Christmas Trading Has Begun…

December 21, 2022

* Currencies & metals rally on Tuesday!

* A back-room deal prevents the country from defaulting… 

Good Day… And a Wonderful Wednesday to you! This is the last day to go outside for the rest of week, as a major winter storm is arriving tomorrow around noon, and will leave us with snow, biting, dangerous winds, and sub zero temps… If Mother Nature keeps this up, I’m going to have to change my plans to be here for Christmas and then head south… To heading south right after Thanksgiving! I would have to go by myself, as my wife is NOT going to go for that! In case you are a new reader, or skipped class the thousand times I’ve said this in the past, but I abhor cold weather… I’ve gottta go where it’s warm! I heard something on the radio the other day, and it reminded me that I had a John Denver Christmas CD somewhere… I dug it out, and that’s what’s playing this morning… It’s John Denver doing he version of one of my fave Christmas songs: O Holy Night…

Well, there was no follow-up with the U.S. traders yesterday to add to the dollar’s woes… So, when in the overnight markets the BBDXY showed an 8—point loss that never saw any addition or subtraction to it all day yesterday, and the dollar index represented by the BBDXY was still 8 index points down for the day… So, the currencies were unable to add to their overnight gains VS the dollar yesterday, but Gold & Silver did, and did so in a BIG WAY! Gold gained $30.90 on the day to close at $1,819.40, and Silver gained even more percentage wise, with it’s $1.18 gain to have it close at $24.25…

What a day for Gold & Silver yesterday… most of the news sources I look at talked about Gold was bought on a safe haven basis… Interesting, isn’t it that I was always told that the dollar was a safe haven instrument… Apparently not any longer…  Here’s the thing that might have contributed to Gold & Silver’s rise yesterday… We’re into Christmas week on trading desks… most likely we’ll see nothing but skeleton crews, and newbies on trading desk the rest of the week, and next week too. These are the times that the folks that get left on the desk have been told to not go long or short any position…  And that, by itself is HUGE, because then when regular buying begins to ratchet up the price of Gold, there’s nothing there to throw down the spike strips, or the road blocks… And Gold could see days like yesterday, a few more times until we get into 2023…

Most people think that Gold will suffer a bit as we turn the calendar into 2023… Because like in every year of my life, there’s new hope for the new year… Things are bound to be better than the previous year, and so on, and that’s when folks forget about all the problems in the economy, and with consumers tapping out, and they forget about Gold… But that scenario will only last as long as it takes for the economic reports to start piling up on the negative side of the ledger… and that’s when Gold & Silver will take off again…

The price of Oil remained in the $76 handle yesterday, with no new news about demand or supply… And the 10-year’s yield gained a couple of bips to  end the day with a 3.70% yield…

In The overnight markets last night… It appears as though the overnight markets weren’t even open, as the BBDXY sits about in the same place it closed yesterday. I guess the foreign markets have skeleton desks too! Gold is seeing some profit taking this morning, and is down $5 in the early trading, while Silver has given back 31-cents of it’s huge gain yesterday. This is typical of these two metals, at lest in recent times… Any huge gain is not followed up on the trading period. And that really gets my goat… But, I then realize that these people taking profits are just commodity investors, they haven’t bought Gold or Silver for the store of wealth they provide, they bought them to trade them… UGH! 

The price of Oil has bumped higher by $1.50 and trades this morning with a $77 handle. And just when you thought the bond boys had finally figured out that the Fed/ Cabal/ Cartel wasn’t going to pivot any time soon, and that the marking down of bonds had begun, we get a day when bonds get bought? Yes, the 10-year’s yield fell to 3.66%, from 3.70% overnight…

On Monday this week, I asked the question “Is the U.S Consumer Tapping Out?” And then on Tuesday, reading Bill Bonner’s letter, he included this ditty: “Higher interest rates. Lower real earnings. Businesses and consumers pull back.  Most reach into their savings. Others look in their pockets for loose change. Some find nothing. NBCnews:

A growing number of consumers are falling behind on their car payments, a trend financial analysts fear will continue, in a sign of the strain soaring car prices and prolonged inflation are having on household budgets.

