Gas prices, and everything under the sun and moon getting more expensive every day, I have to think that this is all going to end up in tears for us, here in the U.S.   The rest of the world will not be doing well either, but to me, that’s their problem, and our problem is more important to me… 
The Fed/ Cabal/ Cartel’s meeting minutes yesterday told a story of the Fed Head getting very scared of the inflation that they created that they are now quaking in their shoes… Remember when the Fed Heads said that they would allow inflation to run hotter, than their target of 2%? Well, they got their wish! Of course the Fed Heads thought that could corral any higher inflation and make it go away with a wave of their hands… I’m of the opinion that they should round the Fed Heads all up and fired them, and bring in a new bunch that understands that money supply increases equals inflation… And when you print over $6 Trillion in a short time, you’re not only going to get inflation, you’re going to get runaway inflation, and all the Fed Head’s horses and all the Fed Head’s economists, won’t be able to put the economy back together again! 
Like I said a week or two ago.. That $6 Trillion has already left the barn, you can’t call it back… it’s in the economy, and not doing a bit of good, except driving up the already over valued stock market… And once the stock jockeys figure out that there’s no more money coming from the Fed/ Cabal/ Cartel, what will they do then? Sell… But then I’m not a stock jockey and don’t play one on TV, or did I stay at a Holiday Inn Express last night, so take my thoughts on that with a grain of salt… 
Is there anything in the markets that is good that I can write about? I’ve scoured the news and can’t come up with anything… Sure you’ve got your naysayers of the whole recession story, but I doubt that they really believe that what they’re saying will come true… And I question their motive at thus point in the proceedings. Do they truly believe what they’re saying, or are they being paid to be optimistic?  I have to believe that it’s the latter of those two… If you think 2008 was bad, with all the layoffs, liquidations, repos, foreclosures, and rot in the markets, then you had better strap yourself in for this bad spell that’s already beginning. 
The U.S Data Cupboard yesterday, had the Durable Goods and Capital Good orders for April, and both were disappointing to say the least… Durable Goods were .4%, and were expected to be .6%, and Capital Goods were .3% VS the 1.1% gain in March… Today’s Cupboard has the usual Thursday fare of Weekly Initial Jobless Claims , which I was telling good friend, Dennis Miller yesterday, that I believe that we’ll begin to see this data shift to adding new jobless claims each week going forward… Dennis and I were having a discussion about what industries are going to suffer the worst this summer when the wheels come off the economy… That will be the subject of a future article, given that Dennis’s health continues to improve… 
To Recap… The dollar wrapped a tourniquet around its recent bleeding yesterday… But after the overnight recovery of the dollar, there was no follow up during the U.S. session, and that tells Chuck that we should look for more dollar selling… 76 gas stations are reprogramming their gas pumps to allow double digit prices… You know like $10 a gallon?  The euro continues to recover from its low price of a week or two ago. What to invest in now, is the subject of the FWIW article today, so you won’t want to miss that! 
For What It’s Worth…  What did your grandparents do during the great depression, after Roosevelt confiscated their Gold, and then devalued the dollar? that’s the subject of this article today, that can be found here; https://www.dollarcollapse.com/wright-payment-system-fragility/
Or, here’s your snippet: “How did people in the Great Depression make payments when money, itself, went broke and gold was confiscated? What will we do today if power outages or cyberattacks take down credit-card/debit systems? Ways to be prepared …

by Robert E. Wright on American Institute for Economic Research:

In previous posts, I suggested ways to cope with rising prices (COLA) and food insecurity (wild game and liberty gardens). Inflation creates many problems, including an increased risk of payment system glitches, like the shuttering of banking and credit card networks, leaving individuals economically stranded. Cyberattacks, power outages, financial crises, and other unexpected shocks can slow, or even disable, the payment system.

True, a de facto or de jure moratorium on payments would ensue but don’t forget that if you can’t make payments, your employer and other debtors (like Social Security or retirement or investment funds) may not be able to pay you either. How, then, will you buy gas or groceries?

