THE FOMC Fails To Look Forward…

February 17, 2022

* Currencies and metals rally yesterday & overnight

* A Good Data Day, but the dollar gets sold any way! 

Good Day… And a Tub Thumpin’ Thursday to one and all! My Billikens put a stop to their 2-game losing streak, to the Bonnies of St. Bonaventure, and whipped up on La Salle last night, hitting over 60% of their shots from the floor… That’s some great shooting folks! We’re going to have a condo happy hour on the deck this afternoon, if the weather cooperates… The weather app says rain in the morning, sun and warmth in the afternoon… Can you believe the ruling the Olympic Committee made regarding the Russian figure skater? I don’t care if she is only 15… You can’t tell me that she didn’t know what she was putting into her body! To me it’s just another example of Russia’s disregard for the drugging rules… Grand Funk Railroad greets me this morning with their song: We’re An American Band…

Well, it was a kind of Meh day for the currencies and metals… they rallied VS the dollar yesterday, but the rallies had a governor on them. The BBDXY closed the day at 1,173.40 after closing at 1,176.90 the day before… The euro gained a bit, sterling gained a bit, but nothing to write home about. Gold was up over $20 at one point yesterday, to find it closing the day up $15.80, for a closing price of $1,1870.90… And Silver also found a way to gain 21-cents on the day to close at $23.66… The price of Oil slipped by $2 yesterday, and bonds were stuck in the mud again…

All this after the data prints yesterday, showed a better than the average bear economy in January… But to believe anything the Gov’t and their agencies put out as far as data is concerned to be the real McCoy, would be very ill-advised, in my humble country boy opinion… So, I’ve always contended that a long-term trend is in place when the rallying asset class keeps seeing data that should turn it around, but it rallies instead…

Yesterday’s economic data in the U.S. played the part of the asset that’s getting sold. Even though the economic data said it should be good for the dollar, it didn’t matter, the dollar was getting sold… We’ll have to watch this carefully for a while to see if this trend continues. I would think it would, given the dollars fundamentals, but you can’t put too much into it being in a new weak trend, until we get some confirmation, meaning days of like trading…

In the overnight markets last night… the dollar was sold further down the river, with the BBDXY dropping to 1,172.87 to start the day today. The Aussie dollar (A$) has scratched and clawed its way back to 72-cents, and the S. African rand has dropped below the 15 handle for the first time in a month of Sundays.  I read a report the other day that talked about how the rand is the choice of investors looking for emerging markets… I didn’t pay much attention to it, for I thought that they must be kidding, but as I look at the performance recently of the rand, it bears fruit… 

Gold is up $16 in the early trading today and is bumping higher toward the $1,900 figure… Silver is up just 7-cents this morning, but that’s better than a sharp stick in the eye, as my former boss, Frank Trotter, used to say! The price of Oil has dropped again, and this trading pattern is strange, as the price of Oil soars, and then falls back, then soars, then falls back… Sort of like the revolutionary soldiers… fire and fall back!

I had to laugh out loud yesterday, while perusing the Kitco.com site, and came across two articles back-to-back that told you totally different stories about Gold… The first one said that Gold was ready for a “substantial” move (higher) as inflation continues to rise… The other one said, “Gold can fall 20% as Fed hikes rates,” … I guess that’s what Kitco has to do, show both sides of the argument… to me, it’s just confusing to readers…

So… how about that info I gave you yesterday regarding the Fed/ Cabal/ Cartel’s balance sheet growing the last 3 months instead of being tapered? I found that news to be so appalling and downright deceitful! All that time I kept question who was buying these bonds, and keepingthey yields low, only to find out that it was the Fed/ Cabal/ Cartel all the time… But then I should have figured that out before having to be told about it… I pride myself on looking under hoods, and around corners to get the right story…

But getting the story right is most important, and for that I’m thankful for the Wallstreetonparade.com folks, Pam and Russ Martens…

Here’s something for you to digest today, before you head off for a -day weekend… this came to me from the good folks at GATA, “The TF Metals Report’s Craig Hemke, writing at Sprott Money, reports tonight that the “trade at settlement” mechanism, seemingly used recently to knock the gold futures price down, is starting to be used in the silver futures market.

: “If the price of Comex silver pulls a full round trip next week, we may be able to say with confidence that we have uncovered the latest bank price manipulation technique.”
Hemke’s analysis is headli ned “Comex Silver Trade at Settlement” and it’s posted at Sprott Money here:
https://www.sprottmoney.com/blog/COMEX-Silver-Trade-at-Settlement-Craig-Hemke-February-15-2022

The U.S. Data Cupboard yesterday had January retail Sales… You may recall that December Retail Sales were negative, and there was no way in hell-o operator given number nine, if you don’t connect me I’ll kick you in the behind the refrigerator was a piece of glass, Lulu sat upon it and cut her little ask me no more questions, I’ll tell you no more lies…

So the January print was an increase of 3.8%, which is pretty good… and quite a jump in one month eh? I was taught early on in my career, if it smells like day old fish, it probably is… Industrial production which was also negative in Dec. printed a 1.4% gain in January, and Capacity Utilization gained last month too moving the index number from 76.6 to 77.6…

And finally, yesterday there was the FOMC Meeting Minutes, and they revealed that the Fed/ Cabal/ Cartel members didn’t really nail down a pace of the rate hikes that were on the table…  I find that interesting in that this is where these things need to be discussed, planned out, and plotted… But not this FOMC they only react to what’s going on right now, with no vision of what it will do to the economy in the future… That’s why we’re stuck with soaring inflation right now…  I’m just saying… 

Today’s data Cupboard only has the usual fare for a Tub Thumpin’ Thursday, and that is the weekly Initial Jobless Claims… And this data just like all theo other data that comes out these days, doesn’t jive with me… I’m just saying…

To recap… The dollar continued to get sold throughout the day yesterday, but the selling had a governor on it, and the currencies’ gains were limited… gold gained $15 on the day, and Silver gained 21-cents… The price of Oil slipped again, and bonds were stuck in the mud. Chuck points out that a new way to manipulate the price of Silver is now being used… And in the overnight markets last night… The dollar has gotten sold further down the river, as Chuck calls it…  Gold is up $16 in the early trading today, so here we go! 

Before we head to the Big Finish today, I know I left you all on the edge of your seats yesterday, when I talked about my new phone… Well, as it worked out, I was growing very impatient with the help at ATT, and remembered what out tech guy, Taru, told me many years ago, when I reported that my computer was not working… he told me to “turn it off, and turn it back on” … Well, knowing that my iPhone has the same computing power as my PC back then, I turned it off and turned it back on, and voila! It worked! And then I was was unhappy that I had spent so much time online, and chat wasting time!

For What It’s Worth… This article came to me from longtime reader Bob, and talks about how the Congressional Budget Office has allowed our debt to reach $30 Trillion dollars… And it can be found here: How Magical Thinking Led America To $30 Trillion In Debt (forbes.com)

Or, here’s your snippet: “Washington, DC must be a magical place.

Because the people in charge of it keep conjuring fantasies that defy belief.

In the Wizarding World of Washington, you can now say a multitrillion dollar federal spending bill “costs zero dollars.” You can claim tax cuts “pay for themselves.” You can even say the government doesn’t need tax dollars to fund anything at all because it can just “create money.”

Unfortunately, Americans are now paying a heavy price for this magical thinking. Inflation—spurred at least in part by record government spending and inaction on other issues—is running at its highest rate since 1982. The prices for meat and eggs are up 12.2% since last year. Furniture and bedding is up 17% and used cars and trucks are up.

It’s no secret of course that Washington spends recklessly. What’s less known is just how much an obscure fifty year-old law enables this behavior. Fixing this law might hold the key to America finally beginning to dig out of this fiscal mess we’re in.

When President Nixon and Congress passed the Congressional Budget and Impoundment Control Act of 1974, they established several new procedures and processes to force more transparency and discipline into the federal budget process. Among them was the creation of the Congressional Budget Office (CBO), which was charged with evaluating the budgetary and economic impact of legislation before Congress and providing a consensus cost estimate that could be trusted by both parties.

Ever since, when major legislation is proposed in Congress, the CBO has to “score” it before it can advance towards passage. The stakes are high. If the CBO score shows a bill would significantly add to the federal deficit, that often kills the bill because: 1) It makes it harder to sell to the public or 2) Its passage would automatically force spending cuts elsewhere in the government to comply with other existing budget rules.

In short, the CBO is supposed to encourage fiscal discipline, but somehow the accumulated national debt, which was $533 billion in CBO’s first year of operation, has multiplied by a factor of 60 in the five decades since. How, you might wonder, is this possible?”

Chuck again… OK, ok, this is long enough, you’ll have to go to the link above if you want to read more about the tricks that our leaders use to get deficit spending on the books…

Market Prices 2/17/2022: American Style: A$ .7207,  kiwi .6709, C$ .7871, euro 1.1367, sterling 1.3605, Swiss $1.0860, European Style: rand 14.9718, krone 8.9012, SEK 9.3101,  forint 312.96,  zloty 3.9615,  koruna 21.9295, RUB 75.74, yen 115.08, sing 1.3438, HKD 7.800, INR 74.97, China 6.3381, peso 20.24, BRL 5.1326,  BBDXY 1,172.87,  Dollar Index 95.78, Oil $91.86, 10-year 2.0%, Silver $23.73, Platinum $1,089.00, Palladium $2,403.00, Copper $4.55, and Gold… $1,887.40

That’s it for today… Well, I had a bet with a friend of mine that lives in Canada, on the U.S. / Canada Woman’s Gold Medal hockey game last night… It came on too late for me to watch, so I had to check it this morning, and …. Canada won…So, I owe Craig 1 Budweiser… He was going to have to pay me 2 Buds (exchange rate)… if the USA won…  I met Craig at Spring Training a few years ago, I told him the name of the watering hole I would be prior to the game, and he met me there! So, needless to say, he’s a baseball fan too! His team is the Blue Jays… Well, Monday is a National Holiday, President’s Day, and so I’m sure tomorrow will be a lite day of trading… Of course, no Pfennig on Monday… I’ve got mattresses to try out! HAHAHAHA! Earth, Wind, and Fire take us to the finish line today with their song: September… I love this song, it’s really upbeat and gets you grooving in your chair! I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… Please Be Good to Yourself! Be Positive, Test Negative! 

 Chuck Butler

The 10-year Treasury Yield Moves Past 2%

February 16, 2022

* Currencies and metals rally in the overnight markets

* Martial Law for Canada… 

Good Day… And a Wonderful Wednesday to you! What a windy day here yesterday, I was thinking that maybe some of the Palm trees would blow over, but that didn’t happen, thankfully! Went to dinner last night with some friends that used to be here every year in January, and didn’t make it last year (who did besides us?) and are only here for about a week this year… Went to a fun place with good food, named Twisted Tuna…  Our Blues won last night on away ice, which is always a good win… And I’m still somewhat depressed about the news regarding the Great Mogambo Guru… I know we all go at some time, I just felt I had more years to share stories with him… You never know when the last time will be to see someone, to talk to someone, to hug someone, to tell someone you love them… So… in this week that includes Valentine’s Day, make sure you tell the people you love that you love them, dearly… Billy Joe Royal greets me this morning with his song: I Knew You When… 

Well… another strong PPI (Wholesale inflation) print yesterday, had the markets in a tizzy… PPI for January was up 1% for the month, but up 9.7% year on year… That’s just below the all-time record high for PPI… And as I’ve explained many times in the past, PPI is an indication of what consumer inflation will be in a month or two… For if Producers are seeing price increases, they are sure to pass those onto the retailer, who will in turn pass them onto you and me…  And with PPI up 1% in just the last month, we can expect to see CPI up probably to 7.9 or 8% in its next print.

So, the dollar couldn’t rally on that news, for once! And traders didn’t want to sell it either… The BBDXY dropped just a bit from 1,1177.07 to 1,176.90 to end the day yesterday. The currencies couldn’t really find any real traction, but did finish the day higher than they were to start the day, and that’s something, eh?  And Gold, which began the day down $20 ended the day down $17.20 to close at $1,855.10, and Silver which began the day down 59-cents, ended the day down 47-cents to close at $23.45…  The price of Oil wrapped a tourniquet around the bleeding from the day before, and gained about 30-cents on the day, while Bonds saw their losses early and then never recovered to get worse, as the day went on…

I read some very interesting news yesterday, regarding Treasury yields… Recall the other day when the 10-year’s yield dropped a bit and I said, “Who’s buying these bonds?” Well, I got my answer to that question yesterday in an article won www.wallstreetonparade.com  Here’s the skinny from that article: “The Fed’s Federal Open Market Committee (FOMC) made its first announcement that it would begin “tapering” the amount of its purchases of Treasuries and Mortgage-Backed Securities (MBS) on November 3 of last year. On that date, according to the Fed’s own H.4.1 filing, it held $8.063 trillion in debt securities. As of last Wednesday, that figure had risen to $8.395 trillion or an increase (not decrease) of $332 billion in the span of just three months.”

Chuck again… Really? Now the Fed/ Cabal/ Cartel are lying to us about tapering?  C’Mon Congress grow some hair on your chests and beat these Fed Heads about the head and shoulders and get them to admit they lied to the public! No, wait… I have a better idea…  Let’s take them all down to the river and get John the Baptist to dunk them in the river, then they’ll never be able to lie again!  Yeah, that’s the ticket! 

In the Overnight Markets last night…. the dollar got sold and the move wasn’t just a token downward move that we usually see in the overnight markets. This one had the BBDXY falling to 1,174.73, from its close last night at 1,176.90… The Petrol Currencies are perky this morning as the price of Oil recovers some of its losses yesterday and trades with a $93 handle this morning.  Bonds were stuck in the mud overnight, and I believe that the overseas bond traders were scratching their collective heads, wondering what it was they were seeing with the 10-year’s yield at 2.03%… They probably can’t believe it, or don’t remember what it looked like! HA! 

Gold and Silver are in the plus column this morning, with Gold up a buck or two and Silver up 14-cents…  The Retail Sales data today should be a report that moves the markets, so keep an eye on that one. 