Repossessions tumbled at the start of the pandemic when Americans got a boost from stimulus checks and lenders were more willing to accommodate those behind on their payments. But in recent months, the number of people behind on their car payments has been approaching prepandemic levels, and for the lowest-income consumers, the rate of loan defaults is now exceeding where it was in 2019, according to data from ratings agency Fitch.”

Chuck again… yes, it does appear to me that this is all going the wrong way… But then what else did you expect? Once the Gov’t sent checks to people for doing nothing, the bad precedence was set… And from then on the people would demand more checks, more bailouts, more debt forgiveness… As I see it, why pay your debt obligations? The Gov’t will somehow get involved and pay them for you, right?  Well, these people with that thought are going to be waiting a long time for that to happen, and in the mean time, they’ll see their cars towed away, their Big Screen TV’s taken back, and so on… It’s all going to get very messy, folks… Got Gold?

I told you yesterday, that the Bank of Japan (BOJ) had surprised the markets with their hawkish statements, and the yen was the beneficiary of those hawkish words.. . On Twitter yesterday, the tweets were making me laugh out loud… One guy said that the markets had been blindsided by the BOJ…Another guy said, I only thought economists had a blindside… Another said, economists are blind, that’s the only way they can deliver news, blindly! And so on…

The thing is that even I had gotten caught up in the idea that the BOJ was going to go on forever with negative rates and bond buying…They had been doing this for so long now that it had become a regular thing, even as bizarre as it is… So, I too was blindsided with the announcement by the BOJ… But I do have an excuse, first of all I only play the role of economist… I’m not a real economist, because I use logic… And second of all I DO HAVE a Blind Side!   Remember folks, I only have functional eye…

Well, the U.S. lawmakers, you know the kuckleheads we voted into place, came up with a “special Omnibus spending package to fund the gov’t… We all knew they would, but this was something really strange.. This is a $1.7 Trillion package to fund the Gov’t for 2023… ZeroHedge.com had a comment from a writer that really caught my eye; “Every one deserves a full debate and a roll call vote, so that Americans can see where their representatives stand. Instead, this monstrosity is cooked in a back room, and members can claim they had no choice but to vote against a shutdown–ducking accountability.”

That really gets me riled up to read that! But what else did I expect? These lawmakers are evil folks… and they only do things that will get them reelected… I say we fire them all! Send them packing! And start over again, and this time with the strict instructions that there will be no pork, earmarks or other things added to bills, and that all of them will be debated and voted in public, for all to see just how their elected lawmaker does…   Now doesn’t that sound like something that we used to have? What happened to that scenario? Oh, well… it’s changed, and I didn’t have a vote!

The U.S. Data Cupboard yesterday was a dud… And today’s Data Cupboard will only have the stupid Consumer Confidence report, and Existing Home Sales for November…  So, like I told right out of the starter’s blocks on Monday, that the Data Cupboard will be lacking until we get to Friday this week…

One thing that caught my one eye in the Home Builder’s Sentiment report on Tuesday was the fact that NAHB sentiment tumbled to the lowest level since June 2012 excluding the onset of the Covid-19 lock-downs .The headline index dropped 2 points to 31 (after being expected to rise to 34)…but still a very long way to fall to match the utter disdain Americans have for buying homes right now…

To recap… The dollar selling that took place the night before, stalled out once the U.S. traders took over the books, so the BBDXY ended up with an 8 index point loss yesterday. Gold & Silver were bought as safe havens, and gold gained $30 and Silver gained $1.18 on the day… Chuck explains how this could all be taking place, as it is Christmas week on trading desks…   In the overnight markets we saw nothing… the dollar didn’t move one way or the other! Gold is seeing some profit taking after yesterday’s huge gain, and I do believe that we’re now into Christmas trading, which could be interesting, but most likely will be dull…

Well, we’re getting closer to Christmas, I can feel the excitement building in my bones… I’m like a kid at Christmas, with anticipation, and impatience!  My wife’s family will join us on Christmas Eve, and we’ll have a great time, and then it’s Christmas Day! Open presents! And play Christmas classics on the stereo, and then say a quick prayer to acknowledge that it’s Christ’s Birthday…

For What it’s Worth… This is good one folks… for it takes me back to my childhood, and watching the Looney Tunes cartoons… This is about how people need to have more than one rabbit hole… Stay with me on this and check out the article here: “It’s a Sorry Rabbit That Has Only One Hole” – (internationalman.com)

Or, here’s your snippet: “Like most antiquated sayings, the one above contains sound advice.