The most obvious way to hedge against payment system risk is to hold some cash. Many people who lived through the Great Depression stockpiled paper money for the rest of their lives, just in case their bank went under or the ghost of Roosevelt, the President who seized their gold, declared another bank “holiday.” Few of those people are left, however, and many members of our youngest adult generation go out of their way to avoid carrying cash. Even some old timers like me use paper notes only when absolutely necessary.

Moreover, it would be rather daft to hold onto much physical cash when I-series bonds are yielding north of 9 percent. That’s still a losing proposition in inflation-adjusted terms but literally better than the nothing that those limp pieces of paper pay. If you think that you’ll just saunter down to your bank and fill out a withdrawal slip like it was 1999, think again. Even if some banks remain open, they hold very little physical cash these days. Any functioning ATMs will also be quickly stripped.

Given the current rate of inflation, a better approach might be to stockpile the nonperishables that you will need. Gasoline is tricky but certainly many foods can be stocked for long periods. As long as you eat it up before it goes bad, it will actually save you money by buying now instead of after prices go up (again).”

Chuck again… remember a month or so ago when I lamented that I was holding too much cash, because there was nothing out there that I saw as a value to buy? Well, I’m still holding tons of cash, and it appears that it might be best to withdraw some of that cash and hold it in my safe at home… I do own I-bonds, but like the article says, if inflation continues to rise, those will be a losing proposition…  UGH! 

Market Prices 5/26/2022: American Style: A$ .7089,  kiwi .6471,  C$ .7801, euro 1.0710, sterling 1.2611, Swiss $1.0410, European Style: rand 15.7689, krone 9.5648, SEK 9.8820,  forint 264.98,  zloty 4.3000,  koruna 23.0289, RUB 62. 83, yen 127.08, sing 1.3745, HKD 7.8497, INR 77.57, China 6.7317, peso 19.79, BRL 4.8269,  BBDXY 1,230.31,  Dollar Index 101.85,  Oil $111.24, 10-year 2.76%, Silver $21.90, Platinum $946.00, Palladium $2,002.00, Copper $4.25, and Gold… $1,843.90

That’s it for today… I totally forgot that the Blues were going to play last night, so I didn’t watch it, and they won, so I’ll keep that in mind for Friday night’s game! I did watch the replay at midnight last night! Well, this is heading into Memorial Day Weekend! The weekend the pools open up, that is if they can find lifeguards! I’ll be giving my Big Green Egg a workout this weekend, even if I’m only cooking for myself! I plan to smoke some pork steaks, which is a St. Louis fave… Hey! if you want some fall off the bone, smokey, bar- be -que pork steaks, stop by! HA! I do believe that Andrew, Rachel, Braden and Evie, are going to stop by on Monday, so I won’t be cooking for myself!  This weekend is the unofficial start of summer, and things are going to heat up in more ways than just the temperature, so get yourself a shad tree, and cool beverage, and relax… and forget about the markets, and all the turmoil going on for a couple of days, it’ll do you some good! The Moody Blues take us to the finish line today, with their song from my fave album Seventh Sojourn: New Horizons… “Well, I’ve had dreams enough for one, and I have love enough for three”… I hope you have a Tub Thumpin’ Thursday today, and Fantastico Friday and Holiday Weekend… Please remember to Be Good To Yourself! 

Chuck Butler

Is This A Dead Cat Bounce For The Dollar?

May 25, 2022

* Currencies & metals have a good day on Tuesday… 

* A price manipulator pleas guilty! 