So, inflation is still soaring, and the Fed/ Cabal/ Cartel is still snoring…  They’re still buying bonds, which they said they weren’t, but the numbers don’t lie, and if they’re still buying bonds, they’re still printing counterfeit currency to pay for the bonds…  Don’ know if you noticed or not, but I’ve changed how I describe currency printing to counterfeit currency printing…  Because that’s what, it is to me! It’s not currency that was earned by anyone, it’s not currency that was handed down generation to generation. It’s currency that was printed with nothing behind it… counterfeit!

I have an article for you in the FWIW section today that deals with someone else’s view on inflation. This way you just don’t hear me shouting from the rooftops, like the Beatles singing Get Back… 

For years I read the annual World Gold Council reports, until I realized that they weren’t doing Gold any favors… But this year’s report is interesting in that they talk about how Gold is more than an inflation hedge, and I thought it would behoove me to give you a snippet of this report that can be found here: Gold is more than just a safe-haven asset and can fit in all portfolios – WGC’s John Reade | Kitco News

“On Monday editor Neils Christensen recorded a podcast with Phillip Streible, chief market strategist at Blue Line Futures. The guest was John Reade, chief market strategist of the World Gold Council. The three talked about the health of the global marketplace.

Reade said safe-haven demand is positive for gold, but prices could see a sharp correction if the conflict is quickly resolved.

Instead of looking at short-term price volatility, Reade said that the World Gold Council’s research shows that gold plays a vital diversification role for any type of portfolio.

“We’ve issued various editions of the strategic case for gold in the U.K. and Europe and Australia, Russia, Singapore. Looking at the benchmark of assets that might be in a typical portfolio for each of those countries, you find very similar result,” he said. “Somewhere between 4% and maybe the higher 10%, of gold in your portfolio seems to be optimal for increasing the risk-adjusted returns,” he said.

Chuck again… See what I mean about this WGC? They don’t do Gold any favors, a 4% allocation of Gold in an investment portfolio, makes no sense whatsoever!  The allocation should be 10%, and when Gold is really moving higher that allocation could be raised to 20%… 

OK, Chuck, move along there’s nothing to see here, or to get your blood pressure boiling! 

A Dear Reader from Canada sent me a note yesterday, and asked me why I didn’t mention the Marial Law that’s been put in place in Canada… He said something that makes you think, he said, “Enjoy your freedom because it can be taken away easily, and then it’s gone”… 

For those of you not following what’s going on Canada, here’s the skinny: Canadian Prime Minister Justin Trudeau invoked the Emergencies Act, which is essentially martial law and has never been used before. It is allowed only in emergencies, in critical situations that seriously endanger the lives, health or safety of Canadians.”

I guess Trudeau thought that the peaceful protests that are going on were  “emergencies”…  So, any-old-way, that’s what’s happening, but the Canadian dollar/ loonie is above all that, and continues to be strong alongside the other Petrol Currencies. 

I got a new iPhone last night, and activated it on the ATT.com site, and while I got everything transferred over, I can’t make a call, or have no record of texts! UGH! Now I’ll have to sit on hold for an hour today until I get a tech help… UGH!

We already talked about what the U.S. Data Cupboard had for us yesterday… And today’s Data Cupboard is chock-full-o-data, starting with Jan Retail Sales… The Butler Household Index (BHI) tells me that this report will be disappointing…  In addition to Retail Sales, we’ll also see the color of Industrial Production and Capacity Utilization. We’ll also see some 3rd tier data prints, that won’t mean a hill of beans to the markets. And to finish the day, the FOMC Meeting Minutes from the last meeting will print…

To recap… PPI was strong again last month, and came within a hair of meeting the all-time high level… Jan’s PPI was 9.7 yoy, and Chuck explained how this will filter through to consumer inflation in a month or two.  The dollar was stopped from gaining any more ground yesterday, but didn’t get sold, so to speak… The BBDXY lost 15 BPS on the day, so that meant that the currencies were allowed to gain a bit, but not much… Gold lost big time on the day, but not as badly as it was getting sold earlier in the day… The need for Safe havens was thought to be over, but Chuck just can’t see that happening, and believes Putin is doing a head fake… So, don’t let those safe havens get too far away from your reach!

For What It’s Worth… ok, I did a little teaser above about this article… It’s not long so you have that going for you! But this is Doug Casey answering questions about inflation, and it can be found here: https://internationalman.com/articles/doug-casey-on-record-inflation-what-comes-next-and-what-you-need-to-do-right-now/

Or, here’s your snippet: The Consumer Price Index (CPI) itself has been totally corrupted over the years, mainly by changing definitions of what it entails. That’s why it’s interesting to follow the work of a website called Shadow Statistics, where John Williams calculates the CPI and other government statistics using the parameters of 40 years ago.

He’s found that if the CPI was calculated the way it was in the Reagan era, that the actual reported CPI wouldn’t be 7%, but 15%. That makes intuitive sense to me. For over a year, I’ve asked people whether they believe their lying eyes or the government statistics regarding the CPI. The general price level is easily up 15%. That’s conservative. In my view, the US CPI is only marginally more reliable than its equivalent in Argentina—a country whose index is completely political and laughably inaccurate.

I think consumer prices are going much higher. Even Powell has dropped his dishonest and idiotic use of the word “transitory” in regard to it. That’s because the Fed, the US central bank, continues to monetize $120 billion a month of government deficits. The money supply is skyrocketing upwards. At the same time, the Biden regime is enforcing loads of new regulations which act to decrease production.

Meanwhile, free handouts continue to discourage millions of Americans from working. The massive drops of helicopter money during the Covid hysteria has actually crystallized a change in the culture—it now seems socially acceptable to live on the dole. In some parts of society, the ability to consume without producing has become proof not of how worthless, but of how clever you are.

The money supply is up while actual production is down. Of course, inflation is higher. And that’s just part of the cancer growing in the economy. We’re looking at a wholesale disaster over the next three years. And likely over the rest of the decade. Even if the Democrats are replaced in 2024, it will only be because a Republican will promise even “bolder”—“more stupid and destructive”— new solutions.”

Chuck Again…  The article goes on with thoughts on what you can do to protect your investment portfolio from this raging inflation…  But as the Great Mogambo used to say, “this investing stuff is easy… wheeeeee” 

Market Prices 2/16/2022: American Style A$ .7177,  kiwi .6662, C$ .7885, euro 1.1387, sterling 1.3588, Swiss $1.0814, European Style: rand 15.0619, krone 8.8904, SEK 9.2644,  forint 312.30,  zloty 3.9431,  koruna 21.3497, RUB 74.94, yen 115.67, sing 1.3437, HKD 7.8004, INR 74.96, China 6.3404, peso 20.35, BRL 5.1696,  BBDXY 1,174.73, Dollar Index 95.80,  Oil $93.14, 10-year 2.03%, Silver $23.59, Platinum $1,042.00, Palladium $2,354.00, Copper $4.56, and Gold… $1,856.60

That’s it for today… Well, my beloved Mizzou Tigers just don’t cut it this year with regards to Basketball… They lost again last night to Arkansas, at COMO! UGH!  Well, pitchers and catchers should be starting to arrive today to spring training camps, but NOOOOOOO! This stupid lockout and bad negotiations for a new Collective Bargaining Agreement, are going nowhere!  So, spring training isn’t going to start on time, and that ticks me off to no end! Both the Union and the Owners are to blame for this delay to spring training… And both had better get to an agreement soon, or their sport is in danger of becoming persona non gratis with fans… The Rascals take us to the finish line today with their song: It’s A Beautiful Morning… Ahhh… I think I’ll go outside for a while…  I hope you have a Wonderful Wednesday, and Please Be Good To Yourself, while Being Positive and testing Negative!

Chuck Butler

 

 

 

10-year Treasury Yield Climbs Past 2.0%!

February 15, 2022

* Currencies rally in the overnight markets

* An apparent end of saber rattling has safe havens running for cover!

Good Day… And a Tom Terrific Tuesday to you!  Well, my Billikens basketball team can’t seem to figure out the St. Bonaventure Bonnies, losing to them twice in the last 5 days…  I have to give Billikens coach, Travis Ford, a lot of kudos, for his handling of the team that lost the pre-season, “player of the year” candidate, to a knee injury before the season started. OK. Travis, get them turned around here… For our Valentine’s Day Dinner last night, I took Kathy to her favorite pizza place, and let her order the pizza that she wanted… Canadian bacon and artichokes…  Yes, it took a lot of restraint on my part to not slip the waitress a note telling her to add some sausage, pepperoni and mushrooms to the pie! How was your Valentine’s Day? You know, I thank the Good Lord all the time that I found Kathy all those years ago…  Eric Clapton greets me this morning with his song: Blues Power…  This used to be the opening song for the band I played in…

Well… I have sad news to share with all of you who read and enjoyed the Great Mogambo Guru… He passed away on Friday night, peacefully, holding the hand of his beloved Mrs. Mogambo…

For those of you who didn’t know him, his real name was Richard Daughty.. I got to know him quite well through the years, and will miss him greatly. He always had nice things to say about my Pfennig, and I was the same with his writings.  He loved to play the banjo… And we had many conversations about music.  So, RIP Mogambo Guru, aka Richard Daughty… I will miss you greatly!

OK… well the dollar, which had gained a couple of points in the BBDXY yesterday morning, petered out and traded flat the rest of the day… The BBDXY started the day at 1,179.95, and ended the day at 1,179.90…  So the currencies were able to hold onto their gains they booked VS the dollar on Friday of last week…  The Big Mover of the day was the yield of the 10-year Treasury… The 10-year’s yield rose to 1.97%, from a starting point of 1.91% yesterday. As the 10-year moves toward 2.0%, I believe that  from there, there will be no looking back, until… The Fed / Cabal/ Cartel cries uncle, and begins to buy bonds again…

And the price of Oil bumped higher again yesterday and traded with a $94 handle last night…  And after a brief couple of days last week when Oil’s price was dropping, it appears that the next stop for Oil is $100…  I’m not happy about that, folks… But, as the bumper Sticker on my writing desk back home says” What would the Mogambo Guru buy?”  Gold, Silver & Oil… moron! As a holder of Oil contracts, you like to see a higher Oil price… For a citizen that has to fill their gas tank once a week or more, a high price of Oil is the last thing you want to see…

As I said, Gold gained $12.30 on the day to close at $1,872.30, and Silver gained 29-cents to close at $23.92… A good day for the metals yesterday, so let’s keep that going!

In the overnight markets last night… well that’s what I get for starting the letter this morning before checking what the overnight markets did… UGH! The dollar is getting sold as I write this morning, the BBDXY has fallen to 1,177 from yesterday’s close of 1,179.   In the overnight news, Russia President Putin claimed that Russia was pulling back some forces, and that news has shaken the safe havens to the core…  As I just told you the dollar is getting sold this morning, but so is Gold, which is down $20, Silver, which is down 59-cents, Oil which is down over $3, and bonds, with the 10-year’s yield moving higher than 2.0%…

Is this just a head fake by Putin? I wouldn’t put it past him, to get everyone thinking that the escalation of arms at the Ukraine border was nothing but a tempest in a teapot, and then when everyone is breaking for a vodka and scones, he hits them hard…  I hope that’s not the case, but one never knows when dealing with communists… 

So, today is starting out like a Turn-around Tuesday, but with the wrong direction for Gold, Silver, Oil, and bonds…  

When yesterday’s Pfennig hit my email box and I saw how long it was, I gasped, what was I thinking? Well, it was a product of having a rainy day on Sunday… And having lots of time on my hands before the Super Bowl Game, and I made a ton of notes about what I wanted to talk about on Monday… And before you knew it… the Pfennig was over 2,500 words! YIKES!

Ok, I promise you that today’s edition will be much shorter!

I had a long conversation with good friend, Dennis Miller, yesterday… He sent me an email asked me to comment on it… I think went into a tirade, and talked about how Congress was just like a small-time crook… The small-time crook pulls off some minor heists, and finds that he didn’t get caught and everything is fine, so he decides to go bigger, and still he doesn’t get caught, so he keeps on going bigger, until one day, it all comes crashing down around him, and he spends the rest of his life in jail…

Congress like the small-time crook, deficit spends a little one year, and finds that it really didn’t hurt things too much, so they decide to up the ante on the deficit spending the next year, and this goes on for years, and the deficits keep growing larger and larger, until one day, it all will come crashing down around them….  And the only difference here is that they will not spend the rest of their lives in jail… But they should for bankrupting the country!

I like that comparison, don’t you?  This has gone on too long, all this deficit spending that turns to Treasury issuance, and currency counterfeiting… And one day, mark my words on this folks, this is going to end up in tears…  And of course, it will be somebody else’s fault…  So, get ready for the finger pointing, and blaming aliens…

So, what did you think of my suggestion for a Fed/ Cabal / Cartel redo? If you’re scratching your head right now, and trying to recollect what I said, I direct you the Pfennig archives, where you can read yesterday’s Pfennig over again by clicking: www.dailypfennig.com

Well, I was thinking yesterday and wondering if Gold was finally free to move higher without interference?  Well, not completely void of interference but maybe less of it and on a rare occasion? I would take that in a NY minute! Wouldn’t you? The overnight markets have taught us that to even dream about such foolish things is a waste of time… 

I had a dear reader ask me one day why I talked about the price manipulators so much, while telling everyone they needed to have an allocation of Gold in their investment portfolio?  Well, that’s easy… 1. Gold has never gone to zero, 2. It has historically given an investment portfolio protection against a. dollar weakness, b. inflation. Gold is also a flight to safety investment when there are countries rattling their sabers…  So, to me, all those pros outweigh the con… 

The Petrol currencies of Russia, Norway, Brazil, U.K., and even Mexico are champing at the bit to move higher VS the dollar with the price of Oil soaring once again… The Russian ruble was being held hostage to the saber rattling between Russia and Ukraine, but the Norwegian krone is free and clear of any saber rattling, and if the euro can get going higher again, then the krone will have a double dose of medicine…  So… I would watch these Petrol Currencies if I were you and watch how they respond to the price of Oil’s rise. That is when Oil gets past this overnight drop… 

Today’s Data Cupboard will print January’s Producer Price Index (PPi) this is a check on the wholesale price increases during January… You may recall me talking about the HUGE jump in PPI a couple of months ago and telling you that these price increases here would filter through to consumer price increases, and voila! We have increased consumer prices!  So, January’s print, should give us another indication of what to expect a month or two down the road. Tomorrow’s Data Cupboard is stacked with data, so we have that to look forward to!