When I was a boy, I was privileged to be exposed on a regular basis to the American Warner Brothers cartoons that lasted from the forties to the mid-sixties.

A favorite was Bugs Bunny, who delighted in outsmarting the bumbling hunter, Elmer Fudd. Elmer would threaten to shoot Bugs, who would then proceed to try to talk him out of it. Eventually, Elmer would decide that, as he was the one with the shotgun, he would cease the discussion and kill the rabbit.

He would fire his shotgun just as Bugs dived into his rabbit hole. Elmer would then fire again, directly into the hole, and assume Bugs was no more.

However, the wily Bugs had a tunnel leading to another rabbit hole that was just a few feet behind Elmer. He would calmly come out of the second hole, chewing a carrot, and ask Elmer what he was shooting at. Elmer would advise him that he’d just shot a “wabbit,” and Bugs would wait patiently for Elmer to figure out that he was very much alive.

Bugs could afford to be calm, since, as he had more than one hole, Elmer was no match for him.

As adults, we may no longer watch such clever cartoons, but Bugs still has a lesson to teach us today.

If we have only one hole and a hunter comes after us, we have no means of escape.

But life back then was very different. There were no rapacious governments hunting “tax cheats” and “deserters” – those who had chosen to expatriate their wealth, and very possibly themselves, in order to keep governments from stealing what they had earned.

At one time, this “hunt” by governments seemed not to be terribly unreasonable, but in recent decades, the mask has been withdrawn and it’s becoming increasingly clear that they’re not pillaging their citizens “for the common good.”

In fact, far from seeking to protect their citizens, many governments of the former “free world” countries clearly regard their people as milk cows.

Those who remain in such countries are like rabbits with only one hole. They’re at the mercy of their governments. And as conditions worsen, an increasing number of people are coming to realise that they’re actually trapped in their holes.”

Chuck again, of course this article comes from the International Man web site… But I have to say that I agree with him for the most part…

Market Prices 12/21/2022: American Style: A$.6689, kiwi .6300, C$ .7336, euro 1.0625, sterling 1.2106, Swiss $1.0804, European Style: rand 17.3171, krone 9.8216, SEK 10.4152, forint 379.19, zloty 4.3908, koruna 22.8055, RUB 71.19, yen 131.94, sing 1.3521, HKD 7.7921, INR 82.52, China 6.9508, peso 19.74, BRL 5.2039, BBDXY 1,255.13, Dollar Index 104.11, Oil $77.78, 10-year 3.66%, Silver $23.94, Platinum $998.00, Palladium $1,712.00, Copper $3.78, and Gold… $1,814.56

That’s it for today… Yes, the time is winding down… But the weather that’s coming our way, will make it seem like it’s lasting longer! In all the excitement of my trip to the cat Scanner a few days ago, I forgot to tell you that I had no new signs of cancer… So, that’s a good thing, but it also means that the chemo I take each and every night is doing its job, and I can’t be taken off it! Oh well, it is what it is…   It’s been more than 15 years now that I have dealt with Cancer… I can honestly say that right now is the best I’ve felt in all those years… So.. I have that going for me!  Our Blues looked tired last night, playing back-to-back games on the road, and lost 5-2… UGH! Oh, so this week, no Pfennig on Friday, as usual… But, don’t be surprised to see my traditional Christmas Pfennig in your box on Saturday! I already wrote it, so it’s all geared up and ready to be sent! You know me and traditions, right?  John Denver is still playing this morning so his version of the song: Away In A Manger takes us to the finish line today! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler