May 19, 2022
* currencies rally for 3rd consecutive day…
* Powell talks tough…
Good Day… And a Tub Thumpin’ Thursday to one and all! Longtime readers know that my two oldest children, (Dawn, & Andrew) are both teachers, Dawn teaches kindergarten, and Andrew deals with high schoolers… Their last full day of school is today, and if I recall correctly, they’ll be smiling like Cheshire Cats at noon tomorrow… The Pond Scum (80’s name) have taken 2 of 3 so far from my beloved Cardinals… And a rain storm came through yesterday, and cooled down the temps for a few days… The Great Leon Russell greets me this morning with his song: Back To The Island…
Well, ever since Monday this week the dollar has been slipping, yesterday the BBDXY game up 2 index points, and overnight was even worse. More on that in a minute. I’m still not convinced that this brief dollar selloff is a long lasting trend, instead, just a “correction”… But stocks are really getting sold these day, and a lot of those stock holdings were by foreigners, who then would sell the dollars that they just received for the sale of their stock, and convert them to their home base currency… I don’t know how much of this scenario has happened, but it’s difficult for me to believe that it hasn’t happened by the truck load…
Gold tried like the dickens to get back to flat on the day yesterday, but ended up short by $2.70, and ended the day at $1.822.20. Silver did get back to flat and more gaining 4-cents on the day, and ended the day at $21.74… The Price of Oil slipped again from its high on Tuesday of $115… And bonds continue to wallow around in the muck… I for the life of me can’t come up with a reason for an individual to buy U.S. Treasuries when the Fed/ Cabal/ Cartel is hell bent and whiskey bound to hike rates further…
Buying bonds now would be like a poker player calling another player’s bluff… Buyers now are going with the thought that the Fed/ Cabal/ Cartel can’t hike rates much further without getting the economy in a deep dive… That’s their story and they are sticking to it! Me, on the other hand, still won’t touch Treasuries with your ten-foot pole!
In the overnight markets last night… The dollar got sold more, and this is becoming quite interesting… The BBDXY lost 7 index points in all yesterday and last night… The euro is above 1.05, and the Russian ruble continues to rack up the gains VS the dollar. Gold is up early this morning, along with Silver, so we have that going for us today! I just talked about Treasuries, and then I look at the early morning level for the 10-year, and see that it has rallied to 2.83%… I don’t get it… but then I’m just a humble old country boy…
When I left you on Tuesday, I told you that the Fed/ Cabal/ Cartel Chairman, Jerome Powell, who has been confirmed to his second term now, was being interviewed… Well, let’s listen in on some of his interview;” Federal Reserve Chair Jerome Powell emphasized his resolve to get inflation down, saying Tuesday he will back interest rate increases until prices start falling back toward a healthy level.
“If that involves moving past broadly understood levels of neutral we won’t hesitate to do that,” the central bank leader told The Wall Street Journal in a live-streamed interview. “We will go until we feel we’re at a place where we can say financial conditions are in an appropriate place, we see inflation coming down.”
“We’ll go to that point. There won’t be any hesitation about that,” he added”
Chuck again… So, like I said above, the Fed/ Cabal/ Cartel is hell bent and whiskey bound to hike rates… And well, I think they will soon find that their rate hike didn’t stop inflation from rising… And why’s that? Well, I told you on our Tom Terrific Tuesday… The over $4 Trillion in new money supply in the past couple of years has already been issued, spent and son on… You can’t call it back now…
I will say this though, Seniors have to be thrilled that their CD’s will be getting increased rates when they rollover… This group of people have been the hardest hit by the ZIRP (zero interest rate policy), and then they had to take another arrow when inflation began rising! I’m now considered a “senior”, and I know first hand what kind of damage my investment portfolio has taken with ZIRP, and now inflation…
I want to spend some time talking about Gold (& Silver) this morning… Sure Gold has taken on water in the month of May, but… it’s still the commodity I want to own during a war overseas, rising inflation at home, and an overbought dollar.. I saw this quote by one of my fave founding fathers, Thomas Jefferson, so here it is: “Specie (gold and silver coin) is the most perfect medium because it will preserve its own level, because having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.” – Thomas Jefferson
What a smart man Thomas Jefferson was… Many of the things he’s known to have said, are still relevant today… I’m just saying…
Like I said above, Gold has been taking on water in May… That makes it cheaper for people that has shuffled their feet, hemmed and hawed, and had to be dragged to the watering hole! That’s why it’s so darn cheap these days… Because a very small percentage of individuals actually own Gold… If they were buying physical Gold like they do stocks or Bitcoin, they’re buying power would keep the price manipulators at sea… But when your stock broker, talks you out of buying Gold, what are you going to do? Listen to your broker? Or… go rouge, and open an account with a Gold dealer, someone trustworthy, like my metals guru, Tim Smith at 1-800-926-4922…
Here’s a good fact for you… Gold doesn’t really go up in price, it goes up only because the dollar goes down, or the pound sterling goes down, etc. Oh! Did you hear about the guy in the U.K. that has decided to pay his employees in Gold instead of sterling? Here’s a quote from the Employer…
““With the cost-of-living crisis going from bad to worse,” says TallyMoney CEO Cameron Parry, “it didn’t make sense to continue offering pay hikes in pounds when its value is being eroded further with every passing day. It was like putting a Band-Aid over an open wound,” he tells local paper City A.M.