To recap… The dollar traded flat all day yesterday, but Gold gained $12, and the price of Oil bumped higher again, while the 10-year’s yield jumped higher too… Chuck had sad news to share with readers regarding the passing of the Great Mogambo Guru…  And then Chuck begins to compare Congress to small -time crooks, you have to read it to know what he’s talking about here… Not much in data other than PPI for Jan in today’s Data Cupboard. The overnight markets have knocked Gold, Silver, Oil and bonds off their perch, as the need for safe havens have supposedly lessened…  

For What It’s Worth… Yesterday, I pointed out the 40 year high for inflation in the U.S., and I truly believe that the mass media is just ignoring this report… But not everyone, and this is a report on the question of whether or not this high inflation will turn to a recession, and it can be found here: Inflation is at a four-decade high, could a recession be next? | Kitco News

Or, here’s your snippet: “Inflation is now at yet another four-decade high, with the headline consumer price index surpassing (CPI) December’s reading of 7% to reach 7.5% in January, according to the latest data release from the Bureau of Labor Statistics.

All eyes are now on the reaction of the Federal Reserve. Michelle Makori, editor-in-chief of Kitco News, discussed likely responses from the U.S. central bank, as well as the assets that will benefit most from a high inflationary environment, with Mike Lee, founder of Mike Lee Strategy, and David Nelson, chief strategist of Belpointe Asset Management LLC.

“I definitely think we’re going to get 50 basis points [of rate hikes] in March,” said Lee.

Nelson said that several rate hikes are now priced into the markets.

“Right now, what you’re seeing price in is 200 basis points by the end of the year,” he said.

However, raising the Fed Funds rate may not be enough to combat inflation Lee said.

“I don’t know what raising rates is actually going to do for inflation, other than home prices. It’s not going to affect rents, it’s not going to reduce a gallon of milk, it’s not going to make oil prices go down. You’re so far away from taking real liquidity out of the economy vis-à-vis the Fed Funds rate,” Lee said.

Lee added that inflation has likely already peaked.

“If we’re not at peak inflation now, we will be in the next couple of months, mostly because of the demand destruction and lower base effects,” Lee said. “If inflation continues to accelerate, you now are running into a real societal problem. Governments in countries like Argentina have been toppled because of this. 

My concerns of a recession are close to zero in the next couple of years. Recessions are caused by debt bubbles, we don’t have your classical debt bubble of a financial crisis…credit spreads have not blown out, high yield spreads have not blown out, and if you look at the Chicago Fed national liquidity index, you really haven’t seen meaningful tightening of financial conditions yet. All this can change in six months from now, a year from now,” Lee said.

That’s not to say that a recession is impossible, especially if the inflation problem exacerbates.

“I think we’re in a bit of no-man’s land, bouncing around, a lot of volatility. I think this inflation is bad”

Chuck again…  Well this is one of those articles that I put in every now and then to give you the other side of what I’m thinking, just to be fair!  You know me, I’m fair, and reasonable, and an overall nice guy, right? HAHAHAHA

Market Prices 2/15/2022: American Style: A$ .7136,  kiwi .6617, C$ .7860, euro 1.1345, sterling 1.3540, Swiss $1.0816, European Style: rand 15.1090, krone 8.8929, SEK 9.3155,  forint 313.08,  zloty 3.9762,  koruna 21.5353, RUB 75.53, yen 115.68, sing 1.3457, HKD 7.8034, INR 75.23, China 6.3484, peso 20.36, BRL 5.2191,  BBDXY 1,177.07, Dollar Index 96.05,  Oil $91.75, 10-year 2.03%, Silver $23.33, Platinum $1,026.00, Palladium $2,336.00, Copper $4.52, and Gold… $1,852.10

That’s it for today…  Good luck to the U.S. Woman’s Hockey Team who will play Canada for the Gold Medal… I watched their game yesterday VS Finland, which they won 4-1… And looked pretty good… The U.S. Men’s Curling team was on TV last night, but too late for me! It’s supposed to get warmer as each day goes by this week, ending the week at 86 on Friday! YAHOO! That means we’ll be able to have a happy hour out on the deck that overlooks the ocean on Friday!  Shoot Rudy, I’m already talking about Friday, and its only Tuesday! UGH!  The Great Otis Redding takes us to the finish line today with his song from Live at the Whiskey A-Go-GO: Can’t Turn You Loose… on one of my visits to NYC back in the day, I visited the Whiskey A GO-GO, and it was a very cool place, and I could hear (in my head) Otis Redding singing! I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself… Be Positive, Test Negative

Chuck Butler

Inflation AT A 40-Year High, U of Michigan Confidence At A 10-year low, But The Dollar Rallies

February 14, 2022

* Currencies and metals rally on Friday… 

* Will We Continue To Turn Japanese? 

Good Day… And a Marvelous Monday to you! Well… Kathy came back to S. Florida on Saturday, and immediately lit candles in the condo… I guess the smell was too much bachelor smell?  HA! Well, the Super Bowl was last night…The Rams won, but I can’t get myself to say congrats…  I liked most of the commercials, except the one for Coinbase… Didn’t get it, period! It was nice to see the Clydesdales back in an ad at the Super Bowl… Well, the weather here has been warmer, but, we get one day of beautiful sunshine, and one day of rain… This pattern will end this week… good riddance! Crosby, Stills & Nash greet me this morning with their song: Suite: Judy Blue Eyes…  This song was a love song to Stephen Stills’ girlfriend at the time, Judy Collins… And their appearance at Woodstock, signing this song, led to their stardom as a group…

After suffering through Thursday’s selling… Gold rallied $32 on Friday, as the stock market dropped 503 points, and investors rushed to the safety of Gold in times like this… Notice they rushed to Gold and not Bitcoin… I’m just saying…  So… the dollar didn’t really go down on Friday, it slipped a little, but nothing like you would think it would have fallen, given Gold’s $32 gain on the day.

The damage that dollar buyers did to the currencies and Gold on Thursday, was enough to make you find a barf bag… I know, I know, the talk around town was that with inflation rising so quickly, it will take an aggressive Fed to squelch it…  But C’Mon, just because The Fed/ Cabal/ Cartel needs to be aggressive, doesn’t mean they will! I’m betting a shiny quarter that they won’t!

The dollar rallied big time on Thursday moving the BBDXY from 1,173 on Thursday morning to close that day at 1,178…  Friday the dollar gave back some of that gain, and closed the week at 1,177.62…  The euro fell back below 1.14, which it had held for 2 days last week, and the rest of the currencies followed the euro downward on Thursday… And then the euro was there to lead them on their mini-recovery on Friday.

In the overnight markets last night, the dollar was back on the rally tracks, and getting bought hand over fist… The BBDXY, which closed at 1,177.62 on Friday is up to 1,179.95 as we start our day… Gold is down $3 in the early trading, while Silver is up 13-cents, so as we begin this week, Gold is looking perky, along with Silver, and inflation is soaring… But the dollar is getting bought, because traders truly believe the Fed/ Cabal/ Cartel will be aggressive in fighting inflation… 

The price of Oil jumped by quite a bit to end the week last week… This morning, the price of Oil is trading with a $93 handle…  The saber rattling going on in Europe is also rattling the Oil markets… And Bonds.. well, once again defying gravity, the 10-year’s yield has dropped to 1.91% this morning…  Who’s buying this bond?  Wouldn’t it be great if you could look at a web site and see who bought the 10-year or any other bond?  Then we could blow raspberries at them and say, neener, neener, neener! 

Well… By now I’m sure you all have heard that the Gov’t’s report on consumer inflation hit a 40 year high in January, as it rose to 7.5%…  This news brought out the Big Guns of the Fed/ Cabal/ Cartel… St. Louis Fed President, James Bullard, he who is known as a dove, started shouting from the rooftops that he backs a 50 BPS rate hike, and an aggressive Fed…  So, I have to ask this question of Mr. Bullard… “How does a 50 BPS rate hike and an aggressive Fed, play in the same sandbox, as your chairman Powell’s promise that he’ll deliver a “soft landing” for the economy?”

Of course there were no Bonafide, economics major, journalists in the room with Bullard, so there were no questions like that presented to him… C’Mon James, inquiring minds want to know how that works…. Because if you’ve got an answer, we want to hear it… Or, were you just spouting off to sound like a hawk, that you’re not, so people will gain some solace in your hawkish words?  Because if that’s it, then you can forgetaboutit… Because Mom and Pop America, doesn’t pay attention to you guys… Heck, even the media probably wouldn’t pay attention to you if they didn’t have to!

So, maybe I’m all wet here, with my call that the Fed would do 25 BPS rate hikes one after another until somebody, namely the stock jockeys, cried uncle…  I guess we have a month to see what gives, and there will be plenty of talk about what the Fed / Cabal/ Cartel will do or won’t do at the FOMC Meeting in March…

Getting back to the inflation print… One would have thought that a 40-year high in even the Gov’t’s watered down inflation report would get Gold firmly on the rally tracks, but nooooooooo! That didn’t happen at all on Thursday, instead, we saw Gold lose $6… Friday made up for Thursday downward move, for sure, but… it would have much more sense it Gold had booked two consecutive up days to end the week.

Last week I proposed that Congress reinvent the Fed/ Cabal/ Cartel… I said that they needed to change their direction, and provide a stable currency (no inflation), quit buying bonds, now and in the future, stop currency printing, and stop worrying about the employment situation, or the stock market, and be the lender of last resort, but only with Congressional approval… 

Well, perusing Twitter this past weekend netted this from Sven Heinrich : “The entire Fed board should resign. Not only were they completely wrong, they kept misleading the public with their transitory narrative and persisted on it when the data was already showing they were wrong.And still they keep injecting liquidity. Reckless.” -Sven Heinrich on Twitter

I agree 100%! This group of Fed/ Cabal/ Cartel decision makers have missed the boat, and now they are attempting to swim out to sea without life jackets to catch up with the boat that left them on the shoreline… 

So… did you hear the news about what China and Russia agreed to last week? Here’s the skinny: China and Russia agreed to a 30-year deal in which Russia will supply gas to China via a new pipeline, with both sides of the energy transfers managed by state-owned companies And this is the part that should really rattle the chains of the U.S. Gov’t… These two countries decided to settle the trades in euros, not dollars!   What a slap in the face of the dollar hegemony, eh?

I’m telling you this now, so that maybe you’ll hear me later, and that is that, this dedollarization that Russia and China have embarked on, is going to gain traction around the world, folks… I’m telling you this so that you can plan accordingly… The dollar, in 10 years from now, and probably sooner will NOT be the reserve currency of the world any longer…  There aren’t any challengers to speak of to the throne right now, but… One will be named by default because the dollar doesn’t have the werewithall to compete any longer…   That’s my story, and I’m sticking to it!

OK, longtime readers will recall me always talking about how we were Turning Japanese, yes, I really think so…  We’ve followed the Japanese in just about every monetary policy they’ve tried, and none of them have worked for Japan, just like well, I’m not here to debate whether bond buying was good for our economy, let’s just say, in my opinion, it widened the gap between those that have, and those that don’t have, and it blew air into the stock market bubble… of which most ordinary people don’t participate in…   

Is this what the future for the U.S. looks like? It does appear that we are heading in that direction, with one exception… The U.S., now that the Fed/ Cabal/ Cartel are out of the bond markets (supposedly), depends on other countries to buy a bulk of their Treasuries… While Japan’s bond issuance is usually taken up by the Japanese people… Self-financed, if you will… 

Well, The Japanese announced late last week that they were going to continue buy bonds…  Japan needs some inflation folks, any inflation would help them get off the schnide, with regards to economic growth… So, as the rest of the world is moving away from easy money, the Japanese are continuing to feed the inflation kraken, in hopes they can awaken him!  On second thought, maybe I should have used Godzilla, instead of Kraken…

I’m thinking that the Fed/ Cabal/ Cartel are walking around humming the melody and maybe even some are singing the words to: Torn Between Two Lovers…  Feeling like a fool… Torn between two lovers felling like they’re breaking all the rules…  Oh, I guess I should have said that the Fed/ caba/ Cartel are torn between fueling the asset bubble, and fighting inflation… 

The U.S. Data Cupboard today has nothing, nada, zilch, nil, a big fat goose egg, for data… But on Friday, the U of Michigan printed their Consumer Confidence report for this month, and it fell out of bed! Here’s the skinny : The University of Michigan’s measure of consumer sentiment crashed to an initial February reading of 61.7, from January’s level of 67.2, the lowest reading since October of 2011.  That’s a HUGE downward move, eh?  I don’t think the people they surveyed are liking what’s being called Bidenflation…

That’s unfair to him I think, because it should be Powellflation…  He’s the one that was in charge for most of the currency printing that has fueled this run of inflation… You know the Fed heads, kept interest rates ultra-low for so long, and bought bonds for so long, while printing currency to buy the bonds, that they were under the impression that none of that would fuel inflation… That’s why in the beginning of this inflation run, they kept denying it existed… They like many of the traders that exist these days, either hadn’t ever seen real inflation, or they had forgotten what it looked like… They are getting a cram course on it now, however…

To recap… Thursday’s inflation report was awful, as it hit a 40 year high for consumer inflation, and the dollar rallied strongly on Thursday… Dollar traders were thinking that this higher inflation number would bring about an aggressive Fed… But Chuck points out that an aggressive Fed doesn’t play in the same sandbox as Powell’s promise for a soft landing…  You may recall that when Paul Volcker fought runaway inflation in the late 70’s, he was very aggressive, and it threw the economy into a recession…  not, a soft landing!  Gold got sold on Thursday, but rallied by $32 on Friday, and the dollar got sold a little bit…

For What It’s Worth…  This article came to me from the good folks at GATA, and it’s about the difference between GDP and progress… And it can be found here: Difference between growth and progress (goldmoney.com)

Or, here’s your snippet: “The stated objective of nearly all economists, policy planners, and politicians is to achieve economic growth, which they measure by gross domestic product. Attempts to quantify an economy initially focused on gross national product, which differs from GDP by including net flows to and from abroad. GNP was devised by Simon Kuznets, an American Nobel Prize winner and economist, in the early 1930s and GDP followed as the common measure of economic conditions much later.