Good Day… And a Wonderful Wednesday to you! Well, I lost a bet… I have a good friend that lives in Toronto, Canada, and we bet on who would win the 2 game series between the Cardinals and Blue Jays, with a run differential the tie breaker… The Cardinals enjoyed a 4 game run differential after the first game, and my friend, Craig, thought that the 4 runs would be enough… I told him don’t worry, and I was right, with the Cardinals losing 8-1 last night, he won the bet… A Cold Budweiser! Firefall greets me this morning with their 70’s song: Strange Way… Not familiar with that? YouTube it, I think you’ll like it… 

Well, the dollar dominance certainly took another hit yesterday, with the BBDXY index losing 2 more index points, to end the day at 1,229…  The data from the U.S. yesterday could have something with the weakness in the dollar, as the Manufacturing Index slipped again, and new home sales dropped like a rock in April…  But, for the data to have any bearing on the dollar’s performance, we would have to be returning to fundamentals, and there’s no way, that’s happening!  So, we’ll just go with the thought that the dollar lost more ground yesterday, because it had been overbought, and the correction continued…  Oil gained $1 buck yesterday, and bonds… 

What can I say about bonds, that I already haven’t said? Bond yesterday rallied big time with a 6 basis point drop in the 10-year’s yield…  The 10-year was bought hand over fist yesterday, and the yield dropped to 2.75%…  And that begs the question, is the Fed/ Cabal/ Cartel buying bonds still?  The Fed Heads did say that they would begin their massive Quantitative Tightening in June, so that left them some breathing room to continue buying up to June, right? 

If the Fed Heads aren’t buying, then that opens another can of worms…  The Bond Boys aren’t thinking that the Fed will renege on their call for multiple rate hikes, are they?  Well, either the Fed Heads are still buying bonds, or the Bond Boys are calling them out for their lies… 

Everyone, and their brother, are talking about a recession coming to the U.S. and Big Recession, not you run of the mill recession either! When I say “everyone, and their brother, I’ talking about the people that I listen to, People like: Ray Dalio, Bill Bonner, Doug Casey, David Rosenberg, Evon Von Greyerz, Mathew Pipenberg, and others…  I certainly don’t listen to the Government, or the Fed Heads, or anyone else that speaks for the government.  So, if a Big Time Recession is coming…  Oh, well, I’ll save that for another day… 

So, a long list of analysts believe a Big Time recession is coming to America, and that Gold is the best way to combat the effects of the recession…  And that leads me to my usual question: Got Gold? 

Gold and Silver had good days yesterday with little interference. Gold gained 14.50 to end the day at $1,867.40, and Silver gained 32-cents to end the day at $22.19…  Volumes were light once again… 

In the overnight markets last night… Well, the dollar bounced back, with the BBDXY index gaining 3 points… The question now is this bounce back a dead cat bounce?  (no animals were hurt here, this is just an old markets saying)  And Gold is starting the day down… Gold is down $14 in the early trading today, and Silver has given back the 32-cents it gained yesterday, and more this morning…  With no interference yesterday, the price manipulators seem to be trying to catch up on a lost day…  I’m just saying…

Speaking of price manipulators… I saw this in Ed Steer’s letter this morning, and it’s a little long, but I think you should see this…. “Glencore International A.G. (Glencore) and Glencore Ltd., both part of a multi-national commodity trading and mining firm headquartered in Switzerland, each pleaded guilty today and agreed to pay over $1.1 billion to resolve the government’s investigations into violations of the Foreign Corrupt Practices Act (FCPA) and a commodity price manipulation scheme.