Wow! Thinking back to the early 2000’s If I had demanded that I get paid in Gold…. I’d would be singing: We’re in the money, we’re in the money,… Of course my wife would say to me: Show me the money!
The U.S. Data Cupboard will only have the usual Tub Thumpin’ Thursday fare of: Weekly Initial Jobless Claims for last week… And then some housing data that doesn’t make me tingle all over… We will see the Leading Indicators for April, with a reminder that the previous month’s print was flat as a pancake! (Head East)
To recap… The dollar is showing signs of weakness… Chuck isn’t sold on it being anything more than a correction of the dollar’s extremely overbought position…Gold lost ground yesterday, while Silver eked out a 4-cent gain. The over night markets saw the dollar get sold some more… I have an interesting article for you in the FWIW section today, so you won’t want to miss that!
For What It’s Worth….i was talking about the Plaza Accord a few Pfennigs ago, and look what the cat dragged in… An article about a potential new Plaza Accord! And that article can be found here: Surging Dollar Stirs Markets Buzz of a 1980s-Style Plaza Accord (yahoo.com)
Or, here’s your snippet:” The dollar’s skyrocketing rise has some contemplating a rare, if not unthinkable, action: major nations agreeing to manipulate the U.S. currency until it falls.
It has happened before — most notably with 1985’s Plaza Accord — which took place against a backdrop of soaring inflation, an aggressive Federal Reserve rate-hike campaign and surging dollar. In other words, a scene that looks a lot like today — a parallel that won’t be lost on Group-of-Seven finance ministers and central bank governors as they meet this week.
Demand for the greenback has been relentless this year, the result of interest rates rising quicker in the U.S. than other developed economies and the war in Ukraine prodding a stampede to the ultimate haven. The dollar’s 6.3% surge since the start of the year has clobbered the yen to a two-decade low and put the euro almost back to 1-to-1 parity with the U.S. currency for the first time since 2002. Investors are lasering on the yen tumbling to 150 per dollar and the euro falling below 90 cents as a potential line in the sand.
For Stephen Miller, a four-decade market veteran and former head of fixed income at BlackRock Inc. in Sydney, the situation now is reminiscent of his time as a young buck in Australia’s Treasury Department, where he had a front-row seat watching the Plaza Accord unfold.
Through that agreement which France, Japan, the U.K., U.S. and West Germany agreed to weaken the dollar — a stance taken out of a belief that the dollar’s huge move higher was damaging the global economy.
“One of the options down the track could be some sort of coordinated intervention,” said Miller, now an investment consultant at GSFM, a unit of Canada’s CI Financial Corp. which oversees about $289 billion in assets.”
Chuck again… While that would be a welcome sight to non-dollar holders, I just don’t see it happening, but it sure is an interesting thought, eh?
Market Prices 5/19,/ 2022: American Style: A$ .6998, kiwi .6351, C$ .7801,
euro 1.0524, sterling 1.2417, Swiss $1.0239, European Style: rand 15.9693, krone 9.7979, SEK 9.9861, forint 366.54, zloty 4.4085, koruna 23.4682,
RUB 62.26, yen 129.80, sing 1.3846, HKD 7.8480, INR 77.48, China 6.7738, peso 19.99, BRL 5.1348, BBDXY 1,147.37, Dollar Index 103.30, Oil $107.94,
10-year 2.83%, Silver $21.63, Platinum $956.00, Palladium $2,008.00,
Copper $4.23, and Gold… $1,826.89
That’s it for today and this week, of course… I’m looking forward to the weekend, as I’ll be attending a wedding… the little girl that grew up next door to us, Jordan Yanker, will be walking down the aisle and saying “I do” on Saturday… Jordan and Alex are about the same age, and they used to play together all the time, but then they grew apart as the grew up… Congrats to the parents, Kevin and Lisa… I remember when Dawn got married, I was so proud to walk her down the aisle… Geez Louise, that was 19 years ago now! Where does the time go? The Cardinals and the pond scum at noon today… A good day to sit outside and watch them! Chicago takes us to the finish line with their uber hit, that was the make out song of the 70’s… Color My World… (I used to be able to play that on the piano, but not anymore! UGH!) I hope you have a Tub Thumpin’ Thursday today and please remember to Be Good To Yourself!
Chuck Butler