The federal government had been collecting business and economic data from 1865, but because the dollar was fixed on a gold standard of $20.67 to the ounce in Kuznets’ time and had been since the Gold Standard Act of 1900, the price data was broadly comparable over the previous three decades, permitting reverse engineering of GNP statistics. But Kuznets focused his first report on GNP estimates over the period of the Wall Street bear market, 1929-1932. At that time, the US government was gathering evidence with the objective of ensuring a stock market and banking crisis leading to a depression would be prevented by government action in the future.

GDP replaced GNP in US statistical usage in November 1991, though in many other national accounts the switch had already been made some time before. GDP has since become central to a statistical approach to economic and monetary policies. Coupled with Keynesian theories, economic statistics have superseded the classical economics of the past as the mainstream’s economic analysis.

The human factor which underlies all economic activity has become ignored. A new form of economics was born — macroeconomics. It removes the human factor, and state management of economic outcomes became perceived as a viable policy, along with socialist welfare redistribution of economic resources as the principal feature of modern economies, replacing free markets.

With its math-based approach, fundamental questions over macroeconomics’ appropriateness and of its statistical relevance have been papered over. The government’s statistics are assumed to be as accurate as they can possibly be, and so they go unquestioned. They are accepted as a true representation of the economic condition and increases in GDP are associated with national wealth and improvements in living standards. But besides the rejection of human factors, the underlying questions remain.”

Chuck again… An interesting article, and I just barely touched on it here, so, as the great Paul Harvey used to say, “for the rest of the story”,  you ‘ll need to click on the link above…

Market Prices 2/14/2022: American Style: A$ .7096,  kiwi .6603, C$ .7828, euro 1.1310, sterling 1.3516, Swiss $1.0819, European Style: rand 15.2527, krone 8.9212, SEK 9.4180,  forint 315.36,  zloty 4.0382,  koruna 21.6751, RUB 77.17, yen 115.11, sing 1.3479, HKD 7.8021, INR 75.49, China 6.3596, peso 20.53, BRL 5.2451,  BBDXY 1,179.95, Dollar Index 96.41,  Oil $93.22, 10-year 1.91%, Silver $23.89, Platinum $1,031.00, Palladium $2,389.00, Copper $4.48, and Gold… $1,856.80

That’s it for today…  Yesterday was my very good friend Duane’s Birthday… I hope you day was grand Dewey!  And today is Valentine’s Day… I trust you have done what you needed to do to keep the house quiet tonight, with no arguing! So have you been watching the Olympics? I try, but they just can’t seem to hold my attention… I do like to watch the final round of the Phoenix Open each year, with those crazy crowds! Yesterday, would have been my oldest sister’s birthday, we lost her too soon, she was only 38 when ovarian cancer took her life… Each year on her birthday, I think of how she taught me to slow dance with a girl… she taught me to tie my shoes, she took me to kindergarten the first day… I miss you Brenda… My darling granddaughter, Delaney Grace, sent me a text last night, during halftime and asked me if I was enjoying the halftime show… (she was kidding, she knew I would not like it)…    OK… The great Leon Russell takes us to the finish line again today, this time singing his song: This Masquerade…  I hope you have a Marvelous Monday, and Please Be Good To Yourself! Be Positive, test Negative!

Chuck Butler

 

 

What Will CPI Have Up Its Sleeve Today?

February 10, 2022

* The dollar weakens in the overnight trading… 

* What’s up with the Senate not confirming Powell? 

Good Day… And a Tub Thumpin’ Thursday to one and all! Yesh! Yesterday was a complete washout as far as getting outside was concerned… It was one of those days where you say, “we have to experience these to better enjoy the nice days” … I went to dinner last night with some friends, and it was yummy, as usual… The restaurant was packed to the gills, with people waiting outside for a table… When the place first opened, I would go there and be one of the few that ate dinner there, but now… It has become a very popular pace, so good for them! What’s up with our government supplying the crack pipes for people? Is this not an example of how weird this country had gone?  Oh well, nothing I can do about that, so I’ll move on… Kansas greets me this morning with their song: Dust In The Wind…  I have a long story about that song, that I’ll go over in before we end today’s letter, so you have that going for you!

Well, Wednesday was much like Tuesday, in that it had the dollar getting sold, with the currencies and metals rallying against that dollar weakness. I’m actually surprised that the dollar hasn’t lost more ground than it has recently, given the things stacked up against a strong dollar…  But it is what it is, and I carry on despite my wanting to complain about it!

So, the BBDXY which began the day at 1,173.11, ended the day at 1,173.97… As it appeared to be a dollar mini rally in the dollar index, but that was not reflected in the values of the currencies yesterday.  Gold gained $7.50 to close at $1,834.20, and Silver gained $12 cents to close at $23.38…  The price of Oil gained for the first time this week, and trades last night with an $89 handle, while Treasuries remained stuck in the mud…

There was some news from the Treasury Auction yesterday…. News that surprised me… It was reported that $37 Billion of 10-year Treasury Notes were auctioned, and, according to Bloomberg.com, “In a sign of big demand, the securities drew a yield of 1.904%, below the 1.926% level that they were trading at in the so-called when-issued market just before the auction. Not only that, but investors submitted bids for 2.68 times the amount offered, a level exceeded only two other times for that maturity going back to early 2017.”

Ok, so buyers lined up to buy the 10-year at 1.90%.  They must truly believe that interest rates are not going to be higher in the years to come, otherwise why would they make such a long-term commitment? They must also believe that going forward, that this is the highest the yield will be, and that they got a bargain…  I, personally, wouldn’t touch a 10-year Treasury at 1.90% yield, with YOUR ten-foot pole…  But then that’s me, and I see things differently than most folks…

In the overnight markets last night… the dollar slipped a little and the BBDXY is starting the day t 1,173.41… Gold is down 50-cents, and Silver is up 7-cents in the early trading today… No big shakes, and levels that can be wiped out easily… Especially when the CPI print gets published this morning…  The price of Oil has bumped higher again and trades this morning with a $90 handle…  And the 10-year’s yield is still stuck in the mud at 1.93%… 

Well, today is the day, the markets have been waiting so anxiously for… The day when the stupid CPI for January will print… I’ve told you time and time again, just how stupid the CPI (Consumer inflation) is with all of its hedonic adjustments, and today it will be displayed, just how stupid this report is, in all its glory, when it says that January consumer inflation is up 7.3% from a year ago… That’s preposterous! And I can’t believe the BLS is still allowed to print such garbage! But they do, and we all know that the markets can’t get enough of it! So, the markets are all in on this report, even though, as I’ve shown you earlier this week, consumer inflation is probably up 30%, in the goods that we use and buy every day…  And… I’m not complaining about this, just merely pointing out the discrepancies…

In 2010, then Fed Gov. Thomas Hoenig, President of the Kanas City Fed, was the lone dissenting vote against ZIRP and Quantitative Easing…  (it’s too bad that it took 10 years to find this information out!) Then Fed Chairman, Ben Bernanke, didn’t look kindly at this dissenting vote, but it was just one negative vote, and both programs to “save the U.S. economy” were hatched…  Have you ever wondered what things would be like today, if say, more of the members of the FOMC voted no at that meeting?

The problem I had with QE and still have with it, is that the U.S. economy, while dragging its feet, was not in need to stimulus… But yet we put the future of our citizens at risk to see if we could get the economy stronger…  Longtime readers will have to go back into the memory logs to confirm what I’m saying, but I was against QE from the beginning, for I knew then, that it was merely currency printing to buy bonds, and that one day all that currency in the economy would cause inflation…

For, did QE make our lives better? no…  Did ZIRP help seniors and savers? not in any imaginable way!  And did it bring on a new identity to the Fed, that being the knight on the white horse to the stock market? Well, yes, it did! And that’s where the Fed’s newfound guilty conscience to do something about inflation, is going to become a real dilemma for the FOMC members… I believe it’s time to reinvent the Fed… This needs to be done folks… They need new marching orders, and scrap the ones from the deep state/ elitists that they’ve been following for the last 20 years… 

We need to do more than just audit the Fed, as Ron Paul has called for, we need to change the marching orders of the Fed…  1. They need not worry about the value of the stock market, 2. They need to solely focus on providing a stable currency, one without inflation…  3. No bond buying, no currency printing without a vote of the people. 

Now THAT would be a Central Bank that I could get my arms around!

Ok, before I get accused of being a big cry baby, complainer… I’ll move on to something else…

Oh, and this is something to watch… the Senate has not confirmed Jerome Powell to his new term as Fed/ Cabal/ Cartel chairman… Right now, he’s going to carry on with the title Chair pro tempore…  Seems the Senate does not like the 3 new folks that are vying for Fed jobs… This is all a tempest in a teacup folks, but still interesting to watch! 

Debasing a currency…  do you all know what that means?  You see, a currency is the stock of a country… The country’s fundamentals will dictate how the stock performs…  And interest rates, or yield on the stock, is a very important item when valuing a currency.  So, when a country’s Central Bank decides to cut interest rates, they are taking away a very important item used to value the currency, thus they are debasing the currency… There are other ways to debase a currency, like increasing the money supply… Which our Fed/ Cabal/ Cartel has down pat… 

So, as India, New Zealand, Brazil, the U.K., and other countries have moved off of ZIRP and hiked rates, they are adding to their currency’s value…  One-time years ago, I wrote about an upcoming Central Bank meeting in Norway, and forecast that they Norges Bank would hike rates, and that folks looking to get into Norwegian krone, would do well to buy before the meeting…  This info was picked up by a writer at the Wall Street Journal, by the name of Jeff Opdyke, who quoted me in the WSJ, and then followed up a month later to show his readers that the Norwegian krone had indeed gained value VS the dollar since the rate hike.

We’ve been in a world of ZIRP (zero interest rate policy) for so long now, all across the globe, except in Russia, that those days of picking out upcoming Central Bank meetings, have gone to the wayside… But… now that we have several countries around the world, looking to hike rates again, it could very well be making a comeback!

The U.S. Data Cupboard today finally has the January print of the stupid CPI, which should show that consumer inflation increased by 7.3% VS last year…  Chuck doesn’t give much credence to the BLS’s version of CPI and prefers to us the inflation numbers that John Williams gives us on his www.shadowstats.com web site.  With it being A Tub Thumpin’ Thursday, our usual Thursday fare of weekly Initial Jobless Claims will print for last week… This data has reflected a weekly rise in the Claims, so it will be interesting to see if that trend remains…

To recap… The currencies & metals rallied a bit yesterday… Volumes in the metals were low, and Gold was able to gain $7.50, while Silver gained 12-cents on the day… The 10-year Treasury Auction was oversubscribed, which was a surprise to Chuck, and the price of Oil wrapped a tourniquet around its recent slippage and gained for the first time this week.  And Chuck talks about debasing a currency, something you won’t want to have missed!  HA!

Before we head to the Big Finish today, I promised you above the story about Dust In The Wind…  My wife and I and two good friends were in Cancun in 1999, and we happened upon a street musician playing his guitar, and he had a sound system with a microphone. He started playing the song Dust In the Wind, and me being the ex-musician and someone that loved the attention, I grabbed the microphone and started singing the words to Dust In The wind… When the song was finished, a large crowd had gathered and began clapping and whooping it up… I’ll always remember that as my last stage appearance! HA!

For What It’s Worth… Well, I’ll leave you this week with an article I found on Bloomberg.com that’s about why now is probably not the right time to buy a house, and it can be found here: The Housing Bubble May Be About to Burst – Bloomberg

Or, here’s your snippet: “As we all know, millennials are America’s most economically cursed generation. Now that they’re hitting their 30s and 40s, they’re not even cool anymore. And the housing market might be about to stick it to them once again.

As we recently wrote, millennials are finally buying houses after years of being sidelined by such catastrophes as the dot-com bust, Sept. 11, two long wars, the financial crisis and its jobless recovery, a pandemic, and the endless musical career of Chris Brown. In its foolish haste to analyze, this newsletter suggested this could be a way for millennials to wreak a bit of economic vengeance on the world by helping push home prices even further past the moon.

But what if it’s actually just another trap for the broke generation? Americans think this is the worst time ever to buy a house, according to a recent poll. Gary Shilling has many, many charts and numbers validating that sentiment. Interest rates are rising, and housing affordability is approaching rock-bottom.

One silver lining is that home builders are starting to ramp up supply. Oops, it turns out that silver lining is actually a sharpened katana dropping on the neck of anybody buying a house right now, with all this new supply hitting just as soaring costs crush demand. That’s not to mention the rising odds of a Fed-induced recession, which would be the third one of those since the millennium began.

Oh, and if you buy a house in the ’burbs, you’ll need a car, unfortunately. Best of luck ever getting a bargain on one of those again.”

Chuck again…  Man, am I glad I’m finished buying houses… And that my kids seem to be finished buying them too, at least I would hope if they aren’t, that they wait until this next housing boom bubble bursts!

