July 13, 2022
* the dollar continued to rally on Tuesday
* But overnight there’s been some slippage in the dollar
Good Day… And a Wonderful Wednesday to you! You, know, one of the mysteries of life, is how does one get tired, from sitting on airplanes all day? That was me yesterday, and after arriving to our destination, I was plum tuckered out! I was able to stay up to watch my beloved Cardinals beat the vaunted Dodgers… The game was full of drama, so that kept me awake! America greets me this morning with their 70’s song: Sister Golden Hair
Well, me being gone for a day, didn’t change things one iota ,the dollar is still the Cat’s Meow, and Gold is being treated like a rented mule, Oil is trading at a multi month low, and bonds are getting bought again… I’m at a loss for words to describe this current market other than to say that it’s crazy as a loon…
Yesterday the dollar traded sideways, with the pull to the upside most prevalent… The euro remains above parity, but barely… And the best performing currency of the day yesterday was the Russian ruble, which took no prisoners… The BBDXY closed the day at 1,291.89, and looked as if it was going to continue to climb higher…
But, in the overnight markets last night, the dollar actually got sold a bit, and the BBDXY lost 3 index points… The price of Oil slipped further downward, and fears of a recession are being blamed for the price action in Oil. I would say that recession fears are real, and that all of the markets should be trading with that in mind… But they aren’t, so we move on…
Gold is actually up $5 in the early trading today, and Silver is down 3-cents to start the day. I wonder, if you will, just what it will take to get Gold back on the rally tracks…
The ever intelligent, Ted Butler, (no relation that I know of) he of Silver guru status, had some thoughts on this, and I want to take you through what he’s thinking… First of all he believes the meltdown in the London Metals Exchange (LME) last month, was a warning signal for the short sellers of Gold & Silver in the COMEX… You see, the problem in the LME was a short seller that held a short position that was HUGE! And instead of making him take his billions of losses, the LME simply cancelled all the trades in the system that would have made his losses every worse.
Now move over to this side of the Atlantic, and we have massive short positions in Gold & Silver… These holders of the short positions had to notice how this all played out in the LME, and are sweating bullets… And therefore, Ted Butler, believes that the short sellers will begin to wind down their short positions, not all at once but over time to keep the metals from soaring on them. But this would then indicate that Gold & Siler were going to be going on extended winning streaks…
I hope I did a good job of deciphering what Ted Butler, has to say… It’s a long article, but it you want to read it, it exists here: The Perfect (and Only) Solution | SilverSeek
OK… back to markets, economies, and dolts… Speaking of dolts… Ok… I read on Monday that the U.S. Gov’t is going to slash the payroll of military personnel that didn’t get vaccinated.
I find that to be horrible… But yet Illegal Aliens can come into our country Illegally, be unvaccinated and still get free benefits like food, housing & medical. Does that sound right to you? We treat the people that fight our wars to keep us free, like dirt, but give the red carpet to illegal aliens… I’m just saying… And by the way, who pays for those benefits these people get? That’s right, you and me, buddy, taxation, isn’t it wonderful?
On Tuesday this week, the Reserve Bank of Australia (RBA) hiked rates again, and this morning the Bank of Korea (BOK) hiked rates and the Reserve Bank of New Zealand (RBNZ) to hiked rates again. These Central Banks are all trying to stem the rising inflation in their respective currencies, and shore up their weak currencies… But that would involve fundamentals to enter into the equation, and I don’t see that happening…
Recall that a couple of weeks ago the Swiss National Bank (SNB) hiked rates, but still left their deposit rates in negative territory, and the hiking of the rate actually caused a rally in the Swiss franc from a 1.01 to 1.04 level? Well, that giddiness of franc traders has faded with the wind, and with no follow up the franc has fallen back to 1.01 level…
So, the lesson to be learned here by Central Banks is that if you’re going to hike rates, you had better follow that up with a ton of jawboning, the rates higher, before you can actually hike them again… You’ve got to keep your foot on the accelerator… no braking allowed, unless you want to see your currency go up and down like a yo-yo…
Well, the housing bubble is finding its pin in the room… Mortgage rates are climbing and causing problems for buyers who have gone back to buying a house based on their monthly payment… CNBC reported yesterday that: “Americans are canceling deals to buy homes at the highest rate since the start of the Covid pandemic.
The share of sale agreements on existing homes canceled in June was just under 15% of all homes that went under contract, according to a new report from Redfin.
That is the highest share since early 2020, when home buying paused immediately, albeit briefly. Cancellations were at about 11% one year ago.”
