Rocktober 11, 2o22
* currencies & metals get sold on Monday…
* Bringing Home the bacon could get difficult!
Good Day… and a Tom Terrific Tuesday to you! An absolute beautiful day down south yesterday had us all spending the day on the beach… with no baseball to watch last night I had to settle for watching NFL football… at least it was the Chiefs playing… and winning… Since we no longer have an NFL team in town, we have had to change our alliances to our cross state team, the Chiefs… It was an ugly day for non-dollar assets yesterday, just like I thought it would be yesterday morning, after looking over the overnight happenings… The Moody Blues greet me this morning with their song: I’m Just A Singer (in a rock and roll band)…
Well, I hope you all paid attention to me yesterday, and heard what I had told you was the order of the day. And that was to batten down the hatches and not peek at the markets, for I knew in my heart of hearts that it was going to be a very ugly day for non-dollar assets… The BBDXY gained more than 9 index points on the day! That’s right I said 9 index points! The euro dropped 1 full cent, and like I said yesterday, the Russian ruble had been immune to the dollar’s strength so far, but that seems to have ended as the ruble is giving up ground to the dollar. The Reserve Bank of Australia (RBA) hiked rates 25 Basis Points last week, while the Reserve Bank of New Zealand (RBNZ) hiked rates 50 Basis Points… I wonder if traders noticed this difference of rate hikes by the two Central Banks? I would think that traders and investors would have switched from buying Aussie dollars to buying kiwi… You think?
For fundamentally that would be the trade… But we all know that these days, fundamentals have been thrown out with the bathwater… The OFFICIAL CASH RATE (OCR) in New Zealand is now 3.5%.. And my new math skills tell me that 3.5% in New Zealand is higher than 3.25% in the U.S. Hmmm… Makes you wonder now doesn’t it? Oh well, fundamentals be damned, it’s a game of sentiment these days, and I don’t want any part of that!
It was not a good day for Bitcoin either, as it lost 6% of its value yesterday… The downward spiral continues for this once lofty priced digital currency…
The price of Oil slipped again yesterday, losing $3 total on the day to end the day trading with a $90 handle. I can’t believe the production cut announcement didn’t have a longer lasting effect on the price of Oil? Bonds got sold by the bushelful yesterday, with the yield on the 10-year rising to 3.98% from 3.88% to start the day yesterday. There was some very damaging news on the Treasury front yesterday… the net selling by Japan and China, the two biggest holders of Treasuries, is US$69.7 Billion and US$98.7 Billion this year… YIKES! At a time when we need for foreign countries to step up and buy more Treasuries, our two biggest holders, Japan and China, were net sellers of Treasuries… UH-Oh!
Depending on the kindness of strangers, wasn’t always just Blanche DuBois’ forte… the U.S. has been guilty of this pleasure for years, and for years it appeared that they would get by Scott-free! But, the well made plans of mice and men, eh? All this debt, $31 Trillion in the current debt, and $171 Trillion in unfunded liabilities will have to be financed with Treasury issuance, and with yields rising, the interest costs of those Treasuries will begin to creep up to $1 Trillion per year… Who’s going to pay for that? Ahem… Chuck, you know darn well who will have to pay for that! Yes, yes I do… And it’s you & me dear reader!
In the overnight markets last night… The dollar buying continued, but on a smaller scale, as the BBDXY gained 1 index point overnight. The Russian ruble slipped again overnight, as did the price of Oil… Oil is right back to where it was before the production cut announcement of last week. And that is trading with a $88 handle this morning.
Gold is getting sold again this morning and is down $6 in the early trading, while Silver gives back 37-cents this morning. Gold & Silver enjoyed a brief time on the rally tracks last week, but that was short-lived, and we’re right back to watching these two precious metals go south each day as the paper trades mount up once again.
The good folks at GATA sent me this article on Gold, by one of our fave Congressmen… I’ll let them explain it: “America’s currency would regain stable footing for the first time in half a century if a bill just introduced by U.S. Rep. Alex Mooney, R-West Virginia, becomes law.
Referred to as the “Gold Standard Restoration Act” by sound money activists, H.R. 9157 calls for the re-pegging of the Federal Reserve note to gold in order to address the ongoing problems of inflation, runaway federal debt, and monetary system instability.
“The gold standard would protect against Washington’s irresponsible spending habits and the creation of money out of thin air,” Mooney said.