Market Prices 2/10/2022: American Style: A$ .7201,  kiwi .6701, C$ .7895, euro 1.1432, sterling 1.3571, Swiss $1.0816, European Style: rand 15.1134, krone 8.8113, SEK 9.1954,  forint 309.41,  zloty 3.9250,  koruna 21.3189, RUB 74.57, yen 115.82, sing 1.3413, HKD 7.7929, INR 75.05, China 6.3580, peso 20.41, BRL 5.2317,  BBDXY 1,173.41, Dollar Index 95.54,  Oil $90.54, 10-year 1.93%, Silver $23.45, Platinum $1,040.00, Palladium $2,404.00, Copper $4.61, and Gold.. $1,833.70

That’s it for today, and this week…  Well, Sunday is Super Bowl Sunday, and there will be parties and gatherings at bars, etc. to watch the Big Game that this year pits the Rams VS Bengals…  And the game is at the Rams’ home field, just by luck of the draw… no conspiracy here… Our Blues get back on the ice tonight VS the NJ Devils… And tomorrow night the Billikens play St. Bonaventure, and once again the game will be on ESPN+, so I won’t be able to watch it! UGH! It’s been a week, and Tom Brady is still retired! HA! Well, the warmup begins here today, so I’ll get to get back outside again… And Kathy will return on Saturday, so I’ve only got 2 more days of messing up the stove! I kid here, folks, because I cleaned the stove yesterday, and it’s spotless!  Next week is a 3-day holiday weekend, and for me it will be 4-dayer! YAHOO! I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow! Please Be Good To Yourself.. And don’t forget to Be Positive, Test Negative!

Chuck Butler

Traders Pare Down Dollar Positions Ahead Of CPI Print…

February 9, 2022

* Currencies & metals rally on Tuesday & overnight

* One of the unintended consequences of QE… Chuck explains… 

Good Day… And a Wonderful Wednesday to you!  Well, I received an email from a reader yesterday, that had me stop and think… He told me to stop complaining about everything, and write the way I used to… So, I thought… Hmmm… I guess I could not tell people what’s going on in the real world, and tell everyone that everything is seashells and balloons… I don’t get it, when I used to be at EverBank people would write me and tell me to get serious… So, I guess there’s a happy medium somewhere… But for now, I’m not going to go looking for it. I like the way the letter goes these days, and until I get a reason to be happy about everything going on, I’ll keep on keepin’ on… One of my all-time fave bands are up this morning… I’m greeted this morning by Chicago, and their song: Beginnings…

Well, the day yesterday, started out not so good for the currencies and metals, but sometime around mid-morning, they turned the tables, and started to move into positive territory… The euro found a little upward movement, along with the Aussie dollar (A$),  and the rest of the currencies followed… There was some slippage in the Russian ruble as the price of Oil slid further back to a $89 handle…  The 10-year Treasury’s yield saw a rise to 1.95% yesterday, finally moving off of the 1.92/3% it was clinging to this week, after soaring to 1.93% last Friday.   And don’t look now but the 30-year mortgage rate is nearing 4%…. That’s not going to be a good thing for housing, at least I don’t think it will…

Gold & Silver had good days yesterday, with Gold gaining $5.30 to close at $ 1,826.60. And Silver gained 17 -cents to close at $23.27     I’m liking what I’m seeing in the metals these days… Yes, they are still be manipulated, but… each time they get taken down, they bounce right back up and trade even higher than that did before they were taken down…  At least that’s my view from the Cheap Seats on the recent trading of the metals…

Oh, and I’m not complaining here, just pointing out that Gold & Silver had greater gains at one point in the day, only to see those greater gains pared back…

In other news… poor Bitcoin, it has seen better times, for sure… Times when every country allowed the cryptocurrency to be traded… But these days, it’s like a waiting session to see which country will come next in the line of countries that have banned Bitcoin… Yesterday, it was Ireland, who is “highly unlikely” to allow investment funds aimed at mom and pop investors to hold crypto assets and is limiting retail investment funds’ exposure to special purpose acquisition companies.

On a sidebar… did I tell you that I’m going to Ireland this summer? That is as long as they let me in the country! HA! We will stay for a few days at the Butler House…  Sounds pretty cool, eh? My wife and I will celebrate our 46th anniversary while in Ireland…  that is as long as God is willing and the Creek don’t rise…

Some days I feel like my old self again, and then most days I feel like someone that has been on Chemo for 14.5 years! But I don’t complain about it, and attempt to make the most of every day, even on days where I feel like death warmed over!

In the overnight markets last night…  The late rally by the dollar in yesterday’s trading, was reversed overnight, and the dollar got sold throughout the night. The BBDXY, which closed last night at 1,175.64, has dropped to 1,173.11 as we start today… Gold & Silver are flat to up a tiny bit to start the day today. The price of Oil has slipped further downward, and trades with an $88 handle this morning.  I saw a report on Bloomberg.com this morning that said that “the bond selloff is over”… Hmmm… Things that make you scratch your head and wonder, eh? 

I think that, going into the report on consumer inflation that will print tomorrow, that traders are getting leery of what that report will show, and have positioned themselves ahead of that print, by selling dollars…  I guess we’ll know for sure if the dollar selling overnight continues this morning… 

The first part of the Trade Deficit printed yesterday, for December, and I don’t want you to think I’m complaining about this, but in the last year the Trade Deficit has grown  at the fastest rate in 4 decades…  The full-year trade deficit for 2021 increased 27 percent to $859.1 billion, passing the previous record of $763.53 billion set in 2006. Commerce Department records go back to 1960.

I told you a couple of years ago that the trade war that was waged at that time with China would not help reduce the Trade Deficit… There were no governors placed on the Chinese at that time, and well… now we have this…  Not complaining, just pointing out…

OK… in a follow up of what I call “The Great Resignation” I read yesterday that over 20 million people quit their jobs in the second half of 2021.  And to make matters worse, the hours worked by those that are still toiling away at their jobs, fell below 2019 levels… So, there’s less workers and those that are working are working less…

I don’t know about you, but from where I sit, this situation with workers, is getting to be a real problem… I’m not complaining, just pointing out, that in other times, meaning non-inflationary, we could be seeing the Fed/ Cabal/ Cartel announcing more bond buying… Because… These people at the FOMC truly believe that a washing the economy with freshly printed dollars is the cure-all to what ails an economy… 

There are problems with bond buying that have been identified, but not acted on… One of those problems come in the shape of corporate debt issuance/ bonds…  Corporate Debt now makes up about half of the U.S. GDP, at $11 Trillion in outstand debt…  To me, it would be one thing if these Corporations used the funding from the debt issuance to grow their businesses… But they didn’t, as a whole, they used the funding to buy back their stock, which is a sly way of gaining profits… This scenario or lack of a scenario has been quite evident in the Capital Goods Orders each month, as I have pointed out, when they print. 

You have a Corporation that issues debt in the form of a bond, that pays .02% interest…  They then take the funding from the bond sale, and buy back their stock, that has a dividend yield of 3%, they book a profit on that transaction…  Now, all they have to worry about is at what level will interest rates be when they bond comes due, and they need to roll it into a new maturity, because they don’t have the funds to pay it off…..

So, now you know why Corporations were buying back their own stock… Well, that, and one other minor detail… And that is that their buying of their own stock, drives the price of the stock higher, and the CEO’s bonus is tied to the stock performance… 

I have to get away from this discussion, otherwise I’m going to begin to complain about all of these goings on!

Yesterday’s U.S. Data Cupboard had the Small Business Index for January, and it showed a fall from 98.9 to 97.1… Still too high as far as I think it should be, but not complaining about it, just pointing it out..  In addition, yesterday’s Data Cupboard yielded the December report on Consumer Credit (read debt)… This from Zerohedge.com “One month after a shocking consumer credit report, which saw the biggest increase in history driven by a mind-blowing surge in revolving credit (i.e., credit card usage), moments ago the Fed released the latest consumer credit report for the month of December which saw a dramatic drop in growth rate, with total credit rising just $18.9BN, well below the consensus estimate of $25 billion, and a 50% plunge from the November increase of $38.8 billion.”

Chuck again, so while that’s good news for Consumers to cut their debt, but it’s not a good thing for the economy, and economy that depends heavily on Consumer spending… 

We still don’t have much in the way of real economic data getting printed today, but as I told you on Monday, tomorrow’s data cupboard will have the stupid CPI (consumer inflation) … And once it prints, I’ll be heading over the shadowstats.com to see what the REAL inflation number is!

To recap… The currencies & metals turned the tables yesterday, and around mid-morning they began to rally VS the dollar.  Gold gained $5 and Silver earned 17-cents on the day. Chuck likes what the metals are building in recent trading.  The Great Resignation is in full swing, and folks are working less too…  And the price of Oil has slipped further from its recent high of $93 a few days ago. Chuck explains why there is so much Corporate Debt, and what it’s being used for. 

For What It’s Worth…  Ok, I know you get tired of hearing from me about the price manipulators and thought it would be best if I let you hear someone else, and this isn’t just someone else, it’s the Silver guru, Ted Butler (no relation that I know of) and his thoughts on the price action of last week, when Gold & Silver got whacked. And it can be found here: Pure Collusion | SilverSeek

Or, here’s your snippet: “The most recent Commitments of Traders (COT) report, for positions held as of Tuesday Feb 1, indicated, even more than expected, massive managed money selling and commercial (bank) buying in COMEX gold and silver futures. So, once again, as on every big price decline for decades, the banks were big buyers, while the managed money traders were big sellers. In the near 40 years I have followed these markets closely, there has never been an exception to this pattern – on big price downdrafts, the banks on the COMEX are always big buyers.

No doubt, the level of commercial buying on the recent plunge in gold and silver prices should provide the basis for a significant rally, also as usual, but I’d like to stop and have you reflect on this in a different manner. There is a reason why the banks always end up as big buyers on every gold and silver price smash and that reason is that they collude with each other. In fact, there is no possible alternative explanation.

Take this most recent COT report for example. Within the course of 5 trading days and in which gold prices plunged more than $70 and silver plunged more than $1.70, the roughly 70 reporting commercial traders in each market (largely the same banks) bought close to 50,000 net contracts of gold (5 million oz.) and more than 12,000 net silver contracts (62 million oz.).

The first thing that you should be asking yourself is how the heck could 70 different commercial traders managed to buy (covering shorts and adding longs) on such an extreme selloff – such as, are they just lucky or is God on their side? No, God is not on the banks’ side, nor are they simply lucky – it’s something else entirely. The 70-odd gold and silver commercial traders on the COMEX colluded among themselves to make sure they stuck together and refused to pay up to buy the 50,000 gold and more than 12,000 silver contracts and let the sellers come to them. Try coming up with another explanation.”

Chuck Again… You know that’s an approach I should take more often, and that is to say “Try coming up with another explanation” …  I wish I would have had that in my back pocket, every time I got called out at EverBank for talking about price manipulation!

Market Prices 2/9/2022: American Style: A$ .7184,  kiwi .6693, C$ .7885, euro 1.1440, sterling 1.3585, Swiss $1.0836, European Style: rand 15.3074, krone 8.7964, SEK 9.0980,  forint 308.39,  zloty 3.9508,   koruna 21.2313, RUB 74.73, yen 115.73, sing 1.3420, HKD 7.7920, INR 74.75, China 6.3635, peso 20.53, BRL 5.2412,  BBDXY 1,173.11, Dollar Index 95.44,  Oil $88.93, 10-year 1.92%, Silver $23.34, Platinum $1,049.00, Palladium $2,355.00, Copper $4.46, and Gold… $1,828.40

That’s it for today…  Well the northern east Coast is getting pummeled  again with a cold front and snow, and we get the tail end of the cold air… The Sun didn’t make an appearance yesterday, and that coupled with the cooler air, made of a day that I stayed inside all day… My Billikens won their basketball game at LaSalle last night. They were on ESPN+, so I couldn’t watch the game. But I was able to watch my beloved Mizzou Tigers lose to Vanderbilt, UGH!… Well, guys, you have less than a week to secure your VD gift… The Greatest Super Bowl Commercials were aired last night on TV, and the Budweiser reunion commercial won the best of all time! I love those SB commercials! I get to go to dinner tonight with some friends, instead of ordering my dinner to be delivered!  Well, it appears now that Spring Training is going to be delayed, and probably shortened when they do get around to getting together to save the game…  Now THAT I AM COMPLAINING ABOUT, and well I should be! The owners and players are ruining my game! Poco takes us to the finish line today with their song: Just For You And Me… I hope you have a Wonderful Wednesday today, and Please Be Good To Yourself! Be Positive, Test Negative!

Chuck Butler

Commodities Becoming Difficult To Find?

February 8, 2022

*Currencies & metals rally on Monday

* The Myth of a soft landing… 

Good Day… And a Tom Terrific Tuesday to you! Day 2 of being all alone again, and still no one complaining about the stove! HA! It was another beautiful day here, well at least for most of the day, before the clouds rolled in. It’s been the weather pattern lately, with nice warm sun for the first part of the day, and clouds the second part of the day… So… as always, the early bird gets the worm!  And that’s where I shine! I’m a morning person, always have been… When we first started EverBank, I would get up at 3:30 am and be at my desk by 4:430 am… And then 13 hours later, I might be ready to go home… I ate dinner at my desk many a time… But it was all worth it, as I sit here in S. Florida, watching the sun rise over the ocean! The Great Leon Russell greets me this morning with his song:  A Song For You…

Well… yesterday was a good day for the currencies… The dollar started the day at 1,176.04 in the BBDXY and ended the day at 1,174.06… The Aussie dollar was the best performing currency of the day, after it was reported that the Reserve Bank of Australia (RBA) is prepared to hike rates in June… The RBA has already announced an end to their bond buying… So, even more proof that we’re nearing an end of easy money…

So… in a recap of the markets yesterday that I follow, the currencies rallied, with the dollar losing ground all day… But we have to be realistic here… The dollar loses ground all the time, only to recover the next day or a day or two later… I’ve explained this many times in the past, but will go through it again here…  The powers that be in this country have no problem pushing the value of the dollar down, they say to increase exports, but in reality, they want a weaker dollar to invite inflation into the country, they need inflation to eat away at their debts…  But… they will not allow the dollar to fall off a cliff… Slow and steady wins the race, as the tortoise said!

