April 15, 2021
* Currencies & Oil rally on Wednesday…
* Margin Debt is soaring once again, we had better beware…
Good day… And a Tub Thumpin’ Thursday to you! Well, the visit to the heart doc went well yesterday. My heart is functioning better, and is much stronger than when he first saw me in 2017… That was right after I had been on huge doses of steroids for over a year, and apparently they did major damage to my heart… But that’s all in the past now, and with me losing weight, should be much better going forward. We had a wonderful dinner last night at a restaurant, where we met Grace’s mom, Lori… What a Southern Belle! For those of you not keeping up… Grace is youngest Son, Alex’s steady girlfriend, now for about 4 years! Grace is from Arkansas… and was the alternate rifle shooter at the Rio Olympics… So, I don’t mess with her! HA! But what a joyful evening with my kids, and little Evie, and getting to meet Lori… Kansas greets me this morning with their song: Song For America… It’s a rock classic that’s over 9 minutes long!
Well, the currencies sure did like the fact that I was away for the day yesterday… Just like in the days of old they rallied while Chuck was away! The dollar started the day getting sold and ended the day getting sold and all points in-between getting sold… The Dollar Index which ended the day on Tuesday at 91.93, and ended the day on Wednesday at 91.62… We’ve seen this drop in the Dollar Index before and every time it looks like it’s headed to the deep south, the Plunge Protection Team (PPT) steps in and buys dollars to protect it, and then we have to put up with a week or so of the Dollar Index heading higher, but has been the recent trend, it turns around and heads south again eventually…
Yesterday’s dollar selling was brought about curtesy to the strong & stupid CPI (consumer price index/ or consumer inflation whichever you care to call it) Here’s a snippet of the report I received from the folks at MarketWatch.com “Consumer prices rose in March for the fourth month in a row and the pace of inflation hit the highest level in two and a half years, underscoring new pressures emerging on the economy as the U.S. recovers from the coronavirus pandemic.
The consumer price index jumped 0.6% last month, the government said Tuesday, spearheaded by the rising cost of oil. Economists polled by Dow Jones and The Wall Street Journal had forecast a 0.5% increase in the CPI.
The rate of inflation over the past year shot up to 2.6% from 1.7% in the prior month, marking the highest level since the fall of 2018.”
Ok, this is what I was talking about earlier this week about how the numbers are going to be skewed because of the base numbers being during the pandemic… President Biden echoed the words of Cartel Chair, Jerome Powell, yesterday, saying that he believed inflation will only be temporary… Ahhh, even the president gets to play spin doctor, eh? This is where I’m torn between two lovers… While I firmly believe that inflation is here and spreading like wildfire, I’m torn because actual wages in the U.S. have fallen for 3 consecutive months, and that’s deflationary… So, something has to change there for me to be “all-in” on inflation staying… If I were a gambling man, I would bet on inflation coming and staying awhile… I’m just saying…
So, let’s see… Monday Gold was down, Tuesday Gold was up, and Wednesday Gold was down, so it’s Gold’s turn to have an up day! UGH! Gold dropped in price by $9.40 yesterday to close at $1,737.40. And Silver was up 7-cents to $25.50… I’m thinking that everyone including all traders haven’t gotten the memo from the Cartel that they have started their Yield Curve Control (YCC)… Don’t look now but the yield on the 10-year Treasury has now fall to 1.59%… It was just two weeks ago that people were celebrating the 10-year’s yield at 1.80%…
I have to feel that once everyone gets on board that the Fed is buying so many bonds to keep yields from rising that Gold will finally get back on those rally tracks it was on last year, when it climbed to $2,000… At least that’s what I’m thinking will happen…
Dodododododododo… we just went back in time to last year, when the yield on the 10-year treasury was .76%, and Gold was rising daily… But then the bond traders began seeing signs of rising inflation, and the next thing we knew the 10-year’s yield was back to 1.00%, and Gold was off the rally tracks… OK, now we can go back to the future…
OK… onto other things… While the euro was rising within the 1.19 handle, the price of Oil was also rallying yesterday, gaining almost $3 in price, to $62.95.. so we had two of three anti-dollar assets moving higher VS the dollar.. The third anti-dollar asset, Gold… wasn’t able to join its peers… One of these days Alice…. To The Moon!
In The overnight markets…. the dollar selling has abated, and the Dollar Index, this morning, is still 91.62… So no movement overnight in the currencies, but… As I said above today is Gold’s day to rally, and it is in the early trading today Gold is up $13.10, and Silver is up 18-cents, so a good day for these too so far, but I would certainly like to see these early gains get added to as the day goes one…
The rise in the price of Oil has the Petrol Currencies all lathered up and their jeans pressed tight for a good night! The beaten and battered Russian ruble has even joined in on the Petrol Currencies rally… Shoot Rudy, the Mexican peso is below 20!
And recently a dear reader wanted to know why I don’t talk about the Aussie dollar and kiwi any more, or like I used to? Well, here you go… After looking like the A$ might begin a ride on the slippery slope, it has turned around and is now on the rally tracks again, along with its kissin’ cousin across the Tasman, kiwi…
The Fear Factor is still upon us folks… Just when folks were beginning to come out from under their rocks that they have confined themselves to for over a year, there had to be something the powers that be, could bring up that would induce them to go back under their rocks… I’ve had it with all this keeping us under lock & key and not living our lives… We live with risk every day! The moment you walk out of your house each day you’re taking a risk, when you start your car you’re taking a risk… The world just needs to accept the risks they are willing to live with, and move on with their lives, and not be influenced by the Fear mongers… I’m just saying!
OK, sorry about that tangent… I have no idea why I began to type that and before I knew it, the paragraph was finished, and now I have to somehow get back to the markets… Let’s see how that goes! HA!