These guilty pleas are part of coordinated resolutions with criminal and civil authorities in the United States, the United Kingdom, and Brazil.
“The rule of law requires that there not be one rule for the powerful and another for the powerless; one rule for the rich and another for the poor,” said Attorney General Merrick B. Garland. “The Justice Department will continue to bring to bear its resources on these types of cases, no matter the company and no matter the individual.”
The charges in the FCPA matter arise out of a decade-long scheme by Glencore and its subsidiaries to make and conceal corrupt payments and bribes through intermediaries for the benefit of foreign officials across multiple countries. Pursuant to a plea agreement, Glencore has agreed to a criminal fine of more than $428 million and to criminal forfeiture and disgorgement of more than $272 million. Glencore has also agreed to retain an independent compliance monitor for three years. The department has agreed to credit nearly $166 million in payments that Glencore makes to resolve related parallel investigations by other domestic and foreign authorities.
Separately, Glencore Ltd. admitted to engaging in a multi-year scheme to manipulate fuel oil prices at two of the busiest commercial shipping ports in the U.S.”
Chuck again…  The reason this is so important is that, if this is going on with one company, it’s going on all over, folks… Manipulated markets, no more free trading assets… I shake my head in disgust, and you should too, for this is NOT, the way it’s supposed to work…  I’m just saying…
I already told you about the Data Cupboard yesterday, but I left out that the new home sales this month had dropped 16% from the previous month, but that didn’t affect home prices, as they continued to soar…  But, if the Fed Heads come through with their rate hikes, then home prices should be at their apex right now…  Today’s Data Cupboard has April Durable Goods, and Capital Goods Orders… I don’t expect either of these to give any indication that the U.S. economy is recovering… 
To recap… The currencies and metals continued to rise against the dollar, as the dollar dominance waned again… Gold gained $14, while Silver gained 32-cents yesterday, and the BBDXY fell by 2 more index points…  In the overnight markets, the dollar has rebounded, with Gold & Silver both giving back their gains from yesterday, and the BBDXY gaining 3 points.. Chuck also tells us about a price manipulation scheme gone bad… 
For What It’s Worth…  This is an interesting and thought provoking article, that talks about what could come after the next recession, and it can be found here: https://internationalman.com/articles/how-inflation-destroys-civilization/  
Or, here’s your snippet: “Thanks to rampant inflation, socialism could soon become irreversibly entrenched in the US—just as it is in Argentina, Venezuela, and other countries.Rapidly rising food, housing, medical, and tuition prices are squeezing Americans—many of whom do not understand the true cause of their falling living standards.

The explosion in the cost of living is a predictable consequence of money printing.

Since the outbreak of the Covid hysteria, the Federal Reserve has printed more money than it has for the entire existence of the US.

From the founding of the US, it took over 227 years to print its first $6 trillion. But in just a matter of months recently, the US government printed more than $6 trillion.

For further perspective, the daily economic output of all 331 million people in the US is about $58 billion. At the push of a button, the Fed was creating more dollars out of thin air than the economic output of the entire country.

In short, the Fed’s actions amounted to the biggest monetary explosion that has ever occurred in the US.

Initially, the Fed and its apologists in the media assured the American people its actions wouldn’t cause severe price increases. But unfortunately, it didn’t take long to prove that absurd assertion false.

As soon as rising prices became apparent, the mainstream media and Fed claimed that the inflation was only “transitory” and that there was nothing to be worried about. When the inflation turned out to obviously not be “transitory,” they then told us “inflation was actually a good thing.”

Of course, they were dead wrong, and they knew it—they were gaslighting.

The truth is that inflation is out of control, and nothing can stop it.

Even according to the government’s own crooked CPI statistics—which understates reality—inflation is hitting 40-year highs. That means the actual situation is much worse.”

Chuck again…  Nick makes a good point here, that I’ve made a couple of times in the past, and that is this… Either the Fed Heads and all their economists that they employ, knew that their money printing was going to cause inflation and they lied about it, or they didn’t have a clue, and either way they should all be fired!  I sent that note to Bill Bonner, and he replied: “Either way…knave or fool…they shouldn’t be running the world economy! – Bill Bonner

Market Prices 5/25/2022: American Style: A$ .7063, kiwi .6456, C$ .7782, euro 1.0660, sterling 1.2494, Swiss $1.0373, European Style: rand 15.6299, krone 9.6214, SEK 9.8762,  forint 362.48, zloty 4.3200,  koruna 23.0870, RUB 56.81, yen 127.13, sing 1.3760, HKD 7.8497, INR 77.52, China 6.6765, peso 19.89, BRL 4.8194, BBDXY 1,233.95, Dollar Index 102.27,  Oil $111.27, 10-year 2.75%, Silver $21.75, Platinum $945.000, Palladium $1,998.00, Copper $4.25, and Gold… $1,852.28