Gold gained $11.90 yesterday to close the day at $1.821.30, and Silver gained 50-cents to close at $23.10…   The price of Oil bumped a little higher, and moved back above the $91 handle. Bonds saw just a 1 BPS move higher in the 10-year yesterday… 

Speaking of Oil… the Texas Tea, has climbed to levels not seen in Oil since 2014, and then it was falling back from being over $100…  And like I showed yesterday the price has increased 30% from a year ago… And once again I’ll point out that the stupid BLS says consumer inflation is 7.3%, and the Fed/ Cabal/ Cartel aren’t going to do anything about it, until next month… And then it will only be 25 BPS rate hike, with the promise to hike more in the future, and they truly believe that they will slay the inflation dragon… 

You see… When Fed/ Cabal/ Cartel chairman, Jerome Powell, said that the FOMC would bring inflation down and allow for a soft landing, this is where I say hogwash!  The mention of a soft landing is a key to how they will hike rates, folks… 1/4% or 25 BPS at a time, so that they can stop at any time, or keep adding bit by bit… 

In the overnight markets last night…. Well, it didn’t even take one full day of trading for the dollar to get back on the rally tracks… The dollar was bought in the overnight markets, and this morning the BBDXY trades at 1,175.73, after closing yesterday at 1,174.06… The A$’s climb that was the best performance in the currencies yesterday, was chopped back, and all the currencies are reeling this morning. 

Gold is down $2.50 in the early trading today, and Silver is down 15-cents, to bring Silver back below $23.00…  Oil price has slipped lower and trades with a $90 handle this morning, while bonds are still stuck in the mud..

I told you last week that BOA has forecast that the Fed/ Cabal/ Cartel will hike rates at 7 consecutive meetings thus brining their Fed Funds Rate to 3%… And that would be impressive, but still leaving U.S. rates in negative territory when taking in inflation…

I’ll bet you a shiny quarter that the FOMC doesn’t get to 7 in rate hikes… I just don’t see them getting past 4 rate hikes… At that point, the Fed Funds Rate would be just over 1%, and the stock jockeys won’t like it one bit… 

In reading the book “The Lord of Easy Money”, I’ve learned that Jerome Powell, the Fed/ Cabal/ Cartel Chairman, was anti- QE when he was a FOMC Gov. Really? I hear you saying… Yes… I was talking with good friend, Dennis Miller, again yesterday, and I said, “Powell is not a dummy, he’s very smart, and he knows that the Fed/ Cabal/ Cartel’s policies have pushed investors/ savers into risky investments, but… he must be getting his marching orders from outside the Fed/ Cabal/ Cartel…

But at some point, someone has to be the adult in the FOMC Meeting Room… And stand up for what you believe, and not just go status quo…

In reading the book mentioned above, I found it very interesting that all the Fed’s men and all the Fed’s horses couldn’t figure out why the economy remained stagnant during their QE problems… Really? It was something that I kept harping about in Pfennig after Pfennig, that when the debt gets so large, that all the efforts go toward servicing the debt, and dealing with it, instead of putting funds to work in the economy…  All they had to do is read a Pfennig, or email me, or call me I would have shared my view with these confused propeller heads that the Fed/ Cabal/ Cartel employs…

So, when will the Bank of Canada (BOC) get off their duffs and hike rates?  Well, they’ve got a ton of problems in the land to the north, A housing bubble, rising inflation, a ton of debt, (is this all sounding familiar? ) and the list goes on…  But in the end, I do believe that the BOC will look to hike rates once the Fed/ Cabal/ Cartel gets going…  And then, with the price of Oil giving the Canadian dollar/ loonie all the support right now, I would think that a rate hike or two would push the loonie back to previous highs…  But then I’ve always like the loonie, and I only want what’s best for the currency.

Yesterday, I talked briefly about how I had been waiting for the regular people, like me, to rise up and point out the stupidity of Gov’t demands, and then right after I hit “send” on the letter I saw this quote from someone I admire…  Here it is: “We have the greatest opportunity the world has ever seen, as long as we remain honest — which will be as long as we can keep the attention of our people alive. If they once become inattentive to public affairs, you and I, and Congress and Assemblies, judges and governors would all become wolves.” – — Thomas Jefferson

I truly admire Thomas Jefferson…  And his position on Central Banking…  It’s too bad there aren’t any Thomas Jeffersons in Congress these days, eh?  Remember what then President John Kennedy said about him, “I think this is the most extraordinary collection of talent, of human knowledge, that has ever been gathered at the White House – with the possible exception of when Thomas Jefferson dined alone.”

And in something that took me by surprise I read this article yesterday that I’ll share with you in the FWIW section today, but before then, I have this to share with you… When inflation soars, so too do commodities, historically that is… And while past performance has nothing to do with future performance, I would have to say that Commodities are in demand right now… And that will be a boon to the countries that produce the commodities…  And so I’m going to give you an idea to look at…  Long ago when I was at EverBank, I created a basket CD titled: The Commodity CD, which took in the currencies from the following Commodity producing countries: Australia, New Zealand, Canada and South Africa… I do believe they still offer that CD, or have tweaked it a bit… 

This is how you can take advantage of rising inflation, and commodities rallying ….  I suggest you call the folks at 1-800-926-4922, and tell them I told you to call them… ( full disclosure: I do NOT receive any money from TIAA for recommending this CD)

As I told you yesterday, the U.S. Data Cupboard won’t be in play until Thursday this week. Today’s offering is the Small Business Index, which isn’t exactly a real economic print…

To recap… The currencies turned around the dollar buying in the U.S. session yesterday, and ended the day, and the BBDXY closed down on the day. Gold gained nearly $12 on the day, and Silver gained 50-cents, to move back above $23…  Chuck points out that the Jerome Powell was one a FOMC Gov. and was anti-QE!!!!   Chuck also pays homage to Thomas Jefferson and wishes we could find another one in Congress today! And in the overnight markets the currencies and metals have given back some of their gains from yesterday… Chuck just shakes his head, and wonders… 

For What It’s Worth….  Ok, I gave you a hint above of what I’m putting up for today’s FWIW article, this is JP Morgan saying that they can’t find commodities, that they are all spoken for, and that article can be found here: Goldman Commodity Veteran Says He’s Never Seen a Market Like It (yahoo.com)

Or, here’s your snippet: “Jeff Currie, the closely-followed head of commodities research at Goldman Sachs Group Inc., says he’s never seen commodity markets pricing in the shortages they are right now.

“I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said in a Bloomberg TV interview. “This is a molecule crisis. We’re out of everything, I don’t care if it’s oil, gas, coal, copper, aluminum, you name it we’re out of it.”

Futures curves in several markets are trading in super-backwardation — a structure that indicates traders are paying bumper premiums for immediate supply. The downward sloping shape in prices is generally taken to mean commodities are severely undersupplied.

The Bloomberg Commodity Spot Index, which tracks 23 energy, metals and crop futures, has touched a record this year. That has been driven in part by surging oil prices, which have hit their highest level since 2014.

Top Commodities ETF Reaps Record $1.1 Billion as Markets Soar

Diesel futures are in their strongest backwardation since 2008, excluding expiry days, according to data compiled by Bloomberg, while the structure of the crude market has also been booming in recent days. All six of the main industrial metals traded on the London Metal Exchange moved into backwardation late last year, in a rare synchronized bout of tightness last seen in 2007.”

Chuck again… Once again, historically, commodities do well in inflationary times… And they will become scarce and that will drive their prices even higher…

Market Prices 2/8/2022: American Style: A$ .7130,  kiwi .6642, C$ .7886, euro 1.1405, sterling 1.3547, Swiss $1.0828, European Style: rand 15.4960, krone 8.7843, SEK 9.1298,  forint 309.84,  zloty 3.9708,  koruna 21.2237, RUB 75.35, yen 115.35, sing 1.3445, HKD 7.7951, INR 74.71, China 6.3671, peso 20.62, BRL 5.2559,  BBDXY 1,175.73,  Dollar Index 95.61,  Oil $90.87, 10-year 1.93%, Silver $22.95, Platinum $1,016.00, Palladium $2,319.00, Copper $4.43, and Gold… $1,818.80

That’s it for today… Well, it was a good night for the U.S. skiing team last night, as a Silver medal was won by the U.S. male skier in Super G… I don’t really like much of the Winter Olympics other than the curling, and hockey, but I will watch the downhill skiing…  Kathy’s not here to watch the figure skating, so that means I don’t have to watch it! My Billikens are on the road again tonight, and play LaSalle… Go Billikens!  And this marks two days in a row that the great group: The Marshall Tucker Band take us to the finish line, today, with their song: Searchin’ For A Rainbow… I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself! Be Positive, Test Negative!

Chuck Butler

 

 

Wave Goodbye To Easy Money…

February 7, 2022

* Dollar gets bought on Friday & overnight

* What on earth did the BLS do to get 467,000 jobs created? 

Good Day… And a Marvelous Monday to you! Well, back home they are still digging out from the snowstorm they received late last week… Kathy went home on Saturday to all that… Better her than me! Yes, I’m all alone once again, and after I cooked myself some breakfast yesterday, I didn’t hear anyone getting upset because I made a mess of the oven!  Good basketball games on Saturday, with both my St. Louis U. Billikens and Mizzou Tigers winning! OK, longtime readers know that I’m a HUGE Jack Reacher fan, and was thoroughly disappointed when they gave Tom Cruise the role of Jack Reacher in the two movies that have been made. But Amazon got it right! They made the latest movie on Jack Reacher, and this guy matched the description that Lee Child had made in the books!  Sugar Ray greets me this morning with their song: Every Morning…

Well, I have to start today’s letter by saying… What a Crock! And I’m talking about the BLS’s attempt to throw everyone off the scent of a decaying economy, by changing the way they computed the jobs report, and came up with 467,000 job created by the BLS in January…  Trust me on this one folks, the BLS changed the whole process for computing the report…  Let me give you the skinny on that…

BLS revised four years’ worth of claimed jobs and population data. By subtracting over a million prior jobs from 2021, essentially wiping out the COVID pandemic monthly impact, and by changing the workforce population over the same number of years, the BLS was able to recalculate the current number of people in the workforce and claim 467,000 jobs were recently created.

Here’s how it was described by the conservativetreehouse.com “In my lifetime of reviewing data and analytics, I have never reviewed a level of statistical manipulation that even comes close to this.  Well, at least not since the 1980’s junk bond valuations used for corporate restructuring and asset removal.  What the BLS produced today will likely go down in the annals of actuarial history as one of the most comprehensively fraudulent manipulations of labor and statistics in history.”

So, I’m going to leave that there, for today… But doesn’t it just make you sick to think that a Gov’t agency would stoop so low to throw us off the scent of a decaying economy?  And why would they do that? Well, you certainly can’t be seen hiking rates when a country is losing jobs, right? Or better said, you shouldn’t be hiking rates when a country is losing jobs, so what does the BLS do, they go hyper-hedonic adjustment, and show a HUGE gain in jobs…  You may recall that the ADP Employment Report last week had January jobs at negative 301,000…  

So… after this report on Friday, the euro soared higher… The euro ended the week trading with a 1.14 handle!  The BBDXY though actually gained nearly 2 points on the day… It was as Ed Steer described the trading in Gold & Silver on Saturday, “déjà vu all over again”… I think you know that means, right? That Gold & Silver were putting in good days, when suddenly they weren’t any longer… We all know how that happens, but for any new readers, it goes like this… The price manipulators show up at the COMEX with arms full of paper short trades in Gold & Silver… 

Gold did end the week up $3.80 to close at $1,809.40, and Silver gained 11-cents to close at $22.60…  The two assets that soared on Friday, were… drum roll please…  The price of Oil soared to trade with a $92 handle, and the 10-year Treasury’s yield soared to 1.92% !  

Remember when I said that by the time I’m sitting in my seats behind home plate for a Spring Training game the 10-year’s yield would be 2%?  Well, it looks like the 10-year is going to have to go it alone, because it sure looks like Spring Training is going to be set back…

I could go on for a day and then some describing all the things I’ll be missing by not starting Spring Training on time, but I won’t bore you with my love of baseball…

In the overnight markets last night…. There was more dollar buying, but the buying is not affecting the euro, which is very strange. The euro has held its gains from late last week, and is trading with a 1.14 handle this morning… The price of Oil has slipped back to a $90 handle, and bonds are stuck in the mud… Gold is up $2 in the early trading, and Silver is up 19-cents, so it could be the start of a strong week for the metals… Notice I said, “could”, because there’s always the Big Bad Wolf waiting to pounce on Little Red Riding Hood… 

On a sidebar, the song, Little Red Riding Hood, was the first song I taught myself to play on my guitar, oh, so many years ago!  Sam the Sham and the Pharaohs…  did the song originally… 

Not that I’m going to go all-in on talking about the Data Cupboard this week, but, there is one data print that will prove to be quite interesting… And that is Thursday’s print of the stupid CPI… I say it will be interesting because by all accounts, the CPI should show a 7.3% increase in consumer inflation from a year ago… That would be 7.3%, according to the stupid BLS…   Let’s do a roll call of some items that people buy all the time: homes are up 25%, rent is up 30%, new car prices are up 15%, used cars are up 30%, grocery bills are up 30%, and gas is up 40%…  But the BLS says that inflation is only up 7.3%? these people should be taken out back and flogged until they admit they are doing the dirty deeds for the government, and promise not to do it any longer! 