OK, so did you hear this one? The U.S. CPI report got “leaked” yesterday ahead of its print today, and the “leaked” report said that inflation had gone to 10.2%! That was quickly exposed as “fake”, and everyone calmed down. My spider sense is tingling here folks… this is all too suspicious, don’t you think? My take on this “fake” report, was that this was the initial actual BLS CPI report, before they applied their hedonic adjustments! Oh, well, it was “fake” and it should be treated as such…
Today’s U.S. Data Cupboard has the stupid CPI report for June, and it will print in just 20 minutes from now and should show that inflation continued to rise in June. Remember that the stupid CPI isn’t the Fed Head’s preferred inflation calculator, but the stupid CPI is a fave of the markets, and so we are stuck dealing with it…
The Fed’s Beige Book will print this morning too, this used to be important print, but it is no more… Still though, it’s always interesting to see the different Fed regions report what’s happening in their neck of the woods, and compare it to the other regions…
To recap… The dollar continued to gain on Tuesday, and moved the euro to close to parity. But overnight the dollar backed off a bit, and is starting today in the red, so maybe… Ted Butler, gives us his idea for a reversal of the trading in metals, and it’s worth a listen to… Gold is up $5 in the early trading today, and looks promising.
For What It’s Worth…. I have no idea what some readers are doing these days, for last week I highlighted in the FWIW section the fact that traders at JPMorgan were being brought to court for price manipulation, and then my email box was flooded with readers sending me a link to the article? Anyway… Here’s the follow up to that original article… and it can be found here: JPMorgan Gold Desk Cheated Market With Spoofing, Ex-Trader Says – BNN Bloomberg
Or, here’s your snippet: “JPMorgan Chase & Co.’s gold trading and sales team was so focused on making money that they scammed the market for years with so-called spoofing trades, according to a former colleague who testified at the trial of three former bank employees charged with fraud.
“Our job was to do whatever it takes to make money,” and using spoof trades to manipulate prices for all sorts of precious metals was an almost daily method for generating profit, said John Edmonds, 39, who worked as a trader at the bank until 2017. “Everyone at the time did it on the desk and it worked.”
Edmonds is testifying against his former boss, Michael Nowak, the longtime head of the trading desk, gold trader Gregg Smith and hedge funds salesman Jeffrey Ruffo. Edmonds told a federal jury in Chicago on Tuesday that the team wasn’t just buying and selling precious metals, but systematically cheating to help themselves and their top clients over the course of the decade that Edmonds worked as a trader.
Edmonds is the first of a handful of cooperators slated to testify that prosecutors say will bolster their claim that Nowak, Smith and Ruffo participated in a racketeering enterprise from 2008 to 2016. Edmonds was the first on the precious-metals desk to admit to crimes and secretly cooperated against former colleagues. He pleaded guilty to conspiracy and commodities fraud charges related to spoofing in 2018.
Traders on Nowak’s desk engaged in spoofing as a core business practice, doing it more than 50,000 times over nearly a decade, prosecutors allege, though the jury will only hear about a tiny portion of those. Lawyers for the three said the government’s case is based on a misreading of evidence and the reliance on witnesses, like Edmonds, who are testifying in order obtain light punishments. If convicted of all charges, the three face decades in prison.”
Chuck again… I sure hope this trial continues to expose these guys for what they did, and then jail them! C’mon I can hope can’t I?
Market Prices 7/13/2022: American Style: A$ .6792, kiwi .6149, C$ .7592, euro 1.0063, sterling 1.1920 Swiss $1.0241, European Style: rand 16.9485, krone 10.1898, SEK 10.5436, forint 407.52, zloty 4.8023, koruna 24.2256, RUB 58.88, yen 137.05, sing 1.4043, HKD 7.8500, INR 79.63, China 6.7255, peso 20.79, BRL 5.4388, BBDXY 1,289.01, Dollar Index 107.93, Oil $96.63, 10-year 2.94%, Silver $18.99, Platinum $848.00, Palladium $1,991.00, Copper $3.34, and Gold… $1,731.33
That’s it for today… I love it here in S. Florida, looking at the ocean while my fat fingers fly across the keyboard! People always question me as to why I go to Florida in the summer, and I say, well, it’s just as hot here (in St. Louis) and in Florida I get a sea breeze! It took us a while to get here yesterday, as our plane in Atlanta was delayed for takeoff for 2 hours while we waited for pilots to show up and fly the plane! UGH!, I just worked crossword puzzles, and passed the time, listening to a guy behind me on the phone complaining and whining about how he was being delayed… I used to be like that when I traveled for business, but not any longer… And I’m glad! Elvin Bishop takes us to the finish line today with his song: Fooled Around And Fell In Love…. I hope you have a Wonderful Wednesday today, and remember to be Good To Yourself!
Chuck Butler