That’s it for today… A little shorter than usual, but not by much… Well, I’m all by myself for the next weeks, plus… And the first night, I had a rough night with my stomach! UGH! I don’t think it was me aching for company either! HA! My chemo pills do that to me every now and then, more often here recently, and that bothers me… But then I’ve led an easier life with chemo…( compared to most)  I’m still able to eat (most things), have a cold one with friends, and go to games, etc.  I can’t do those things every day, but most days! I think that my family  & friends forget that I take chemo every night… But that’s Ok with me, because I don’t want them to treat me with kid gloves… Crosby, Stills & Nash take us to the finish line today with their song that made it on the Woodstock film: Suite Judy Blue Eyes…  I hope you have a Wonderful Wednesday today, and please, remember to Be Good To Yourself!

Chuck Butler

 

Could We See Blackouts This Summer?

May 24, 2022

* Currencies continue to push against the dollar

* Bullard talks tough… 

Good day.. And a Tom Terrific Tuesday to you! Well… I found a different laptop in my closet yesterday, only the shadow knows how long this one will last, or how outdated it is, but for now, it works much better than my old one! I spent most of the day yesterday setting up the new laptop…  It’s crazy, and I’m not even your last choice for a techie… But I soldiered through, and got my email set up, so that was a victory in itself!  I mentioned in yesterday’s brief letter that I had a good doctor visit last week… The doc said, “Your blood sugar is great, your BP is great, your Blood oxygen is great, your weight is down, and your legs aren’t swollen, keep doing whatever it is you’re doing”!  I left his office smiling like the Cheshire Cat!  Buddy Miles greets me this morning with his version of the song: Down By The River
Well… there was more selling of the dollar after I sent out my letter yesterday, and the BBDXY closed the day at 1,231.97, down 9 index points in all, on the day… I suspect that the PPT will be in soon to help the dollar out, with their Exchange Stabilization Fund… But if the dollar is really on the tenterhooks, then the PPT will only be able to stem the tide… But if the dollar was only going through a correction to all the overbought positions, then it will recover… Only the Shadow Knows which way it will go… In my younger years, I would be bold and go out on a big fat limb, and make a call on which way the dollar was going… But that was back in the day, when fundamentals ruled the roost, and it was not that difficult to see, as long as you followed the fundamentals like i did! 
So, Gold ended the day giving back some of its gains once again in the intraday trading, and Gold was only allowed to gain $6.80, to close at $1,854.50, and Silver couldn’t hold its gains ending the day down 1-cent, to close at $21.87… I have to say that while I would rather see Gold hold its intraday gains throughout the trading sessions, I can’t complain too much given that each day Gold shows gains, albeit, small ones, but gains nevertheless… 
Here’s a snippet from Ed Steer this morning: “But volumes were exceedingly light in the precious metals on Monday, so those with in an interest in pushing their respective price around, had no problems doing so. Gold closed above its 200-day moving average for the third day in a row, but not by a significant amount — and with ultra-low volume it’s not really possible to tell how aggressively the Managed Money traders, or others, might have been covering short positions. I’d guess, not much.”
Chuck again… The price of Oil was steady Eddie throughout the day, ending the day trading with a 110 handle. Bonds got sold, for the first time in about 10-days, with the 10-year Treasury yield rising to 2.85%… 
In the overnight markets last night…  Well, before I went to bed last night, I looked at what the currencies were doing overseas, and saw, at that time, that the dollar had wrapped a tourniquet around its recent bleeding, and was up a bit… But, as the night wore on, the dollar got sold again, and starts today a little less in value than what it ended the day yesterday.  Gold is up $4 in the early trading, and Silver is up 14-cents to start the day. The price of Oil remains steady at $110, and bonds got bought again last night, by someone, or some country, to bring the yield on the 10-year to 2.81%… 
Yesterday, I had this quote from James Bullard, St. Louis Fed President, all lined up and in the letter, when it played a disappearing act with me, so here you go… “Fed’s Bullard says retailers who don’t understand that consumers are stretched thin by inflation are going to get ‘punched in the face’” I guess he doesn’t realize that retailers have seen their finished goods prices rise every month, and in April, they were up 15%!  But then… what else do we expect from a Fed Head? They never saw inflation coming and now it’s the retailers fault that people are getting pinched… 