OK… It just make me sick to think about how the media eats up Gov’t reports like it’s homemade goodness, instead of picking it apart, and asking questions, looking under the hood and around the corner…

The ECB is talking about ending bond buying… And well they should! They have been stoking the inflation fire for months now, and like our Fed/ Cabal/ Cartel, they aren’t doing a thing about it… This is not the old Bundesbank, where inflation was Taboo… I’m surprised that we haven’t heard from the Bundesbank, (Germany’s Central Bank) regarding the rising inflation in the Eurozone… But this announcement of ending bond buying is what sent the euro soaring on Friday…

It does appear to me that we need to be saying so long to easy money… Good buy, and Good riddance!  The Bank of England (BOE) announced last week that they are prepared to make their second rate hike, and I just told you about the ECB, and we have the Fed/ Cabal/ Cartel, supposedly going to hike next month… That would signal that an end of ZIRP (zero interest rate policy) was coming to an end…  of course, one rate hike doesn’t make a trend, just like one swallow doesn’t make it summer… And technically, easy money will still be in place, but for how much longer? That’s up to the Fed/ Cabal/ Cartel… 

I had a long conversation with good friend Dennis Miller on Friday… We talked about a lot of things, but one topic really took up a lot of our time… And it was about how the Fed/ Cabal/ Cartel had stopped buying bonds, and how the bond yields should begin to move higher, even if the Fed Funds rate doesn’t…   For those of you new to class… The Fed Funds rate is the interest rate that everyone talks about regarding the Fed/ Cabal/ Cartel… It historically was used by banks as the rate they charged other banks for overnight loans, but through the years, it has become the Key Rate when discussing rates, when actually the 10-year Treasury’s yield is the Key Rate, for it is used to price mortgage loans, car loans, student loans, individual loans, etc.  

Without Fed/ Cabal/ Cartel interference in the bond markets, I believe two things:

  1. That there’s going to be a huge supply of Treasuries, without the Central Bank buying
  2. That surplus will have to see higher yields to attract buyers…

And I should have added another number, with the thought that all of those buyers and holders of Treasuries that have bought them previously, will be experiencing losses in the bonds should they need to sell them before maturity…  but you knew that already…

On a side bar… I’ve gotta say that I’m loving the Trucker Caravan in Canada… At some time I knew that the public would stand up to the stupid demands of Gov’t… And if this is the way to get that done, so be it! 

The U.S. Data Cupboard today is basically empty, and furthermore, we don’t get into the real meat of economic data until Thursday this week… That’s when the aforementioned stupid CPI will print, along with usual Tub Thumpin’ Thursday fare of Weekly Initial Claims…  And then on Friday we go back to not much to look at in the Data Cupboard. So, this will be a week of waiting for something or someone to do or say something that gets everyone up in arms… And it’s not going to be me! For I’m just an old country boy, Money have I none. But I’ve got silver in the stars. Gold in the mornin’ sun…

To recap… Chuck calls FOUL on the BLS this morning saying that their jobs report for January was a Crock! Then goes on to explain what the BLS did and it ain’t pretty!  But the dollar rallied on that news, even though it was a CROCK!  Gold & Silver saw déjà vu all over again, with trading, and the euro climbed through the 1.13 handle and traded with a 1.14 handle to end the week. The overnight markets have the dollar getting bought once again, but it’s not affecting the euro… Gold & Silver are up a bit in the early trading, and Chuck says we need to begin to say goodbye to easy money… 

For What’ It’s Worth… Well, I mentioned this article above that explained the trickery that the BLS used to get to 467,000 jobs created in January, and it was well written and very good at explaining how they did it. So… That’s my FWIW article today, and it can be found here: BLS Cooks Books to Generate January Jobs Report That No One Believes, For Good Reason – The Last Refuge (theconservativetreehouse.com)

Or, here’s your snippet:” In order to get to a point of being able to claim 467,000 job gains last month, the BLS needed to revise four years’ worth of claimed jobs and population data. By subtracting over a million prior jobs from 2021, essentially wiping out the COVID pandemic monthly impact, and by changing the workforce population over the same number of years, the BLS was able to recalculate the current number of people in the workforce and claim 467,000 jobs were recently created.

Again, to unpack this effort would require a week of intensive education on statistics.  {Summary Here}

To avoid that complexity, just think of the big picture this way:

In order to claim a nonexistent gain today, you have to change what took place before.

Ex. Your home is worth $1.4 million as of this morning.  Your home is worth $400,000 more today alone. Why? Because your appreciation was stopped for the past year, and you are now comparing January 2022 to December 2020 when your home was worth $1 million.   You need to pretend the $33,000 your home was gaining in value each month never existed.  Instead, your home went from $1 million to 1.4 million in one day, today.

This is, essentially, the methodologic mindset behind the statistical manipulation.

Additionally, again using this actuary example, to justify your current home valuation to a quizzical audience (a potential buyer), the appraiser (BLS) would have to change every previously appraised value of the entire neighborhood – for every comparable that took place in the prior year.  This is akin to changing the population in the workforce statistics.

The problem becomes that once you set this numerical foundation (the number of people working), all subsequent job reports will have to reflect a new position against a higher base.   Without expanded economic activity to support it, future job gains will be lowered because they are going up against a higher baseline, because the entire population of workers has been changed.

We also know that U.S. economic activity is not expanding.

The value of this January BLS report is essentially nil.”

Chuck again…  I think to get the full effect of what the BLS did, you’ll need to go to the link and read the whole article. I think a corralled it the best I could, in the snippet, but you never really know…

Market Prices 2/7/2022: American Style: A$ .7093,  kiwi .6618, C$ .7857, euro 1.1425, sterling 1.3517, Swiss $1.0819, European Style: rand 15.5588, krone 8.8473, SEK 9.1496,  forint 308.89,  zloty 3.9853,  koruna 21.2267, RUB 75.54, yen 115.09, sing 1.3450, HKD 7.7933, INR 74.67, China 6.3597, peso 20.66, BRL 5.3261,  BBDXY 1,176.04, Dollar Index 95.57,  Oil $90.90, 10-year 1.92%, Silver $22.79, Platinum $1,020.00, Palladium $2,337.00, Copper $4.44, and Gold… $1,811.50

That’s it for today… Man I was wound up this morning like a top! I’ve settled down a bit now, that I’ve had a cup of coffee, while writing… Coffee to me is calming… it doesn’t’ get me jumpy, or fill me with energy… I know, that’s strange, but as Popeye would say, “I ams what I am”… Sunday was an absolutely beautiful day here, folks… I finally got out side about 2pm to enjoy the warm sun, and finish reading by new book: The Lords of Easy Money…  I’m so depressed about baseball, that I’m going to have to find something else to do with my time in March down here! And that depresses me to no end! I know, I don’t sound like I’m depressed, but I am, believe me! The great Marshall Tucker Band (one of my all-time fave bands)  takes us to the finish line today with their song: Can’t You See…   now you fellow Marshall Tucker Band fans, will be humming the melody to that song all day! HA! I hope you have a Marvelous Monday, and Please Be Good To Yourself! Be Positive, Test Negative!

Chuck Butler

 

 

The ADP Reports Negative Jobs In January!

February 3, 2022

* Currencies and metals have small gains on Wednesday

* The dollar rebounds in the overnight markets… 

Good Day… And a Tub Thumpin’ Thursday to one and all! The days keep getting warmer here, and the thing that’s just as important, is the nights are staying warm, and not dropping in temperature. So, I’ve got that going for me! I watched the U.S. / Honduras World Cup qualifying game last night that was played in St. Paul Minnsnowta!  And the temp during the game was 5… When I saw that my question was… “Who was the mental genius to schedule a game in Minnesnowta in February? “  I know what it’s like to play soccer in bone cold weather, for back “in the day” high school soccer was a winter sport… That was changed long after I was finished with playing soccer in bone chilling weather!  The U.S. won the game… The Jefferson Starship greet me this morning with their song: Count On Me…

Well… The dollar began the day, down big, with over 4 points in the index lost, but by the end of day, the dollar had won back 1 of those lost points, and the BBDXY closed the day at 1,176.65… The euro remained above 1.13, so it had that going for it… Gold found a way to hang on to $5.60 to increase to $1,807.40… Silver added a whopping 2-cents on the day to close at $22.73… Both metals were stronger during the day, only to see the price manipulators come in and take a pound of flesh from both metals…

The price of Oil slipped back below $88 as our friends (NOT!) at OPEC announced that they would be keeping production levels the same… And bonds saw the 10-year’s yield drop a couple of BPS to 1.76%…  The moves yesterday were small in all markets that I care about…

Not that I want to talk too much about the data cupboard up front, but there was a report in the data cupboard yesterday, that was mind blowing…  The ADP Employment Report For January, was expected to show 200,000 jobs created in Jan. But instead of 200,000 jobs created, ADP reported 301,000 JOBS LOST!  That’s right the number for January was negative…  Ok, this doesn’t mean that the Friday’s Jobs Jamboree, from the BLS is going to be negative too…  And right now the so-called experts are calling for 150,000 jobs created by the BLS… (notice how I worded that?)

But 301,000 negative jobs in January should have had a negative effect on the dollar yesterday, and it really didn’t… Bizarre, once again… But I can see the dollar bulls looking at that data and say, “we don’t follow the ADP, our bag is the BLS Jobs Jamboree”…  

In the overnight markets last night… the dollar has rallied and is up over 2.5 points in the BBDXY, all the upward moves by the currencies yesterday morning have been wiped out. The BBDXY trades this morning at 1,179.27. Gold is down $5 to start the day, and Silver is down 32-cents… I don’t know for sure but my spider sense is tingling, and telling me that I had better walk away from the market screens today, and not pay attention to them… Uh-Oh…     The price of Oil remains below $88, and bonds got sold yesterday to the tune of 4 BPS to trades this morning at 1.80% yield in the ten-year… 

You know… that I’ve been telling you for years that this money printing that began in response to the 2007/ 08 financial meltdown in the U.S. was going to cause inflation eventually… And it took money printing on steroids, in response to the plandemic, that pushed inflation to the forefront… When the Fed/ Cabal/ Cartel make these monetary policies that they feel are best, and then they turn out to be not so good, and far from the best, everyone forgets that iy was the monetary policy that caused the problem because it was done years before…

And I know that I’ve been the boy who cried wolf regarding the rising debt in the U.S. but trust me on this folks, it’s been the main reason that the economy hasn’t grown for over a decade… So, the rising debt didn’t cause economic collapse, not yet, and it hasn’t caused a dollar collapse, not yet, but it has held down economic growth, while those other two things are percolating… 

OK, I told you yesterday that we had passed the $30 Trillion mark on Tuesday… Well, yesterday, longtime publisher and author, Bill Bonner has this to say about this historic moment in time:

“The federal government now owes $23.5 trillion in debt to creditors and another $6.5 trillion to itself. Debt to creditors soared by $1.5 trillion over the last year alone, according to the Peter G. Peterson Foundation, a nonpartisan organization focused on addressing the country’s fiscal challenges.

“It does not make sense as a society to simply spend more than we take in on a permanent and growing basis,” said Michael A. Peterson, the group’s chief executive officer. “What that essentially does is place the burden onto our future and onto the next generation.”- Bill Bonner

Did you know, that the U.S. has added $24 Trillion of that $30 Trillion Current Debt total since 1999?  For over 200 years we accumulated just $6 Trillion in debt, with most of that coming since the 80’s…  And in the last 22 years, we did 4 times that amount…   And when you add in Corporate debt the number climbs to $56 Trillion…  I guess that doesn’t say a lot for our War on Terror, War on Drugs, War on Poverty does it? Or, as Bill Bonner says, “it certainly didn’t place stars of democracy on Iraq and Afghanistan” Just shows to go ya that it makes no difference how much bad money you can throw on bad ideas, it’s still a bad idea…  And that’s all I’ll say about that!

But zero interest rates have been a boon to Corporations in the U.S. they get to borrow interest free… I wonder if they even still have to put up collateral on interest free loans? HA!  And everyone thought that ZIRP (zero interest rate policy) was the best things since sliced bread… Well, until interest go higher, as they seem to be getting ready to do, and these Corporations have their loans come due, and they need to refinance at higher rates…    See this is another bad policy by the Fed/ Cabal/ Cartel that is taking years to show its warts… But eventually all bad ideas come home to roost…

Of course for you, and me, the savers of the world, ZIRP has been hated, kicked, driven like a rental and everything else bad that we who depended on interest income had to say about ZIRP… It’s been an awful policy for us… And it’s something that former Kansas City Fed Head, Thomas Hoenig tried to explain to people back 12 years ago, about how everyone will get used to ZIRP, and it will be difficult to come off of, all the while hurting seniors and savers…

And now I’ll circle back to inflation and discuss the Fed/ Cabal/ Cartel’s response to it… Well, as you know they denied the fact that inflation was rising for months, thus putting them way behind the curve with regards to squelching inflation…  If they had acted months ago, by now the markets would be on board with rate hikes, inflation would not be still rising, and well… They didn’t act months ago, and still haven’t acted…  Another bas policy…

Last week, in the bizarre week of trading that almost caused me to walk away from the markets for a week, there were economists and analysts that were spouting off about how the Fed/ Cabal/ Cartel was going to hike rates aggressively… I said, “hogwash”…   And then on Tuesday this week, two Fed Heads, Mary Daly, and Esther George tired to put that kind of talk in the trash, and repeated often that they have no plans to upset the economy with rate hikes…   In other words, expect 25 BPS rate hikes…

If we get a couple more of the Fed Heads to put the aggressive rate hikes to bed, I think Gold will take notice and begin having better days than the $4 and $5 daily gains it has had so far this week.

But…  Even with 25BPS rate hikes if you have enough of them, they begin to add up… The Bank of America (BOA), my friend Aaron’s favorite bank, NOT!, has projected that we will see 7 rate hikes this year bringing the Fed Funds rate to 3%… Uh-Oh…  Somebody forgot to tell the Fed Heads or the folks at BOA about what happens to the U.S.’s $30 Trillion tab’s expenses when rates go higher…   I’ve always told you that eventually the bond costs/ interest costs would become too large for the country to bear…  At 4% rates, the interest rate costs on our tab would be $1.5 Trillion, and that’s 40% of the tax revenues in a good year…  Not the kind of year we’re going to have this year, when all the roosters seem to be coming home to roost…

And we’re still waiting for the Fed/ Cabal/ Cartel… to act… They’re still in the “jawboning” stage, and it’s not taking effect, or swaying anyone… The markets need them to wet their powder, actually hike rates…  And even then the markets are going to be left feeling like a jilted lover…

The U.S. Data Cupboard today has the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims, which for the past few weeks have seen increases to the total each week… I suspect this week’s report to show the same…  In addition, December Factory Orders will print…. Oil data… There’s nothing that’s more worthless, other than a FOMC meeting. HA!