So… today is the day… The day when we get a plethora of economic data… First up with the Usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims… This data has seen weekly claims rise the last two weeks… One has to wonder what today holds? Next up is Retail Sales, and like I said on Monday the BHI tells me that while there may be a recovery of Retail Sales in March, it’s not going to be anywhere near what March usually holds for us in regards to Retail Sales… Then we’ll see the color of Industrial Production and Capacity Utilization… IP is supposed to rebound from Feb’s negative -2.7% print, and CAPU is supposed to rise to 75 from 73… Hmmm….
OK riddle me this Batman… if for the most part businesses especially in Manhattan, are finding that having employees working from home isn’t exactly ideal, but works, and they’re staying with it for now, why would these same Businesses be spending money on Capital improvements, when no one is going to be there to use them? Because that’s what the so-called experts are telling us is happening by forecasting a big rise in CAPU…
There are a few other data prints today, that don’t really move markets, so we’ll just leave them at the side of the road, in hopes that someone picks them up!
To recap… Chuck was away, so the currencies rallied yesterday, and the price of Oil rose, but Gold lost $9.40 on the day, while Silver rose 7-cents.. . The dollar got pummeled by the strong and stupid CPI print that showed year on year consumer inflation at 2.6%… But as I explained earlier this week the year-on-year numbers are going to skewed because the base being used is last year during the height of the pandemic. And Chuck goes off the deep end this morning with a discussion that belongs on the Butler Patio, and not in the Pfennig! Oh well, whatcha gonna do when the money is all gone?
Before we head to the Big Finish today, there’s something else I want to talk about… On Tuesday it was reported that margin debt in the U.S. markets has reached $814 Billion, That’s Billion with a Capital B! Longtime readers may remember me telling them in a past life I ran a margin Dept for a Midwest Brokerage Firm. I was the youngest person to hold that position ever in that company! But I digress… So, I know all about margin, how it works, and where the pressure points are… Ok, having said that, let me also say that, the last time Margin Debt grew that much was in 2007, before the Great Recession. And the time Margin Debt grew that much before that was 1999, just before the dot com implosion.
Doesn’t that give you the willies? It does me… And I can hear the margin clerks now calling investors on the phone and telling them their account fell below min. Margin, and they need to deposit stock or money to meet the margin call, or else… They will begin to sell stocks to bring the account back into regulation… Those are NOT calls you wan to be taking folks… so this is a public service announcement, to remind you to have those stop losses updated!
For What It’s Worth… Anything you can do I can do better… Sing that song and it’ll be in your head the rest of the day… I say that because it appears that President Biden has sung the song, and is now proving he can do better… This article talks about the debt explosion in March, and it can be found Here: March Deficit Blowout: US Spends 3.5x More Than It Brings In; YTD Deficit Is Biggest Ever | ZeroHedge
Or, here’s your snippet:” The Covid crisis may be over (with nearly 60% of the population vaccinated, one would certainly hope it’s over), but covid crisis spending is here to stay.
At 2pm, the Treasury released its latest Monthly Treasury Statement which showed that in March, the US budget deficit exploded once again, surging to $660BN, up five-fold from a tiny $119BN last March, driven by a 160% increase in government Outlays which soared to $927 billion – the third highest on record – from $355.7BN a year ago, and from $559.2BN in February.
The large spike is primarily due to the stimulus checks released to households after the passage of the American Rescue Plan (ARP) Act which totaled $339bn and included forgiveness of roughly $87bn in Payroll Protection Program (PPP) loans in March. In total, the government spent $453bn on “income security” in March, with social security ($94BN), Commerce and Housing Credit ($81BN), Health ($71BN), National Defense ($70BN) and other spending far in the rearview mirror.”
Chuck Again… It’s a race to see who can outspend who… And we, U.S. taxpayers will feel the pain of all this deficit spending in the coming years…
Market Prices 4/15/2021: American Style: A$ .7751, kiwi .7166, C$ .8000, euro 1.1970, sterling 1.3797, Swiss $1.0832, European Style: rand 14.2100, krone 83860, SEK 8.4593, forint 299.71, zloty 3.8052, koruna 21.6626, RUB 75.76, yen 108.77, sing 1.3341, HKD 7.7677, INR 74.98, China 6.5316, peso 19.95, BRL 5.6957, Dollar Index 91.62, Oil $62.75, 10-year 1.59%, Silver $25.68, Platinum $1,196.00, Palladium $2,796.00, Copper $4.16, and Gold… $1,750.50
That’s it for today… Well, our Blues couldn’t stand the heat of an important game last night, even though they rallied in the 3rd period, they couldn’t win… UGH! And after scoring 14 runs on Tuesday night, my beloved Cardinals got shut out in yesterday’s day game… I drowned my sorrows with a zero sugar Gatorade last night… UGH! But seriously, these outcomes were all forgotten about while I had that joyful dinner last night! My primary doc sent me a note yesterday saying he wanted to see me next week… So now I have two doctor appts next week! Then I’m finished with doctors this month! Reminds me of that old PeeWee Herman skit… I say we shoot ‘em, I say we shoot ‘em then hang them, I say we shoot ‘em, then hang ‘em, and then kill them… And Pee Wee says, I say let him go! HAHAHAHAHA I was a huge fan of Pee Wee Herman, until… My Cardinals play this weekend in Philly VS the fighting Phils… with all their high salaried players… Billy Squier takes us to the finish line today with his song: In The Dark… send me a note if you’re still reading, OK, Bill? I hope you have a Tub Thumpin’ Thursday, a Fantastico Friday tomorrow, and a Wonderful Weekend, and please Be Good To Yourself…
Chuck Butler