OK… Fed Heads never say what they mean, and never mean what they say… (Joe South) And here’s more proof of that… Remember when Fed/ Cabal/ Cartel Chairman, Jerome Powell, said the Fed would deliver a “soft landing”?  Well, not so fast there Tim!  He now says that no one can predict a soft landing, and that inflation is stronger than he first realized…. 
I wouldn’t touch whatever it is a Fed Head is saying with someone else’ ten foot pole! 
The Russian ruble continues to gain VS the dollar, and it has gained over 30% from its low last month, VS the dollar… You know, I’ve told you on more than one occasion that I own Russian rubles, and therefore I’ve done my due diligence… I’ve said since the beginning of the time when the old EverBank World Markets began offering ruble deposits, that the ruble was strictly an Oil play, that and the fact that they had high interest rates… Russian doesn’t have debt up to their eyeballs like most countries of the world, and they only black mark is that they invaded a sovereign nation, in Ukraine… 
Is your spider sense tingling, because mine is… Yesterday the headlines said that “Biden vows to protect Taiwan should China invade the country”…  Uh-Oh! Please tell me that someone with a cooler head will talk him out of that move, please tell me! And this is not a political statement, it’s just the deep state are war mongers, and they certainly seem to have the POTUS’s ear right now…  I’m just saying…
What would get people’s collective minds off of rising inflation, and the 10% stealth tax that inflation represents? A war… So, please, let’s all take a step back, and think about this first… 
OK… Well, European Central Bank President, Christine LaGarde told reporters yesterday that the negative rates in the Eurozone will end in September. And a first look at interest rate futures for the Eurozone shows that the markets believe that the Eurozone internal rate will be 1.10% by year-end… Not that 1.1% rates will excite everyone, but at least they will have moved off of negative, which was beginning to feel like they were going to last forever, and a day!  Euro bulls are now predicting a return to 1.10 for the euro before year-end… 
Longtime readers my recall me telling them many moons ago, that 1.10 is probably a fair and reasonable level for the euro VS the dollar. With the euro currently trading with a 1.06 handle, it’s still undervalued, hint, hint… 
Commodity Currencies in Aussie dollars and kiwi, were ratcheting up some nice gains VS the green/peachback dollar, until yesterday. So even with the dollar losing ground yesterday, A$’s and kiwi lost ground too… It must have been some profit taking by large corporations, etc. because the drops were quick and  large… 
I have a good friend, Mike, that always makes fun of me talking about how a 1-cent gain in a currency is noteworthy…  I always come to my own defense and explain that the currency market is the largest market in the world, and that large positions, multi-million like, take place every day, and when dealing with say $5 Million trade, a small gain is worth it to the position holder…  So, now you know too! 
OK.. The U.S. Data Cupboard is back on the data prints track today, with the S&P Manufacturing Index, that I talked about yesterday…  And new home sales will also print… Last week, existing home sales saw a HUGE drop in April, which was the first month with a rate hike… I can’t even begin to think about how affected the housing market will be once the Fed hikes rates two more times… 
I’ve refrained from calling what’s coming a recession… But, I do believe things are going to get really ugly, especially in housing, and house prices.. This could be 2008 all over again and I’m dead serious about that… I told you how ridiculous rents have become in Florida, right?  Memo to condo and apartment owners, better get those commitments for next winter booked, and contracts signed, before the floor caves in… I’m just saying… 
To recap… The dollar lost more ground yesterday, with the total loss in the BBDXY 9 points… Bullard is talking tough, and Powell is talking out of both sides of his mouth. LaGarde says that the Eurozone’s negative rates will end by Sept, and euro bulls have the euro pegged to go to 1.10 by year-end. The Russian ruble is now 30% higher VS the dollar, from the ruble’s low last month… Given the high interest rates in rubles, that’s quite a nice move, eh? 
For What It’s Worth… This one is leftover from yesterday, when again, my letter did a disappearing act, and I tried to reconstruct what took me 2 hours to write, and didn’t get much done… UGH! This is a scary story of what could happen this summer, folks… and it can be found here:
Or, here’s your snippet: “Tens of millions of Americans could be thrown into a summer of hell as a megadrought, heatwaves, and reduced power generation could trigger widespread rolling electricity blackouts from the Great Lakes to the West Coast, according to Bloomberg, citing a new report from the North American Electric Reliability Corporation (NERC), a regulatory body that manages grid stability.

