February 11, 2021
* Currencies & metals rally for a 4th consecutive day!
* What’s the deal with the Gov’t’s version of Consumer Inflation?
Good Day… And a Tub Thumpin’ Thursday to you! Well, both my fave college basketball teams were playing last night at the same time, which had me going back and forth to watch both the Mizzou, and St. Louis U games… I couldn’t stay awake for either one, and so when I woke up in the middle of the night, which is what I do almost every night, I checked my phone to see who won the games… Mizzou got pummeled and SLU won… It was another beautiful day here, warm, with full sun, and umbrella blue skies… The daily highs in temps here for the next 6 days will be about the same, before we see the highs dip into the 70’s again… I absolutely love this weather! An old friend who used to come to Spring Training with us, before bowing out, Big Jay, used to say, “the weather is the same every day, sunny and 80”… And if he were going to be here this week, that would have held true for him! Gerry Rafferty, greets me this morning with his song: Get It Right Next Time… Gerry Rafferty also sang for Steeler’s Wheel, back in the day… And we lost him way too early…
Well, the Dollar Index lost more ground yesterday, but not a huge chunk of ground, but lost ground nonetheless. In the FWIW section today, I will have an article on the Dollar Index, so make sure you don’t change channels! So… it was the 4th consecutive day of dollar weakness, and I’m of the opinion that this is exactly what the Cartel heads want to see… A slow grind down for the dollar, so that people don’t try to hit the exit door at the same time… Sort of like the old story about how if you put a frog in boiling water, it’ll jump out immediately. But if you put him in warm water, and slowly turn the heat up, the frog will never notice it, until it’s too late!
And one way to keep the dollar from falling off a cliff, is to keep a lid on what people think is the real Consumer Price Index (CPI)… Yesterday, the stupid CPI showed a .3% gain, which was widely expected to happen, but Core Inflation was flat, no growth… Really? So food and energy, by way of deduction here was up .3%… Since the total number was .3%, but when taking out food and energy, it was flat, then Food and Energy was .3% higher…
You know, when my wife tells me that the prices at the grocery story are higher every time she goes back, then you know that food prices are rising, and that’s a form of inflation… And the game keeps getting played by the Gov’t… Telling people lies about what the real inflation rate is… John Williams over at shadowstats.com, who calculates how CPI was computed before Clinton and Greenspan worked their magic with hedonic adjustments, says that real CPI is north of 5%… Now what do you think investors would be thinking if the Gov’t printed a 5% CPI? Well, I can tell you that they would be thinking of dumping dollars quicker than NY Minute!
And like I told you yesterday, the Chapwood Index shows inflation is around 10%… Longtime friend, Bill Bonner explains the two kinds ways inflation is derived… So, here’s Bill from his letter yesterday, that can be found here: Bill Bonner’s Diary – Daily Newsletter | Rogue Economics
“Either the economy heats up (cyclical inflation)… and businesses need more labor and raw materials to keep up with the demand. Shortages then arise. Everyone tries to keep up with the whirlwind of getting and spending, leading to higher prices…
Or… the other possibility (systemic inflation) is that the economy cools down. Fake money, false price signals, regulation, bubbles, giveaways, and COVID-19 shutdowns could simply cause a cutback in buyable output… while the supply of available money continues to rise.”
Chuck again… And the latter of those two are what we are looking at now folks… Sure I’ve told you before that the velocity of money was the key to rising inflation, but this systemic inflation is real… and scary…
Ok, so the currencies gained small amounts yesterday, nothing to write home about, but the Dollar Index which yesterday morning was 90.47, ended the day at 90.43, after hitting a low of 90.37. So, from this index you can see just how small the moves in the currencies were… But as I described yesterday, still making progress, which is important…
Gold gained $4.60 yesterday, to close at $1,843.40, and Silver lost 20-cents on the day to close at $27.12… But Gold was higher during the day by $12 more, which the price manipulators couldn’t leave alone… This current rally in Gold, from reaching a low last Thursday morning, has gotten its legs under the shiny metal’s price, and that’s a good thing… it doesn’t mean that the Gold rally is a One-Way Street upward, it’s just a good thing to follow… For if you haven’t bought your Gold by now, after all my hinting and pointing you in that direction to do so, then you’ll need to wait for the next dip lower in the price, and buy on the weakness… Buy the weakness, sell the strength… One of the first things I learned when I began in the financial industry in 1973…
You see, I had missed the starting semester of College in September 1973, because I was still traveling around the country in our VW microbus, playing my guitar and thinking that all I needed was a break, before becoming a Rock Star…. So, in Rocktober of 1973, I began at Stifel Nicolaus and it was just supposed to be a temp job until the next semester began… I loved learning about markets, and how they worked and traded, etc. and I never went off to college… Instead, I opted for night classes, of which two of my classes were on economics… I would bet a dollar to a Krispy Kreme, what I learned back in the day, VS what they teach in econ classes now, would not be the same… But I digress…
In the overnight markets, The Dollar Index has fallen further, so if things continue this way today, it will mark the 5th consecutive day of dollar weakness… Gold is down a buck in the early trading, and Silver is up a nickel! So, no real movements here so far today… The CPI data yesterday stirred the blood hot in Gold traders and it began to move higher, but was cut off at the pass, and only allowed to gain $5… The euro is moving higher in the 1.21 handle, and the Petrol Currencies are back on the rally tracks, with the price of Oil staying above $58…
The price of Copper has really moved higher in the last week… When I first began to report Copper’s price it seemed that it remained at 3.62, every day… But then last week it began to move higher, and today Copper is trading at $3.76… A friend of mine that has to buy copper for wiring, asked me what was going on with the price of Copper, and I told him that it was inflation fears…His customers were not happy with that for sure, but it is what it is…
The U.S. Data Cupboard, only has the Weekly Initial Jobless Claims suite of data prints today… Remember what I told you last week that you shouldn’t pay attention to the continuing claims behind the curtain, for once the continuing claims run out, the person is no longer counted at unemployed… And they certainly are no longer receiving their continuing claims, so they get dropped! Like I described yesterday, makes about as much sense as a tanning booth at a nudist colony!
And we’ll end the week, tomorrow, with the Data Cupboard still lacking at best, to produce a print of real economic data… And next week will start off slow, staring with nothing on the Monday President’s day Holiday, and won’t get around to printing anything worth looking at until Wednesday, when Retail Sales and Industrial Production and Capacity Utilization will print… That seems to me to be a long time from now, especially with the Monday holiday in the middle…
The reason this is something to talk about, the lack of data, is that the last real piece of economic data was last Friday’s Jobs Jamboree, which was downright awful/ weak. So the bad taste of that report is still in the mouths of currency traders… But it’s wearing out, and they need something else to reinforce their belief of the need to sell dollars…
To recap… it was indeed the 4th consecutive day of dollar weakness yesterday… Gold gained, but Silver lost, and the Dollar Index keeps going down, to the ground, to the earth… And pretty soon, it could reach lows it hadn’t seen in several years! Chuck stays strictly to the markets that he covers today, without any straying into fields that get him in hot water with some readers, so that should make everyone happy!
For What It’s Worth… Well, for some time now, the good folks at FXStreet.com have posted my Pfennigs on their site, and then posted them on Twitter, so when I saw this report from them on the Dollar Index, I though that I should return the favor! So that’s the FWIW article today, from the FXStreet.com and it can be found here: US Dollar Index Price Analysis: DXY drops further below key support to refresh monthly low (fxstreet.com)
Or, here’s your snippet: “DXY bears attack late January lows during the four-day declines.
- MACD flirts with bears, sustained trading below key SMAs nd trend line suggest further weakness.
- Confluence of 100-day SMA, 50% Fibonacci retracement adds to the upside filter beyond the monthly top.
US dollar index (DXY) remains depressed around 90.40, intraday low of 90.37, ahead of Wednesday’s European session. In doing so, the greenback gauge stretches Friday’s U-turn from a two-month top towards attacking the lowest since January 29.
Also portraying the bearish momentum could be the gauges downside break of a short-term support line, stretched from January 06, marked the previous day, as well as receding strength of the bullish MACD.
Even so, 50-day SMA near 90.40 restricts the dollar moves while joining hands with 23.6% Fibonacci retracement of November-January downside.
Overall, the bears have an upper hand over the USD bulls but are waiting for the fresh impulse to attack the 90.00 threshold, needless to mention about the yearly bottom surrounding 89.20.
Meanwhile, the corrective pullback may attack the previous support line, at 90.76, but further recoveries will have to refresh the multi-day top beyond 91.58 to attack the key hurdle around 91.75, including 50% Fibonacci retracement and 100-day SMA.”
Chuck again… Technicals are something that I’ve never really depended on, as they normally tell you why something happened after it happened, but once in a while you get something that looks forward, and this is what they are doing here…
Market Prices 2/11/21: American Style: A$ .7750, kiwi .7230, C$ .7890, euro 1.2130, sterling 1.3827, Swiss $1.1236, European Style: rand 14.6404, krone 8.4566, SEK 8.3118, forint 294.34, zloty 3.7094, koruna 21.2483, RUB 73.82, yen 104.70, sing 1.3242, HKD 7.7526, INR 72.79, China 6.4442, peso 19.94, BRL 5.3799, Dollar Index 90.39, Oil $58.29, 10-year 1.14%, Silver $27.16, Platinum $1,256.00, Palladium $2,440.00, Copper $3.76, and Gold… $1,843.50
That’s if for today… And tomorrow, and Monday as well.. Well, you still have a couple of days to secure a Valentine’s Day President for your sweetheart… On Saturday this week it’ll be my very good friend’s birthday.. .So Happy Birthday Duane! It would also have been my oldest sister’s birthday… We lost Brenda to cancer a very long time ago now, but as I did the night before when I heard the song: Tell It Like It Is, by Arron Neville, I’m reminded of how she taught me to slow dance to that song… I’ve lost both my older sisters, and at times like this I find that I miss them terribly! The Turtles takes us to the finish line today with their song: Happy Together… “no matter how they toss the dice, it had to be, the only one for me is you, and you for me, so happy together! I hope you have a Tub Thumpin’ Thursday and a Fantastico Friday tomorrow, and Please Be Good To Yourself!
Chuck Butler