“Prices would be shaped by economics rather than the instincts of bureaucrats. No longer would our economy be at the mercy of the Federal Reserve and reckless Washington spenders.”
Chuck again… Boy that sounds good to me, to put a limit on Gov’t spending would be a boon for the economy, and our future… But we all know that it has a snowball’s chance in hell of getting passed, right?
While we’re on a roll here with metals talk… Did you hear about the ban of Russian metals? It seems that Russia, which accounts for about 9% of global nickel production, 5% of aluminum and 4% of copper — could no longer be delivered into any warehouses around the world in the LME network, which store metal used to deliver against futures contracts when they expire.
This proposed ban would have the potential of really shaking up the metals markets folks… We had better keep an eye on this…
There are so many articles out there talking about how the speculators are shorting everything they can these days… Shorting metals has always been there, but now the speculators are shorting stocks, Bitcoin, bonds, Oil, you name the investment and it’s getting shorted.. That is except if it’s dollars…
I’ve told you all this story before, but here goes again.. Long ago, in a galaxy far away, I ran the margin dept at a regional brokerage company, and this was in the day of shorting stocks because they had gone nowhere for some time… So, the “shorters” would figure that the stocks only had one play to go, which was down… And when the stocks didn’t go down, and when up instead, the “shorters” received margin calls on their positions, and many times we had to “sell out” the account, down to bare bones, to pay for the margin call.. These weren’t pretty times, and I just can’t help but think about that time, these days, with all this shorting going on… I’m just saying…
The U.S. Data Cupboard comes back on board today, but its offerings aren’t up to giving us any indication of what’s going on… And it won’t do thatS until Thursday this week, when the latest stupid CPI prints… And then on Friday when we’ll see the color of Sept. Retail Sales… The BHI (Butler Household Index) indicates that Retail Sales will be flat in Sept…
To recap… The dollar buying came back with a real attitude yesterday, and the BBDXY gained 9 index points on the day. Gold lost ground again, and Oil slipped too… It was a complete washout, ugly day for non-dollar assets, and today is not shaping up to be any kind of reversal… UGH!
For What It’s Worth… This article screams FWIW! This is an article about how a new potential ruling in California could lead to bacon costing more… As if we can handle the cost of pork and bacon now… The article can be found here: Supreme Court, Justice Jackson kick into gear as new term begins (usatoday.com)
Or, here’s your snippet: “The Supreme Court will hear arguments Tuesday over a California animal cruelty law that could raise the cost of bacon and other pork products nationwide. The case’s outcome is important to the nation’s $26-billion-a-year pork industry. But the outcome could also help define the limits of states’ ability to pass laws with impact outside their borders, including laws aimed at combating climate change or improving drug prices. The case before the court involves a California law that says pork sold in the state needs to come from pigs whose mothers were raised with at least 24 square feet of space, including the ability to lie down and turn around. “
Chuck again… I always find these kinds of things to be what is going wrong in this country… But then that’s just me… I look at things logically, and then decide if they are worthy… And to me this decision in California will be not-worthy of anything… I’m just saying…
Market Prices 10/11/ 2022: American Style: A$ .6260, kiwi .5580, C$ .7229, euro .9705, sterling 1.1056, Swiss $1.1056, European Style: rand 18.1672, krone 10.7667, SEK 11.3435, forint 441.40, zloty 5.0147, koruna 25 .2858, RUB 64.15, yen 145.71, sing 1.4385, HKD 7.8499, INR 81.3225, China 7.1743, peso 19.98, BRL 5.1983, BBDXY 1,345.53, Dollar Index 113.27, Oil $88.88, 10-year 3.94%, Silver $19.32, Platinum $890.00, Palladium $2,184.00, Copper $3.47, and Gold… $1,663.25
That’s it for today… Short-n-sweet, as there are many things I would like to talk about, but, think it better to avoid them, so I don’t tick so many people off, or get me thrown in the “talking bad about the Gov’t” jail! I have to admit that I just don’t see myself being able to write much longer if the “political police” keep up the censoring of thought… Baseball gets started again tonight, without my beloved Cardinals, but that’s life, right? That was quite a game last night ending 30-29 in favor of the Chiefs… a wild ending for sure! The great reverend, Al Green takes us to the finish line today with his song: How Can You Mend A Broken Heart… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!