NERC warned power supplies in the Western US could be strained this summer as a historic drought reduces hydroelectric power generation due to falling reservoir levels and what’s expected to be an unseasonably hot summer. Compound the hellacious weather backdrop with grids decommissioning fossil fuel power plants to fight climate change and their inability to bring on new green power generation, such as solar, wind, and batteries, in time, is a perfect storm waiting to happen that will produce electricity deficits that may force power companies into rolling blackouts for stability purposes.
The regulatory body pointed out that supply-chain woes are delaying major Southwest solar projects, while some coal plants have trouble procuring supplies because of increased exports. They said there’s also an increasing threat of cyber attacks from Russia.
By region, the Midwest power grid will be extremely tight. Across the Western US, power generation capacity has declined 2.3% since last summer, even as demand is expected to increase. Grids in the region may have to source power from neighboring grids as extreme heat will cause people to crank up their air conditioners. A situation of low wind speeds could trigger blackouts, according to NERC. They outlined how the Midwest could face power shortfalls due to the removal of power capacity from retiring fossil fuel power plants.
NERC issued a similar warning last year, stating power grids that serve 40% of the US population were at risk of blackouts. One year later, there was only one notable blackout last June during a heatwave in the Pacific Northwest that left 9,000 customers without power. But with reduced electricity generation capacity outpacing new green power sources, the risks of blackouts are increasing this year.​”
​Chuck again… Just because they got it wrong last year, doesn’t mean they’ll be wrong again this year, I’m just saying…
Market Prices 5/24/2022: American Style: A$ .7068, kiwi .6430, C$ .7832, euro 1.0708, 
sterling 1.2505, Swiss $1.0356, European Stye: rand 15.6727,  krone 9.6200, SEK 9.8041, forint 358.51, zloty 4.3001, koruna 23.0329, RUB 56.01, yen 127.49, sing 1.3743, 
HKD 7.8495, INR 77.56, China 6.6696, peso 19.84, BRL 4.8130, BBDXY 1,231.57, Dollar Index 102.04, Oil $110.57, 10-year 2.81%, Silver $21.95, Platinum $961.00, 
Palladium $2,005.00, Copper $4.29, and Gold… $1,868.27
That’s it for today… in my effort to get something out yesterday, after writing for 2 hours and having it disappear, I forgot to mention that it was my grandson’s birthday! Happy Birthday Braden! Man these years go by fast… My darling granddaughter, Delaney Grace, will start high school this fall! My beloved Cardinals won their game VS the Blue Jays in the bottom of the ninth with a grand slam! But sad news for our Blues… They led 1-0 at the end of the first period, and then the flood gates opened and Colorado scored 4 second period goals… Ugh… I went to bed after the second period ended 4-3…  And the Blues lost 6-3…Oldest son Andrew, Rachel, and Braden went to the hockey game for Braden’s birthday last night, and little Evie stayed with us, she’s really talking now, and quite bossy! But she knows she can’t boss me, I say NO! HA! As if!  Elton John takes us to the finish line today with his great 70’s song: Levon… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!
Chuck Butler

May 23, 2022

Good Day… And a Marvelous Monday to you! I have to apologize up front and center this morning… I had my letter all written, 2 hours of writing, and research, and my stupid computer erased it all! I’m not one to redo things, so I’m going to hit the high points, and leave out all the commentary this morning, so this will be short-n-sweet…  I have to get a new computer, this one has driven me to the edge of crazy! 