To recap… The currencies were up strong in the morning, and then gave back a little of their daily gain to the dollar… Gold only gained $5.60, while Silver only gain 2-cents!  The ADP Employment Report was mind-blowing, as it printed a negative 301,000 jobs in January…  That’s right I said negative jobs in Janurary… And the dollar rallied a bit on that news… more bizarre trading folks… Chuck goes through some thoughts on inflation, the debt, and how badly the monetary policies of the Fed/ Cabal/ Cartel have been. And in the overnight markets the dollar is getting bought hand over fist, and Chuck thinks he should step away and not watch what goes on today… Hmmmm….. 

For What It’s Worth… The Good Folks at GATA sent me this link to the article in the FWIW section today… It’s an article about how Gold keeps getting pushed above $1,800 and the thoughts on who’s doing that, and it can be found here: Looks Like There’s a Whale Snapping Up Gold Bullion Below $1,800 (yahoo.com)

Or, here’s your snippet:” Spot gold is again bobbing along near $1,800 an ounce, as it has been since mid-2020. The stickiness of that level, particularly as fundamentals turned more bearish, suggests there’s a big buyer somewhere in these waters.

Since breaking above the round number in July 2020, the gold price dipped below it 19 times on a closing basis, only to regain its footing. In the past year, the modeled value of gold, based on a regression study that includes the dollar, real rates and ETF holdings, dropped nearly 10%. Yet the metal’s price only fell around 2%. Clearly, there is a big buyer who considers the metal a long-term hold.

Such whale activity, which shows up neither in ETF holdings nor in futures positioning, would require a substantial buyer, accumulating in size in the London over-the-counter market. Yet vault holdings reported by the London Bullion Market Association, which include both ETF and some central bank-owned metal, show only a fractional increase in the year through December, from 307 million to 309 million troy ounces.

That would suggest that whoever is buying is able to buy in scale, leave little footprint in the market and then take delivery and store the metal in secure, invisible vaults. And that points strongly toward a sovereign buyer.

Central banks normally declare to the IMF the amounts of metal they have on their books. But there are precedents where this has been done with some delay. Between 2009 and 2015, China reported no change in holdings, only to reveal that it had bought 53 million ounces of metal over the period.”

Chuck again… I think I had talked about this trading in Gold yesterday, or was it earlier today? Sometimes when writing so much I get confused as to when I said something!  I agree with the article that it’s probably a Central Bank somewhere, doing the sneaky trading… Now, if only we could get a couple more whales participating, that would wipe out the price manipulators! 

Market Prices 2/3/2022: American Style: A$ .7120,  kiwi .6642, C$ .7974, euro 1.1279, sterling 1.3583, Swiss $1.0834, European Style: rand 15.3151, krone 8.8086, SEK 9.1975,  forint 313.52,  zloty 4.0153,  koruna 21.3907, RUB 76.27, yen 114.91, sing 1.3479, HKD 7.7940, INR 74.86, China 6.3612, peso 20.61, BRL 5.2981,  BBDXY 1,179.27, Dollar Index 96.09,  Oil $87.23, 10-year 1.80%, Silver $22.41, Platinum $1,030.00, Palladium $2,456, Copper $4.43, and Gold… $1,802.00

That’s it for today… As we head to the first weekend of February, the folks back home are getting snowed on again today… It’s good for them!  HA!  My drinking hole buddies were texting the amounts of snow each one had in their yards, and I was tempted to respond: “no snow here, just 74 and sun”, but then thought that would be rubbing it in, and I’ve not done that in the 6 years here, so I refrained from doing that! Friends that we see each winter in Feb. (not last year of course) Mike and Linda from Jersey arrived this week, and they were glad they got out of Dodge!  Our good friends, Pete and Karen, moved out of their condo, and bought a house about 15 miles from here… UGH! Oh, I mean good for them!  No NFL playoff games this weekend, with next weekend being the Super Bowl…The song for our getaway song today goes out to my longtime colleague, going back to Mark Twain Bank, and latte buddy, Michelle Boschert, for the sone is from the Beatles, and its title is: Michelle…   I hope you have a Tub Thumpin’ Thursday today, and Please Be Good To Yourself…  Be Positive, Test Negative!

Chuck Butler

U.S. Current Debt Surpasses $30 Trillion!

February 2, 2022

* Currencies and metals rally on Tuesday

* The overnight markets saw the dollar getting sold… 

Good Day… And a Wonderful Wednesday to you!  Well… It’s Groundhog Day, and Punxsutawney Phil will be coming out soon to see if he sees his shadow or not… to tell true believers if Phil sees his shadow and whether there will be six more weeks of winter. (Hint: there are always six more weeks of winter from Feb. 2nd to Mar. 20th.)  This is a tradition and you know me and traditions… And this one is so silly, that I find it to be interesting, to follow… Winter is over here, and the days are beginning to really warm up again… Mid to high 70’s are in the cards for the next week, so you can be assured that I’ll be out in the sun, soaking up as much Vitamin D, as possible! I’m treated this morning with my fave Temptations song… I Wish It Would Rain…  “Sunshine, blue skies, please go away, my girl has found another and gone away”…

Ok… Well, according the the Debt Clock… The U.S. is now in debt by $30 Trillion!  We passed that figure yesterday, and since all it ever does is add debt to the total every second, it’s better just to talk in large numbers… Hopefully $30 Trillion hasn’t caused Americans to go Comfortably Numb… And here are some interesting numbers… Right now it would take every citizen to write a check for $90,218 to pay off the current debt… But, if we only counted tax payers, these lovely people would have to write a check for $239,808…   That’s a big discrepancy in check amounts, eh?

And for the bizarre markets yesterday… The dollar traded in a very tight range ending the day down just a smidgen from Monday’s close… The BBDXY started the day at 1,179.58 and ended the day at 1,179.33…  Gold saw a wide range of prices yesterday… You may recall me talling you yesterday that Gold was up $12 in the early trading… Well, from there it went up another $8 for a $20 gain, but… then came the price manipulators, and they whacked down Gold’s gains until the shiny metal only showed a $4.20 gain on the day to close at $1,801.80…

It was the same thing for Silver yesterday… Silver was up 54-cents yesterday morning, and had gained another 10-cents when the price manipulators stepped in to chop down Silver’s gains to just a 17-cent gain on the day, to close at $22.70…  The price action in Gold and Silver yesterday was enough to even sway the Biggest naysayers of price manipulation… 

In other trading yesterday, the price of Oil bumped back above $88 yesterday after slipping below the figure the night before. Bonds got sold yesterday with the 10-year’s yield rising to 1.79%. We’ve watched the 10-year’s yield bounce back and forth in a 5 BPS range for a couple of weeks now, and to me it seems like it’s just biding time until it begins to move higher…  Stocks moved higher, and Bitcoin went higher too…

There are rumors going ‘round, someone’s underground, no wait! I mean there are rumors going around that the POTUS is going to issue an executive order on Bitcoin…  And one of Bitcoin’s big cheerleaders, said, “This could be good for Bitcoin, as regulation would give the crypto space a measure of respectability that would attract more investors.”   Yeah, Ok… I give… where’s the punchline?   Oh, and I got that info from Dave Gonigam’s 5 Minute Forecast yesterday…

In the overnight markets last night…  the  dollar got sold some more, and then some… the BBDXY has dropped over 4 points overnight, and starts today at 1,175.15… Again, that’s a long way from the 1,190.24 we started with at the beginning of the week, after Friday’s massacre of the currencies.  Gold is up $3 in the early trading and Silver is up 21-cents. I just shake my head at the goings on with the price manipulators yesterday, I kept saying, “what do they want?”  Bonds and Oil are stuck in the mud with yesterday’s prices, and it does look like the shoe is on the other foot for the dollar… And I doubt that any of the economic data to follow this week, culminating with the Jobs Jamboree on Friday, are going to help the dollar regain strength…  I guess, we’ll see, eh? 

So, like Tom Brady retiring… not retiring… retiring… not retiring, and finally retiring… The Fed / Cabal/ Cartel, the talk is about will they hike in March, or won’t they, will they, or worn’t they… I don’t care really… for it’ll be too little too late… And even if they come back in April and hike and then again in May, rates will only be at about .85%… Still not even a full 1$, and still negagive when taking into consideration the rate of inflation…

Speaking of the Fed/ Cabal/ Cartel…  On May 31st 2021, James Bullard, President of the St. Louis Fed/ Cabal/ Cartel, spoke at a conference and told the people there that “inflation is expected to rise this year between 2.5-3.0%”…  I wonder if any journalist has taken him to the woodshed for that awful forecast….  But here’s the thing that I keep going back to and bothers me to no end… It’s that Powell, was wrong, Bullard, was wrong, everyone from the Fed/ Cabal/ Cartel was wrong about inflation last year… So they got it all wrong but now they expect us to believe that they’ll get this next phase all right?  Give me Break!  I’m not a trader any longer, and never was I a trader that went out on limbs, but if I were one today, I would be selling dollars, stocks, Bitcoin, and bonds all short!  And going long.. Gold… Oil… and some commodity currencies…   

I told you about the Atlanta Fed’s GDP NOW showing the 1st QTR of this year so far at a .1% gain, very near negative… Then there was this dittiy: “Spurred by a massive inventory rebuild and consumers flush with cash, the U.S. economy last year grew at its fastest pace since 1984.

Don’t expect a repeat performance in 2022.

In fact, the year is starting with little growth signs at all as the late-year spread of omicron coupled with the ebbing tailwind of fiscal stimulus has economists across Wall Street knocking down their forecasts for gross domestic product.

Combine that with a Federal Reserve that has pivoted from the easiest policy in its history to hawkish inflation-fighters, and the picture has suddenly changed substantially.” – CNBC.com

Chuck again…  I’m surprised the actual media talked about what rate hikes could do to the nascent economy…

There’s not much in the U.S. Data Cupboard today, other than the ADP Employment Report for January that right now is forecast to be a 200,000 gain, which is NOT a good number for the economy…  The Quarterly Treasury refunding will be announced…  Good thing it’s being done bore yields go higher next month with a rate hike…

To recap…  The dollar was stuck in the mud yesterday, but Gold after an early rally lost ground all day to only gain $4.20, and Silver which had a 67-cent gain early gave back most of it to only gain 17-cents on the day… Chuck points out that this price action should have turned even the strongest naysayer of price manipulation to see things my way!  And inflation is really strong right now, wait till you get to the FWIW section today to see what I have for you there!

For What It’s Worth…. OK… here it is… This is an article about how renters are finding HUGE increases… And it can be found here: U.S. Rent Inflation on Real Estate Property Allows Landlords to Regain Leverage – Bloomberg

Or, here’s your snippet: “ If you’re a renter and you moved last year, you’re probably already paying more for shelter. If you didn’t, you may soon find yourself in a similar position, when your lease comes up for renewal.

Outsize residential rent increases spreading from new leases to existing ones has been a distinct pattern in places like the Atlanta and Detroit metro areas, where rents rose in 2021 at the fastest pace in decades, according to Labor Department data, propelled in part by an influx of new arrivals fleeing higher-cost cities. In 2022, the pattern is set to become a nationwide phenomenon, as landlords recoup bargaining power they lost in the early part of the pandemic, when unemployment surged and governments responded by enacting eviction bans.

*Production and nonsupervisory employees

Data: Bureau of Labor Statistics

Rent of shelter is the biggest expense for the typical U.S. household and consequently the biggest component of the government’s official indexes of consumer prices, making up about 32% of them by weight. Inflation in that category topped 4% in 2021, after averaging 3.3% annually in the five years before the pandemic.

Many forecasters expect it to remain high through much of this year, even as other overheated categories, such as autos and other durable goods, start moderating. (Several private-sector gauges of rent inflation showing double-digit growth nationally in 2021 focus on prices of new leases, whereas the Labor Department measure also accounts for the much larger category of existing leases being renewed”

Chuck again… And can you blame the landlords for the price increase? Not me… I said that back when they were told they couldn’t raise rents or foreclose on people, that this would be on the other side of that… And nowhere in the article does it say anything about how the Fed’/Cabal’s/ Cartel’s currency printing is the root cause of all this inflation…

Market Prices 2/2/2022: American Style: A$ .7153,  kiwi .6648, C$ .7891, euro 1.1325, sterling 1.3572, Swiss $1.0888, European Style: rand 15.2808, krone 8.7680, SEK 9.1857,  forint 313.40,  zloty 4.0116,  koruna 21.4473, RUB 75.99, yen 114.29, sing 1.3469, HKD 7.7933, INR 74.71, China 6.3612, peso 20.48, BRL 5.2647,  BBDXY 1,175.15, Dollar Index 95.91,  Oil $88.24, 10-year 1.78%, Silver $22.92, Platinum $1,046.00, Palladium $2,482.00, Copper $4.46, and Gold… $1,805.40

This just in folks… Phil did see his shadow this morning, and therefore we will have 6 more weeks of winter…  I got that straight from the live feed from Gobbler’s Knob, PA…  There were probably 40,000 people there to witness this tradition…  So, there you have it! 

That’s it for today… Well, Happy Groundhog Day to you! Back home in St. Louis, they are getting hit with a major snow storm today… Kathy is going back to St.Louis on Saturday, to that mess, I’m not… I hate the cold weather that much that I come here for the winter, and for all of the winter! This is my 6th year of being for the winter, and this year, so far, has not been as warm as previous years… But it’s still warmer than home!  12 days and counting… just a reminder… Baseball negotiators are still talking, and that’s a good thing, I think! The January renters are gone, and the February renters have moved in… Monthly rents in this building I’m in have skyrocketed in price, and some regular renters are balking at paying the increased rates… There’s always someone that will pay those rates….   The Rolling Stones take us to the finish line today with their song: Wild Horses…  I hope you have a Wonderful Wednesday, and Please Be Good To Yourself! Be Positive, Test Negative!

Chuck Butler