OK, the things you need to know this morning are 1. The dollar has gotten sold big time in the last two trading sessions… The BBDXY has given up 15 points in those sessions. The dollar dominance is waning, quickly…  The euro has risen to trade with a 1.06 handle, while the A$ has also risen to trade with a 71-cent handle this morning. But the Big mover of the currencies is the Russian ruble, which is now trading stronger VS the dollar than it was before the Russians started a war. 

South Africa has joined the countries that have hiked rates to combat their respective inflation… The rand is a commodity currency, and therefore to me, that is, this rate hike was warranted. 50 Basis Points were added to their internal rate which is now 4.75%…  While the rate hike was warranted, to me, it sure took some time getting here… but I guess better late than never applies here.. 

Gold is up $14 in the early trading today… On Friday, last week, Gold had climbed intra-day by $26, only to see the sellers dominate the afternoon session and bring Gold back to only a $5 gain… Gold ended the week trading at $1,847.70, while Silver gave back 13-cents on Friday, and ended the week at $21.88…  

In the overnight markets last night, Gold has added $14, and Silver has added 26-cents, so we’re starting the week off on the right foot.

The U.S. Data Cupboard is empty today, and gradually adds data prints as the week progresses, with Friday’s offerings to be the datapalooza!  Tomorrow‘s  Data Cupboard  will have the ISM manufacturing index, which has been inching downward in recent months, although it still remains above the 50 level, at 58. The recent regional reports indicate that the national ISM will drop more in April.

To recap…. The dollar dominance is taking on water… It will be interesting to see if this selling of the dollar, continues… South Africa hiked rates 50 Basis Points, and the Russian ruble is proving that if you have a commodity that other nations not only want, but need, and you price the commodity in your base currency…. The currency will respond favorably…

Market Prices 5/23/2002: American Style: A$ .7113, kiwi .6477,  C$ .7820, euro 1.0665, sterling 1.2582, Swiss 1.0342, European Style, rand 15.7219, krone 9.6073, SEK 9.8296,  forint 359.15,  zloty 4.3314,  koruna 23.0552,  RUB 57.99, yen 127.52, sing 1.3736, HKD 7.8493, INR 77.41, China 6.6468, peso 19.80, BRL 4.8804,  BBDXY 1,232.06, Dollar Index 102.17,  Oil $111.06, 10-year 2.82%, Silver $22.14, Platinum $978.00, Palladium $2,033.00, Copper $4.23, and Gold $1,861.25

That’s it for today… Sorry for the shortness, but it wasn’t user error! Tomorrow I’ll be back to being by myself for the next two weeks… Hello Pizza Man, pizza? I was happy with my doctor visit last week… My A1C was just 5.6…. The doc even removed one of my meds! My left knee is hurting bad again… The last time I asked my son, Alex, the kid with the doctorate in physical therapy about my knee he replied, “it’s just old age”.. I then said “this is what I paid for ?”…. Oh well… Don Henley takes us to the finish line with his song: Not Enough Love In The World… (he’s got that right!) I hope you have a Marveleous Monday and please remember to Be Good To Yourself !

Chuck Butler

Is A 1980’s Plaza Accord Possible?

May 19, 2022

* currencies rally for 3rd consecutive day… 

* Powell talks tough…  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

The Dollar Rally Gets Stopped In The Overnight Markets…

May 17, 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

 

Dollar Dominance Continues…

May 16, 2022

* Currencies & metals continue to get sold… 

* The ruble is the best performing currency this year! 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler

A Pause In Dollar Dominance, For The Cause…

May 10, 2022

* The U.S. Empire is in decline… 

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

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

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

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

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

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

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

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

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

GDP is falling at a 1.4% annual rate.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Chuck Butler